1. 6-1 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved.

2. 6-2 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Part Two: The Role of Culture International Management, 5th ed.

3. 6-3 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. International Management, 5th ed. Hodgetts and Luthans Chapter Six Managing Across Cultures

4. 6-4 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved.  EXAMINE the impact of globalization and national responsiveness on international strategic management  DISCUSS cross-cultural differences and similarities  REVIEW cultural differences in select countries and regions, and note some of the important strategic guidelines for doing business in each Objectives of the Chapter

5. 6-5 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Strategy for Managing across Cultures  MNC strategies must address the cultural similarities and differences in their varied markets  Globalization  Production and distribution of products and services of a homogeneous type and quality on a worldwide basis  National responsiveness  Need to understand the different consumer tastes in segmented regional markets and respond to different national standards and regulations imposed by autonomous governments and agencies  Need to adapt tools and techniques for managing the local workforce

6. 6-6 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Figure 6-1 Globalization vs. National Responsiveness National responsiveness (differentiation) Low High Low Globalization (integration) National responsiveness (Multi-domestic strategy) Globalization strategy Mixed strategy (International strategy) Mixed strategy (Transnational strategy)

7. 6-7 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Managing across Cultures (cont.)  Meeting the Challenge  Globalization imperative  Belief that one worldwide approach to doing business is the key to both efficiency and effectiveness  Factors that help develop strategies for different cultures  Diversity of worldwide industry standards  Continual demand by local customers for differentiated products  Importance of being an insider  Difficulty of managing global organizations  Need to allow subsidiaries to use their own abilities and talents and not be restrained by headquarters  Challenges of adjusting global strategies to regional markets  MNC must stay abreast of local market conditions  MNC must know the strengths and weaknesses of its subsidiaries  MNC must give subsidiary autonomy to address local demands

8. 6-8 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cross-Cultural Differences and Similarities  Parochialism  Tendency to view the world through one’s own eyes and perspectives  Problem for managers from advanced economies who believe that their knowledge is sufficient for doing business in less developed countries  Simplification  Process of exhibiting the same orientation toward different culture groups  Orientation reflects one’s basic culture

9. 6-9 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Table 6-1 Six Basic Cultural Variations Orientations Range of Variations What is the nature of people?Good(changeable/unchangeable) A mixture of good and evil* Evil (changeable/unchangeable) What is person’s relationship to nature?Dominant* In harmony with nature Subjugation What is person’s relationship to others?Lineal (hierarchic) Collateral (collectivist) Individualist* What is the modality of human activity?Doing* Being and becoming Being What is the temporal focus of activity?Future* Present Past What is the conception of space?Private* Mixed * Indicates dominant U.S. orientation Public

10. 6-10 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cross-Cultural Differences and Similarities (cont.)  Similarities across Cultures  Some similarities across cultures have been uncovered by researchers  Russian and U.S. managers both:  Carry out traditional management, communication, human resources, and networking activities  Use organizational behavior modification successfully  Korean and U.S. employees both:  Are more committed to the organization when they occupy higher level positions, have more tenure in their position, and are older  Are more committed to the organization when the structure is more employee-focused and the organizational culture is perceived in a more positive light

11. 6-11 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cross-Cultural Differences and Similarities (cont.)  Many Differences across Cultures  MNCs have discovered that they must understand the cultures where they plan to do business and modify their approaches appropriately  Foreign subsidiaries differ in the standards used to:  evaluate personnel  provide wages and benefits  Based on Hofstede’s work, can link cultural clusters to compensation strategies  Useful to develop a contingency model to analyze HRM practices on a country-by-country basis  Conventional wisdom and common assumptions about HRM practices in certain countries often are incorrect

12. 6-12 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Table 6-2 Cultural Clusters Power Uncertainty Distance Individualism Masculinity Avoidance Pacific Rim Hong Kong, Malaysia, Philippines, Singapore + - + - Japan + - + + South Korea, Taiwan + - - + EU and United States France, Spain + + - + Italy, Belgium + + + + Portugal + - - + Greece + - + + Denmark, Holland - + + - Germany - + + + Great Britain, Ireland, United States - + + -

13. 6-13 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cultural Differences in Selected Countries and Regions  Doing Business in China  China is trying to become a power in the world economy  Still difficult for foreign MNCs to do business in China or to make a profit  Technical competence is the primary criterion for doing business in China  Time is the major cultural difference between many Western countries and China  Guanxi  Good connections that result in lower costs, increased business, greater prospecting opportunities, and facilitation of future transactions

14. 6-14 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cultural Differences in Selected Countries and Regions (cont.)  Doing Business in China (cont.)  When dealing with the Chinese, one must:  Be a good listener  Realize that China is a collective society  Understand that the Chinese are less animated than Westerners  Understand that the Chinese place values and principles above money and expediency  Allow Chinese host to signal the beginning of a meeting  Understand that Chinese are slow to decide on a course of action, but stick to the decision once made  Understand that reciprocity is important in negotiations  Not display emotions during negotiations  Rely on a long-term perspective to view negotiations

15. 6-15 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cultural Differences in Selected Countries and Regions (cont.)  Doing Business in Russia  When dealing with the Russians, one must:  Build personal relationships with partners  Use local consultants  Consider business ethics  Be patient  Stress exclusivity  Deal with just one firm at a time  Keep financial information personal  Research the company  Stress mutual gain  Clarify terminology  Be careful about compromising or settling things quickly

16. 6-16 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cultural Differences in Selected Countries and Regions (cont.)  Doing Business in India  Growing number of MNCs have been attracted to India  Government has helped attract foreign investment by lifting bureaucratic restrictions  Most Indian businesspeople speak English  Indians are tolerant of outsiders  When dealing with Indians, one must:  Be on time for meetings  Avoid asking personal questions  Use formal titles when addressing others  Avoid public displays of affection  Use the namaste gesture to greet people

17. 6-17 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cultural Differences in Selected Countries and Regions (cont.)  Doing Business in France  French culture is markedly different from U.S. culture  Social class and status are very important in France  In contrast to Americans, the French are:  More sardonic  More tolerant of different points of view  More inclined to determine a person’s trustworthiness on the basis of personal characteristics rather than accomplishments  Less motivated by competition  More inclined to have highly centralized organizations with rigid structures  Less moved to industriousness and more concerned with the quality of life

18. 6-18 McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc.,All Rights Reserved. Cultural Differences in Selected Countries and Regions (cont.)  Doing Business in Arab Countries  Arab cultures are distinctly different from Anglo cultures  Arabs have a different understanding of time  Less commitment to punctuality  Arabs are fatalistic  Destiny is in the hands of God, not under the control of an individual  Status in Arabian society determined by family, and not necessarily by personal achievements  Arabs often act on the basis of emotion rather than logic  Arabs rely on elaborate and ritualized greetings  Arabs avoid displays of superiority  Arabs don’t take credit for joint efforts  Arabs rely on administrative channels to get most work done