Transcript 3-1

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BADM 633 - Wk1
International Business Culture
Terry Ryan
Original Work
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My International Bona Fides . .
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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
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Presented to Toyota's Main Board of Directors
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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)
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Other
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Co-founder and former Director General (US) of the Wales North America Business
Council; VP of Wales North America Chamber of Commerce.
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Director of Flax Trust - Belfast
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Former non-exec Chair of the Wales New Media Group and Track 2000
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Operating Committee (board) of the Wales Information Society
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Member of British American Business Council, Ireland Chambers of Commerce in
the USA and Ireland-US Council for Commerce and Industry.
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Numerous UK political, regulatory and inward investment contacts
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Where was this photo taken?
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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.
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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.
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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
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Globalization
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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
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Declining Trade & Investment
Barriers
Table 1.1: Average Tariff Rates on Manufactured
Products as Percent of Value
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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.
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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.
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Glocalization
What is Glocalization?
Think Global . . . Act Local
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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
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SELF-REFERENCING CRITERION
SRC
(ABBREVIATED)
CULTURE – CULTURE - CULTURE
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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
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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)
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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
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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
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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
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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
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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
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Classroom Performance System
The basic social organization of a society is its
a) culture
b) social strata
c) social structure
d) caste system
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Classroom Performance System
The basic social organization of a society is its
a) culture
b) social strata
c) social structure
d) caste system
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Classroom Performance System
The basic social organization of a society is its
a) culture
b) social strata
c) social structure
d) caste system
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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
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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
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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
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Classroom Performance System
The group is the primary unit of social organization in
a) Japan
b) the United States
c) Switzerland
d) Mexico
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Classroom Performance System
The group is the primary unit of social organization in
a) Japan
b) the United States
c) Switzerland
d) Mexico
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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
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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
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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
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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
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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
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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
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Religious And Ethical Systems
Map 3.1 World Religions
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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
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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
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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
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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
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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
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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
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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
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Language
Language refers to the spoken and unspoken means of
communication
Language is one of the defining characteristics of culture
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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
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Spoken Language
Which form of English is predominant in the world?
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Spoken Language
Which form of English is predominant in the world?
Which Chinese language is dominant in China:
Cantonese or Mandarin?
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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?
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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
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Classroom Performance System
The most widely spoken language in the world is
a) Chinese
b) Spanish
c) Hindi
d) English
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Classroom Performance System
The most widely spoken language in the world is
a) Chinese
b) Spanish
c) Hindi
d) English
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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
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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
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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
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Culture And The Workplace
Table 3.1: Work-Related Values for 20 Selected Countries
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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
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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
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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
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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
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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
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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
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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
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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
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$787 billion stimulus program.
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