1. CUTURAL DIMENSIONS OF GLOBAL BUSSINESS

2. Global business different-national differences in political, economic and legal systems.
Differences in culture across and within countries can affect international business.
Success of global business requires cross cultural understanding.

3. In many cases, problems stem from simple ignorance of international culture and its impacts.
Before entering into international business, following aspects are important:
To recognize basic cultural difference
To be aware of potential cultural barriers

4. Definition of culture
“Culture is a complex whole which include knowledge,belief,art,morals,law, customs and other capabilities acquired by man as a member of society “

5. Cross culture is related to how cultural differences across and within nations can affect the way in which business is practiced.

6. Meaning of Culture
Culture is systems of values and norms that are shared among a group of people and that when taken together constitute a design of living .
Values-abstract ideas about what group believes to be good, right and desirable. Values are the building blocks of culture.
Norms – social rules that govern people’s action towards one another.
Norms divided into folkways and mores

7. Culture and workplace
A society’s culture affects values found in work place.
A global business company doing business in different countries have to change management process and practices accordingly.
During international business transactions, culture and its subsequent impacts cannot be ignored ,but should be recognized and understood.

8. Cultural barriers
Culture impacts individual behavior-these effects on behavior present potential barriers to successful international programs.
Cultural barriers divided into two-
First area –corporate culture-addresses the effects of culture on negotiations, management practices and communication.
Second area- business and social etiquette, addresses the area of customs and manners in both the business and social environments.

9. Corporate culture- defined as a company’s shared outlook that determines behavior and actions.

10. Dimensions of Culture
Widely accepted industry tool that is used to measure cultural differences.
One of the commonly used dimension is Greet Hofstede’s cultural dimension which includes:
1. Power distance-PDI
2.Individualism-IDV
3.Masculinity-MAS
4.Uncertainity Avoidance-UAI
5.Long term Orientation -LTO

11. Power distance (PDI)-degree of inequality that exists-and is accepted-especially by the less powerful members of a group ,organization, institution or the society.
High PDI-unequal distribution of power, concern is more for hierarchy, fear to speak up. Communication flows downward and respect upward.
Low PDI-Power is shared and well dispersed and people view themselves as equal.

12. Individualism-IDV-refers to strength of ties people have to others within the community.
High IDV- lose connection with people, little sharing of responsibility.Tendancy to use the “I” form more frequently. In high IDV work place ,employees feel empowered to make their own decisions.
Low IDV – strong group cohesion, tendency to use the “WE” form more frequently. In low IDV work place, employees tend to refer decisions back to their managers.

13. Masculinity –MAS-an indication of the esteem in which the traditional masculine work role model of achievement ,control and power is held.
High MAS – In high MAS work place, there is high level of male dominance and less gender equality.
Low MAS – In a low MAS work place, there is greater equality between males and females and an appreciation of feminine values such as compromise etc.

14. Uncertainty Avoidance Index-UAI-refers to culture’s tolerance for ambiguity , unstructured situations and unplanned events.
High UAI- people with high UAI work well within a structured environment ,under strict laws, rules and guidelines. In high UAI workplace ,employees perform their best with clear directives and follow standards and procedures.

15. Low UAI- people with low UAI can tolerate uncertainty and welcome freedom of opinions, try to have as few rules as possible. In low UAI work place, employees tend to “go with the flow", are more flexible and do not require instructions and rules to perform well.

16. Long-term Orientation –LTO-refers to the degree to which society uphold traditional values.
High LTO – In high LTO workplace, society upholds traditional values, resist change.
Low LTO- In low LTO work place, a society change can occur faster.

17. Hofstede’s study results tell us about the cultural differences.
Cross cultural literacy-Companies going global should have cross cultural literacy –one important danger for companies going abroad for the first time is being ill informed about cross cultural differences.
Global businesses that are ill informed are likely to fail.
Doing business in different cultures require adaptation to confirm with the value systems and norms of that country.

18. The following are sensitive to culture:
(i) The ways in which deals are negotiated
(ii) the right pay system
(iii) organization structure
(iv) relations between management and labor
(v) promotion of products

19. Cultural sensitivity
A sense of empathy ,flexibility and creativity informed by cultural knowledge.
Parochialism is the belief that there is no other way of doing things except that found within one’s own culture, that is, that there is no better alternative.

20. Ethnocentrism is similar to parochialism, and tends to reflect a sense of superiority, and ethnocentric individuals believe that their ways of doing things are the best, no matter which cultures are involved.
Geocentrism is very different to both parochialism and ethnocentrism, reflecting a belief that it is necessary to be responsive to local cultures and markets.

21. The following examples demonstrate how a lack of cultural sensitivity led to failure.
The fast food giant McDonald's spent thousands on a new TV ad to target the Chinese consumer. The ad showed a Chinese man kneeling before a McDonald's vendor and begging him to accept his expired discount coupon. The ad was pulled due to a lack of cultural sensitivity on McDonald's behalf. The ad caused uproar over the fact that begging is considered a shameful act in Chinese culture.

22. When the US firm Gerber started selling baby food in Africa they used the same packaging as in the US, i.e. with a picture of a baby on the label. Sales flopped and they soon realized that in Africa companies typically place pictures of contents on their labels.

23. When colouring in 800,000 pixels on a map of India, Microsoft coloured eight of them a different shade of green to represent the disputed Kashmiri territory. The difference in greens meant Kashmir was shown as non-Indian, and the product was promptly banned in India. Microsoft was left to recall all 200,000 copies of the offending Windows 95 operating system software to try and heal the diplomatic wounds. It cost them millions.