©2004 Prentice Hall3-1 Joint venture between Volkswagen and the Shanghai Automotive Industry Group

©2004 Prentice Hall3-2 Intellectual Property  Patents  Copyrights  Trademarks  Brandnames Intellectual property often forms the basis of a firm’s competitive advantage!

©2004 Prentice Hall3-3 International Treaties Protecting Intellectual Property Rights  International Convention for the Protection of Industrial Property Rights (i.e., the Paris Convention)  Berne Convention for the Protection of Literary and Artistic Works  Universal Copyright Convention  Trade-Related Intellectual Property Rights agreement

©2004 Prentice Hall3-4 Figure 3.2 Software Revenue Lost to Piracy

©2004 Prentice Hall3-5 Political Risk  Ownership risk  Operating risk  Transfer risk

©2004 Prentice Hall3-6 Table 3.1 Examples of Political Risks  Expropriation  Confiscation  Campaigns against foreign goods  Mandatory labor benefits legislation  Civil wars  Inflation  Kidnappings, terrorist threats, and other forms of violence  Repatriation  Currency devaluations  Increased taxation

©2004 Prentice Hall3-7 Basic Country Knowledge  Is the country a democracy or dictatorship?  Does country rely on free market or government controls?  Does government view foreign firms as positive influence?  Are firm’s customers private or public?  Does government act arbitrarily?  Is existing government stable?

©2004 Prentice Hall3-8 Insurance against Political Risks  Overseas Private Investment Corporation (OPIC)  Multilateral Investment Guarantee Agency (MIGA)

©2004 Prentice Hall3-9 Map 3.2 Countries’ Relative Political Riskiness, 2002

©2004 Prentice Hall3-10 Translation Disasters  KFC’s Finger Lickin’ Good –Eat your fingers off (China)  Pillsbury’s Jolly Green Giant –Intimidating green ogre (Saudia Arabia)  Google Translation Tool Google –“The quick fox jumped over the picket fence.”

©2004 Prentice Hall3-11 Yes and No Across Cultures  Latin America –meaning of “manana”  Japan –meaning of “yes” versus “yes, I understand”

©2004 Prentice Hall3-12 Caterpillar has developed its own simplified language instruction program –Caterpillar Fundamental English

©2004 Prentice Hall3-13 Table 4.1 Forms of Nonverbal Communication_1Nonverbal  Hand gestures  Facial expression  Posture and stance  Clothing/ hair style  Walking behavior  Interpersonal distance  Touching  Eye contact  Architecture/ Interior design  Artifacts and non- verbal symbols  Graphic symbols

©2004 Prentice Hall3-14 Table 4.1 Forms of Nonverbal Communication_2  Art and rhetorical forms  Smell  Speech rate, pitch, inflection, volume  Color symbolism  Synchronization of speech and movement  Taste, symbolism of food, oral gratification  Cosmetics  Sound signals  Time symbolism  Timing and pauses  Silence

©2004 Prentice Hall3-15 Religion  Christianity –Catholicism –Protestant –Eastern Orthodox  Islam  Hinduism  Buddhism 72% of the world adheres to one of these four religions!

©2004 Prentice Hall3-16 Map 4.3 Major World Religions

©2004 Prentice Hall3-17 Two million Muslims annually descend on the Grand Mosque in Mecca, Saudia Arabia as part of the Haij

©2004 Prentice Hall3-18 Values and Attitudes  Values: accepted principles and standards  Attitudes: actions, feelings, and thoughts that result from values –Time –Age –Education –Status

©2004 Prentice Hall3-19 Theories of Culture  Hall’s Low-Context, High-Context Approach  Cultural Cluster Approach  Hofstede’s Five Dimensions

©2004 Prentice Hall3-20 Hall’s Low-Context, High-Context Approach  Low-context: words used by speaker explicitly convey speaker’s message  High-context: the context in which a conversation occurs is just as important as the words spoken; cultural clues are critical to communication

©2004 Prentice Hall3-21 Figure 4.2 High- and Low-Context Cultures GermanSwissScandinavianU.S./ CanadianBritainItalianSpanishGreekArabVietnameseJapaneseKoreanChinese Low Context High Context

©2004 Prentice Hall3-22 Map 4.4 A Synthesis of Country Clusters

©2004 Prentice Hall3-23 Table 4.2 Cultural Differences in Negotiating Styles

©2004 Prentice Hall3-24 Hofstede’s Five Dimensions  Social Orientation  Power Orientation  Uncertainty Orientation  Goal Orientation  Time Orientation

©2004 Prentice Hall3-25 Social Orientation IndividualismCollectivism Relative importance of the interests of the individual versus interests of the group

©2004 Prentice Hall3-26 Power Orientation Power Respect Power Tolerance Appropriateness of power/authority within organizations

©2004 Prentice Hall3-27 Uncertainty Orientation Uncertainty Acceptance Uncertainty Avoidance An emotional response to uncertainty and change

©2004 Prentice Hall3-28 Goal Orientation Aggressive Goal Behavior Passive Goal Behavior What motivates people to achieve different goals

©2004 Prentice Hall3-29 Time Orientation Long-term OutlookShort-term Outlook The extent to which members of a culture adopt a long-term or a short-term outlook on work and life

©2004 Prentice Hall3-30 Figure 4.4 Social Orientation and Power Orientation Patterns

©2004 Prentice Hall3-31 Understanding New Cultures  Self-reference criterion – when we act ignorantly in other cultures.  Cultural literacy – is learned.  Acculturation – is cultural literacy in practice.