Adidas - Market Entry in Indonesia

Topics: Indonesia, Adidas, Minimum wage Pages: 18 (5415 words) Published: November 2, 2011

Student Project in the subject Cultural Management

Adidas - Market Entry in Indonesia

I. Table of Contents

II.List of Abbreviations3
1.Scope of the topic4
2.Indonesia as the Lead Economy in Southeast Asia5
2.1The Competitive Advantage of Labor6
2.2Unity through Diversity?6
3.Cross-Cultural Dimensions7
3.1Culture at national and organizational levels in Indonesia8
3.2The German culture at national and organizational levels9
3.3A Cross-cultural Comparison10
4.Challenges of Entering Emerging Markets12
4.1Market Entry Strategy12
4.2Meeting the Challenge13
I Love you soooooooooooooooooo much!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!15

II.List of Abbreviations

BRICCBrazil, Russia, India, Indonesia, China and South Africa IDVIndividualism
NGONon-Governmental Organization
OECDOrganization for Economic Co-Operation and Development PDIPower Distance Index
SOEStandards of Engagement
UAIUncertainty Avoidance Index

1.Scope of the topic

‘The internationalization of business is creating new needs for effective communication across language and cultural barriers.’ In the last decades numerous multinational companies have switched labor-intensive productions from Europe to Asia for the sake of reducing the cost of labor. This piece of work deals with the market entry of the German-based company Adidas in the Southeast Asian republic Indonesia. Adidas shifted parts of the production to the archipelagic state and faced cultural clashes ever since. When entering a foreign market the critical factor to success is the coherence of the different cultures and values. Thus the core of my work will be to outline how Adidas as a multinational company dealt with the problems arising from cultural and national diversity. In the first part I am going to analyze Indonesia’s main characteristics focused on general data, economic development and important cultural impacts. Building upon this, I will identify the values that are critical to the success of conducting business in Indonesia in the second part. The third chapter focuses on differences in the culture at national and organizational levels

2.Indonesia as the Lead Economy in Southeast Asia

With a population of 232 million people Indonesia is the fourth largest country in the world after China, India and the United States. Moreover, the Republic of Indonesia is Southeast Asia’s largest economy and home to the world’s largest Muslim population, representing 88 percent of the people although officially not being an Islamic state. Islam, being the main religion in Indonesia, was established by Arab traders in the early 1600s. The Dutch who colonized the country from 1602 to 1945 brought Christianity, nowadays representing only 10 percent of the population. Indonesia gained its independence from the Netherlands in 1945 but still uses the legal system based on Roman-Dutch law modified by indigenous concepts. Belonging to the newly advanced economical developed BRIICS states (Brazil, Russia, India, Indonesia, China, South Africa), Indonesia is in possession of significant trade associations with OECD (Organization for Economic Co-Operation and Development) member countries. The OECD is a forum that provides member countries with the opportunity to share experiences and find solutions to common problems. Moreover, the co-operation helps to protect democracy and a free market economy. The majority of member states are so called further developed countries with a high per capita income. Thus, apart from its natural resources, Indonesia nowadays offers new opportunities as an emerging market and, partly due to its strong co-operation with the OECD, it plays a major role as a lead economy in Southeast Asia with important trade associations.

At the beginning of the 21st century Indonesia faced economic...
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