Transcript International Business - National University of Malaysia

The Cultural
Environments Facing
Business
2-1
What is Culture?
“A system of values and norms that are shared among a
group of people and that when taken together constitute
a design for living.”
- Hofstede, Namenwirth, and Weber
Ethnocentricity
Cultural literacy
Belief that one’s own
ethnic group or culture
is superior to that of
others
Detailed knowledge of a
culture that enables a
person to function
effectively within it
X
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Cultural Orientations
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International businesses adopt an attitude
towards foreign cultures
• Polycentrism: control is decentralized so
regional managers can conduct business in a
local manner
• Ethnocentrism: belief that ones own culture is
superior and ignores important factors
• Geocentrism: a hybrid of polycentrism and
ethnocentrism, the middle ground

Companies MUST evaluate their practices
to ensure they account for national
cultural norms
2-18
Major Cultural Issues

Problems arise in international business
when:
• Employees have subconscious reactions
• Employees assume all societal groups are
similar
• A company implements practices of work less
well than intended
• Employees encounter distress because of an
inability to accept or adjust to foreign cultural
behaviors
• Companies/employees are insensitive to
foreign consumer preferences
2-3
Some Cross Cultural Blunders
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American Motors tried to market its new car, the Matador, based on the
image of courage and strength. However, in Puerto Rico the name means
"killer" and was not popular on the hazardous roads in the country.
A sales manager in Hong Kong tried to control employee's promptness at
work. He insisted they come to work on time instead of 15 minutes late.
They complied, but then left exactly on time instead of working into the
evening as they previously had done. Much work was left unfinished until
the manager relented and they returned to their usual time schedule.
A US telephone company tried to market its products and services to
Latinos by showing a commercial in which a Latino wife tells her husband
to call a friend, telling her they would be late for dinner. The commercial
bombed since Latino women do not order their husbands around and their
use of time would not require a call about lateness.
Proctor & Gamble used a television commercial in Japan that was popular
in Europe. The ad showed a woman bathing, her husband entering the
bathroom and touching her. The Japanese considered this ad an invasion
of privacy, inappropriate behavior, and in very poor taste.
Cultural Awareness
Problems that hinder cultural awareness
• Subconscious reactions to circumstances
• Assumption that all societal subgroups are
similar
Cultural awareness can be improved
• Research descriptions of specific cultures
• Observe behavior
• Study foreign market directly
Company’s need for cultural knowledge
increases as it:
•Moves from one to multiple foreign
functions
•Increases the number of countries in
which it operates
•Moves from similar to dissimilar foreign
environments
•Converts from external to internal
handling of international operations
Identification of Cultures
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Culture – the set of values, beliefs, rules,
and institutions held by a specific group of
people
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People also belong to national, ethnic,
professional, and organizational cultures
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Points of reference:
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National
Geographic
Language
Religion
International business often changes
2-5
cultures
Identification and Dynamics of Cultures
The nation as a point of reference
• Each nation has certain human, demographic, and
behavioral Characteristics that give it a national identity
– people share values, language, and race
• Laws governing business apply along national lines
• Problems using a country-by-country approach
– individual differences within a country
– similarities link groups from different countries
Cultural formation and dynamics
• Value systems set early in life, but may change
• Values may change due to choice or imposition
– cultural diffusion vs imperialism
• IB increases change in cultures and governments
Components of Culture
Aesthetics
Physical &
Environments
Education
Values &
Attitudes
Culture
Personal
Communication
Manners &
Customs
Social Structure
Religion
Values and Attitudes
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Values are ideas, beliefs, and customs
to which people are emotionally attached.
Example: Islamic law prohibits use of alcohol
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Attitudes are positive or negative
evaluations, feelings, and tendencies
that individuals harbor toward objects or
concepts.
Example: Being on time is important to some
cultures while it is not important in other
cultures
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Manners: Appropriate ways of
behaving, speaking and dressing in a
culture.
Customs: Habits or ways of behaving
in specific circumstances that are
passed down through generations in
culture
Social Structure
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Social structure refers to its
basic social organization
Two dimensions that are
particularly important include:
• The extent to which society is group or
individually oriented
• Degree of stratification into castes or classes
Individual vs. Group Orientation
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Individual societies
tend to view individual
attributes and
achievements as being
more important than
group membership
Emphasis on
individual
performance can be
both beneficial and
harmful
• Encourages
entrepreneurship
• Can lead to high
degree of managerial
mobility
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Group societies see
groups as the primary
unit of social
organization
Group members
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Often form deep emotional
attachments
See group membership as all
important
Emphasis on the
group can be both
beneficial and harmful
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Strong group identification creates
pressure for mutual self-help and
collective action
Discourages managers and
workers from moving from
company to company
Discourages entrepreneurship
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Many of the asian cultures are collectivist, while
anglo cultures tend to be individualist.
Implications
A market research firm conducted a survey of
tourist agencies around the world. The
questionnaires came back from most countries in
less than a month. But the agencies in the asian
countries took months to do it. After many
telexes, it was finally done. The reason was that,
