Daniels ib14inppt 02
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The Cultural Environments Facing Business
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- 1. International Business Environments & Operations The Cultural Environments Facing Business Chapter 2
- 2. Learning Objectives To understand methods for learning about cultural environments To analyze the major causes of cultural difference and change To discuss behavioral factors influencing countries’ business practices To understand guidelines for cultural adjustment
- 3. Learning Objective 1: To understand methods for learning about cultural environments
- 4. What is Culture? “A system of values and norms that are shared among a group of people and that when taken together constitute a design for living.” - Hofstede, Namenwirth, and Weber Cultural literacy Detailed knowledge of a culture that enables a person to function effectively within it √√ Ethnocentricity Belief that one’s own ethnic group or culture is superior to that of others XX
- 5. Priorities of Cultural Values
- 7. Cultural Factors Affecting International Business Operations Culture is an integral part of a nation’s operating environment every business function is subject to potential cultural differences
- 8. Cultural adjustments Companies need to decide when to make cultural adjustments Fostering cultural diversity can allow a company to gain a global competitive advantage by bringing together people of diverse backgrounds and experience
- 9. Why doesn’t McDonald’s sell Beef and Pork hamburgers in India?
- 10. Cultural Collision Cultural collision can occur ….. when a company implements practices that are less effective when employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors
- 11. Avoiding Cultural Collisions People on both sides of the context barrier must be trained to make adjustments. Background information is essential when explaining anything. Cultural Awareness Do not assume the newcomer is self-reliant. Need to make an effort to become more self- adjusted. Country-by-country analysis can be difficult because subcultures exist within nation- Need to focus on relevant groups
- 12. Learning Objective 2: To analyze the major causes of cultural difference and change
- 13. How Cultures Form and Change Cultural value systems are established early in life but may change through Change by choice Change by imposition (cultural imperialism) Cultural diffusion-contact with other culture Creolization-mixing culture element
- 14. Patterns of Diffusion Diffusion refers to how something spreads. A drop of ink, for example, will spread through a glass of water until the ink and water blend into a single mixture.
- 15. Impact of Cultural Diffusion Positive Impacts Access to information and ideas Access to products New entertainment Negative Impacts Loss of local businesses Introduces new problem Loss of cultural identity
- 16. Cultural Diffusion The spread of cultural ideas, practices, or goods from one group of people to another Oreo sign outside a grocery store in China
- 17. Local businesses Walmart could cause local stores to go out of business, then people are forced to shop at Walmart
- 18. Introduces new negatives (such as health problems) New kinds of soda, such as Sprite and Coca-Cola introduced a huge increase in cavities and tooth decay in China
- 19. Learning Objective 3: To discuss behavioral factors influencing countries’ business practices
- 20. Behavioral PracticesBehavioral Practices Affecting BusinessAffecting Business 1-Issues in Social Stratification 2- Work Motivation 3-Relationship Preferences 4- Risk-taking Behavior 5- Information and Task Processing 6-Communications
- 21. 1- Social Stratification Group affiliations can be Ascribed group memberships based on gender, family, age, caste, and ethnic or national origin Acquired group memberships based on religion, political affiliation, professional association Two other factors that are important education and social connections
- 22. 22 Social Stratification Caste system • A form of closed system of stratification in which social position is determined by: ~ the family into which a person is born • Change in that position is usually not possible during an individual's lifetime Immobility and inherited status • Examples: Japan, India Five different levels of the Indian caste system 1. Priest 2. Ruler, Warrior, Landowner 3. Merchants 4. Artisans, Farmers 5. Outside class system - known as ‘Untouchables’
- 23. Caste Systems •Closed stratification system •Resources and social rewards distributed based on ascribed statuses •Lifelong status determined by that of parents •Prohibits marriage outside of caste •Caste system in India has been challenged but still plays a major role Types of Stratification Systems
- 24. 24 Social Stratification British class system 1. The upper class – involve wealthy and powerful people 2. The upper-middle class – members involve in important occupations and the prestigious professions 3. The lower-middle class – members involve in clerical work and the less prestigious professions Class system • 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 • Examples: US, Britain, China
- 27. Social Stratification: Performance Orientation Employment : In US individual competence --- to avoid discrimination rules are set Whereas in Japan cooperation is stressed Age gender
- 28. 2-Work Motivation: How Much Do People Value Work? The motivation to work differs across cultures Studies show the desire for material wealth is a prime motivation to work people are more eager to work when the rewards for success are high In countries with high work centrality, people tend to work more hours per week High levels of work centrality may lead to dedicated workers
- 29. In some culture LESS value on Leisure time and more on Productivity Example of FRANCE and US (OECD research 30 countries) Among 30 countries, France have most vacations, 135 min per day drinking and eating and 530 min sleeping American spend 74 min per day in eating and drinking and 518 minutes in sleeping
- 30. Work Motivation: Masculinity-femininity index high masculinity score prefers “to live to work” than “to work to live” Austria High Masculinity and Sweden Femininity
- 32. Work Motivation: Hierarchy of needs theory Hierarchy of needs theory fill lower-level needs before moving to higher level needs The ranking of needs differs among cultures
- 33. Maslow's Theory & International Managers Managers in U.S., U.K, Europe and Latin America report that autonomy and self- actualization are the most important but least satisfied needs. Some East Asian managers think that hierarchy of needs is western-oriented and focuses on the individual
- 34. Adapting Maslow's Theory to Asia Nevis suggested changing hierarchy for China: Belonging Physiological Safety Self-actualization There is no esteem need in Nevis' hierarchy.
