1. DIFFERENCES IN CULTURE

2. 3-2 What Is Cross-Cultural Literacy?  Cross-cultural literacy is 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. 3-3 What Is Culture?  Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living where  values are abstract ideas about what a group believes to be good, right, and desirable  norms are the social rules and guidelines that prescribe appropriate behavior in particular situations  Society refers to a group of people who share a common set of values and norms

4. 3-4 What Are Values And Norms?  Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture  Norms include  folkways - the routine conventions of everyday life  mores - norms that are seen as central to the functioning of a society and to its social life

5. 3-5 What Is A Social Structure?  Social structure refers to a society’s basic social organization  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

6. 3-6 How Are Individuals And Groups Different?  A group is an association of two or more people who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other’s behavior  In Western societies, there is a focus on the individual  individual achievement is common  dynamism of the U.S. economy  high level of entrepreneurship  But, creates a lack of company loyalty and failure to gain company specific knowledge  competition between individuals in a company instead of than team building  less ability to develop a strong network of contacts within a firm

7. 3-7 How Are Individuals And Groups Different?  In many Asian societies, the group is the primary unit of social organization  discourages job switching between firms  encourages lifetime employment systems  leads to cooperation in solving business problems  But, might also suppress individual creativity and initiative

8. 3-8 What Is Social Stratification?  All societies are stratified on a hierarchical basis into social categories, or social strata  Must consider 1.The degree of social mobility - the extent to which individuals can move out of the strata into which they are born  caste system - closed system of stratification in which social position is determined by the family into which a person is born  change is usually not possible during an individual's lifetime  class system - form of open social stratification  position a person has by birth can be changed through achievement or luck 2.The significance attached to social strata in business contacts  Class consciousness is a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others

9. 3-9 What Is The Role Of Education In Culture?  Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society  important in determining a nation’s competitive advantage  general education levels can be a good index for the kinds of products that might sell in a country

10. ATTITUDES TOWARDS CULTURE (Cavusgil, Knight, Riesenberger, 2008):  Ethnocentric Orientation: Using own cultures as the standard for judging other culture.  Polycentric orientation: A host –country mindset where the manager develops a greater affinity with the country in which she or he conducts business.  Geocentric orientation: a global mindset where the manager is able to understand a business or market without regard to country business boundaries.

11. Ten categories to study culture (Harris, 2002) : 1.Sense of self and space: one's sense of self within a group - independence or interdependence, formality or informality, etc.? What constitutes adequate space between individuals, such as distance or closeness, reserve or intimacy, withdrawal or openness Eg: Brazilian and Greeks. 2.Communication and language: Why a major part of international marketing activities?  Making available of product alone is not enough; it is necessary to provide information.  Export marketing communication is cross-cultural communication. Eg: India many languages.  Different nation to be culturally similar. Eg: farmer in EU use of tractors for the same purposes under same conditions 3-11

12. 3-12 What Is The Role Of Language In Culture?  Language - the spoken and unspoken (nonverbal communication such as facial expressions, personal space, and hand gestures ) means of communication  One of the defining characteristics of culture  countries with more than one language often have more than one culture  English is the most widely spoken language in the world  Chinese is the mother tongue of the largest number of people  English is also becoming the language of international business  knowledge of the local language is still beneficial, and in some cases, critical for business success  failing to understand the nonverbal cues of another culture can lead to communication failure

13.  They may interact with each other as well as have independent effects  Some govt prohibit foreign language. Eg: Germany - an advertisement can be run in English for a raincoat made in the UK  South Korea: comparing two different product is illegal.  Countries are prohibiting the promotion of tobacco.  India cable and TV Act prohibits advertisement on race, caste, colour, creed and nationality.  In 1999 Sweden and Norway banned all advertisement to children.  Greece banned TV advertising of toys for 5 min before and after. 3-13

14.  French and Italian people use their hands more than American do  Sloppy attire (appearance) may be more offensive in some countries than in others  South American and Greeks feel more comfortable when standing or sitting closer to others  Mcdonnel Douglas Corporation brochure sent to India turned out to be Pakistani men not Indians.  Marlboro man projected a strong masculine image not successful in Hong Kong. 3-14

15. 3. Dress and appearance: Dress requirements for various events and subcultures, such as in business or religious practice? Appearance: includes physical attire and grooming Chronemics: the timing of verbal exchanges Haptics: the use of touch while conversing Kinesics: the movement of part of the body to communicate Oculesics: the use (or avoidance) of eye contact Olfaction: the action of smelling Proxemics: the use of space in communication

