extech international business proposition

7/28/2019 ExTech International Business Proposition

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ExTech



Introduction

Language

Financial Benefits

Workforce Characteristics

Organisational Structure

Time

Business Relationships & Etiquette

Recommendation

Bibliography

Appendices

2

3

4

5

6

7

8

10

11

13



ExTech’s management board have researched the

possibility of outsourcing ExTech’s manufacturing

of computer hardware. Recommending the

Philippines as the potential outsourcing location,

this report will outline the financial benefits of outsourcing to the Philippines. More importantly,

the report summarises the cultural considerations

that have been taken when choosing the Philippines

as the ideal outsourcing location for ExTech.



Selecting the Philippines as an outsourcing location

would be financially advantageous for ExTech.

Outsourcing to the Philippines could open new sales

markets for ExTech which could contribute greatly to

it’s growth. At the same time, outsourcing will

significantly reduce manufacturing costs by lowering

overheads.

Overall, outsourcing will lower ExTech’s

production costs, therefore resulting in higher

profit margins.

Labour is considerably cheaper with the Filipino

minimum wage at £6.19 per days work (Government

Digital Service, 2012); whilst land is almost seven

times cheaper in Manila (the capital) (SourcingLine,

2012) than London (BNP Paribas, 2012).



There is no language barrier between the UK and the

Philippines when conducting cross border

communication and business transactions because

English is the accepted business language

(Kwintessential, 2012).



The Filipino attitude toward education is that it is

the main tool through which social and economic

progression is achieved.

The high level of literacy, being over 90% for both

adult men and women (UNESCO, 2012), and a keen

attitude toward furthering education provides a large

selection of skilled labour for ExTech.

Notably, Filipino women aspire to work in higher

organisational positions, whereas a larger proportionof men work in manufacturing sectors (The World

Bank Group, 2010). Importantly, the largest sector

of Filipino manufacturing is of technological

products (The World Bank Group, 2012) meaning

there is an established skilled labour force to

produce ExTech’s computer hardware.



Due to the hierarchical organisational structurepresent in the Philippines, managers need to take into

consideration the importance given to titles

(Kwintessential, 2012).

Downward communication is common practice

(Kwintessential, 2012) and employees work within

their position boundaries, rarely questioning

management decisions. Thus, communication

between the two countries will be made easier by the

high power distance (Kwintessential, 2012) of the

Philippines (Appendix A), with ExTech needing onlyto deal with a small number of Filipino managers.

Filipino employees expect hard work to be

recognised meaning UK managers should ensure

praise is given. Moreover, confirmation of good

work will encourage the Filipino team to drive focus

on ExTech’s long-term strategic aims.



The Philippines and the UK have very similar

business hours making it easy for UK managers

to operate in either country. Punctuality is

considered very important (Kwintessential, 2012)

and setting deadlines well in advance will allowboth the UK and Filipino employees to manage

time expectations.

The Philippines use a synchronous approach to

time (Luthans & Doh, 2012), meaning they are

able to undertake multiple activities at oncewhich is beneficial when producing a

technological product. UK managers will need to

set deadlines to allow for some leeway as the

synchronous approach considers deadlines

flexible.



Our UK outsourcing managers should not change

unexpectedly since Filipinos thrive on interpersonal

relationships and conduct business with people, not

corporations. These managers should be trained toconsider body language when communicating.

We are dealing with a very high context culture,

which is beneficial in the long run since

negotiations will run smoother (MSU, 2012). This

provides opportunities for future expansion andgrowth for ExTech. However, this means that our

management should include individuals willing to

build personal relationships and adapt to another

culture.



The individualism index (Appendix B) is not as

high in the Philippines as in the UK (MSU,

2012). Their attitude revolves around a

collective culture that places importance on

larger societal goals (MSU, 2012). Thisideology is an asset for ExTech because it will

provide us with employees that are loyal and

will conform to management expectations.



The Philippines offers a lot of financial benefits,

mainly lower labour and land costs ultimately

lowering our cost of production significantly.

With no language barrier and an educated

workforce, adapting to the culture would berelatively easy. As long as we are aware of the

top down management structure and the high

power distance and can adapt our management

style to match, outsourcing should be a

seamless process.

If we adapt to the synchronous approach to time

that Filipino managers take and adhere to their

business etiquette, our endeavours to outsource

our manufacturing should be successful.



BNP Paribas.(2012).UK Total Office Occupancy Costs January 2012.

Available:http://www.realestate.bnpparibas.co.uk/upload/docs/application/pdf/

2012-01/jan_2012_occupancy_costs_map.pdf . Last accessed 14th October 2012.

Government Digital Service. (2012). National Minimum Wage Rates. Available:https://www.gov.uk/national-minimum-wage-rates . Last accessed 14th October

2012.

Kwintessential. (2012). Intercultural Management - Philippines. Available: http://

www.kwintessential.co.uk/intercultural/management/philippines.html. Last access

1th October 2012.

Kwintessential. (2012). Philippines-Language, Culture, Customs and Etiquette.

Available: http://www.kwintessential.co.uk/resources/global-etiquette/philippines-

ountry-profile.html. Last accessed 11th October 2012.

http://www.kwintessential.co.uk/resources/global-etiquette/philippines-country-profile.html



http://www.kwintessential.co.uk/intercultural/management/philippines.html










https://www.gov.uk/national-minimum-wage-rates

https://www.gov.uk/national-minimum-wage-rates

http://www.realestate.bnpparibas.co.uk/upload/docs/application/pdf/2012-01/jan_2012_occupancy_costs_map.pdf






Luthans, F. & Doh, J. (2012) International Management : Culture, Strategy and

Behavior,(8th ed.), Boston: McGraw-Hill

Michigan State University. (2012). Philippines: Culture. Available: http://

lobaledge.msu.edu/Countries/Philippines. Last accessed 16th October 2012.

SourcingLine. (2012). Global Services & Outsourcing Locations: Philippines.

Available: http://www.sourcingline.com/outsourcing-location/philippines. Last

ccessed 14th October 2012.

The World Bank Group. (2012). Philippines | Data. Available: http://

data.worldbank.org/country/philippines#cp_wdi. Last accessed 14th October

012.

UNESCO Institute for Statistics. (2012). UIS statistics in brief. Available:

ttp://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=121&IF_Language=eng&BR_Country=6080&BR_Region=40515.

Last accessed 14th October 2012.

http://data.worldbank.org/country/philippines#cp_wdi

http://globaledge.msu.edu/Countries/Philippines

http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=121&IF_Language=eng&BR_Country=6080&BR_Region=40515








http://www.sourcingline.com/outsourcing-location/philippines

http://www.sourcingline.com/outsourcing-location/philippines







0 10 20 30 40 50 60 70 80 90 100

UnitedKingdom

Philippines

Power Distance

(KWINTESSENTIAL, 2012

(KWINTESSENTIAL, 2012)

0 10 20 30 40 50 60 70 80 90 100

United Kingdom

Philippines

Individualism

(KWINTESSENTIAL, 2012

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