6. LEGAL REQUIREMENTS AND CONTRACTUAL LAWS 7. NEGOTIATION APPROACH AND MAKING CONNECTIONS 9. MANAGING EMPLOYEES AND CONFLICT RESOLUTION

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2 TABLE OF CONTENTS 1. INTRODUCTION 2. COLOMBIAN BUSINESS CULTURE 3. GENERAL INFORMATION AUSTRIA 4. PRIMARY RESEARCH 5. CULTURAL DIMENSIONS COUNTRY COMPARISON 6. LEGAL REQUIREMENTS AND CONTRACTUAL LAWS 7. NEGOTIATION APPROACH AND MAKING CONNECTIONS 8. PRESENTATION AND COMMUNICATION STYLES 9. MANAGING EMPLOYEES AND CONFLICT RESOLUTION 10. CUSTOMER RELATIONSHIP 11. SOCIAL ASPECTS 12. ETHICAL DILEMMAS 13. RECOMMENDATIONS 14. CONCLUSIONS 15. REFERENCES 2

3 INTRODUCTION This guide to do business in Austria for Colombian business people will allow you to identify the opportunities and threats of doing business in this country. This guide started based on a research done for professionals and business people from Colombia. Starting from there, we could identify what were the doubts and differences that Colombians and Austrians had in terms of business that are extremely important to have in mind when doing a negotiation between these two countries. This guide will provide information about cultural differences and the most important aspects or requirements to open a business in Austria. Some of this aspect are: which legal requirements are needed, how to have a first approach with Austrian business people, what are the tendencies in terms of making connections, how the presentation has to be and what are the appropriate communications style to avoid any type of misunderstanding. Also, how the management of employees and conflict resolution differs from the Colombian culture with the purpose of creating a long-lasting relationship. I. 3

4 COLOMBIAN BUSINESS CULTURE The Colombian business culture can vary among cities where some can be more formal and others more informal. Based on research and own experiences we can determine that one of the most important aspects about the business culture in this country is the relationship building. Colombians prefer to work in an environment of trust or confidence where they can feel that honesty and loyalty has been created. Creating relationships before closing a negotiation is extremely important, for them knowing about the person they are working with is vital. Relationships are build outside the business environment, besides doing business they are focused as well in creating relationships by making foreign investors feel comfortable in a country they don t know. Colombians tend to make people feel comfortable and welcomed since they are always looking to create future relationships. The business culture in this country is more formal in principal cities like Bogota and Medellin, while in the other cities the business is more informal. Colombians are flexible due to their culture, there are not specific rules or protocols to follow. During negotiations they are able to adapt easily, and they always seek to a win- win by asking for discounts or extra benefits. Colombians always take advantage of all the opportunities, they are known for being very recursive and they always find the way to benefit themselves and their businesses. Colombians are sometimes unpunctual, is normal that people are late, or meetings start late. Meetings may be very important because they prefer to do business in person and the final transaction may take time since they take time to decide and build trust. For them family is very important due to their culture and traditions. Colombians take decisions after discussing with the family and considering their opinions. II. 4

5 GENERAL INFORMATION AUSTRIA Austria is one of the members of the European Union since Vienna, is one of the most visited cities of the country. Their official language is German, Christianism is the religion with more followers in this country. Austria official currency is Euro. The total population in this country is of approximately. Austria has three multinationals that are part of the top 1000 of the biggest enterprises in the world according to Forbes Two of these companies are: OMV group that is the biggest company of refinery and production of petroleum in this country and Erste bank which is one of the most important saving bank of the country. When talking about invest climate, we can refer to Austria as an exceedingly attractive country because of numerous reasons. First, Austria workers are highly skilled, which means that you can find high educated workers. In terms of infrastructure Austria has an excellent development in streets and high technological buildings. The research funding of Austria is awesome, the companies in Austria that work in road to innovation research, development and technology can receive some important benefits, for example reduce or exemption of taxes and high funds from the Austrian Science Funds. In addition, Austria has good industrial relations, which means that the relationships between managers and workers are harmonious. The political stability that Austria has is one of the most important reasons of investing in Austria. The capital of Austria, Vienna counts with the geographical location that joints the Western with the Eastern Europe which is an excellent location to establish a headquarter for any enterprise. This can be evidenced by being one of the headquarters of the UN that is located in the Vienna International Centre. 5

