The Cultural Environments Facing Business

1. The Cultural Environments Facing Business 2-1

2. 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 X √ 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

3. Cultural Orientations • International businesses adopt an attitude towards foreign cultures • Polycentrism: control is decentralized so regional managers can conduct business in a local manner • Ethnocentrism: belief that ones own culture is superior and ignores important factors • Geocentrism: a hybrid of polycentrism and ethnocentrism, the middle ground • Companies MUST evaluate their practices to ensure they account for national cultural norms 2-18

4. Major Cultural Issues • Problems arise in international business when: • Employees have subconscious reactions • Employees assume all societal groups are similar • A company implements practices of work less well than intended • Employees encounter distress because of an inability to accept or adjust to foreign cultural behaviors • Companies/employees are insensitive to foreign consumer preferences 2-3

5. Some Cross Cultural Blunders • American Motors tried to market its new car, the Matador, based on the image of courage and strength. However, in Puerto Rico the name means "killer" and was not popular on the hazardous roads in the country. • A sales manager in Hong Kong tried to control employee's promptness at work. He insisted they come to work on time instead of 15 minutes late. They complied, but then left exactly on time instead of working into the evening as they previously had done. Much work was left unfinished until the manager relented and they returned to their usual time schedule. • A US telephone company tried to market its products and services to Latinos by showing a commercial in which a Latino wife tells her husband to call a friend, telling her they would be late for dinner. The commercial bombed since Latino women do not order their husbands around and their use of time would not require a call about lateness. • Proctor & Gamble used a television commercial in Japan that was popular in Europe. The ad showed a woman bathing, her husband entering the bathroom and touching her. The Japanese considered this ad an invasion of privacy, inappropriate behavior, and in very poor taste.

6. Cultural Awareness Problems that hinder cultural awareness • Subconscious reactions to circumstances • Assumption that all societal subgroups are similar Cultural awareness can be improved • Research descriptions of specific cultures • Observe behavior • Study foreign market directly

7. Company’s need for cultural knowledge increases as it: • Moves from one to multiple foreign functions • Increases the number of countries in which it operates • Moves from similar to dissimilar foreign environments • Converts from external to internal handling of international operations

8. Identification of Cultures • Culture – the set of values, beliefs, rules, and institutions held by a specific group of people • People also belong to national, ethnic, professional, and organizational cultures • Points of reference: • National • Geographic • Language • Religion • International business often changes cultures 2-5

9. Identification and Dynamics of Cultures The nation as a point of reference • Each nation has certain human, demographic, and behavioral Characteristics that give it a national identity • people share values, language, and race • Laws governing business apply along national lines • Problems using a country-by-country approach • individual differences within a country • similarities link groups from different countries Cultural formation and dynamics • Value systems set early in life, but may change • Values may change due to choice or imposition • cultural diffusion vs imperialism • IB increases change in cultures and governments

10. Aesthetics Physical &Environments Values &Attitudes Manners &Customs Education Culture Social Structure PersonalCommunication Religion Components of Culture

11. Values and Attitudes • Values are ideas, beliefs, andcustoms to which people are emotionally attached. Example: Islamic law prohibits use of alcohol • Attitudes are positive or negative evaluations, feelings, and tendencies that individuals harbor toward objects or concepts. Example: Being on time is important to some cultures while it is not important in other cultures

12. Manners: Appropriate ways of behaving, speaking and dressing in a culture. • Customs: Habits or ways of behaving in specific circumstances that are passed down through generations in culture

13. Social Structure • Social structure refers to its basic social organization • Two dimensions that are particularly important include: • The extent to which society is group or individually oriented • Degree of stratification into castes or classes

14. Individual societies tend to view individual attributes and achievements as being more important than group membership Emphasis on individual performance can be both beneficial and harmful Encourages entrepreneurship Can lead to high degree of managerial mobility Group societies see groups as the primary unit of social organization Group members Often form deep emotional attachments See group membership as all important Emphasis on the group can be both beneficial and harmful Strong group identification creates pressure for mutual self-help and collective action Discourages managers and workers from moving from company to company Discourages entrepreneurship Individual vs. Group Orientation

15. Many of the asian cultures are collectivist, while anglo cultures tend to be individualist. • Implications • A market research firm conducted a survey of tourist agencies around the world. The questionnaires came back from most countries in less than a month. But the agencies in the asian countries took months to do it. After many telexes, it was finally done. The reason was that, for example, American tourist agencies assigned the work to one person, while the Filipinos delegated the work to the entire department, which took longer. The researchers also noticed that the telexes from the Philippines always came from a different person.

