international-Business

Acceptance Criteria in International Business

Posted on Posted in Mainstream Agile

The Importance of Acceptance Criteria in International Business

Acceptance Criteria are used to define project objectives and measure how well these objectives have been met. When applied to international business and commerce, acceptance criteria serve to clarify all business objectives in order to avoid an unnecessary waste of material and financial resources.

Establishing acceptance criteria is necessary for the smooth completion of all business objectives, but even more important in international business transactions where miscommunication can more easily lead to major problems. It is prudent to be specific and accurate in international business communication to avoid potential problems based on cultural and other differences. The use of idioms, metaphors, similes and other figures of speech are best leftout of international communication.

A case study published by Global Sources a European company had a miscommunication with its Chinese supplier. This led to the goodsbeing shipped before pre-shipment inspection.  The European company was convinced that they had clearly requested a pre-shipment inspection in their purchase order.  The inspection was listed in the purchase order. But the problem most probably came from the use of anacronym “FAT”, which means Factory Acceptance Test.  The Chinese supplier did not probably under the meaning or the purpose of that acronym.  An acceptance criteria would have helped avoid this costly miscommunication.

One survey revealed that 49% of the nearly 600 executives surveyed, believed that “Communication misunderstandings have stood in the way of major international business deals and therefore resulted in significant losses for their company.” Also, 64% of those surveyed admitted that language and cultural differences were a hindrance to gaining a firm footing in foreign markets. It is obviously imperative that international businesses make every effort to improve communications.

The use of Acceptance Criteria in all international business transactions is one valuable means of improving international business communication. Simply taking the time to consult with customers to identify their specificexpectations, and to ensure you understand their needs, will save time, energy, and eliminate waste.

A case in point: Recently, I was invited by a West African graduate school to give a lecture to their business students. They asked for my logistical needs, and I informed them that I would need an overhead projector for the lecture. I was assured that all my needs would be properly taken care of.

Apparently there was some misunderstanding, because when I arrived to give the lecture, there was no overhead projector in the lecture room.  Whereas I had assumed that an overhead projector would have been ready for my immediate use, I learned that the school had only one overhead projector, and the staff had assumed that they could provide me with the projector if and when I needed it. This resulted in several hours of wasted time until the staff had the projector in the lecture room ready for use in my prepared presentation. As you can imagine, I was somewhat flustered because of the delay.Upon reflection, I realize that if I had taken the time to specify my Acceptance Criteria, the overhead projector would have likely been ready for use in the lecture room when I arrived, thus avoiding this unfortunate situation.

Acceptance Criteria Tips for Overseas Business

Here are some tips for avoiding potential problems when travelling and conducting international business:

  • As an American traveler, when visiting a European country, ensure that you specifically request that an iron and an ironing board be placed in the hotel room for your use. Obtain confirmation that your request has been understood as intended, and then will be delivered as expected.
  • When renting a motor vehicle or a room in Europe or Sub-Saharan Africa, ensure that your acceptance criteria includes air conditioning.
  • If you operate a US-based business and are seeking to establish a Performance Level Agreement (PLA) with an emerging market country, take the time to give detailed Key Performance Indicators (KPIs) as well as a clear explanation for each item. Provide an example of the KPI report that you need in order to avoid any surprises.
  • Take into account regional differences indate conventions and time zones. For example, 11/07/2015 is November 7, 2015 in the United States, but is July 11th 2015 in Ghana, India and France. Be certain that you know which date convention is being used to avoid confusion. Similarly, time zones differ across the world, so be sure to specify which time zone you are referencing.

Conclusion

Acceptance Criteria can be very valuable when conducting business. This is especially true when handling international business transactions, where language and cultural differences can more easily lead to misunderstandings. Miscommunication can result in significant business losses, and should therefore be avoided at all costs. By taking the time to establish clear Acceptance Criteria, we can avoid wastage, delays and other negative consequences. Since the goal of any business project should always attempt to accommodate the customer, it is important to ensure that you understand the customers’ needs, i.e., meet their acceptance criteria. Likewise, when you are the customer when conducting business, be sure to establish clear Acceptance Criteria in order to avoid any potential problems.

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