6 PRIMARY RESEARCH Our primary research about what Colombian business people knew about or wanted to know about how doing business in Austria was given to 40 people who are already professionals and counts with business experience. Many of them already have companies that export products or services to other countries. The surveys were conducted through Survey Monkey, an internet survey page. The questions were of diverse subjects and there were some open answer and others of multiple choice. Before giving the link to the surveys, our group was in charge of explaining the survey and the activity in which all the respondents were very open and interested in a guide that could give them answers and recommendations for doing business in Austria. As a general conclusion of the survey, what the business people want to know when opening a business in Austria is everything that has to do with the legal requirements of the country. In different questions the respondents stated that it is very necessary to know about the requirements and laws before taking any important decision about an industry, staff and sales. The first question of the survey was "What would you like to know when entering into the Austrian market?" in this question almost the 76% of the respondents answer that it was very important to be clear and know everything about the laws, legal requirements, economic data and politics. In contrast, only he 23% left believe is also important to know about the culture, traditions and laws. The second question supports a lot the first question, in which business people were asked if it was important to know if the existence of Austrian laws could affect or benefit their businesses. more than 94% of the respondent s answers that "yes it was important to know and understand the laws and legal requirements perfectly. The third question was open, and it was "Which types of legal requirements do you think are necessary for the Austrian market entry and how relevant are for a Colombian business person when entering to Austria?". In this question everyone was able to write their own opinion, but as a compilation of information we can conclude that the most important requirements are: Document, permissions, laws, taxes and legal requirements of opening a business in a certain industry and hiring employees. The fourth question in the survey was conducted more to the relationships between manager and employers or business and customers. The questions were "Do you think there could be any ethical or moral professional differences in a business between a Colombian and an Austrian?" and approximately 88% answer that these differences can exist. Due to the differences there are in culture and practices, these differences can be evident and in this guide is going to be explained which the differences are and how 6

7 these differences can be minimized to prevent any kind of future misunderstandings or conflicts. The fifth question was "Do you consider that aspects such as punctuality, cordiality and a pact treat could affect negotiations between a Colombian person and an Austrian person?", the 100% answered that "yes" this aspects were essential for negotiations and further in this guide it will be explained which social aspects are very significant for the Austrian business people and why is it important for Colombian business people to take them into account. The sixth question was about how relevant was for the respondents knowing about channels such as communication tools that could help them to create liable relationships with the customers and the 74% answered that it was supremely important to be clear on which channels could give them better closeness with their clients. The guide will also provide important communication channels in Austria that can give businesses options to continue the relationship business-customer with a postsale service. The last question was about which work tendencies the Colombian business people wanted to find in Austria, there were several answer options like technology, health, sustainability and education. The options with more answers were the tendencies of technology (47,5%) and sustainability (42,5%). Survey: 7

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9 CULTURAL DIMENSIONS COUNTRY COMPARISON To understand better some cultural dimensions of Austria, is important to do the Hofstede country comparison between Austria and Colombia. As a first aspect to highlight there are some dimensions that differ a lot and others that are not too different. To start with, power distance is the acceptance by the less powerful members of an institution that power is unequal and that it is fine for some cultures but for others it is not (Hofstede Insights, 2018). In this case, Austria scores a very low score meaning that rights are equal for each and every one and that inequities should be reduced as much as possible. In general terms, people expect to be consulted and taken into account but in business relationships decisions are taken according to the hierarchical position. Communication as well is direct and power in business is centralized meaning that decisions are made by the ones who count with more experience or degrees. In comparison, Colombia scores a very high score meaning that people had accepted that inequities are part of their lives and that they have to deal with it. Power is centralized showing that employees are not expecting to be consulted or taken into account and that just one person can take the decisions he considers necessary. After finding out that in this dimension they are the opposite it is important to identify which could be the possible strategies or ideas to work together between two cultures that think differently. Another dimension where Colombia and Austria have big differences is in individualism. Individualism is known as if I or we comes first (Hofstede Insights, 2018). Austria, scores high in this dimension making us understand that they are taught to care about themselves and their families and that s it. They are also used of working 9

