business culture in turkey
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Organizational Due Diligence for Cross-Border M&A – Turkey
February 29, 2012
BACKGROUND
Location:is located in the
southeastern Europe and the
Southwestern Asia
Capital: Ankara
Population:74.7 Million people estimated for 2011
Language: 90% Turkish.
Other dialects: Kurdish, Arabic,
Circassian, Greek, Armenian, and
Judezmo.
Religion:99% Islamic
Different Islamic groups managed to co-exist together in tolerance.
Although Turkey professes to be a strictly secular country, Islam shaped the culture and the society since it is practiced by the majority of the population.
Turkey has the particularity of sharing both the European and the Asian.
Urban Population: 70%
Rural Population: 30%
Internet Access: 43%
HUMAN RESOURCES
(TLL) TURKISH LABOUR LAW: Regulates all Employment Relationships.
MINIMUM WAGE (MONTHLY): 837 TRY or 474 USD
WORKING HOURS: 45 Hours a Week, and 11 Hours a Day
UNION LAW: All Employees Working Under an Employment Agreement are Eligible to Become a Member of a Labour
Union
MOTIVATION AND TRAINING: Highly Valuated in the Turkish Culture
CORPORATE GOVERNANCE: Rule-Based System of Governance, as Opposed to a Relationship-Based
Personal relationship is key to success in the business
Business conversations should be begun from short conversation• ie: family and soccer, avoiding subjects as religious and politics
People respect punctuality and accuracy
Decision making process is slow and hierarchical
Male earn 3.5 times more than female• ie: 105th out of 134 countries in equal payment to women
Business Etiquette
PEST Po
litics • European Union (EU)
accession •Accession filled in 2005
•Resistance from the EU to accept due to Human right violations
• Prime Minister vs President•President – Ceremonial
•Prime Minister – Executive power
Econ
omic
s•17th largest economy
•GDP :$1.05•Growth: 6.6% In 2011
•GDP:•25.5% agricultural,•26.2% industrial, •48.4% services
•Major trade partners:•United States, •China, •Russia, •Switzerland•Norway
•Currency:•Turkish Lira (0.56 USD)
Soci
al • Success in reducing poverty•28% in2003 to 18% in 2006
• Aim to achieve sustained rapid growth and improving living standard
• Difference between female and male in education
• Secondary school: female:77% vs. male:87%
• Difference between urban city and local city about quality of health care
Tech
nolo
gy •Internet:• 43% of the
households• 18.6% of them
bought goods or services through internet in 2011
• 92.4% of enterprises use Internet
• 59.9% of them have website In 2011
•Cellphone:• Fast growth in
cellphone users• 4M in 2000 to 62M
in 2010
M & AFinancial
• Fast growth driven by internal consumption
• Economist forecast that it will grow as fast as China and India
• Types of Deal• Asset vs. Share Acquisition
• Tax Incentives• Single digit inflation rate
Regulations
• Unrestricted foreign ownership
• Legal framework - EU
• Customs agreement with the EU
• Little restriction on cash repatriation
Risk
• Split between the east and west
• Accounting standards vary form company
to company – moving to IFRS
• Volatility in energy prices, due to the
dependence on Russia and the middle east
• More than half of the population are under 28
• Entrance to the Muslim world• Geographic position• Increasing qualified workforce• Key industries for target
• Construction, automotive, energy, healthcare and banking
Strategic
• Formal Greeting: hand
shake• Normal Greeting: cheek kiss
• Showing of emotions is
accepted• Conflict is threatening – need to agree
• Settle agreements on paper• Work in order to live
• Hierarchical Organizations• Preferred leadership styles:
pacesetting and authoritative• Need for Laws and
Rules
• Traffic jams• Lack of respect – no cues• Penalty Implies loss of face
and shame• Muslim society – body is sacred• Potable water is an issue
• Highly individualistic• Short term orientated• Relationships have priorities over
tasks• Easily forget the past
INTERVIEW
National Culture
Corporate Culture
Business Norms & Practices
Life in Turkey
Mercer’s Cultural Dimensions
Achievement
Environment
Perspective
Power
Communication
Risk
Cultural Dimensions Recommendations
Do not integrate, Partner with them
Team objectives should be aligned with personal objectives in order to achieve companies results
Communication should be done
top-down
Managers are not expected to take risks. Decisions are
made by the Sr. Management
Even though, the country is promoted as a secular one, in the East Islam should be
taken into account
Rapid improvements and technology adoptions are
encouraged
Q&A
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