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Culture and International Human Resource Management
Trinidad and Tobago is a country in South America that has a population that is diverse in terms of ethnicity (Storr & John, 2015). The major groups are Trinidadians of European, African, Indian, Chinese, and Syrian-Lebanese descent. The ethnic diversity of this country makes it has to address some issues the United States also face. When applying Hofstede’s framework, it is clear that Trinidad and the USA share a lot of features in common.
For instance, the two countries have quite similar scores in such dimensions as power distance (47 for Trinidad and 40 for the USA), masculinity (58 for Trinidad and 62 for the US), and uncertainty avoidance (55 for Trinidad and 46 for the USA) (“Trinidad and Tobago,” 2017). These scores show that Trinidadians (just like Americans) prefer being independent, dislike control and excessive supervision, focus on competition and achieving success, and can have fears concerning their future. The dimension of indulgence is quite different as Trinidadians (with the score of 80) tend to be more willing to express their feelings and enjoy their lives as compared to Americans who are more reserved (with a score of 68).
The major difference is associated with such dimensions as individualism and long-term orientation. For instance, Trinidad is a highly normative society (scoring only 13), which means that Trinidadians are reluctant to embrace changes and are concerned with preserving traditions. Americans have a score of 26 in the long-term orientation dimension, so they are significantly less focused on traditions. The major difference between the two countries lies in the dimension of individualism as Trinidad is a high collectivists society (scoring 16) while the USA is a highly individualistic society (with a score of 91).
These cultural differences may have certain implications in doing business in Trinidad and Tobago. For instance, Americans doing business in this country should make sure they know and display respect towards the existing traditions and cultural norms. It can be beneficial to focus on collective work (teamwork) and the development of proper relationships within the working place as Trinidad is a very collectivist society, and people value social links.
Apart from the cultural peculiarities mentioned above, it can be important to remember that different ethnic groups have different attitudes towards entrepreneurship. Storr and John (2015) state that Trinidadians of Chinese, European and Syrian-Lebanese ancestry are 30% more likely to be engaged in the entrepreneurial effort as compared to other ethnic groups. Indians are now considered as “the new business class” in this country (Storr & John, 2015, p. 82).
Only approximately 16% of Trinidadians of African descent are self-employed. This peculiarity of entrepreneurial activity may suggest the level of different ethnic groups’ willingness to make decisions and be active and creative. When doing business in Trinidad and Tobago, it is possible to take into account these peculiarities when hiring people of different ethnic backgrounds. Overall, it can be quite easy to do business in Trinidad as Americans are not very different from Trinidadians in terms of culture. Competitiveness is valued in both countries, which is a good feature for the business environment.
However, Americans can still face some pitfalls that can affect the development of their business. If the manager (or owner) fails to develop proper relationships with employees or create a proper atmosphere, employees may underperform. Trinidadians can also be resistant to any changes, which can have an adverse impact on the development of a company.
Marketing and Strategy
Trinidad is a republic that has a parliament, president, prime minister, and government (Scobie, 2017). The country is one of the largest exporters of natural gas and oil, which contributes to its economic development. Trinidad and Tobago are one of the wealthiest countries in Latin America, but the recent change of prices for these natural resources has had a negative effect on the political and social development of the country. The country’s political stability has improved during the past decade. For instance, according to the World Bank (2017b), Trinidad and Tobago scored 56 out of 100 while it had a lower score (42) in 2005. The country’s governance is quite effective, with a score of 63. Regulatory quality and the rule of law indices are lower (57 and 52, respectively).
These scores reveal the complexities and opportunities associated with doing business in Trinidad. On the one hand, the country enjoys certain stability, which leads to favorable conditions for conducting business. Scobie (2017) notes that politicians are reluctant to introduce laws and regulations that can potentially lead to people’s dissatisfaction and social unrest. On the other hand, the country’s economic issues may force them to impose some regulation that can destabilize the political and social situation. It is also important to note that the country has a significant number of “pro-poor social service mechanisms” that pose a considerable pressure on the budget (Scobie, 2017, p. 271).