10 by themselves instead of working with others. Relationships are also created with a specific interest. It is also considered that in individualistic cultures things are done for personal merit and personal achievements. In Colombia things are completely different. Colombia is considered to be a collectivistic culture who is taught to care for themselves, their families and people around them, they are used to work with others and they rely on other ideas, thoughts and believes. Creating bonds and long-lasting relationships are much more important that obtaining personal achievements. As a recommendation for these differences the Colombian business person should implement some of the global mindset characteristics in order to avoid future misunderstandings or conflict. The Colombian person should be open minded to adapt to different situations, he or she would have to be aware of the differences and diversity each culture has. In order to be global minded it would have to apply intercultural empathy in order to build better relationships. In masculinity, a high score means that it is a culture where competition, achievements and success go first than anything, while a low score means that it is more important to like what they do and to have equal rights for everyone (Hofstede Insights, 2018). In this dimension Colombia and Austria scores a similar high score letting us understand and analyze that they are driven and impulse by being successful and nothing more. Competition is an everyday thing. Austrian people had been pointed out as people who live in order to work and even though Colombia has as well a high score, it is lower than the Austrian culture. Even though Colombians are competitive, they are collectivistic, and competition is between others and not between people with whom they work together. Uncertainty avoidance is related to the way people react and act with the fact that they don t know what is going to happen in the future (Hofstede Insights, 2018). Austria and Colombia score a similar high score meaning that they follow certain rules or believes to avoid uncertainty and they consider that there is no time to waste. For both countries, decisions are taken after a very deep investigation and analysis. As a differentiator, Austria is a culture where being punctual is sort of a rule and that not being on time is a lack of respect while Colombian people are not very good in being punctual. The Colombian culture is not always on time, it is known for being a little late and for them it is fine but for other cultures such as the Austrian culture it is a rule and an important believe. Passing to talk about the long-term orientation, Austria is a country where people believe that relations are created with a purpose. Trust is gain according to the situation or the context they are in. Colombians, in the other hand, are known for building strong long-lasting relationships that are not only impulse or influenced by money or business. 10

11 They are known to be a culture where trust is gain because they want and not because they need. Colombia is considered to be a normative culture where people prefer to maintain traditions and norms, they are interested in knowing the truth and traditions are extremely important. For the future their saving is small, and they are always seeking for quick results. Austria, in the other hand, scores a very high score in this dimension showing that they are considered a pragmatic culture where people believes that the truth depends of the situation, time and place. compared to the Colombian culture, they are able to adapt easily to different traditions and changes and their saving for the future are high. instead of looking for quick results they are persistent, they work hard to achieve the best results as possible. Last but not least, Austria is considered to be an indulgent country where people are raised to focus their desires and impulses to have a very joyful life and to have fun (Hofstede Insights, 2018). Colombia is as well an indulgent country where they are optimistic and think money should be invested and used as they wish. In this dimension Austrians and Colombians are very much alike and it could be a possible point to take advantage and create good working relationships between these two countries. LEGAL REQUIREMENTS AND CONTRACTUAL LAWS Starting a business in Austria is guide by a process that any person has to follow. To make buy & sell transactions (trade) in Austria you must have a trade license that is required. (Gewerbeberechtigung). This license applies to sole partnerships, incorporated and proprietor s entities. But this license is not needed by companies or citizens of the EEA countries (All EU countries and Iceland, Norway and Liechtenstein) but only if they had already a license of trade of their origin country. If you are an entrepreneur that is not a member of the EEA, you can obtain a license if your origin country has an international treaty with the European Union or have ask for a Residence that allows it. If you have a Incorporate or a Partnership entity and is foreign, it must set an office in Austria in order to start trading in this country. The Austrian Trade and Industry Regulation Act 1994(Gewerbeordnung GewO), emphasize that there are regulated and free trade in Austrian territory. This regulated trade is found on a list, the trades that do not appear in this list are free trades. All the trades that are scripted on the list must have a certification of professional competence or a diploma. All the incorporate entities or partnerships must select a Statutory manager, which is the responsible of the trade licensing law objectives. Also, this Statutory manager must 11

