Summary of Australian Business Style & Operational Insights

1. Business Australian Style
Handout
Paul Mracek of Kotan Australia Pty Ltd
The “Next Step” is yours…to build a better “Business”
Elegant Simplicity…to Success
Contact: paul@kotanaustralia.com
www.kotanaustralia.com
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2. General Information
Capital: Canberra
Surface Area: 7,692 thousand sq km
Official Language: Australian (form of English)
Population: 22.155 million (2010)
Head of State:
H.M Queen Elizabeth II, represented by the Governor General -
HE Ms Quentin Bryce
Head of Government:
Prime Minister The Hon Ms Julia Gillard (finally decided)
Key Concepts
Egalitarianism – Australia has a very egalitarian culture where differences in status need
no particular deference. Often referred to as the ‘tall poppy syndrome’, this creates a
society that avoids differentiation between individuals, or being a ‘tall poppy’ by standing
out from the crowd. Instead, modesty, parity and mutual respect are preferred.
Egalitarianism infiltrates all aspects of Australian life and is particularly prominent in the
business sphere. Australians generally avoid drawing too much attention to their
academic qualifications, personal achievements or business success, since this may be
perceived as arrogance. Its influence can also be seen in the more down-to-earth approach
to business that Australians adopt.
Openness
A highly valued aspect of Australian culture and well-known trait of the nation’s
population is the open and direct manner in which daily life is conducted. Generally,
Australians are literal and to the point in their communication, often voicing what might
be perceived as strong and confrontational opinions. As a nation, they value directness
and respect those who express their own views and beliefs. In a business context, you will
find that your Australian counterparts are, on the whole, receptive to new ideas and
encourage lively discussion or debate.
Individualism
This characteristic is prominent in the behaviour of many Australians and in the way they
interact with other members of society. A common feature of individualism, which must
be taken into consideration, is the importance of personal privacy and the segregation of
the public and private life of individuals. Whilst dealing with your Australian
counterparts, you may find attempts at developing personal relationships are treated with
caution.
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3. Doing Business with Australia
The Commonwealth of Australia, a united independent nation established in 1901,
consists of six states and two territories. Aboriginal settlers were the first to migrate to the
continent almost 50,000 years ago, until the seventeenth century when the first Europeans
began to explore and Captain James Cook took possession under Great Britain in 1770. As
a self-sufficient country, natural resources helped to rapidly develop the nation’s
agricultural and manufacturing industries. In recent years, Australia has increased its
economic focus and has become one of the most dominant and advanced market
economies in the world with increasing demands from its trading partners.
Australia Business Part 1 - Working in Australia (Pre-departure)
• Working practices in Australia
Punctuality is an essential part of Australian business practice. Lateness may
create the impression that you are unreliable and careless in your business
dealings. However, whilst arriving on time is expected of foreigners, it is not
uncommon for Australians to bend these rules slightly.
It is advisable to schedule business appointments approximately one month in
advance. Generally, making appointments with executives is relatively easy and
you will find most of them accessible and accommodating.
Business hours in Australia tend to be 9.00 am to 5.00 p.m., Monday to Friday.
You should avoid making business trips to the country around Christmas and
Easter, as this is the time of the year when most business people are on holiday.
• Structure and hierarchy in Australian companies
Company structure in Australia is generally flat with little visible distinction
between those of varying rank and status.
The authority to make decisions is not always left in the hands of the high level
executives. In Australia, lower level employees often have a considerable amount
of power and authority within the company.
• Working relationships in Australia
Australians tend to initiate a first name basis with their fellow business associates
quickly. This is an indication of mutual respect and equality.
In Australia it is essential to establish personal relationships with those you are
conducting business with. It is important to make connections with established
representatives who are able to help build those relationships.
Australia Business Part 2 - Doing Business in Australia
• Business practices in Australia
The use of titles is not an essential part of Australian business culture. Australians
tend to be more informal in their business dealings and will move to a first name
basis quite quickly. However, when initially introduced, you should address
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4. your Australian counterparts by their last names preceded by “Mr.”, “Mrs.”, or
“Miss.”, until they initiate this informality.
When meeting your Australian associates for the first time, it is customary to
shake hands, firmly but briefly, at the beginning and end of a meeting. This is the
preferred gesture for both male and female colleagues, although men should
allow a woman to offer their hand first.
Following initial introductions, negotiations will proceed quickly. Australians
will negotiate major issues in an open and direct manner, but always in
accordance with company policy. It is fundamental to abide by established rules
and laws rather than allow feelings to take precedence.
