1. Differences in Culture3
Differences in Culture

2. Differences in Culture
INTRODUCTION
Operating a successful international business requires 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.

3. Differences in Culture
WHAT IS CULTURE?
The fundamental building blocks of culture are values (abstract ideas about what a group believes to be good, right, and desirable) and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations).
The term society refers to a group of people who share a common set of values and norms.

4. Differences in Culture
Value and Norms
Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture
Norms are the social rules that govern the actions of people toward one another and can be further subdivided into 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)

5. Differences in Culture
Culture, Society, and the Nation-State
A society can be defined as a group of people that share a common set of values and norms; that is, a group bound together by a common culture.
There is not strict one-to-one correspondence between a society and a nation-state.
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

6. Differences in Culture
The determinants of culture

7. Differences in Culture
SOCIAL STRUCTURE
A society's social structure is its 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

8. Differences in Culture
Individuals and Groups
The Individual
A focus on the individual, and individual achievement is common in many societies
This contributes to the dynamism of the Western economy, but can lead to a lack of company loyalty and failure to gain company specific knowledge, competition between individuals in a company rather than team building, and a limit on people's ability to develop a strong network of contacts within a firm

9. Differences in Culture
The Group
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

10. Differences in Culture
Social Stratification
All societies are stratified on a hierarchical basis into social categories, or social strata that differs in terms of mobility and significance
Social Mobility
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

11. Differences in Culture
Significance
In cultures where there is a great deal of consciousness over the class of others, the way individuals from different classes work together (i.e. management and labor) may be very prescribed and strained in some cultures (i.e. Britain), or have almost no significance in others (i.e. Japan)
Class consciousness is a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others

12. Differences in Culture
RELIGIOUS AND ETHICAL SYSTEMS
Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacred. The religions with the greatest following are Christianity, Islam, Hinduism, and Buddhism. Confucianism influences behavior and shapes culture in many parts of Asia.
Ethical systems are a set of moral principles, or values, that are used to guide and shape behavior. The ethical practices of individuals within a culture are often closely intertwined with their religion.

13. Differences in Culture
Dominant religions across the world.

14. Differences in Culture
Christianity
Christianity is the largest religion and is common throughout Europe, the Americas, and other countries settled by Europeans
Economic Implications of Christianity:
The Protestant Work Ethic
At the turn of the century Weber suggested that it was the Protestant work ethic (focus on hard work, wealth creation, and frugality) that was the driving force of capitalism

15. Differences in Culture
Islam
Islam extends the underlying roots of Christianity to an all-embracing way of life that governs one's being.
Islamic Fundamentalism
In the West, Islamic fundamentalism is associated in the media with militants, terrorists, and violent upheavals. However, the vast majority of Muslims point out that Islam teaches peace, justice, and tolerance. Fundamentalists have gained political power in many Muslim countries, and have tried to make Islamic law the law of the land.
Economic Implications of Islam
In 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. While Islam is supportive of business, the way business is practiced is prescribed.
Country Focus: Islamic Banking in Pakistan
Summary
This feature focuses on changes in the Pakistani banking system as the country adopts Islamic banking methods. Because Islamic banks cannot pay or charge interest, they must find an alternate means of making money. Currently, Pakistan’s banks are experimenting with two different Islamic banking methods, the mudarabah (a contract similar to a profit-sharing scheme), and the murabaha (a contract that involves a mark-up that is paid directly to the bank).
Suggested Discussion Questions
1. Describe the basic difference between Islamic banking and conventional Western banking. Compare and contrast the two Islamic banking methods that are being considered by Pakistan’s banks. Which method is more likely to be adopted? Explain your answer.
2. Discuss the transition process from conventional Western banking to the Islamic system. What challenges should banks be prepared for?

16. Differences in Culture
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 self-denial
Economic Implications of Hinduism
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
Management Focus: McDonald’s and Hindu Culture
Summary
This feature describes the unique challenges faced by McDonald’s in India. The cow is considered sacred in India’s Hindu culture prompting McDonald’s to alter its menu to offer mutton and chicken alternatives to its traditional beef burgers. However, the company recently made news when it was discovered that its French fries were cooked in oil that contained beef extract.
Suggested Discussion Questions
1. How did McDonald’s change its product line to meet the needs of the Indian market? Does the Indian version of McDonald’s still maintain the company’s identity?
2. Did McDonald’s handle the revelation that its French fries contained beef extract well? What would you have done differently?

17. Differences in Culture
Buddhism
Buddhists stress spiritual growth and the afterlife, rather than achievement while in this world
Buddhism, practiced mainly in South East Asia, does not support the caste system, however, so individuals do have some mobility and can work with individuals from different classes

18. Differences in Culture
Confucianism
Confucianism, practiced mainly in China, teaches the importance of attaining personal salvation through right action
The need for high moral and ethical conduct and loyalty to others is central in Confucianism
Economic Implications of 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

19. Differences in Culture
LANGUAGE
Language, both spoken and unspoken, is one of the defining characteristics of culture.
Spoken Language
While English is the language of international business, knowledge of the local language is beneficial, and in some cases, critical for business success
Unspoken Language
Unspoken language such as facial expressions and hand gestures can be important for communication. However, because these can have different interpretations in different cultures, misunderstandings are common

20. Differences in Culture
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.
The knowledge base, training, and educational opportunities available to a country's citizens can also give it a competitive advantage in the market and make it a more or less attractive place for expanding business.

21. Differences in Culture
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.

22. Differences in Culture
IMPLICATIONS FOR MANAGERS
Cross-Cultural Literacy
Individuals and firms must develop cross-cultural literacy
International businesses that are ill informed about the practices of another culture are unlikely to succeed in that culture
Individuals must also beware of ethnocentric behavior, or a belief in the superiority of one's own culture
Management Focus: Cross-Cultural Illiteracy
Summary
This feature describes the debacle resulting from the publication of a print ad depicting a helicopter hovering above a mosque with soldiers being lowered to the roof and a tag line stating “It descends from the heavens, ironically it unleashes hell…Consider it a gift from above.” The ad was commissioned by the aircraft makers, Boeing and Bell Helicopter, and originally was published in the Armed Forces Journal. The ad was seen as conveying the message that the war on terror was really a war on Islam. The two companies withdrew the ad immediately, but not before it was also printed in the National Journal. The two companies publicly apologized for the ad.
Suggested Discussion Questions
1. What message was the ad trying to convey? How was the ad interpreted?
2. What lesson can companies learn from the Boeing and Bell Helicopter incident? How can companies prevent similar misunderstandings?

23. Differences in Culture
Culture and Competitive Advantage
For international companies, the connection between culture and competitive advantage is important because:
the connection suggests which countries are likely to produce the most viable competitors
the connection between culture and competitive advantage has important implications for the choice of countries in which to locate production facilities and do business