12 make the Austrian trade licensing laws are correctly. The S.M. does not have to be the CEO of the enterprise, it also can be a worker that labor full time on the company or at least 50% of the labor time. In terms of working hours according to Austrian working days consist on eight hours, in these eight hours are taken into account a break of half an hour per 6 hours worked (That break given is not paid). The working hours can be extended only if there is an agreement between the employer and the employee. Any kind of overtime have to be remunerated with a bonus of 50%, but if them are in night, Sundays or holidays the bonus must be of the 100%. The maximum time of working per week is of 40 hours, but in Austria the average of working hours per week was of 42.9, more than the EU average, which means that Austrians are hardworking people. It is important to highlight that in Austria there is no statutory minimum wage, the minimum wage is established by the industry you work for, by an agreement made by the unions and the representative of employers. In addition, the social insurance of Austria is composed by pension, health, and accident insurance. As soon as you get an occupation or job the health insurance covers the employee. The social insurance is paid by the employer over the social insurance office, also the employer is responsible of registering the employees in the social insurance office. NEGOTIATION APPROACH AND MAKING CONNECTIONS A negotiation approach when doing business in Austria may be somehow strict and with certain order. The first step when having a negotiation approach in Austria will be having the first meeting that has to be scheduled with some weeks is advanced. The cancellation of this first meeting will give bad impressions of unprofessionalism. Austrian people rely a lot on first impressions that's why punctuality, a good appearance, and a prepared meeting is very important. When addressing someone is important to do it by their titles or professional experience. In first approaches Austrian business people expect to receive business cards in their language with all the information (titles and degrees) since is something very important for them (Passport to trade, 2014). In Austria the negotiations and relationship building require time, the process is slow that's why the Colombian business people must understand that they also need to build trust and know who they are going to work with before closing any deal. Negotiations in Austria are focused on real data and information, they have a formal structure for meetings and they expect to follow strictly. A negotiation should begin with a small talk 12

13 to establish personal relationships. Although a stronger relationship needs more time, so it is always good to begin with a good conversation to create an environment of trust. There is a topic to discuss that is supremely important when doing business in Austria and specifically when a foreigner it planning to have a negotiation approach. In Austrian businesses, hierarchy is very important this means authorities or senior managers are the ones in charge of taking any decision. When having a first approach there must be an absolute respect for title and they also prefer to have important meetings with people that have their same ranks, so decisions can be taken easily. Making connections in Austria might be linked to job positions and ranks that allow to create work networks between people. Businesses in Austria are attaching to new technological tendencies to make connections by the usage of social media. Austrian businesses and Austrian business people are using social media to do job relating tasks (Passport to trade, 2014). Companies are increasing the use of social media to improve their image, to acquire new customers and to preserve relationships with their actual customers. This will be one excellent communication channel to continue the process and follow the customers when the negotiation is closed. Additionally, Austrian business people are also using a lot social media to do job networking and search for work. According to Passport, to trade the most common social media internet pages for making business connections in Austria are Facebook, Twitter and Xing. PRESENTATION AND COMMUNICATION STYLES The presentation is important and Austrian people care about their image and appearance is always good for them to give good impressions. Presentation must be cordial and respectful also very professional. The first aspect to take into account about the Austrian communication style, when addressing a person titles are very important (Passport to trade, 2014). They prefer to be called by their last names or title that can describe their job position. First names are only for family and close friends, in business relationships is necessary to address people by their correct title. Most of Austrian business people speak English but the official language to do business is German. Their communication style is very direct and conservative, public gestures are not common and are only accepted for family or very close friends. Is very important to be polite and cordial, to give a firm handshake and to make eye contact. Business relationships are very conservative that s why the communication must be very professional. Different to, Colombia is a country where communication is very linked to emotions they like to express what they feel a lot. Their communication style is indirect, and they 13