Despite an overall results-orientated outlook towards business, the decision
making process can be a slow and extended one, that should not be rushed or
hurried. Australian business culture prefers a more collaborative approach to
work and therefore managers and subordinates alike will give their input and
consider the options before reaching a final decision.
Australian Business Etiquette (Do’s and Don’ts)
DO partake in some initial “small talk” before a business meeting begins.
Australians use this as a way of establishing rapport with their colleagues and is
an important part of business etiquette.
DO keep a certain amount of distance when in conversation with your Australian
counterparts. Personal space is highly valued in Australian culture.
DO maintain good, direct eye contact with your Australian colleagues during all
business meetings and conversations as this helps to establish trust.
DON’T over exaggerate or boast about your company’s abilities or build up
business information. Self-importance is not a favoured quality in Australian
culture; therefore you should remain modest and unassuming at all times.
DON’T discuss aspects of your personal life during business negotiations.
Privacy is an important element of everyday life in Australia.
DON’T use aggressive sales techniques whilst negotiating. Your Australian
business colleagues will dislike being pressured and may be put off by this
approach.
Gift Giving
Gift – giving is generally not a part of Australian culture. However, if you are
invited for dinner, it's permissible to bring a token gift of flowers, chocolates, or
wine.
An illustrated book from your home region can be another welcome gift.
A product unique to your home region can also be a good choice
Bear in mind that your thoughtful choice is considered more important than the
actual cost of the gif
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5. Structure - Business
• Manufacturing in Australia is approximately 16% of GDP, and is continuing to
decline
• Focus has shifted in many industries to importing, selling and servicing to meet
industry demands
• Population base in Australia makes it difficult for local manufacturers to compete
on commodity type products, where overseas manufacturers have a lower cost
base compared to Australia (A$18/hr)
• Majority of the population is based in the capital cities of Melbourne (5 M),
Sydney (5M), Brisbane (2M), Adelaide (1M), Perth (1M). To be able to support the
Australian market for commodity type products requires to be present in at least
Melbourne and Sydney as a minimum.
• Expectation from customers is that an organization has as a minimum – Sales,
Technical, Quality and Customer support; Service, Repair and Parts replacement
capability to support products sold within an acceptable lead time, this can range
from 24 hours (for breakdowns) to 1 week for remote sites
• Structure of organizations generally consist of head office with core functions
and inventory with a satellite network of service centres and / or agents to handle
interstate and remote customers. This network can be company owned or joint
venture / license / service contract arrangements with small owner operators
through to larger service specialists
Market Penetration
• The core fundamentals for gaining a foot hold in the market is based around
QCDS, i.e.:
Quality
Cost
Delivery
Service
• Product reliability is a key consideration to establishing creditability in the
market place
• Cost or price needs to be competitive, but not necessarily the lowest. Many
organizations use “Whole of Life Calculations” for establishing the total cost to
the organization and establishing savings potential.
Knowledge and approach varies widely, e.g. mining companies versus small
residential supplier
• Relationships are important in Australia, they provide the entry conditions into
customers and establishes credentials for the product
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6. • Buying decisions and approaches vary dependant on the type of organization
being targeted, i.e. small, medium or large. The key is always to develop trust
with the key decision maker to ensure that the price is competitive, product is
reliable, service and support infrastructure is in place.
The bottom line is to ensure that no one in the decision tree will lose face, it
operates at an unsaid level but is alive and well
• The base operating culture is “Say what you do, and do what you say”
Operations
• Start up of a operation in Australia can be through a number of options, i.e.:
Licencee – quickest entry and lowest cost base, limited flexibility and
control
Joint Venture – quick entry, medium cost base, ability to control and
monitor
Partnership – medium entry, medium + cost base, more ability to control,
monitor and drive
Company Owned - longest entry, higher cost base, greatest flexibility
• Each of these options provide pro’s and con’s to growth and profit opportunities,
depending on the target market(s) and long term plans for revenue growth
• Distribution is costly due to the long distances between locations, especially in
remote areas. Most organizations use established distribution specialists and
negotiate their specific needs and prices.
• Product range – the optimum approach is to have a core range of products and
then alter /adjust to the specific conditions and needs of customers, if technically
possible. This reduces the overall inventory levels needed to be held and reduces
required working capital and infrastructure requirements
• Personnel – Australia is currently experiencing a skill shortage in a number of
areas, mainly in the tradesman and professional areas. Obtaining people with the
required skill set could be a challenge
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