Cross-Cultural Business Adventure: Bolivia

Bolivia's Overview 

Bolivia is among the fastest developing country in Latin America. Over the years, it has proved to be an economic hub for many industries with investors from all parts of the world. According to the World Bank, the country had a Gross Domestic Income (GDP) of 36.69 billion dollars at the end of the 2020 financial year 1 . It represents approximately 0.03% of the global economy. Upon the COVID-19 outbreak, Bolivia experienced a drastic fall in its GDP growth rate in the first quarter of 2021 but expanded 21.91% during the second quarter of the year 2 . The country has a score of 42.7 in terms of economic freedom positioning its economy at 172 in the world's freest in 2021 3 . Bolivia is a member of the World Trade Organization. The primary trade bloc is the Mercosur formulated in 1991, which includes most Latin American countries such as Brazil, Colombia, Peru, Paraguay, Bolivia, and Argentina 4 . Bolivia is a hybrid economic system with a combination of centralized government regulation and economic planning and a variety of private freedom. The primary industries include mining, food and beverages, petroleum, jewelry, smelting, services, and tobacco, with the leading companies being Tigo Telecel, Jalasoft, Yacimientos Petroliferos Fiscales Bolivianos, Microsoft, and Google. 

Bolivia is a South American country bordered by Peru to the northwest, Brazil to the east and north, Argentina to the south, and Paraguay to the southwest. Extending over 1,500 kilometers (950 miles south to north and approximately 1,300 kilometers (800 miles), it shares South American second largest Lake Titicaca with Peru 5 . Since the 1879-84 Pacific war with Chile, it has been landlocked, but treaties with neighboring nations have given Bolivia indirect access to the Atlantic and Pacific oceans. Bolivia has two primary capitals, including the historic constitutional city where the Supreme Court is located, Sucre and La Paz, the administrative capital where the legislative and executive arms of the government operate. 6 . The country is traditionally viewed as a highland nation, although only less than one-third of its terrain lies in the Andes Mountains. Though most of the nation's cities are established there and for years, the mountains have attracted some of the hugest business, mining, and commercial investment. However, the economic and demographic landscape in the 20 th century started switching as the landowners in the east, like the Santa Cruz department, developed rapidly. 

Bolivia has a rich history where significant historical events and developments took place. The country was a section of the Inca empire between the 15 th and early 16 th century and was once the Tiwanaku ancient Centre (Tiahuanaco). Bolivia was incorporated within Peru's Viceroyalty upon the conquistadores' arrival and was a primary source of silver and wealth of Spain. The country's inhabitants speak over 37 languages, with the most used being Spanish, Aymara, and Quechua, by 70%, 10%, and 18% accordingly. 7 . The country is predominated by the Roman Catholic religion, where indigenous Bolivians blend their traditional religious beliefs with Catholicism. The country residents like to go to movies, play all kinds of modern spots, and celebrate most holidays such as Christmas, Independence Day, Easter, Labour Day, and Corpus Christi. 

Bolivia's Customs and Business Etiquette 

Bolivia citizens are affluent in a culture full of unusual and intriguing customs and traditions. Bolivian cultures originate from various origins, including the Catholic Spaniards, traditional Andean culture, and ancient indigenous people 8 . The country's inhabitants are family-oriented individuals and very closely knit, where all generations cohabit under one roof. Matrimony is a vital part of the community, commonly in rural areas, and everyone is expected to be married when they are of age. Some communities in the country believe in starting their families before the marriage ritual and cohabitation. However, a portion of the Bolivian society adheres to the Catholic traditional system of marriage, where they have to conduct the marriage ceremony before starting a family. They offer much food during baptisms, funerals, or weddings, where every community member is invited. One of the most vital Bolivian traditions is the Day of the Dead or All Souls' Day, where they offer food to the deceased since they are believed to go back home on this day. They are suspicious and think that supernatural things exist where some Andean beliefs are still in practice which came from the Incas. However, customs and beliefs are dictated by an individual's background, social class, and religion. 

