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Armenia
Although a small country, Armenia is diverse in traditions,dialects and cultures peculiar to a number of clearly defined regions.In order to do business with a cross section of all regions, it is important to have knowledge and a clear understanding of these cultural differences.
Ara had an excellent educational background, including a Ph.d in economics, but he had limited practical experience when he joined a commercial lending program in 1996 at age 24. This program provided financing to small and medium enterprises all over Armenia. Ara was not prepared at that point, both from his work or life experience, to deal effectively with such diverse potential borrowers. Obviously,he needed to be able to evaluate them and their businesses in order to assess their needs and the repayment potential.
A farmer from a region in the Ararat Valley came to Ara for a loan.These farmers were well known for poor repayment and many banks had stopped lending to them. Ara was unaware that their method of securing loans was often to pay bribes to loan officers. When the farmer presented his proposal to him, Ara discussed the details of the loan process, such as the interest rate, the repayment terms, and the required collateral. He says that normally, he would have expected the meeting to be completed, and the next step would be submission of the application. But the farmer stayed in the office, as if expecting more. Finally, he asked Ara to tell him the amount of money he should pay Ara for the loan. Ara was surprised and assured the man that the only requirement for loans at this institution was proper repayment. The farmer stood up to leave, and said angrily that Ara should not have wasted his time if he already knew he would not give him a loan!
Only then did Ara realize that the farmer equated his refusal to take a bribe with a refusal to consider the loan possibility. He took time to explain his position on ethical business practices to the farmer, who eventually did get the loan and has been a long term client ever since.
Ara learned the importance of understanding different mind sets that people may possess, even one’s own countrymen. He realizes that he actually influenced this farmer to do business in a more ethical way and along the way, created a relationship based on trust and honesty.