1. The Cultural Environments Facing Business
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2. X √ What is Culture? Cultural literacy Ethnocentricity
“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
Cultural literacy
Detailed knowledge of a culture that enables a person to function effectively within it √
Ethnocentricity
Belief that one’s own ethnic group or culture is superior to that of others X

3. Cultural Orientations
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
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4. 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
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5. Some Cross Cultural Blunders
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.

6. 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

7. 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

8. Identification of Cultures
Culture – the set of values, beliefs, rules, and institutions held by a specific group of people
People also belong to national, ethnic, professional, and organizational cultures
Points of reference:
National
Geographic
Language
Religion
International business often changes cultures
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9. 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

10. Physical & Environments Personal Communication
Components of Culture
Physical & Environments
Education
Personal Communication
Religion
Social Structure
Manners & Customs
Values & Attitudes
Aesthetics
Culture

11. Values and Attitudes
Values are ideas, beliefs, and customs to which people are emotionally attached.
Example: Islamic law prohibits use of alcohol
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

12. 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

13. Social Structure
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

14. Individual vs. Group Orientation
Group societies see groups as the primary unit of social organization
Group members
Often form deep emotional attachments
See group membership as all important
Emphasis on the group can be both beneficial and harmful
Strong group identification creates pressure for mutual self-help and collective action
Discourages managers and workers from moving from company to company
Discourages entrepreneurship
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

15. 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.

16. Social Stratification
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

17. Social Stratification Systems
Individuals status with the culture
Managerial groups may be highly valued
Employees may be valued less
Ascribed group memberships
Gender, family, age, caste, and ethnic, racial or national origin
Acquired group memberships
Religion, political affiliations, and professional and other associations
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18. Characteristic-Based Groups
Gender-based groups
China
India
Afghanistan
Saudi Arabia
Age-based groups
Family-based groups
Occupation
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19. Religious and Ethical Systems
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

20. Religious and Ethical Systems
Map 3.1 The Map of World Religions, p. 99

21. Christianity
This is the most widely practiced religion in the world, approximately 20% of the world’s people identify themselves as Christians
Christianity grew out of Judaism and has monotheistic beliefs
Christianity can be subdivided into three separate organizations
The Orthodox church
The Roman Catholic church
Protestants which is an umbrella for several denominations

22. Economic Implications of Christianity
Several sociologists have argued that protestants have made a significant economic impact
Max Weber commented
That business leaders and owners of capital, as well as the higher grades of skilled labor, and even more the higher technically and commercially trained personnel of modern enterprises, are overwhelmingly Protestant.
That Protestant ethics emphasize the importance of hard work and wealth creation (for the glory of God) and frugality (abstinence from worldly pleasures).
That the combination of hard work and the accumulation of capital, which could be used to finance investment and expansion, paved the way for the development of capitalism in Western Europe and subsequently in the United States.

23. Islam
The central principle of Islam is that there is but the one true omnipotent God
Islam requires unconditional acceptance of the uniqueness, power, and authority of God and the understanding that the objective of life is to fulfill the dictates of his will in the hope of admission to paradise
According to Islam, worldly gain and temporal power are an illusion

24. Other major principles of Islam include:
Honoring and respecting parents
Respecting the rights of others
Being generous but not a squanderer
Avoiding killing except for justifiable causes
Not committing adultery
Dealing justly and equitably with others
Being of pure heart and mind
Safeguarding the possessions of orphans
Being humble and unpretentious

25. Economic Implications of Islam
The Koran establishes some explicit economic principles, many of which are pro-free enterprise
The Koran speaks approvingly of free enterprise and of earning legitimate profit through trade and commerce (the prophet Mohammed was once a trader)
The protection of the right to private property is also embedded within Islam
Islam is critical of those who earn profit through the exploitation of others

26. Given the Islamic proclivity to favor market-based systems, Muslim countries are likely to be receptive to international businesses as long as those businesses behave in a manner that is consistent with Islamic ethics

27. Education Education level Brain drain
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

28. Problem of Illiteracy

29. 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

30. Dealing With Cultural Differences
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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31. 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

32. Language Strategies 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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33. Language Groups
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34. Differences in Information and Task Processing
We perceive and reach conclusions differently
Perception of cues; Arabic has more than 6,000 words for camels…
Obtaining information
Low-context cultures (United States)
High-context cultures (Saudi Arabia)
Information Processing
Sequentially or simultaneously
Focused or broad
Handling principles or small issues first
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35. High Context vs Low Context
Low context cultures include Anglos, Germanics and Scandinavians. High context cultures include Japanese, Arabs and French.
Implications
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
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.

36. Individualism vs. collectivism Uncertainty avoidance
Hofstede Framework
Individualism vs. collectivism
Power
distance
Uncertainty avoidance
Masculinity
vs femininity

37. Culture in the Workplace
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
Of considerable importance for an international business with operations in different countries is how a society’s culture affects the values found in the workplace. Management process and practices may need to vary according to culturally determined work related values. For example, if the cultures of the United States and France result in different work-related values, an international business with operations in both countries should vary its management process and practices to account for these differences. Probably the most famous study of how culture relates to values in the workplace was undertaken by Geert Hofstede.44 As part of his job as a psychologist working for IBM, Hofstede collected data on employee attitudes and values for more than 100,000 individuals from 1967 to These data enabled him to compare dimensions of culture across 40 countries. Hofstede isolated four dimensions that he claimed summarized different cultures—power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity.

38. Work-Related Values for 20 Selected Countries
Table 3.1 – Work-Related Values for 20 Selected Countries, p. 113

39. Power Distance & Individualism

40. Power Distance & Uncertainty Avoidance

41. Kluckhohn-Strodtbeck Framework
Relation to nature
Time orientation
Trust and control
Material or spiritual
Responsibility to others
View of personal space

42. Managerial Implications
Cross-cultural literacy
Culture and competitive advantage
Culture and business ethics

43. Keys to Success 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