Everyone in the country values greetings and communication when talking to people of different ages, social classes, and cultural beliefs. The people in the country name their offspring names with meaning. Names are considered vital since they serve as a representation of an individual's traits. The most common names in Bolivia include Alberto, Alejandra Alejandro, Alfonso, Alicia, Angela, Alfredo, and Andrea. Greetings are one of the most vital communication elements that shows respect and an individual's personality. The most used form of greeting in the country is a regular handshake. 9 . However, it is vital to maintain eye contact with a Bolivian since it reflects an individual's trustworthiness. While a handshake can be used for first-time meetings and acquitted people, a kiss on the cheek or a pat on the shoulder is appreciated if the two individuals are acquitted. They can be shy during the first meeting, but they are kind-hearted and amiable people. Bolivians' idea of personal space differs since they stand very close when conversing, which should not alarm people in a first-time interaction. They are very observative, appreciate upright posture during a one-on-one encounter or group meetings, and like to stare at people or things, especially when they are new to them. They love to socialize with new people, perhaps trying to learn something from them. One other gesture that every new individual in Bolivia should know is that rocking the palm-down open hand from side to side denotes "no." 

Dress code and personal appearance are vital to the Bolivian culture. Dress codes differ by religion and region within the country. Therefore, a visitor must ensure they dress in a decent way that is universal and acceptable to any community within the country. Men are known for wearing suits or trousers and plaited tops. In La Paz, a dark, three-piece suit is considered decent and classy, while people in a Santa Cruz prefer a lightweight suit. It is crucial to follow the lead of Bolivian colleagues concerning removing jackets and wearing ties. Women are known for wearing long pleated skirts and an embroidered or lacey blouse. However, women wear long dresses, suits, or long skirts and blouses in an official capacity. It is advised not to wear shorts in public. It is considered impolite to arrive at a business meal or any social occasion on time. Guests should arrive between 15 and 30 minutes late 10 . An individual should decline the first food offer until the host insists, never eat or touch food with bare hands and wait until they are given a fork and a knife, not even a fruit. They expect one to finish all the food on the plate as a politeness gesture, only complement the food if you want more, stay about 30 minutes after the meal. Bolivians are generous and will always insist on footing the bills. Their typical indigenous food includes Anticuchos, noodle chili, yuca sonso, silpancho, pig, and humintas. Gifts sincerely given are appreciated despite their worth, and they might open them until after the giver has left. They tend to be relaxed about everything, including time. It is vital to set meeting times or deadlines ahead before announcing to ensure they are met. 

Cultural Analysis and Comparison to the United States 

Communities worldwide have different ways of doing things, perspectives, and customs that guide them daily. These differences are called cultural dimensions such as power distance, masculinity, long-term orientation, individualism, indulgence, and uncertainty avoidance. The United States and Bolivia have vast differences in multicultural dimensions. Therefore, before starting a company in Bolivia, it is vital to examine these differences. The 6-dimension Hofstede's Insights would be the best in this case. Bolivia has a very high score of power distribution where some individuals have more privileges than others. With a score of 78, it means that Bolivians accept a hierarchical order where each individual has a place and requires no further justification. 11 . The power distance score reflects inherent inequalities where the less powerful are underprivileged than the powerful. However, the United States has a relatively low power distance score of 40 12 . Despite that it is somewhat lower, it shows that people do not believe in the hierarchical order in the United States. They believe in equality where each individual has a voice. Combined with its power distance, the people of the United States are some of the most individualistic people in the world. They champion justice and liberty for all where each individual has equal rights. On the other hand, Bolivia has one of the lowest scores of individuals of 10, which reflects a collective society where each individual takes care and is responsible for the other. 

Compared to the United States, with a masculinity score of 62, Bolivia is a less masculine country with 42 13 . Bolivia is less competitive and success-driven since it is driven by fairness and modesty, where people value their solidarity, work-life quality, and equality. The United States is driven by highly competitive people where each individual wants to succeed individually. They are more masculine engendered by values installed in people in their childhoods and adulthood. While the people in Bolivia avoid risks, the US citizens are risk-takers with uncertainty avoidance of 46. They welcome innovative products, willing to try new things such as technology, food, and business practices. Bolivia, at 87, avoids ambiguity, dislikes change, and is risk-averse. In long-term orientation, Bolivia has a score of 25, indicating that they have a normative culture similar to that of the United States. 14 . Bolivians have a relatively balanced indulgence score of 46, while the United States has 68. Bolivians can control their impulses and desires better than Americans. 