16. 4.Food and feeding habits: Manner in which food is selected, prepared, presented, and eaten What utensils are used or not, such as cutlery, chop sticks, or just hands 5.Time and time consciousness: Is the sense of time exact or relative, precise or casual? 6.Relationships: How are individual or organizational relationships determined (e.g. age, gender, degree of kindred, status, wealth, power, etc.) What designations, rank, or protocols are evident? 3-16

17. 7.Values and norms What priorities seem evident in group behaviour Are materials, or money of greater value than affection and friendship, creative arts and spiritual development, etc.? What conventions are observed (honesty or duplicity, rituals and gift-giving, action and meditation, respect and deference, privacy and sharing, environmental sensibilities, etc.) 8.Beliefs and attitudes Dominant religion or religious practice evident? 3-17

18. Christianity: 20% identify themselves as Christians.  Growing in Africa, Capitalism emerged in western Europe.  Relationship between Protestantism and emergence of modern capitalism. Combination of hard work and accumulation of wealth. Islam: second largest religion, has roots in both Judaism and Christianity.  Those who pursue riches on earth may gain them, but those who forgo worldly ambitions seeks favour of Allah.  Koran speaks of free enterprise and of earning legitimate profit through trade and commerce. 3-18

19. Hinduism: 750 millions  Believe in karma – spiritual progression of each person’s soul.  Emphasis that individual should not be judged by their material achievement but by their spiritual achievements.  Pursuit of material well-being as making the attainment of nirvana more difficult. Buddhism: 350 millions  Suffering originates in people’s desires for pleasure.  Emphasis on wealth creation that is embedded in Protestantism is not found in Buddhism 3-19

20. Confucianism:  Was the official ethical system in china.  Followed in Japan, Korea and China  Attaining personal salvation through right action.  Three central values in Confucian system: loyalty, reciprocal obligation and honesty in dealings with others. 3-20

21. SYMBOLS:  Successful communicator depends upon symbols as a means of establishing empathy with another person.  In china: light and bright colours by young people, plainer and deeper colors by their elders  Yellow is imperial colour,  Purple noble colour in Japan and death in Myanmar and some Latin American countries.  Green symbolizes nationalism in Egypt and this colour should be used only with great care  comparing people to animals, or utilizing animals in cartoons advertisements – Buddhist & Reincarnation.  Care should be taken not to offend sensibilities of the audience  US company used deer as a sign as masculinity however found that deer to be street name for homosexual.  Owl in promotion in India: symbol for bad luck. 3-21

22. 9.Mental processes and learning: What differences do you observe in the way this people thinks and learns What rewards or punishments are provided for learning or not learning? Who is excluded or delimited in the pursuit of educational opportunity? 10.Work habits and practices: At what stage of work development does this people seem to be (e.g. hunter/gatherers, farming/agricultural, industrial/factory, post-industrial/technical or information oriented)? Group's attitude toward work or labour? What are its dominant type of work, division of work, work habits and practices? 3-22

23. 3-23 How Does Culture Impact The Workplace?  Management processes and practices must be adapted to culturally-determined work-related values  Geert Hofstede identified four dimensions of culture 1.Power distance - how a society deals with the fact that people are unequal in physical and intellectual capabilities 2.Uncertainty avoidance - the relationship between the individual and his fellows 3.Individualism versus collectivism - the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity 4.Masculinity versus femininity -the relationship between gender and work roles

24. 3-24 Was Hofstede Right?  Hofstede later expanded added a fifth dimension called Confucian dynamism  captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors  Hofstede’s work has been criticized because  made the assumption there is a one-to-one relationship between culture and the nation-state  study may have been culturally bound  used IBM as sole source of information  culture is not static – it evolves  But, it is a starting point for understanding how cultures differ, and the implications of those differences for managers

25. 3-25 What Do Cultural Differences Mean For Managers? 1.It is important to develop cross-cultural literacy  companies that are ill informed about the practices of another culture are unlikely to succeed in that culture  managers must beware of ethnocentric behavior, or a belief in the superiority of one's own culture 2.There is a connection between culture and national competitive advantage  suggests which countries are likely to produce the most viable competitors  has implications for the choice of countries in which to locate production facilities and do business

26. CULTURE AND THE WORK PLACE: Japanese: - well prepared - purchasers role is predominant - very sensitive emotionally - conceal their true emotions (Burt, 1984) - within the negotiating group, power and roles are difficult to identify - Americans would see ambiguity as a sign of weakness and lack of masculinity and assertiveness - Japanese are very long term oriented. Banks/ shareholders don’t strive for quick return. 3-26