At that, these tools are often inefficient, and over half of Trinidadians face substantial financial issues. Nevertheless, it is clear that the Trinidadian government is interested in attracting foreign investors, so doing business in the country is not associated with any serious regulatory or legal restrictions. The government introduces various subsidies and other mechanisms aimed at attracting foreign investors (Scobie, 2017).
One of the most apparent issues when doing business is quite an ineffective regulatory system that is not always conducive to doing business. The high level of corruption is one of the major reasons for this situation. Trinidad and Tobago are 101th in the list of countries with a score of 35 (Transparency International, 2017). This list ranks countries based on the level of corruption, with the lowest scores for highly corrupted countries and 100 points for no corruption. It is noteworthy that corruption in Trinidad increased during the past five years as the country scored 39 in 2012. These scores illustrate a negative trend in the development of the country that can become less attractive to foreign investors.
The high level of corruption in the country poses numerous threats to business people operating in Trinidad. For instance, it can be quite difficult to start a business in the country as the authorities may expect some benefits to facilitate the process. Trinidad and Tobago is also a country with a high level of crime. Organized crime is associated with controlling many industries (Scobie, 2017).
Finally, the judicial system is not very effective as it often serves some individuals or business elites. Therefore, business people may have considerable financial losses when doing business in Trinidad, especially if they choose to adhere to the ethical code existing in the global market. However, these threats are different for different industries, so doing business in the oil production industry can be hard, while it can be much easier to have a hospitality company in Trinidad and Tobago.
International Financial Management
As far as the financial situation in the country is concerned, it is associated with certain issues, but the country manages to address them effectively. Trinidadian currency in Trinidad and Tobago dollar (TT dollar), which is regarded as stable (Oxford Business Group, 2017). The financial situation worsened in 2014 when oil prices started going down. The Central Bank of the country tries to control the currency imposing certain regulations.
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For instance, it has limited the number of licensed, authorized dealers from 12 to eight. Although such measures are effective, the currency is fluctuating. Irrespective of the global economic issues, the banking system in Trinidad and Tobago is developing at a high pace. The country has various commercial banks as well as non-bank institutions (Oxford Business Group, 2017). Importantly, the country is the regional financial hub, so several international banks operate successfully in Trinidad. These are banks from Canada and Europe.
It is necessary to note that the country was affected by the financial country of 2008, just as many other countries in the world. The banking system also faces certain difficulties due to low prices for natural resources. Nevertheless, the system is stable, and no significant banking crises have taken place recently. It is possible to state that the banking system is stable and secure.
The financial situation is the country is favorable for doing business in Trinidad and Tobago. De Kluyver (2012) notes that the macroeconomic performance of a country reduces the financial risks of doing business there. As for Trinidad, it is still one of the largest exporters of gas and oil, although it has only 0.5% of the world’s gas deposits (Scobie, 2017). The country is likely to meet its international obligations, which contributes to the economic stability of the country and the development of a favorable business environment. Another aspect to consider is the existing infrastructure. In Trinidad, the infrastructure is quite well-developed, and it can be quite easy to run a business. However, there can be certain difficulties associated with such resources as electricity since the country subsidized local people, which leads to higher costs for foreigners.
De Kluyver (2012) also states that a country’s ability to innovate is an important premise for its development and the creation of a favorable business environment. When it comes to Trinidad, the ability to innovate is one of the major areas of concern. As has been mentioned above, the country has a very low score long-term orientation dimension, according to Hofstede’s model (“Trinidad and Tobago,” 2017). Trinidadians are reluctant to adopt changes and innovate. Besides, the level of corruption, as well as certain structure of the country’s government (having a strong lobby of a number of elites), can make it difficult to run a business in Trinidad.