Managers from the United States unfamiliar with the Bolivian culture are likely to face many challenges running a business. They are likely to face the most challenges in three primary areas: power distance, individualism, and uncertainty avoidance. United States managers are likely to conflict with Bolivian employees since they expect employees to use their knowledge on some tasks without supervision. 15 . Bolivians will not give suggestions or air their grievances since they believe they should follow the managers' instructions without question. Also, on meeting deadlines, Bolivians are less conscious of time. It will lead to slowed development of the company. Managers will have challenges selling their new products and services to the Bolivian community since they like to be sure about new things and are resistant to changes. It will require different skills and convincing power to sell the products in that market. Also, Bolivian employees will be less productive since they are risk-averse, which reduces their creative and innovative capacities. The level of individualism in Bolivia will challenge managers when there is a mixture of American and Bolivian employees. Americans are focused on individual growth, while Bolivians want collaborative development creating a less competitive environment. American employees will not have competitors limiting the full productivity potential of the employees and the company. 

Power Distance difference Bolivia 78 – Bolivia 40 = 38 

Individualism difference USA 91 – Bolivia 10 = 81 

Masculinity difference USA 62 – Bolivia 42 = 20 

Uncertainty avoidance difference Bolivia 87 – USA 46 = 41 

Long-term Orientation difference USA 26 – Bolivia 25 = 1 

Indulgence difference USA 68 – Bolivia 46 = 22 

Figure 1.1 https://www.hofstede-insights.com/country-comparison/bolivia,the-usa/ 

Management of Cultural differences and Adjustment 

Culture shock is one of the primary problems that face many managers, employees, or companies when they venture into a new country. Therefore, the managers need to be prepared to adjust and make changes before resuming their duty. They are responsible for preparing the employees for a cultural shock. 16 . For this case, the manager needs to consider all verbal and nonverbal communications. In Bolivia, communication is regarded as one of the most vital elements of message conveyance. However, their communication styles vary from those in the United States. Eye contact when talking is considered a sign of confidence in the United States while proving trustworthiness in Bolivia. Therefore, the managers should create other ways of showing confidence, such as body language and posture, to substitute posture. Bolivians have balanced indulgence, which enables them to control and balance their desires and impulses during communication. Managers should create an environment whereby the communication used is moderate to ensure that the Bolivians do not react. Their indulgence score and culture of standing close when talking allow efficient communication between individuals of different genders since Bolivians can effectively control their impulses. 17 . Managers should train their employees to use moderate language to avoid fits durian work. 

Business negotiations are important determining aspects that ensure that a business runs smoothly. It enables employees to coexist amicably, develop collective ideas, and conduct successful business meetings. The primary differences between Bolivia and United States in negotiations are determined by power distance, individualism, masculinity, and uncertainty avoidance. Bolivians like to make decisions collectively where everyone is involved. However, in the United States, people can make decisions on behalf of others. 18 . Therefore, a manager needs to adjust to a model where all stakeholders, including the lowest grade employees or community members, are involved during negotiations. The country's inhabitants believe that business should be a win-win and find solutions that interest concerned parties. Bolivia is a more feminine country compared to the masculine United States community. Masculinity is a key factor that would affect negotiations in Bolivia by managers from the US. A conflict in Bolivia would affect every Bolivian in a company. Thus, managers need to make compromises since a negotiation decision could affect the productivity of the company. 19 . One primary factor that managers need to change and adjust is uncertainty avoidance. Americans are welcome to new things and innovative ideas, unlike Bolivians who do not like ambiguity. Managers should adjust to the Bolivian negotiation culture to ensure they remain relevant in the market. 

Companies need to network with potential consumers, partners, and suppliers upon entry of a new market. Bolivian society is subdivided based on economic status, social class, and place of residence influenced by power distance. They tend to trust big companies that have been in the market. However, some strategies can be used to influence other companies' partnerships and attract consumers. Managers can include all members to create a networking system that allows all companies to form partnerships by attending meetings and forums. Despite that there might be differences between two or more companies, they will feel included and respected, which adheres to their individualistic nature. 20 . Depending on their social class, all members of society should be included in their networks to create an all-inclusive company network. Unlike in the United States, where companies only network with potential consumers and only the companies they are willing to partner with, managers in preparing for Bolivia should consider every company and individual in their networks. Bolivia has a mixed economy whose decisions determining what services and goods are produced and distributed are influenced by government policies and market forces. However, decision-making between Bolivia and the US defers influenced by individualism and power distance. Bolivians expect and accept that power and responsibility will not be equally distributed while Americans, hierarchy is reduced ad responsibilities equally shared. Also, Americans are individualistic and champion equality across all job grades. In Bolivia, managers should ensure employees are guided in their daily undertakings. Top ranking individuals should make decisions on behalf of juniors. However, it will require them to create an effective downflow of information and ensure Bolivian employees are not oppressed based on their culture. 