- 35. 3- Relationship Preferences Relationship preferences differ by culture Power distance high power distance implies little superior- subordinate interaction (e.g., Mexico, South Korea, India) low power distance implies consultative style e.g., Austria, Finland, Ireland)
- 36. Low power distance culture High power Distance culture Boss and employees treat one another as equals + equals rights Employees respect managers and managers expect obedience Decentralisation of the power The ideal boss is a democrat Centralisation of the power The ideal boss is an autocrat - Subordinates expect to be consulted / - Boss expect initiatives from employees - Subordinates expect to be told what to do / - Boss is expected to take all the initiatives People disapprove of status- Narrow range of salaries Privileges for managers are expected- Wide range of salaries Less formal social interaction Formal social interaction
- 37. Relationship Preferences: Individualism and Collectivism High individualismcountries: (e.g., U.S., Canada, Sweden) High collectivism countries: – (e.g., Indonesia, Pakistan)
- 38. 4- Risk Taking Behavior Risk taking behavior differs across cultures Uncertainty avoidance handling uncertainty Trust degree of trust among people Future orientation delaying gratification Fatalism attitudes of self-determination
- 39. Hofstede’s Cultural Dimensions: Uncertainty Avoidance - people feel threatened by ambiguous situations High uncertainty avoidance countries: high need for security- people worried strong belief in experts and their knowledge structure organizational activities more written rules less managerial risk taking (e.g., Germany, Japan, Spain) Low uncertainty avoidance countries: people more willing to accept risks of the unknown less structured organizational activities fewer written rules more managerial risk taking more ambitious employees (e.g., Denmark and Great Britain)
- 40. 5-Information and Task Processing Cultures handle information in different ways Obtaining information low context versus high context cultures Information processing Monochronic versus polychronic cultures Idealism versus pragmatism
- 41. High-context vs Low-context cultures High-context cultures Emphasize on establishing and strengthening relationships in the communication process Non-verbal communication is as important as verbal communication Examples: Asians, Arabians, Latin Americans Low-context cultures Emphasize on exchanging information and is less focused on building relationships Pay more attention on spoken words and less attention on non-verbal communication (body language, eye movement Examples: Americans, Canadians, Australians, Germans
- 42. Monochronic vs. Polychronic Monochronic cultures Like to do just one thing at a time Orderliness They do not value interruptions. The Germans tend to be monochronic Polychronic cultures Like to do multiple things at the same time. A manager's office in a polychronic culture typically has an open door, a ringing phone and a meeting all going on at the same time. Polychronic cultures include the French and the Americans.
- 43. Interactions between types can be problematic. A German businessman cannot understand why the person he is meeting is so interruptible by phone calls and people stopping by. Is it meant to insult him? When do they get down to business? Similarly, the American employee of a German company may be disturbed by all the closed doors - it seems cold and unfriendly.
