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3-1 BADM 633 - Wk1 International Business Culture Terry Ryan Original Work 3-3 3-4 My International Bona Fides . . .. Lived and worked in nine states, Puerto Rico, Scotland and Wales (seven years offshore) Traveled and worked in China, England, Japan, Northern Ireland and the Republic of Ireland Have worked with Mexican, French-Canadien and Korean companies With Toyota and Nissan for fourteen years, including seven trips to Japan Presented to Toyota's Main Board of Directors Hosted Toyota Chairman, President and Vice Presidents during US visitations Was Chief Analyst for Europe in Ford's International Product Planning Office (Fiesta) Earned MBA in International Business and Marketing at the Univ. of Michigan Hold a Diploma in Company Direction from the Institute of Directors (London) Other Co-founder and former Director General (US) of the Wales North America Business Council; VP of Wales North America Chamber of Commerce. Director of Flax Trust - Belfast Former non-exec Chair of the Wales New Media Group and Track 2000 Operating Committee (board) of the Wales Information Society Member of British American Business Council, Ireland Chambers of Commerce in the USA and Ireland-US Council for Commerce and Industry. Numerous UK political, regulatory and inward investment contacts 3-5 Where was this photo taken? 3-6 China Envoy Brings Deep Skill Set to Job By Kathy Chen - WSJ 23 May 2009 WASHINGTON -- Utah Gov. Jon Huntsman Jr., President Barack Obama's choice for China envoy, is a former businessman and trade official with a direct understanding of the commercial issues that are likely to color one of the U.S.'s most important bilateral relationships. The two-term Republican governor, considered a moderate within his party, is a fluent Mandarin speaker and former deputy U.S. trade representative with personal and family-business ties to China. His nomination comes at a time when China is taking on an increasingly important role in global issues, from the financial crisis to global warming to counterterrorism. Mr. Huntsman is seen as a rising star in the Republican Party, and has been mentioned as a potential presidential candidate in 2012. By picking him, Mr. Obama continues to follow his pledge to include Republicans in his administration and removes a potential rival in the 2012 election. The Senate must approve his nomination. 4-7 3-7 U.S., China Tackle Prickly Issues As Two Days of Talks Begin, Obama Adds Tough Topics of Human Rights, North Korea By DEBORAH SOLOMON - JULY 28, 2009 Bloomberg News WASHINGTON -- President Barack Obama kicked off two days of meetings with Chinese officials by calling for greater bilateral coordination in resolving the global economic crisis, tackling climate change and ending the proliferation of nuclear weapons. and China's State Councilor Dai Bingguo Secretary of State Hillary Clinton meet In his administration's first high-level dialogue with Chinese officials, Mr. Obama on Monday sought to strike a note of cooperation between the two countries -- a contrast from his oftencritical tone during the presidential campaign. But his ambitious to-do list, coupled with continued differences between the two sides over social and economic issues, may make concrete progress difficult in the near term. "If we advance [our mutual] interests through cooperation, our people will benefit and the world will be better off -- because our ability to partner with each other is a prerequisite for progress on many of the most-pressing global challenges," Mr. Obama said. 4-8 3-8 Globalization The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace In many industries, it is no longer meaningful to talk about the “German market” or the “American market” Instead, there is only the global market 3-9 Globalization Falling trade barriers make it easier to sell internationally The tastes and preferences of consumers are converging on some global norm Firms help create the global market by offering the same basic products worldwide 3-10 Declining Trade & Investment Barriers Table 1.1: Average Tariff Rates on Manufactured Products as Percent of Value 3-11 Reasons to Go Global Increase market share. Respond to competitive pressures in labor and material costs. Expand the product life cycle. Increase profits. Balance business cycles. Acquire technology. Gain access to additional factors of production. 3-12 GM Sales Show Significance of China BEIJING – General Motors Corp. on Wednesday said its first-half sales in China rose 38% from a year earlier to a record 814,442 units, underlining the importance of the Chinese auto market to the U.S. car maker as it works to emerge from bankruptcy protection. Sales of small autos helped GM's January-June period, and new models will boost second-half sales. The market has benefited from Chinese-government stimulus policies and growing demand in rural areas, Mr. Wale said. In January, China halved the purchase tax on small cars to 5% and also introduced a subsidy program for rural residents who scrap old vehicles and buy new ones. GM's China sales in June climbed 61.6% from a year earlier to 143,294 units, the company said, but the increase was a slowdown from May's sales jump of 75% to 156,000 units. The company's sales rose 25% in March and 50% in April and have been outstripping China's overall auto sales. 3-13 Glocalization What is Glocalization? Think Global . . . Act Local 3-14 Introduction Successful international managers need cross-cultural literacy - an understanding of how cultural differences across and within nations can affect the way in which business is practiced A relationship may exist between culture and the costs of doing business in a country or region 3-15 SELF-REFERENCING CRITERION SRC (ABBREVIATED) CULTURE – CULTURE - CULTURE 3-16 What Is Culture? Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living where -values are abstract ideas about what a group believes to be good, right, and desirable -norms are the social rules and guidelines that prescribe appropriate behavior in particular situations Society refers to a group of people who share a common set of values and norms 3-17 Values And Norms Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture Norms include folkways (the routine conventions of everyday life) and mores (norms that are seen as central to the functioning of a society and to its social life) 3-18 Classroom Performance System Abstract ideas about what a group believes to be good, right, and desirable are called a) norms b) values c) folkways d) mores 3-19 Classroom Performance System Abstract ideas about what a group believes to be good, right, and desirable are called a) norms b) values c) folkways d) mores 3-20 Culture, Society, And The Nation-state There is not a strict one-to-one relationship between a society and a nation state Nation-states are political creations that can contain one or more cultures Similarly, a culture can embrace several nations 3-21 The Determinants Of Culture The values and norms of a culture are the evolutionary product of a number of factors at work in a society including religion, political and economic philosophies, education, language, and social structure 3-22 Social Structure Social structure refers to a society’s basic social organization Two dimensions to consider: the degree to which the basic unit of social organization is the individual, as opposed to the group the degree to which a society is stratified into classes or castes 3-23 Classroom Performance System The basic social organization of a society is its a) culture b) social strata c) social structure d) caste system 3-24 Classroom Performance System The basic social organization of a society is its a) culture b) social strata c) social structure d) caste system 3-25 Classroom Performance System The basic social organization of a society is its a) culture b) social strata c) social structure d) caste system 3-26 Individuals And Groups A group is an association of two or more people who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other’s behavior Societies differ in terms of the degree to which the group is viewed as the primary means of social organization 3-27 Individuals And Groups In many Western societies, there is a focus on the individual, and individual achievement is common This contributes to the dynamism of the US economy, and high level of entrepreneurship But, leads to a lack of company loyalty and failure to gain company specific knowledge, competition between individuals in a company instead of than team building, and less ability to develop a strong network of contacts within a firm 3-28 Individuals And Groups In many Asian societies, the group is the primary unit of social organization This may discourage job switching between firms, encourage lifetime employment systems, and lead to cooperation in solving business problems But, might also suppress individual creativity and initiative 3-29 Classroom Performance System The group is the primary unit of social organization in a) Japan b) the United States c) Switzerland d) Mexico 3-30 Classroom Performance System The group is the primary unit of social organization in a) Japan b) the United States c) Switzerland d) Mexico 3-31 Classroom Performance System Which of the following is not characteristic of individualism? a) individual achievement b) low managerial mobility c) low company loyalty d) entrepreneurial behavior 3-32 Classroom Performance System Which of the following is not characteristic of individualism? a) individual achievement b) low managerial mobility c) low company loyalty d) entrepreneurial behavior 3-33 3-34 Social Stratification All societies are stratified on a hierarchical basis into social categories, or social strata While all societies are stratified to some extent, they differ by: the degree of mobility between social strata the significance attached to social strata in business contacts 3-35 Social Stratification Social mobility is the extent to which individuals can move out of the strata into which they are born A caste system is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime A class system is a form of open social stratification in which the position a person has by birth can be changed through his or her achievement or luck 3-36 Social Stratification The social stratification of a society is significant if it affects the operation of business organizations Class consciousness is a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others In cultures where class consciousness is high, the way individuals from different classes work together may be very prescribed and strained 3-37 Religious And Ethical Systems Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacred Ethical systems are a set of moral principles, or values, that are used to guide and shape behavior Religion and ethics are often closely intertwined Four religions dominate society -Christianity, Islam, Hinduism, and Buddhism Confucianism is also important in influencing behavior and culture in many parts of Asia 3-38 Religious And Ethical Systems Map 3.1 World Religions 3-39 Christianity Christianity is the world’s largest religion and is found throughout Europe, the Americas, and other countries settled by Europeans Perhaps the most important economic implication of Christianity is the Protestant work ethic In 1804, Max Weber suggested that it was this ethic and its focus on hard work, wealth creation, and frugality, that was the driving force of capitalism 3-40 Islam Islam, the world’s second largest religion, extends the underlying roots of Christianity to an all-embracing way of life that governs one's being In the West, Islamic fundamentalism is associated in the media with militants, terrorists, and violent upheavals, but in fact Islam teaches peace, justice, and tolerance Fundamentalists, who demand rigid commitment to religious beliefs and rituals, have gained political power in many Muslim countries, and blame the West for many social problems The key economic implication of Islam is that under Islam, people do not own property, but only act as stewards for God and thus must take care of that which they have been entrusted with, so while Islam is supportive of business, the way business is practiced is prescribed 3-41 Hinduism Hinduism, practiced primarily on the Indian sub-continent, focuses on the importance of achieving spiritual growth and development, which may require material and physical selfdenial Since Hindus are valued by their spiritual rather than material achievements, there is not the same work ethic or focus on entrepreneurship found in some other religions Promotion and adding new responsibilities may not be the goal of an employee, or may be infeasible due to the employee's caste 3-42 Buddhism Buddhism, which has about 350 millions followers, stresses spiritual growth and the afterlife, rather than achievement while in this world Buddhism does emphasize wealth creation, and so entrepreneurial behavior is not stressed However, because Buddhism does not