Bolivians accept a hierarchical leadership structure where each person has their place. They are more inclined to an autocratic leadership style where the leaders make all decisions without consultation. 21 . The carbonates are not supposed to question the decisions of top managers. On the other hand, American countries adopt a democratic leadership style where the employee-manager relationship is less formal. Leaders in this leadership style involve their subordinates, where each individual has a voice in the decision-making style. Given these differences, managers should train American employees under Bolivian supervisors to respect their decisions without questions. They should change their leadership style to a blend of democratic and autocratic, accommodating both the American and Bolivian cultures. Time management, meeting deadlines, and communication within the company are among the major business ethics. 22 . Also, competition and government policies defer to some degree. Since Bolivians are not timekeepers, managers should set deadlines ahead to ensure the company's productivity is not affected. They should set work, meetings, and company functions arrival time earlier by one hour to ensure punctuality. Also, the managers should familiarize themselves with Bolivian government policies affecting business such as taxation and corporate social responsibility to avoid problems, penalties, or closure. While Americans are motivated by work culture and compensation, Bolivians are motivated by knowledge of their tasks and overall productivity. Also, Americans are innovative and risk-takers compared to Bolivians. Therefore, managers should create a positive work culture that educates employees on their tasks and advocates for production. 

Important Things to Know About Bolivia Business Environment 

A new business entity in Bolivia needs to navigate various government departments such as the Ministry of labor, the Chamber of Commerce, the National Tax Service, the Registry of Commerce, and the Municipal Government. Establishing an enterprise in Bolivia takes at least 50 days and costs about 74.1% of income per capita. 23 . Culture is a primary thing any businessman should know about Bolivia. The people of Bolivia, despite their social class, are inclined to their cultural beliefs. They adhere to their calendar, attending all cultural, religious, and national holidays in solidarity. It is important to close business operations on important public holidays. Also, they are formal in most of their business dealings, maintain a degree of professionalism, whether during entertainment or negotiations. It is considered impolite to question the decision of the leader in their culture. Building relationships is a crucial aspect influencing the direction a business process takes. A business person should be sure to familiarize themself with the Bolivian culture before any business undertakings. All businessmen should know that gifts are valued and are a symbol of goodwill. Also, it is not advised to talk about politics, religion, poverty, or drugs where knowledge about Bolivian sports is considered an advantage. 

Electricity is a major challenge in Bolivia. The country's electrical connections cost more than the percentage of income per capita compared to other Latin American countries and many times the OECD average. Electricity connection takes at least eight procedures completed by the interested individual or corporations instead of the state-appointed board. Companies are responsible for buying the materials such as the meter and distribution transformer for the connection. Also, they should secure excavation permits before forwarding the official application in writing and signing a contract of supply. Taxation procedures are important to know since they might lead to hefty penalties or the closure of a business. The IFC and World Bank rank Bolivia 180 th of the 185 countries they track on taxes payment ease. Businesses pay about 42 taxes annually, taking 1025 business hours to complete. Bolivians are less conscious of time are not punctual in most of their undertakings. A business person should not be offended when a Bolivian arrives late for work or an official meeting. The dress code reflects an individual competence in Bolivia. Business people should be decent, clean, and smartly groomed in all their business undertakings, with black, brown, and navy blues suits preferred for men and feminine suits, dresses and skirts, and blouses preferred for men. 

Training Program 

Managers and employees need training after research of the Bolivian culture and business undertakings. It will help blend efficiently in the Bolivian market, ensuring the success of the new ventures. The primary training areas in Bolivia are the country's customs and business etiquette and cultural dimensions. Americans practice different business etiquette compared to Bolivians, who need the training to attract consumers in the new market. 24 . The company's business has to respect society's customs and beliefs in all their undertakings. As CSR, the company will need to hire locals who will need American managers and employees to be aware of relating and communicating with them. Bolivia and the United States defer business undertakings, such as leadership styles, negotiations, decision making, and communication methods. These areas need to be a primary concern for any manager or employee set to leave for Bolivia. 