- 44. 6- Communications Cross border communications do not always translate as intended Spoken and written language Silent language Color Distance Time and punctuality Body language Prestige
- 45. Vocabulary American & British English sometimes have different words for the same things -- AMERICAN BRITISH Apartment Flat Argument Row Lawyer Solicitor Bathroom Loo Can Tin Cookie Biscuit Diaper Nappy Elevator Lift Eraser Rubber Flashlight Torch Fries Chips Gas Petrol Mail Post
- 46. Ways to Avoid Saying No in Japanese
- 49. Spoken and Written -Formality Examples: A written note might say, "Would you like to go out to lunch? “ The person who would write that note, might alternatively say, in person, "You wanna go out for lunch? "
- 50. Spoken Communication Motorola face difficulty assigning cell phone numbers in China because certain sound in Mandarin came out wrong If the number end in 54 7424 You will sound as if you are saying I die, my wife dies and my child dies
- 51. 51 Opening a meeting Germany Formal intro. Sit down. Begin. Finland Formal intro. Cup of coffee. Sit down. Begin. USA UK France Japan Spain/ Italy Number of minutes Informal intro. Cup of coffee. Jokes. Begin. Formal intro. Cup of tea. 10 min small talk. Casual beginning. Formal intro. 15 min small talk. Begin. Formal intro. Protocol seating. Green tea. 15/20 min sm talk. Signal from senior member. Begin. 20/30 min small talk while others arrive. Begin when all are there. 55 1010 1515 2020 2525 Adapted from Richard D. Lewis
- 52. Communications Body Language Is Not A Universal Language
- 56. CROSS-CULTURAL MEANINGS AND ASSOCIATIONS OF INDIVIDUAL COLORS GREEN: Represents danger or disease in Malaysia, envy in Belgium, happiness in Japan and sincerity, trustworthiness in China. BLACK: In western countries black is colour of mourning whereas in some countries is associated with power. WHITE: Symbolizes mourning or death in East Asia, but happiness and purity in Australia, New Zealand and USA
- 57. When United Airlines first started flying from Hong Kong, they gave all of their passengers a white carnation as a complimentary gift. many of passengers refused to accept the gift. The reason for the refusal was that white carnations represent death or bad luck in many parts of Asia. As a result, the airline decided to change the color of the carnations to red.
- 58. Dealing with Cultural Differences Learning Objective 4: To understand guidelines for cultural adjustment
- 59. Do managers have to alter their customary practices to succeed in countries with different cultures? Must consider Host society acceptance Degree of cultural differences and distance- Cultural Friction Cultural Shock-Ability to adjust Reverse culture shock Company and management orientation
- 60. Dealing with Cultural Differences Three company and management orientations Polycentrism business units abroad should act like local companies Ethnocentism home culture is superior to local culture overlook national differences Geocentrism integrate home and host practices
- 61. Strategies for Instituting Change Value Systems Cost-Benefit Analysis of change Resistance to too much change Participation Reward Sharing Opinion Leadership Timing Learning Abroad
- 62. Opinion Leaders An Opinion LeaderOpinion Leader is Someone Who is Knowledgeable About Products and Whose Advice is Taken Seriously By Others. An Opinion LeaderOpinion Leader is Someone Who is Knowledgeable About Products and Whose Advice is Taken Seriously By Others. Have Prescreened, Evaluated, and synthesize Product Information Have Prescreened, Evaluated, and synthesize Product Information Are Similar to the Consumer in Values and Beliefs Are Socially Active in Their Community Are Technically Competent and Have Expert Power Are Often Among the First to Buy New Products Opinion Leaders Opinion Leaders
- 64. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-64 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Notes de l'éditeur
- International Business Environments and Operations 14e by Daniels, Radebaugh, and Sullivan
- The Learning Objectives for Chapter 2 are To understand methods for learning about cultural environments To analyze the major causes of cultural difference and change To discuss behavioral factors influencing countries’ business practices To understand guidelines for cultural adjustment
- Learning Objective 1: To understand methods for learning about cultural environments.
- Culture refers to the learned norms based on values, attitudes, and beliefs of a group of people. Culture can be based on nationality, ethnicity, gender, religion, work organization, profession, age, political party membership, income level, and so on. International business activities incorporate people from all different groups and backgrounds, thus, every business function is subject to cultural differences.
- Most people recognize that cross-country differences exist, but they don’t always agree on exactly what they are. It can be beneficial to foster cultural diversity in some cases. Bringing together people of diverse backgrounds and experience can give companies a deeper knowledge about products and services and ways in which to produce and deliver them.
- But keep in mind that cultural collision can create problems. Companies doing business in another country must determine which of that nation’s business practices differ from their own and then decide what adjustments, if any, are necessary in order to operate efficiently.
- People on both sides of the context barrier must be trained to make adjustments. Background information is essential when explaining anything. Do not assume the newcomer is self-reliant. In order to increase their chance for success, managers need to develop their awareness of and sensitivity to other cultures. They can do this by educating themselves. Gathering some basic research on another culture can be instructive. In addition, managers should consider the information they gather to determine if it perpetuates unwarranted stereotypes, covers only limited facets of a country and its culture, or relies on outdated data. Managers should also observe the behavior of those people who have garnered the kind of respect and confidence they themselves will need. Note though that subcultures do exist within nations and groups from different nations can actually be quite similar. International managers need to focus on relevant groups—differentiating, for example, between the typical attitudes of rural dwellers and those of urban dwellers, or those of young people versus old people.
