2. Cultural Environment of International Business
International Business Strategy
301REN
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Unit: 5 Knowledgecast: 1

3. Module Learning Outcomes
Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process
Assess current developments in the organisational environment and alternative responses related to strategy
This Knowledgecast focuses on functional area excellence with a particular focus on marketing in the international business. The second knowledgecast of the Unit will focus on HRM and Financial Management and Accounting.

4. The Four Risks of International Business
Of the four risks in international business, we will now concentrate on cross-cultural risk.

5. CULTURE
Culture: The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.
Cross-cultural risk: A situation or event where a cultural miscommunication puts some human value at stake. It arises in environments characterized by unfamiliar languages and unique value systems, beliefs, and behaviors.
Greeting ceremonies are a deeply embedded cultural marker and have evolved over many centuries. They specify such behaviors as whether to shake hands, what to say, and how far apart to stand. These cultural conventions may vary as a function of the age, gender, or status of the greeters. Unlike political, legal, and economic systems, culture has proven difficult to identify and analyze, but its effects on international business, as well as on interpersonal exchange, are profound and broad.
Companies want their employees to learn about other cultures and become cross-culturally proficient in order to minimize the risk that can result from cultural misunderstandings. For example, in California’s Silicon Valley, where many IT firms are concentrated, Intel offers a staff seminar called “Working with India” to help employees work more effectively with the estimated 400,000 Indian nationals in the valley.

6. Managers’ (Cultural)Orientations
Ethnocentric orientation: Using one’s own culture as the standard for judging other cultures
Polycentric orientation: A mindset in which the manager develops a greater affinity for the country in which he or she works than for the home country
Geocentric orientation: A global mindset in which the manager is able to understand a business or market without regard to national boundaries
Managers should strive for a geocentric orientation.
Cross-cultural risk is exacerbated by ethnocentric orientation—using one’s own culture as the standard for judging other cultures. Polycentric orientation refers to a host-country mindset in which the manager develops a strong affinity with the country in which she or he conducts business. Geocentric orientation refers to a global mindset in which the manager is able to understand a business or market without regard to country boundaries. Managers with a geocentric orientation make a deliberate effort to develop skills for successful social behavior with members of other cultures. They adopt new ways of thinking, learn to analyze cultures, and avoid the temptation to judge different behaviors as somehow inferior.

7. Key issues-Culture Is…
Not right or wrong: It is relative. There is no cultural absolute. Different nationalities simply perceive the world differently.
Not about individual behavior: It is about groups. It is a collective phenomenon of shared values and meanings.
Not inherited: It derives from the social environment. We are not born with a shared set of values and beliefs; we acquire them as we grow up.
Culture is relative; there is no cultural absolute. People of different nationalities simply perceive the world differently. For instance, in many countries, nudity is entirely acceptable on TV. In Japan and Turkey, wearing shoes in the home is taboo.
Culture is about groups. It refers to a collective phenomenon of shared values and meanings. Thus, while culture defines the collective behavior of each society, individuals often behave differently. For example, in most countries, men wear their hair short. But a some men have very long hair and stand out among their peers.
Culture is derived from the social environment. People are not born with a shared set of values and attitudes. Children gradually acquire specific ways of thinking and behaving as they are raised in a society. For example, in the United States, children usually acquire the values of individualism and Western religion, such as Christianity or Judaism. But in China, children learn to depend on family members and acquire values based on Confucianism.

8. Culture as an Iceberg
Many aspects of culture are not easily seen or understood. While a culture’s literature or religion can be seen, beliefs about right and wrong and family relationships are more difficult to understand.

9. Impact of Culture on Managerial Tasks
Developing products and services
Preparing advertising and promotional materials
Preparing for overseas trade fairs and exhibitions
Screening and selecting foreign distributors
Communicating and interacting with foreign partners
Negotiating and structuring ventures
Interacting with current and potential customers from abroad
Culture should be considered in many aspects of international business, including product development, promotional material, negotiations, and customer interaction, among others.

10. Some Cultural Differences in Entrepreneurship
It is said that when someone starts a new business…
in Hong Kong, the whole family works ceaselessly to make it a success.
in the United States, friends put up their money for the entrepreneur.
in Turkey, friends will ask the entrepreneur to hire their sons and nephews.
in India, the administrative system will impose a staggering amount of red tape.
Entrepreneurship has different results depending on the culture. In Hong Kong, the extended family helps, while India imposes many regulatory barriers.

11. Interpretations of Culture
Stereotypes are generalizations that may or may not be factual, often overlooking real, deeper differences.
People from the United States are said to be:
Argumentative and aggressive when compared to Japanese people, who tend to be reserved and humble.
Individualistic lovers of personal freedom when compared to Chinese people, who tend to be group oriented.
Entrepreneurial when compared to Saudi Arabian people, who use time-honored methods to get things done.
Direct and interested in immediate returns when compared to Mexican people, who invest time in building relationships.
Stereotypes are generalizations that may or may not be true. For example, some consider Americans to be argumentative and direct and Japanese to be reserved.

12. More on Culture Idioms that Symbolize Cultural Values
Virtually all countries have idioms, as seen on this slide.

13. Language as a Key Dimension of Culture
Language is the “mirror” or expression of culture; it is essential for communications and provides insights into culture.
Linguistic proficiency is a great asset in international business.
Language has both verbal and nonverbal components (i.e., facial expressions and gestures).
There are nearly 7,000 active languages, including over 2,000 in both Africa and Asia.
A great asset when doing business in other countries is being fluent in the host country's language, which greatly enhances communications.

14. Blunders in International Advertising
Salem cigarettes was embarrassed in Japan when this translation hit the airwaves.

15. Examples of Differences in Meaning Between British and U.S. English
“Windscreen” means a windshield in the UK, but is taken more literally in the U.S.

16. Knowledgecast Summary
Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process
Assess current developments in the organisational environment and alternative responses related to strategy
MAXIMUM THREE LEARNING OUTCOMES TO REVIEW: ONE REVIEW SUB BULLET PER LEARNING OUTCOME

18. Seminar Article Review
M. Ayhan Kose and Eswar S. Prasad (2010), Emerging Markets Come of Age, Finance and Development Journal, 2010
Prepare to review this article in your seminar for this unit. You should make written notes to bring to the seminar to support your contributions.
Guide Questions.
What are the key changing drivers of global growth?
Are emerging economies really in control of their destiny ? WHY?
What are the factors responsible for the relative resilience of emerging economies during the global recession

19. Group Activity Environmental Audit – Preparation
Assignment Preparation – Research
You have an opportunity to use this time to continue to gather information regarding the environmental audit of your case study organisation, which will be invaluable in preparing you for the first assignment.
Assignment Preparation – Rehearsal
You should also use this opportunity to rehearse your presentation of finding from the environmental analysis of your case organisation in a mock presentation.
Remember to have several practice sessions and reflect on your individual and group performance.