27. AMERICAN STYLE National Characteristics - individualism - ability, competence, decision making, and implicit communications Qualities: - serious, pragmatic, accurate. - autonomy of maneuver within set parameters - speed of negotiation (Beliaev et al 1985) - failure to take account of other cultures - ethnocentric missionaries (Tung 1984) - convinced their way is best way. - attention to facts and evidence - positive mental attitude - frankness and sincerity - always make the first move, hoping for reciprocation. - naiveté usually in their openness and being taken advantage of. 3-27

28. BELIEFS: - equality between buyer and seller (Alder 1986) - personal assertiveness makes them appear tough and little sympathy for anyone who loses - contract oriented - short term oriented (quarterly reviews) - time restricted GERMAN STYLE - formal - respect for accepted rules - slow decision making pace - machine is well oiled - large no. of negotiators required - sincere, dislike flippancy - strict time keeping 3-28

29. - explicit communication that is monochromic - low levels of emotion, and distance respected - feel a personal relationship may interfere with result of their work. (Schnidt 1979) - Germans are both admired and disliked. BARZINI (1983): ‘GERMANS ARE: - arrogant, tactless, and obtrusive. - pursue excellence in almost all fields - treat Germans as individuals’ 3-29

30. BRITISH STYLE - affected by their tradition of diplomatic negotiation - a soft sell approach (Cater, 1983) - British reserve, and ‘stiff upper lip’ - confidence, restraint, and calmness is required by sellers to the British. - never be pushy in negotiations - less motivated by money - high levels of administration - seller must be careful not to annoy buyer - turn up too often, too many proposals, or adopting an attitude which is action oriented. - THEY ARE NOT AMERICANS! 3-30

31. - indirect in communication - style of communication important for style’s sake FRENCH STYLE - difficult to negotiate with - ideologists - find it difficult to accept facts - consider themselves to be experts, although they tend to be amateurish, and inadequately prepared. (Weiss and Stripp 1985) - competitive and inherently confrontational - emotional and theatrical in negotiations - social class remains an important factor 3-31

32. - centralised nation - Paris based decision making - very high power distance society - power display may be exacerbated to the detriment of politeness and courtesy - enjoy negotiation for negotiation’s sake - stalemates - no. of cigarettes per hour is counted - strong diplomatic background CHINESE STYLE - tactical, skillful, and fairly tough - as hosts, take advantage of their control by dictating pace of negotiations, and set agenda. 3-32

33. - always allow Americans to start - proposals put to them become starting point of negotiations. - deliberately adopt passive attitude - never show enthusiasm, impatience. Poker faced. - never shy away from appearing manipulative - always seek concessions - attribute an exaggerated importance to minor details - bureaucratic - strong governmental control - always exaggerate importance of dealing with a large population, even though per capita spend is low (Eiteman 1990) 3-33

34. - use time shrewdly, turn deadlines to their advantage MIDDLE EAST STYLE - Arab-Islamic not Persia, which is Shi’ite Islam, but is not Arab, and not Turkey, which is Ottoman and Islamic, but not Arab. - There are Christian Minorities (and Jewish) - Essentially, there are Arabs who are not Muslims, and Muslims who are not Arabs. - Knowledge of ‘concrete territorialities’ ie, the sub group of the negotiator is essential. - The role of intermediaries is very important - the majority of people speak English or French 3-34

35. - they understand Europeans - the pride of the person you are dealing with must be truly respected - great deal of emotion, theatrical play interspersed with true pragmatism, which can be bewildering - ‘riba’ meaning interest, is literally mentioned in The Koran as being forbidden. RUSSIAN STYLE - lacks basic understanding of economics - low level of entrepreneurship - negotiators tend to view adversaries concessions as weaknesses - make minimal concessions and ignore deadlines ( Cohen 1980, Graham 1992) - Undergoing fundamental transition. 3-35

36. Conclusions: … the secret of success for winning in the new economy is to manage cultural diversity with information, intelligence, a critical and demanding attitude, patience and, above all, with much respect for and understanding of the culture of others. 3-36

37. 3-37 WATCH THE VIDEO  Fiat’s acquisition of one third of Chrysler means that the American company will now be led by an Italian CEO.  What challenges do you see for the restructured Chrysler Group as it tries to mesh operating styles and organizational cultures?