A new Business environment
If you were to go to New York city and decide to open a fish and chips shop in lower Manhattan, and call it “The Osama Bin Laden Best Fish Shop”, you would probably lose your money. Everyone knows that it would offend most of your potential customers. If you were to go to Israel, and open a pork butchery next to a synagogue in an exclusive Jewish area, you could also expect not to make a profit.
Every country has its own set of norms and acceptable behaviour. I could give thousands of additional examples like if a female were to go to a business meeting dressed in a bikini, it may be acceptable on the Australian Gold Coast, but certainly not in Saudi Arabia.
I raise this point because a couple of weeks ago I had a meeting with a large multi-national and the director told me that whenever they enter a new country they go through a process of understanding the new environment. I can’t name the company but let’s call it Giant Multi-national Corporation. They recently invested in Oman (a country in the Middle East) and they produced a policy document called “The Omanisation of Giant Multi-national Corporation”. They do this whenever they enter a new country, so presumably also have a policy called “The Austalianisaton of Giant Multi-national Corporation.” These policy documents covers all aspects of the country – its social norms, to its business norms and everything else in-between.
It’s no wonder that they have a “South Africanisation of Giant Multi-national Corporation” document which covers our own local issues. I was assisting them in understanding the BEE issues that they will face when they do business here. The director accepted what I said without interrupting too much. He understands that each country has its own quirks – his aim is to ensure his company manages those quirks and hurdles to optimise the company’s profits.
I have no doubt that all multi-national companies do similar things. They set out to examine the potential profit they can make in any country and work out what they need to do to live like a good corporate citizen in their new country. Why don’t local companies do the same thing?
I started looking at how smaller South African countries approach BEE. In many cases they put their head in the sand, like the proverbial ostrich. What our own South African companies do not realise is the political and business environment has changed. They live and work inside this country, and maybe have not realised the change that has taken place. I’m not only referring to the BEE act, but all aspects. It is a slow change and from one day to the next nothing seems to change – it’s just like watching the hands of a clock. It does move but you can’t actually see it move.
South African companies are doing themselves a disservice by ignoring the change that is happening. In many cases there is too much emotion around the issue for managers to think clearly.
We had a potential client who runs an air-conditioning repair company call us and ask what is necessary to become “BEE Compliant”. We told him it is a process, firstly of education and then to start changing his business, by making good business decisions to increase his BEE levels. We explained that he can learn most of what he needs in a 4 hours BEE workshop, costing R650.00 and then to be aware of the issues from then on.
His reaction: “I employ 10 people – I’d rather close down than go through this process, and then they will be unemployed”. Looking at it rationally – he is prepared to close down a business (not sell it) to spite someone? Who is going to care? Some other air-conditioning business is going to get more business!
The conclusion is clear. Each business should examine the environment in which they operate just like the Giant Multi-national, and react accordingly.