16. Social Stratification • Social stratification refers to the fact that all societies are stratified on a hierarchical basis of social categories • Strata are typically defined on the basis of characteristics such as family background, occupation, and income

17. Social Stratification Systems • Individuals status with the culture • Managerial groups may be highly valued • Employees may be valued less • Ascribed group memberships • Gender, family, age, caste, and ethnic, racial or national origin • Acquired group memberships • Religion, political affiliations, and professional and other associations 2-8

18. Characteristic-Based Groups • Gender-based groups • China • India • Afghanistan • Saudi Arabia • Age-based groups • Family-based groups • Occupation 2-10

19. Religious and Ethical Systems • Religion: a system of shared beliefs and rituals that are concerned with the realm of the sacred • Ethical systems: a set of moral principles, or values, that are used to guide and shape behavior • Most of the world’s ethical systems are the product of religions • Among the thousands of religions in the world today, four dominate in terms of numbers of adherents: • Christianity with 1.7 billion adherents • Islam with 1 billion adherents • Hinduism with 750 million adherents • Buddhism with 350 million adherents

20. Religious and Ethical Systems

21. Education level Well-educated attract high-paying jobs, while poorly educated attract low-paying manufacturing jobs Brain drain Departure of highly educated people from one profession, geographic region or nation to another Education Cultures pass on traditions, customs, and values through schooling, parenting, group memberships, etc.

22. Problem of Illiteracy

23. Physical and Material Culture These influence a culture’s development and pace of change Topography Physical features characterizing the surface of a geographic region Climate Weather conditions of a geographic region Material Culture Technology used to manufacture goods and provide services

24. Dealing With Cultural Differences • Be tolerant of differing perceptions of time • Understand the message sent by body language • Be sensitive to accurate translations • Spoken • Written 2-14

25. Language as a cultural stabilizer • Culture spreads rapidly when people from different areas speak the same language • Stronger adherence to a culture if it does not share its language with other peoples • English, French, and Spanish are widespread • most of IB conducted in English

26. Language Strategies • Get references for translators • Ensure the translator is familiar with technical vocabulary for the business • Do a back translation • Use simple words • Avoid slang • Repeat words and ask questions • Expect the extra time communication will take 2-16

27. Language Groups 2-17

28. Differences in Information and Task Processing • We perceive and reach conclusions differently • Perception of cues; Arabic has more than 6,000 words for camels… • Obtaining information • Low-context cultures (United States) • High-context cultures (Saudi Arabia) • Information Processing • Sequentially or simultaneously • Focused or broad • Handling principles or small issues first 2-13

29. High Context vs Low Context • Low context cultures include Anglos, Germanics and Scandinavians. High context cultures include Japanese, Arabs and French. Implications • Interactions between high and low context peoples can be problematic. • Japanese can find Westerners to be offensively blunt. Westerners can find Japanese to be secretive, devious and bafflingly unforthcoming with information • French can feel that Germans insult their intelligence by explaining the obvious, while Germans can feel that French managers provide no direction • Low context cultures are vulnerable to communication breakdowns when they assume more shared understanding than there really is. This is especially true in an age of diversity. Low context cultures are not known for their ability to tolerate or understand diversity, and tend to be more insular.

30. Individualism vs. collectivism Power distance Uncertaintyavoidance Masculinity vs femininity Hofstede Framework

31. Culture in the Workplace • Four dimensions of culture • Power distance - cultures are ranked high or low on this dimension based on the particular society’s ability to deal with inequalities • Individualism versus collectivism - this dimension focuses on the relationship between the individual and his/her fellows within a culture • Uncertainty avoidance - this dimension measures the extent to which a culture socializes its members into accepting ambiguous situations and tolerating uncertainty • Masculinity versus femininity - this dimension looks at the relationship between gender and work roles

32. Work-Related Values for20 Selected Countries

33. Power Distance & Individualism

34. Power Distance & Uncertainty Avoidance

35. Relation to nature Material or spiritual Time orientation Responsibility to others Trust and control View of personal space Kluckhohn-Strodtbeck Framework

36. Managerial Implications • Cross-cultural literacy • Culture and competitive advantage • Culture and business ethics

37. Keys to Success • Organizations must understand cultural differences • Organizations must be culturally literate in order to avoid misunderstanding • As companies enter into the international market, localizing business policies and practices can help managers to succeed