The three-day training program will focus on five primary steps: Bolivia culture brief, assessment of knowledge of the Culture, Bolivia customs, business etiquette, and cultural differences training, testing to ensure understanding and application. Managers will undergo further training with experimental learning exercises to ensure they are well equipped to run the business in Bolivia. Each day will have two sessions where the employees will be thoroughly trained and tested by two trainers with vast knowledge of the Bolivian culture, specializing in business etiquette and cultural differences. 25 . Each potential trainee will be given a handout that contains the basics of Bolivia's cultural dimensions and business etiquette. There will be measures to ensure attendance which includes biometric registration where each train will be required to have a 100% attendance score unless with a valid reason. 

First Day Session 1 

Employees will report to the training hall at 9 AM. They will socialize and brainstorm ideas on approaching the new working environment by testing their knowledge about Bolivian culture as they wait for the trainers to arrive at 10 AM. Before attending the training forum, each individual will be required to research first-time Bolivian greetings in at least two primary languages. Upon arrival, the trainers will introduce themselves to reflect the Bolivia culture, where each trainee will introduce themselves afterward, applying their knowledge about Bolivia. The trainers will give a brief of Bolivia in different aspects of business activities and operations. At 12:30 PM, everyone will break for lunch and return at 2 PM. 

Session 2 

The trainers will test the trainee's knowledge of Bolivian culture by asking them questions. These questions will be based on the brief the trainers rendered in the morning session and general knowledge. Each trainee will have an opportunity to give their take on questions that interest them the most, where every trainee must participate. This activity will allow the trainers to identify misguided ideas about the Bolivian culture that may affect the business activities of a new venture. The trainer will allow all employees to answer the questions as they note wrong information about Bolivia. After the trainees answer the questions, the trainers will correct all misguided ideas and educate them on their alternatives. The meeting will end at 4 PM, where everyone will sign out on the biometric register. 

Second Day, Session 1 

The meeting will commence at 9 PM. Trainers will be allowed to ask questions about day one's training and any new information they might have learned for 30 minutes. The trainers will embark on thorough training of cultural differences and business etiquette in Bolivia based on handouts given by the company one week before. They will address differences in Bolivia customs and business etiquette with the United States. Also, the trainers will focus on the difference between the two countries' cultural dimensions and how to adjust to the new business environment. 26 . The session will be between 9:30 AM and 12:30 PM to allow the trainers time to train adequately. The session will be adjourned to 2 PM. 

Session 2 

In groups of five, the trainees will solve a scenario of business etiquette and cultural dimensions. They will be required to say what they would do. For instance, the trainer can ask them the best gifts to bring, grooming for, and time to arrive in a business meeting. Also, they can be asked what leadership style and decision-making model they would apply in a Bolivian business scenario. 27 . These activities will enable the trainees to apply what they have learned. Each group will have 1 hour to answer their approach. Then, each group will present their work which will be subject to corrections by the trainers. 

Third-Day, Session 1 

The final day of the training will entail practical application of the knowledge. In the groups they used to answer the questions on day 2, they will undertake business negotiations applying Bolivian culture. Two groups, one representing the American Culture and the other Bolivian Culture, will conduct business negotiations or networking activities in front of others. Every two groups will be assigned an activity. It will help the trainers assess whether the trainees understood and applied the knowledge in a real-world scenario. These activities will determine whether the trainees are ready to embark on their roles in Bolivia. The training will end here for the employees. They will have the rest of the afternoon to practice the experimental activities without further supervision. 

Session 2 

Trainees who will be managers in the new company in Bolivia will undergo further training from 11 AM to 12:30 PM and then from 2 PM to 5 PM. They will use business simulations that provide a real-world simulated business management environment. They will be tasked with running virtual corporations in Bolivia, applying all the skills they have gained from the training. Also, they will engage in role-playing and case studies activities to further apply their decision-making skills, business ethics, leadership styles, and motivation styles. 28 . The activities will be comprehensive to avoid culture shock and ascertain that each manager is well equipped to play their role and approach a new environment. 

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