14 do not go straight to the point. In business some companies might have people who speak English but the common language to negotiate is Spanish. Also, in a business situation formality is important and people must be address according their hierarchical position, in other contexts Colombians are very informal and it is achieved when there is a strong relationship. Another aspect of their communication style is that they are have physical contact something that people in Austria don t like or expect from their business colleagues. Colombian business people must be very aware of the differences of the communication style since it will be crucial for the process of negotiation and when having a business, it will be very important for dealing with the Austria people. Colombian business people must apply a cross cultural communication where there must be an acceptance for the diversity this means he/she must be very explicit with directions or ideas. Adaptation is important that's why communication must turn to be intercultural it means that the Colombian business people have to understand how to address others, communicate with good manners and be careful about what they say in order to achieve an efficient communication with Austrian people. MANAGING EMPLOYEES AND CONFLICT RESOLUTION Business and work in Austria is characterized by hierarchy. The ones who have important ranks and professional experience will be the ones who have the greatest power. Authorities are in charge of taking important decisions it means management is autocratic and doesn't take into account the opinions or ideas of subordinate workers. Managers are not interested in consensus or agreements made with the employees since they are the authority that decides about the important determinations of the business. (Mole, J., 2003). The relationships in a business are definitely unequal, superiors and subordinates are very different and are defined by titles. Although there are differences in work positions respect and politeness are important aspects to create good relationships between employees no matter the rank they have. Managers create rules to work better with the employees. If a Colombian business person would have to manage employees in Austria then he would have to be global minded because changes in this country need time, he or she would have to adapt and also understand that every person is different. Relationships should be based on mutual or reciprocal respect in order to avoid conflicts. Conflicts should be prevented by using cultural agility and global mindset. With cultural agility people might be able to adapt fast by responding accurately to changes in the actual situations of the business. Respect to others is an essential part of this theory 14

15 and it means that managers and employees should understand the differences in behaviors and personalities, they have to be flexible, they need to interact with others by using the correct communication. Then in Austria it will be very important that conflicts are solved directly between the ones that are involved in it and with a lot of respect and politeness. To prevent or solve conflicts Global mindset is also important, with this theory business must understand that they are in a global environment where different cultures are trying to work together without having any kind of borders that divide them. CUSTOMER RELATIONSHIP Business people in Austria consider that punctuality and gender equality are the most important aspects to have in mind when doing business and in normal life as well. Having said this, it is clear that the relationship with their clients is professional and serious. As we said before, relationships are build based on the trust they have created with time and experience. The relationship is direct and based in a win- win approach where both parties will obtain what is needed or desired instead of creating a personal relationship. Austrians are always interested in achieving a long-term relationship than just making a fast sale without a post- business relationship. When they close deals their interest is to continue having contacts and relationships because in the future they might go back where they had a satisfactory experience. In contrast, Colombians are used to creating a personal relationship to break the ice before doing business, but it takes less time for them to gain their trust. Professional relationships for Colombians could end up being more personal, friendly and informal due to their outgoing personalities. This is why Colombians have to be very careful of not to exceed the limits of confidence with Austrian people. SOCIAL ASPECTS There are some social aspects that can be taken into account when having a business with Austrian business people. To begin there are different entertainment activities when doing a business in Austria, but two of the most recognized are: the first to practice Winter Sports in the Austrian alps. For this entertainment activity is important to know how to do it, it would be great since it is adventurous, but it will turn really bad if someone doesn t know how to ski or practice these kinds of sports. The second idea of entertainment will be to visit the Vienna State Opera, it is a well-known place to visit and also recognized around the world. For this entertainment or cultural activity is important to research and be prepared in advance knowing more about it and why is so recognized and important for the country. 15

16 Punctuality is absolutely significant and valuable is part of a discipline approach of their working life. Their time is very important and prized, is managed carefully that s why they follow a strict order of their activities and meetings. Unpunctuality is seen as unprofessional that s why being late can be a problem when doing business with Austrian business people. In Austria it isn t common to give gifts not even in business, however for special events, holidays or invitations gifts are common. Gifts are not expected in business but for a big deal with close business colleagues the gifts that can be given are books, music or country gifts (ediplomat,2018). Never give personal gifts or a very expensive gift and when giving a gift the wrapping should be attractive. The dress code is very important since they dress well no matter their positions or jobs and they take pride on their appearance. The appearance and presentation are essential. People need to be prepared according to the situations and dress code. For doing business formal clothes are appropriate, business dress for women and conservative business suits with solid and dark colors for men. ETHICAL DILEMMAS Ethical dilemmas may be presented in a business between people. The first ethical dilemma that we could identify is that Austrians work by hierarchy and power is in a very few hands. Due to this, sometimes the ones who control the power take decisions based on their personal benefit instead of thinking in the welfare of the company. This is an aspect that can cause conflict because when the personal benefit is more important than the company's benefits the person involved is not being professional and honest with his or her job and it is letting that personal opinions or interests be over those of the company. Another ethical dilemma that it could possible to confront is that Austria has become a country with sustainable practices and it is encouraging business to have sustainable practice. If the company or the managers decide to have unethical practices in the organization, specifically the ones that affect the environment then it will cost a big conflict with authorities. In addition, managers expect employees or subordinates to be loyal and correct with the company's protocol but there have been cases where the employees had reveal important information of the company to the competition or even had not work efficiently for the goals of the company. This is an ethical dilemma because it clearly demonstrates that by acting in this way there are not benefiting the company instead, 16