for example, American tourist agencies assigned
the work to one person, while the Filipinos
delegated the work to the entire department,
which took longer. The researchers also noticed
that the telexes from the Philippines always came
from a different person.
Social Stratification
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Social stratification refers to the fact that
all societies are stratified on a hierarchical
basis of social categories
Strata are typically defined on the basis of
characteristics such as family background,
occupation, and income
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Social Stratification Systems
• Individuals status with the culture
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Managerial groups may be highly valued
Employees may be valued less
• Ascribed group memberships
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Gender, family, age, caste, and ethnic, racial
or national origin
• Acquired group memberships
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Religion, political affiliations, and
professional and other associations
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Characteristic-Based Groups
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Gender-based groups
• China
• India
• Afghanistan
• Saudi Arabia
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Age-based groups
Family-based groups
Occupation
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Religious and Ethical Systems
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Religion: a system of shared beliefs and rituals
that are concerned with the realm of the sacred
Ethical systems: a set of moral principles, or
values, that are used to guide and shape
behavior
• Most of the world’s ethical systems are the product
of religions
Among the thousands of religions in the world
today, four dominate in terms of numbers of
adherents:
• Christianity with 1.7 billion adherents
• Islam with 1 billion adherents
• Hinduism with 750 million adherents
• Buddhism with 350 million adherents
Religious and Ethical Systems
Education
Cultures pass on traditions, customs, and values through
schooling, parenting, group memberships, etc.
Education level
Well-educated attract high-paying jobs, while poorly educated
attract low-paying manufacturing jobs
Brain drain
Departure of highly educated people from one profession,
geographic region or nation to another
Problem of Illiteracy
Physical and Material Culture
These influence a culture’s development and pace of change
Topography
Physical features characterizing the surface of a geographic region
Climate
Weather conditions of a geographic region
Material Culture
Technology used to manufacture goods and provide services
Dealing With Cultural Differences
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Be tolerant of differing perceptions of
time
Understand the message sent by
body language
Be sensitive to accurate translations
• Spoken
• Written
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Language as a cultural stabilizer
•Culture spreads rapidly when people
from different areas speak the same
language
•Stronger adherence to a culture if it
does not share its language with other
peoples
•English, French, and Spanish are
widespread
–most of IB conducted in English
Language Strategies
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Get references for translators
Ensure the translator is familiar with
technical vocabulary for the business
Do a back translation
Use simple words
Avoid slang
Repeat words and ask questions
Expect the extra time communication will
take
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Language Groups
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Differences in Information and Task
Processing
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We perceive and reach conclusions
differently
• Perception of cues; Arabic has more than
6,000 words for camels…
• Obtaining information
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Low-context cultures (United States)
High-context cultures (Saudi Arabia)
• Information Processing
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Sequentially or simultaneously
Focused or broad
Handling principles or small issues first
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High Context vs Low Context
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Low context cultures include Anglos, Germanics and
Scandinavians. High context cultures include Japanese, Arabs and
French.
Implications
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Interactions between high and low context peoples can be
problematic.
• Japanese can find Westerners to be offensively blunt. Westerners can
find Japanese to be secretive, devious and bafflingly unforthcoming
with information
• French can feel that Germans insult their intelligence by explaining the
obvious, while Germans can feel that French managers provide no
direction
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Low context cultures are vulnerable to communication
breakdowns when they assume more shared understanding than
there really is. This is especially true in an age of diversity. Low
context cultures are not known for their ability to tolerate or
understand diversity, and tend to be more insular.
Hofstede Framework
Individualism
vs. collectivism
Power
distance
Uncertainty
avoidance
Masculinity
vs femininity
Culture in the Workplace
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Four dimensions of culture
• Power distance - cultures are ranked high or low on
this dimension based on the particular society’s ability
to deal with inequalities
• Individualism versus collectivism - this dimension
focuses on the relationship between the individual
and his/her fellows within a culture
• Uncertainty avoidance - this dimension measures
the extent to which a culture socializes its members
into accepting ambiguous situations and tolerating
uncertainty
• Masculinity versus femininity - this dimension looks
at the relationship between gender and work roles
Work-Related Values for
20 Selected Countries
Power Distance & Individualism
Power Distance & Uncertainty
Avoidance
Kluckhohn-Strodtbeck Framework
Relation to nature
Material or spiritual
Time orientation
Responsibility to others
Trust and control
View of personal space
Managerial Implications
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Cross-cultural literacy
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Culture and competitive
advantage
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Culture and business ethics
Keys to Success
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Organizations must understand
cultural differences
Organizations must be
culturally literate in order to
avoid misunderstanding
As companies enter into the
international market, localizing
business policies and practices
can help managers to succeed