- Learning Objective 2: To analyze the major causes of cultural difference and change.
- Culture is learned – from parent to child, teacher to student, peer to peer, and so on. So, while cultural value systems tend to be established early in life, they can change. Change can be by choice or it can be imposed – this type of change is called cultural imperialism. Cultural value systems can also change as a result of contact with other cultures. This is known as cultural diffusion. When this change results in mixing cultural elements, the process is known as creolization. Creolization Occurs When Foreign Influences are Absorbed and Integrated With Local Meanings
- Learning Objective 3: To discuss behavioral factors influencing countries’ business practices.
- Social stratification determines an individual’s class, status, and financial rewards within a culture. It’s determined by individual achievements and qualifications, and by affiliation and membership in groups. An individual may belong to a group because of age, gender, family, racial, or ethnic variables. This is known as ascribed group membership. When membership is based on religion, political affiliation, or professional association it’s an acquired group membership. In general, equalitarian societies tend to put more emphasis on acquired group membership. Keep in mind that education and social connections also impact an individual’s rank in a society.
- The desire to work differs across cultures. In countries where material wealth is valued, there is generally a greater motivation to work. This of course, also helps to promote economic development. In fact, the higher level of development that exists in some countries can be explained by the work of Max Weber who suggested that self-discipline, hard work, honesty, and a belief in a just world foster work motivation and, thus, economic growth. Typically, people are also more eager to work when the potential rewards are high. We can also measure attitudes toward work and achievement using the masculinity-femininity index. The degree to which individuals are assertive, confrontational, and aggressive in their relationships with others varies across borders. These attitudinal differences help explain why an international company may encounter managers abroad who behave differently from what it expects or prefers.
- The hierarchy-of-needs theory suggests that people fill lower-level needs before filling higher level needs. An understanding of this theory is helpful to managers as they make decisions regarding reward preferences of employees in different countries. In very poor countries, for example, workers might be motivated with enough compensation to simply satisfy their needs for food and shelter. Workers in other countries may be motivated by other needs.
- Relationships preferences – and more specifically the interactions between bosses, subordinates, and peers – also differ from country to country. Power distance refers to the general relationship between superiors and subordinates. Where it is high, people prefer little consultation between superiors and subordinates. Employees usually prefer one of two management styles: autocratic -ruling with unlimited authority - or paternalistic - regulating conduct by supplying needs. Where power distance is low, they prefer “consultative” styles. Individualism is characterized by a preference for fulfilling leisure time and improving skills outside the organization. It also implies a low preference for receiving compensation in the form of benefits and a high preference for personal decision making and on-the-job challenges. In contrast, collectivism encourages dependence on the organization and a preference for thorough training, satisfactory workplace conditions, and good benefits.
- How people approach risk also varies from country to country. Four types of risks are important: uncertainty avoidance, trust, future orientation, and fatalism. In cultures where there is high uncertainty avoidance employees prefer following set rules even if breaking them may be in the company’s best interest. Similarly, many consumers are not prepared to risk being early adopters of products. In cultures where trust is high, the cost of doing business tends to be lower because managers don’t spend much time fussing over every possible contingency and monitoring every action for compliance with certain business principles. Business decisions can also be influenced by a culture’s attitude toward the future and whether it’s worthwhile to delay gratification in order to invest for the future. Optimistic about the future They think they understand it and can shape it through their actions. Planning, implementing and controlling (as opposed to going with the flow, letting things happen). Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if they’re fatalistic and believe every event in life is inevitable, they’re less likely to accept the basic cause-and-effect relationship between work and reward.
- How information is perceived, obtained, and processed differs from country to country. In low context cultures people generally regard only firsthand information that bears directly on the subject at hand as being relevant. Managers typically spend little time on small talk and tend to get to the point. In contrast, in high-context cultures people see seemingly peripheral information as pertinent and infer meanings from things said either indirectly or casually. In monochronic cultures people prefer to work sequentially. So, for example, a transaction with one customer is completed before dealing with another. But in a polychronic culture, people often feel more comfortable working simultaneously on a variety of tasks, such as dealing immediately with multiple customers who need service. Cultures that prefer to establish overall principles before tackling smaller details take an approach called idealism, while those that focus more on details than on abstract principles take a pragmatic approach. Keep in mind that an individual’s approach to information processing can affect business in a number of ways. In a culture of pragmatists like the United States, for example, labor negotiations tend to focus on well-defined issues—say, hourly pay increases for a specific bargaining unit. However, in an idealist culture like that of Argentina, labor disputes tend to blur the focus on specific demands as workers tend to rely first on mass action—such as general strikes or political activities—to publicize basic principles.