To mitigate risks, it is possible to choose international banks to manage financial operations. The use of financial institutions will minimize risks associated with the possible instability of the local banking system (Oxford Business Group, 2017). Apart from this, it is essential to hire people wisely and concentrate on employing people who are ready for innovations. As has been mentioned above, some ethnic groups within the Trinidadian society are more eager to innovate, so it can be beneficial to pay more attention to those groups or rather people involved in entrepreneurial activity. These are Trinidadians of Chinese, European and Indian ancestry (Storr & John, 2015).
Market Selection and Foreign Entry Mode
The brief analysis implemented shows that Trinidad and Tobago can be an attractive country for an American corporation. Although the population of the country is only over 1.3 million people, the market can be sufficient (The World Bank, 2017a). Some of the most attractive industries are finances and tourism. However, companies operating in other segments can also find the market attractive. The country’s GNI per capita is $18,600, which reveals a certain potential of the market (The World Bank, 2017a).
Another favorable factor is the government’s willingness to attract foreign investors and make the country attractive to international companies (Scobie, 2017). The financial system of the country is quite stable, and it can become the necessary background for the development of any business. Trinidad and Tobago are still one of the largest exporters of natural resources, which makes its economy stable, at least, in the short-term perspective. Finally, Trinidadians start engaging in entrepreneurial efforts, which shows their readiness to innovate and change. Besides, Trinidad and the USA do not differ significantly in many cultural dimensions, which makes it easy to run a business.
Nevertheless, Trinidad is also characterized by several aspects that can have negative effects on the development of a company. One of the major issues is corruption and rather, an ineffective regulatory system. The crime rate and the involvement of organized crime in the country’s governance also pose certain threats to the development of businesses (Scobie, 2017). Trinidadian politicians’ reluctance to implement the necessary change and introduce certain unpopular measures is another negative factor. The existing policies result in the growing inflation level.
Some macroeconomic issues can lead to certain difficulties, as well. Low prices for gas and oil can result in political and social unrest in the country of the is unable to develop proper policies to address the economic issues. It can also be quite difficult to hire people having the necessary skills and experience. Local employees may also be unprepared to work in accordance with Western business norms.
Overall, it is possible to run a successful business in Trinidad. However, some industries are associated with higher risks (such as natural resources production, energy, etc.) due to the involvement of elites and even organized crime. Such industries as tourism and finances are developing at a significant pace (Storr & John, 2015). The country has become an important financial hub in the region. Therefore, tourism (especially business tourism) is likely to develop into a potent industry.
Although the financial system of the country is quite effective and local banks are secure, it can be beneficial to choose an international bank when doing business in Trinidad. However, the country is facing significant economic issues that can result in social and political instability. It is quite easy to open and run a business in the country (The World Bank, 2017a).
In conclusion, it is possible to note that running a business in Trinidad is associated with significant risks but has considerable potential. Some industries are specifically attractive for investment. It is possible to consider doing business in the country, but it can be necessary to develop a sophisticated business plan taking into account the existing risks.
De Kluyver, C. (2012). Fundamentals of global strategy. New York, NY: Business Expert Press. Web.
Oxford Business Group. (2017). Trinidad and Tobago’s lenders enjoy profitability in a well-capitalised banking sector. Web.
Scobie, M. (2017). Fossil fuel reform in developing states: The case of Trinidad and Tobago, a petroleum producing small island developing state. Energy Policy, 104, 265-273.
Storr, I., & John, A. (2015). The determinants of entreprenerial alertness and the charcateristics of successful entrepreneurs. In L. Grube & I. Storr (Eds.), Culture and economic action (pp. 68-88). Southampton, MA: Edward Elgar Publishing.
The World Bank. (2017a). Ease of doing business in Trinidad and Tobago. Web.
The World Bank. (2017b). Worldwide governance indicators. Web.
Transparency International. (2017). Corruption perceptions index 2016. Web.
Trinidad and Tobago. (2017). Web.