support the caste system, individuals do have some mobility and can work with individuals from different classes 3-43 Confucianism Confucianism, an ideology practiced mainly in China, teaches the importance of attaining personal salvation through right action High morals, ethical conduct, and loyalty to others is central in Confucianism Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies 3-44 Classroom Performance System Which religion promotes the notion that a moral force in society requires the acceptance of certain responsibilities called dharma? a) Islam b) Buddhism c) Hinduism d) Confucianism 3-45 Classroom Performance System Which religion promotes the notion that a moral force in society requires the acceptance of certain responsibilities called dharma? a) Islam b) Buddhism c) Hinduism d) Confucianism 3-46 Language Language refers to the spoken and unspoken means of communication Language is one of the defining characteristics of culture 3-47 Spoken Language Countries with more than one language often have more than one culture The most widely spoken language in the world is English, but Chinese is the mother tongue of the largest number of people English is also becoming the language of international business, but knowledge of the local language is beneficial, and in some cases, critical for business success 3-48 Spoken Language Which form of English is predominant in the world? 3-49 Spoken Language Which form of English is predominant in the world? Which Chinese language is dominant in China: Cantonese or Mandarin? 3-50 Spoken Language Which form of English is predominant in the world? Which Chinese language is dominant in China. Cantonese or Mandarin? What is similar (almost identical) about these two Chinese languages? 3-51 Unspoken Language Unspoken language refers to nonverbal communication such as facial expressions, personal space, and hand gestures Failing to understand the nonverbal cues of another culture can lead to communication failure 3-52 Classroom Performance System The most widely spoken language in the world is a) Chinese b) Spanish c) Hindi d) English 3-53 Classroom Performance System The most widely spoken language in the world is a) Chinese b) Spanish c) Hindi d) English 3-54 Education Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society Education is important in determining a nation’s competitive advantage General education levels can also be a good index for the kinds of products that might sell in a country 3-55 Culture And The Workplace It is important for companies to understand how a society’s culture affects workplace values Management processes and practices must be adapted to culturally-determined work-related values Geert Hofstede identified four dimensions of culture: power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity 3-56 Culture And The Workplace Power distance focuses on how a society deals with the fact that people are unequal in physical and intellectual capabilities Individualism versus collectivism focuses on the relationship between the individual and his or her fellows Uncertainty avoidance measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity Masculinity versus femininity looks at the relationship between gender and work roles 3-57 Culture And The Workplace Table 3.1: Work-Related Values for 20 Selected Countries 3-58 Culture And The Workplace Hofstede later expanded his study to include a fifth dimension called Confucian dynamism which captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors 3-59 Classroom Performance System _______ focuses on how society deals with the fact that people are unequal in physical and intellectual capabilities. a) power distance b) individualism versus collectivism c) uncertainty avoidance d) masculinity versus femininity 3-60 Classroom Performance System _______ focuses on how society deals with the fact that people are unequal in physical and intellectual capabilities. a) power distance b) individualism versus collectivism c) uncertainty avoidance d) masculinity versus femininity 3-61 Cultural Change Culture evolves over time, although changes in value systems can be slow and painful for a society Social turmoil is an inevitable outcome of cultural change As countries become economically stronger, cultural change is particularly common 3-62 Implications For Managers Societies differ because their cultures vary Cultures vary because of profound differences in social structure, religion, language, education, economic philosophy, and political philosophy There are three important implications that flow from these differences: 1. There is a need to develop cross-cultural literacy 2. There is a connection between culture and national competitive advantage 3. There is a connection between culture and ethics in decision making 3-63 Cross-Cultural Literacy Cross-cultural literacy is critical to the success of international businesses Companies that are ill informed about the practices of another culture are unlikely to succeed in that culture Managers must also beware of ethnocentric behavior, or a belief in the superiority of one's own culture 3-64 Culture And Competitive Advantage The connection between culture and competitive advantage is important because: it suggests which countries are likely to produce the most viable competitors it has implications for the choice of countries in which to locate production facilities and do business 3-65 Leaders of U.S., Mexico and Canada Vow Cooperation By ELIZABETH WILLIAMSON AUGUST 11, 2009 GUADALAJARA, Mexico -- President Barack Obama concluded a summit with his Mexican and Canadian counterparts by pledging greater cooperation on uncontroversial issues like flu prevention and drug dealing, but he papered over trade disputes between the U.S. and its close trading partners, dashing hopes for progress on those issues. The North American Leaders Summit, an annual meeting of the three countries' leaders, isn't seen as a catalyst for breakthrough agreements. But Mexican and Canadian officials had said before the two-day meeting that Mr. Obama's response to several trade disputes could serve as a bellwether of his broader attitude on trade with Canada and Mexico, the U.S.'s largest and third-largest trading partners, respectively. Mr. Obama played down the possibility of taking any near-term action to address Mexico's and Canada's concerns that "Buy American" provisions would prevent their countries' companies from competing for projects funded by the U.S.'s 3-66 $787 billion stimulus program. 3-67