International Business

1
International Business

• Chapter Two
• The Cultural Environments Facing Business

2
Understanding Culture

• What is Culture? Sum total of all learned
  activities, a way of life that includes values,
  attitudes, beliefs, lifestyles etc.
• Cultures consist of societies, i.e., relatively
  homogeneous groups of people, who share
  attitudes, values, beliefs, and customs.
• Why an international business manager should
  study the culture of a country?

3
Understanding Culture

• National cultures are dynamic, they evolve over
  time change may occur by choice or by imposition
• The Nation or Nation-State as point of reference
  (identity, symbolism, common history)
• Language as both a diffuser and stabilizer of
  culture (expression, sharing, bond)
• Religion as a cultural stabilizer (beliefs,
  ethics, spiritualism)

4
Behavioral Practices Affecting Business

• Issues in Social Stratification
• Work Motivation
• Relationship Preferences
• Risk-taking Behavior
• Information and Task Processing
• Communications

5
Social Stratification Systems

• Individuals status in a culture
• Open vs. closed societies
• Ascribed and acquired group membership gender,
  age, or family-based groups

6
Work Motivation

• Work vs. leisure-how it affects productivity
• Role of materialism, how it motivates people
• Achievement orientation
• Expectation of success and reward
• Hierarchy of Needs

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The Hierarchy of Needs
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Relationship Preferences

• Power distance, i.e., the psychological and
  social distance between superiors and
  subordinates
• Individualism vs. collectivism
• Individualism represents a desire for personal
  freedom, time, and challenge.
• Collectivism represents a dependence on the
  organization as well as a need for a safe
  environment.
• Role of extended families/clans

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Risk-taking Behavior

• Uncertainty avoidance, i.e., ones tolerance of
  risk
• Trust, i.e., ones belief in the reliability and
  honesty of another
• Future orientation, i.e., the need for immediate
  vs. delayed gratification
• Fatalism, i.e., the belief that life is
  pre-destined, that events are the will of God

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Information and Task Processing

• Perception of Cues
• Obtaining information Low-Context cultures
  explicit, e.g., USA vs. High-Context cultures
  implicit, e.g., Saudi Arabia
• Information processing
• Monochronic work sequentially vs. Polychronic
  multi-task
• Idealism vs. Pragmatism

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Communications

• Spoken and Written Language
• Silent Language of time, distance/space, and
  friendship
• Verbal vs. Nonverbal Language (kinesics body
  language and gestures)
• We need to be sensitive to linguistic differences

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Dealing With Cultures

• Host society acceptance (i.e., accommodation of
  foreigners in a culture)
• A few terms Cultural Distance, Cultural
  Diffusion, Cultural Imperialism, Culture Shock
  and Reverse Culture Shock
• Managerial Orientations Polycentrism,
  Ethnocentrism, Geocentrism

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Strategies for Instituting Change

• Value systems
• Cost-benefit analysis of change
• Resistance to change
• Participation in decision-making
• Reward sharing
• Role of opinion leaders
• Timing
• Opportunities to learn from abroad

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Hofstedes Cultural Value

• Individualism/collective index (IDV) Refers to
  preference of behavior that promotes ones self
  interest. Higher score (e.g., USA) means high on
  individualism.
• Power distance index (PDI) Measures the
  tolerance of social inequality, i.e., inequality
  between superiors and subordinates within a
  social system. Higher score (e.g., Arab
  countries) means more hierarchical.
• Uncertainty avoidance index (UAI) Refers to the
  intolerance of ambiguity and uncertainty among
  members of a society. Higher score (e.g., Greece)
  means less tolerance for uncertainty.
• Masculinity/feminity (MAS) Refers to ones
  desire for achievement and entrepreneurial
  tendencies. Higher score (e.g., Latin culture)
  means more assertiveness and masculinity.
• Future orientation Refers to the future or
  long-term orientation of the society

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Chapter 2 Discussion Questions

• Define culture? Why an international business
  manager should study the culture of a country?
• Explain how the dynamic interplay of nation,
  language and religion shapes the culture of a
  country.
• Explain the six behavioral practices that affect
  the business in a country.
• Explain the three managerial orientations and
  their implications in international business.
• What are the five cultural values of Hofstede?
  Explain.