- Communication across cultures can be problematic when communications are not translated with the same meaning as intended. This problem can occur with not only with spoken and written language and but also with silent language. Even a slight misuse of words or phrases can have a significant impact on the meaning of a message. Moreover, it’s important to recognize that even when two countries share a language problems can exist. For example, some 4,000 words have different meanings in British and American English. Silent language refers to a host of nonverbal cues. How these physical cues or “body language” are perceived and interpreted varies between cultures. Many Western countries, for instance, associate black with death ,while white has the same connotation in some parts of Asia. Similar differences exist with perceptions of time and punctuality. In the United States, people usually arrive early for business appointments, a few minutes late for dinner at someone’s home, and a bit later still for large social gatherings. In other countries though, the concept of punctuality in any or all of these situations may be different. The appropriate distance people maintain during conversations and prestige also differs between countries. For Americans, the customary distance for a business discussion is 5 to 8 feet; for personal business, it’s 18 inches to 3 feet. The much smaller distances common in Latin America can make many Americans quite uncomfortable. Likewise, a U.S. manager who places great faith in objects as cues to prestige may underestimate the status of foreign counterparts who don’t value large, plush offices on high floors. A foreigner may underestimate U.S. counterparts who perform their own services, such as opening their own doors, fetching their own coffee, and answering unscreened phone calls. e Chinese and Russians favour less personal space in the business environment than their counterparts in Northern Europe and Canada.
- These images show how a simple gesture is interpreted quite differently around the world.
- BLUE: common corporate color in the U.S. but it is perceived as cold and evil in East Asia but stands for warmth in the Netherlands; coldness in Sweden; death in Iran and purity in India. Blue denotes femininity in Belgium and the Netherlands, but masculinity in Sweden and the USA. YELLOW: Represents warmth in the USA, but unfaithfulness in France. It is associated with jealousy in Russia, but pleasant, happy, good taste, royalty in China. In Brazil purple and yellow are perceived as symbolic of sorrow and despair.
- Learning Objective 4: To understand the guidelines for cultural adjustment.
- So, are managers required to change their customary practices to match those of the host culture? The answer is not always clear. In general, host cultures don’t expect that foreign managers will totally conform with their norms and values, but it is important that they understand and respect the local culture. Managers need to consider how they will be received by the host country, and make adjustments accordingly. In many cases, host countries are willing to view foreigners differently. Managers should also be aware that closely clustered countries may not be as alike as they seem, and so adjustments may be necessary in some cases. Women’s roles and behavior, for example, differ substantially from one Arab country to another even though Arab countries overall are similar culturally. Sometimes, managers going abroad experience culture shock—the frustration that results from having to absorb a vast array of new cultural cues and expectations, and then reverse culture shock when they return home.
- Companies and managers doing business abroad will typically take one of three basic approaches when dealing with foreigners. Those that take a polycentric approach believe that business units abroad should act like local companies. In contrast, those that take an ethnocentric orientation believe that the home culture is superior to the local culture, and therefore national differences can be overlooked. Finally, those that integrate both home and host practices have a geocentric orientation. Managers should recognize that excessive polycentrism or ethnocentrism can be dangerous. A geocentric approach is often the safest.
- Companies that choose a geocentric approach to their operations will often combine both home and host practices requiring that people in both countries adapt to some degree. Companies may face some resistance to these changes, and so must manage the process carefully. There are various ways to implement changes. Companies may need to promote changes in value systems. A cost-benefit analysis of change can reveal whether a change makes sense. Moving too quickly can create additional resistance to change. Many companies find that encouraging stakeholders to become involved in change and sharing the rewards of making changes can be beneficial. Similarly, using the right channels of influence and the right timing can make a big difference in whether change is accepted. Finally, companies should recognize that they can gain important knowledge from other companies in the market. Emulating their methods can often be successful.
- Opinion leaders are product-category or activity-group specific. They tend to have greater product knowledge, more exposure to relevant media, and more gregarious personalities than their followers. They tend to have demographics similar to their followers. A situational variable, product dissatisfaction, motivates many individuals to become temporary opinion leaders. The term market maven is used to describe individuals who are opinion leaders about the shopping process in general.