17 they are affecting it negatively. Last but not least, discrimination in the workplace is another ethical dilemma that could take place in the business environment specifically when there are different cultures working together like in the Colombian and Austrian case. RECOMMENDATIONS After this research we are able to propose or recommend some possible solutions or tips to open a business in Austria and to create good relationships between Colombians and Austrians in order to avoid any type of misunderstand due to the differences they have. Austrian people consider that punctuality is extremely important and is sign of professionalism and education. Colombian business people should change their minds and adapt to this aspect and be very punctual even though they are recognized as people who are always late. For Austrians the first impressions are very important. Not only the physical but also the way you express and communicate. Colombians in the other hand, are people who believe in second chances but if they want to have good relationships in business with Austrian people they have to be conscious about their appearance, their manners and the appropriate communication styles. Relationships with Austrian business people are created with a purpose, they are not as Colombians who prefer to create a more personal relationship to make business. Austrians differ business relationships from personal relationships and trust is gain after a long time. Colombian business people must understand that people in Austria separates personal from professional aspects, so they must be careful with the way they interact. Austrian people are very direct with their communication different to Colombians that are very indirect and relaxed. Colombian business people must understand that Austria has a different culture and people from this country will always be very clear on what they believe or think about an idea or a proposal. they also expect that negotiations are very direct, and that the counterpart is very precise. CONCLUSIONS In conclusion, this guide gave key points and worked as guideline to understand that there will always be differences between diverse cultures and the way they think and do things. When a Colombian business person is interested in entering to the Austrian market he or she must identify that business has to be global and open minded to establish a good communication and build strong relationships with partners, employees and customers. Leaders must understand that they have to be flexible and 17

18 be willing to adapt to other cultures and respect each other and their ideals. Entering to Austria might be complicated for a Colombian person and it will take a while to achieve positive results but with time and good information people will have better business experiences. 18

19 REFERENCES Commisceo Global. (2017). Austria Management Guide. Retrieved from ediplomat. (2018). Austria. Retrieved from Expat. (2017). Doing Business in Austria. Retrieved from GOV.UK. (2018). Local laws and customs - Austria travel advice. [online] Available at: [Accessed 2 May 2018]. Hofstede, Geert. Country Comparison. Hofstede Insights, Hofstede Insights, 15 Jan. 2018, Icaew (2018). Doing business in Austria. [online] Available at: [Accessed 2 May 2018]. Katz, L. (2008). Negotiating International Business - Austria. Retrieved from Kwintessential. (ND). Guide To Colombia - Etiquette, Customs, Culture & Business. Retrieved from Mole, J. (2003). Mind Your Manners(Third ed.). London: Nicholas Brealey. Moorestephens.com. (2018). Doing business in Austria 2017 Moore Stephens International - global accountancy and advisory network. [online] Available Passport to trade. (2014). Austria. Retrieved from Protocolo.org. (2011, March 23). Austria Costumbres y consejos de utilidad Situaciones y... Retrieved May 01, 2018, from Wien (2018). Health insurance. [online] Available at: [Accessed 2 May 2018]. 19

20 Moorestephens.com. (2018). Doing business in Austria 2017 Moore Stephens International - global accountancy and advisory network. [online] Available at: [Accessed 2 May 2018]. Wien.gv.at. (2018). Health insurance. [online] Available at: [Accessed 2 May 2018]. GOV.UK. (2018). Local laws and customs - Austria travel advice. [online] Available at: [Accessed 2 May 2018]. Icaew.com. (2018). Doing business in Austria. [online] Available at: [Accessed 2 May 2018]. Moorestephens.com. (2018). Doing business in Austria 2017 Moore Stephens International - global accountancy and advisory network. [online] Available at: [Accessed 2 May 2018]. 20