1. Fundamentals of International Business

CHAPTER 3:
What Is Culture?
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

2. Fundamentals of International Business
Key Terms
culture
subculture
counterculture
rationalization
monochronic
polychronic
spatial perception
cultural dimensions
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

3. Fundamentals of International Business
Chapter Objectives
By the time you finish this chapter, you should be able to:
Analyze the ways in which cultural factors influence international business methods and operations
Analyze differences across cultures in perceptions, interpretations, and attitudes that might affect how individuals work in another country
Compare management and negotiation strategies in other countries with those in Canada
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

4. Fundamentals of International Business
Culture Defined
Culture
The knowledge, experience, beliefs, values, attitudes, religion, symbols, and possessions acquired by a group of people who have lived in the same region or country for generations.
Culture is transmitted from one generation to the next through education and by example.
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Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

5. Fundamentals of International Business
Culture Defined
Subculture
A cultural group within a larger or predominant culture, distinguished from it by factors such as class, ethnic background, and religion, and unified by shared beliefs and interests.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

6. Fundamentals of International Business
Culture Defined
Counterculture
A culture that has values or lifestyles that are in opposition to those of the current accepted culture. Members of a counterculture openly reject the established cultural values that surround them.
Examples of countercultures include punk, emo, nu metal, and gangsta rap.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

7. Fundamentals of International Business
Cultural Differences
Cultural determinants
The main factors that shape the culture of a specific group. These include religion, politics, topography, climate, and history.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

8. Fundamentals of International Business
Cultural Differences
The Culture of Saudi Arabia
Revolves around the religion of Islam
Activity stops five times a day for prayer
Friday is the holiest day for Muslims; weekend begins on Thursday and ends on Saturday
Clothing is loose and flowing as climate is extremely hot
Women must wear clothing that leaves only the hands, feet, and face bare
Criminal cases are tried under sharia courts, which enforce a strict, conservative version of Sunni Islam
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Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

9. Fundamentals of International Business
Cultural Differences
The Culture of Japan
Predominant religious beliefs are Shintoism and Buddhism
Belief in the “natural order of things” has translated into hierarchical relationships among people
Western culture is embraced, but traditional Japanese culture is still dominant in terms of food choices, sports, and entertainment
Definite sense of etiquette and rules of behaviour
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Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

10. Cultural Awareness and Business
Canadian firms that want to “go global” must determine the extent and importance of cultural differences between Canada and their target nations.
They must decide whether and to what extent products and processes can be adapted to a foreign environment.
Some cultural traits can be studied and learned; others can only be understood by living in a country and experiencing the culture first-hand.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

11. Cultural Awareness and Business
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

12. Cultural Awareness and Business
Extent of Foreign Operations
Level of cultural awareness depends on how much business a company does in a foreign country and the type of business it does there.
Primarily domestic operations that export to only one or two foreign markets don’t need to be as conscious of cultural differences as businesses that have manufacturing, retail, and other interests in another country.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

13. Cultural Awareness and Business
Control of Foreign Operations
Companies that have branch plants or distribution outlets in other countries that are managed by local people do not need to have as much knowledge about cultural differences.
If all of a business’s foreign dealings are handled domestically, the required level of cultural awareness is high.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

14. Cultural Awareness and Business
Degree of Cultural Differences
If the culture of the foreign market is similar to Canadian culture, companies do not need to spend much time examining cultural differences.
When the language, habits, beliefs, and attitudes of a culture are markedly different from Canada’s, it is important to study the culture of the foreign market.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

15. Cultural Awareness and Differences
Number of Foreign Operations
Companies conducting business in several foreign markets must be aware that each country has a distinct culture.
The more operations a business has in foreign markets, the greater the need for cultural knowledge.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

16. The Impact of Culture on International Business
Impact of Culture in Business
Culture’s role in business can be as important as the influence of tariffs, legal regulations, and competition.
Failure to consider that influence could ruin a negotiation, derail a marketing campaign, and cause labour unrest.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

17. The Impact of Culture on International Business
Culture has a direct impact on products.
It is important to consider factors such as climate and religious beliefs when considering entering a foreign market. For example, there is no market for Canadian pork in Israel, as Jewish culture forbids eating this product.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

18. The Impact of Culture on International Business
Culture also has a direct impact on services.
Canada’s financial service industry has successfully entered foreign markets.
As attitudes towards money are often culturally determined, Canadian banks in foreign countries must understand their clients’ culture to meet their savings goals.
For example, many Japanese families save for specially- made kimonos for their daughters.
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Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

19. The Impact of Culture on the Labour Market
The Canadian government, influenced by labour unions and cultural values, regulates the labour force:
Provides minimum wage
Mandates workplace safety
Prevents discrimination
legislates holidays and hours of work
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

20. The Impact of Culture on the Labour Market
Rationalization
Any attempt to increase a company’s effectiveness or efficiency, including downsizing, cutbacks, layoffs, and relocating corporate functions and activities to countries that have cheaper labour and few or no union problems.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

21. The Impact of Culture on the Labour Market
Not all countries share Canada’s values in terms of labour and the workplace. Canadian business people may encounter differences in the following areas:
Child labour
Discrimination
Wages
Standards and practices
Indigenous cultures
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

22. The Impact of Culture on the Labour Market
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

23. Business Meetings and Negotiations
Every country has a meeting culture that is
based on the following factors:
Time perception—monochronic or polychronic
Spatial perception—individual comfort levels with personal space and physical contact
Non-verbal communication—eye contact and body language
Business etiquette—appropriate topics of conversation, whether or not you should present a gift, etc.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

24. Business Meetings and Negotiations
Members of different cultures perceive time in
one of two ways:
Monochronic
Time is seen as linear and sequential, and focus is placed on one thing at a time in a logical progression.
Polychronic
Time is seen as involving many things happening simultaneously with the participation of many people. Time is flexible, and schedules are not of primary importance.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

25. Business Meetings and Negotiations
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

26. Culture’s Influence on the Workplace
Cultural dimensions (identified by Geert Hofstede)
Power Distance (PDI)—how the difference in power between people is perceived
Uncertainty Avoidance (UAI)—how do various cultures adapt to change
Masculinity vs Femininity (MAS)—the degree to which a culture values assertiveness, competitiveness, ambition, and the accumulation of material goods
Individualism vs Collectivism (IDV)—the extent to which people are expected to make their own decisions regarding their choice of education, job, etc.
Orientation (LTO)—the degree to which cultures value short- or long-term goals
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.