International Business

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International Business

• Chapter Two
• The Cultural Environments Facing Business

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Chapter Objectives

• Understand cultural environments
• Explain major causes of cultural difference and
  change
• Examine behavioral factors influencing countries
  business practices
• Examine cultural guidelines for companies that
  operate internationally

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Cultural Influences
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Cultural Awareness

• Some people seem to have na innate ability to do
  and say the right thing at the right time, and
  others offend unintentionally or misrepresent
  what they want to convey.
• Nevertheless, business people can improve their
  awareness their awareness and sensitivity and
  that trainning about others cultures will enhance
  the likehood of succeeding in those cultures

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Definition of Culture

• Hofstede the collective programming of the mind
  which distinguishes the members of one group or
  category from those of another.
• Cultures and Organizations The Softwar of Mind,
  1991
• Terpstra and David Culture is a learned,
  shared, compelling, interrelated set of symbols
  whose meaning provide a set of orientations for
  members of society. These orientations, taken
  together, provide solutions to problems that all
  societies must solve if they are to remain
  viable.
• The Cultural Environment of International
  Business, 1991

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Identification of Cultures

• Cultures are derived with people with shared
  attitudes, values, and beliefs
• People also belong to national, ethnic,
  professional, and organizational cultures
• Points of reference
• National
• Geographic
• Language
• Religion
• International business often changes cultures

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World Output by Language Group
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Major Religions of the World
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Language Groups
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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

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Cultural Factors affecting International Business

• Cultural awareness
• Attitudes, beliefs, preferences
• Religion
• Language
• Identification and dynamics of cultures
• Behavior practices affecting business
• Social stratification,
• Motivation for work
• Relationship Preferences
• Risk-taking behavior
• Strategies for dealing with cultural differences
• Communication skills
• Education
• Research

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Behavioral Practices

• Social Stratification Systems
• Individuals status with the culture
• Based on individual performancecompetence
• Based on physical or cultural heritage
• Ascribed group memberships
• Gender, family, age, caste, and ethnic, racial or
  national origin
• Acquired group memberships
• Religion, political affiliations, and
  professional and other associations

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Characteristic-Based Groups

• Gender-based groupsdifferences in countries
  attitudes and job assignments regarded males and
  females
• Age-based groupsage and wisdom are associated
  seniority-based system
• Family-based groups low trust outside the family
• Occupation in every society certain occupations
  are perceived as having greater economic and
  social prestige than others

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Motivation

• Cultural difference in
• Work ethic Protestant Ethics
• Materialism vs Leisure
• Japan vs. United States
• Europe vs. United States
• Expectation of success and reward
• Assertiveness and Masculinity index
• Japan vs. Sweden

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Hierarchy Comparisons
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Relationship Preferences

• Power distance relationship between superiors
  and subordinates
• Individualism vs. collectivism
• United States is clearly different from Japan
• China is clearly different from Mexico
• Risk-taking behavior
• Uncertainty avoidance
• Trust
• Future orientation
• Fatalism

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Hofstede Model cultural dimension
Power Distance Scale
Power Distance
Low
High
Social integration Little concern for
hierarchical status
Social differential Significant concern for
hierarchical status
Individualism Scale
Individualism
Low
High
Collectivity Concern for group harmony vs.
personal achievement
Self-determination High concern for achievement
and personal growth
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Hofstede Model cultural dimension
Uncertainty Avoidance Scale
Uncertainty Distance
Low
High
Informal relationships Little regard for
structure or control
Formal relationships High regards for structure,
rituals, and procedures
Masculinity Scale
Masculinity
Low
High
Nurturing relationships Little concern for
control, decisiveness, assertive behaviour, or
competition
Controlling relationships Assertiveness,
decisiveness, and competitive behaviour
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Culture-Based Segmentation
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Beauty is altoghether in the eye of the
beholder Margaret Hungerford
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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

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Characteristics of Low-Context and High-Context
Societies

Low Context
High Context
Heterogeneous High social mobility High job
mobility Short-term relationships Insiders and
outsiders not closely distinguished
Homogeneous Little social mobility Little job
mobility Long-term relationships Insiders and
outsiders clearly distinguished
Relative Differences
Lack of widely shared meanings requires
explicit communication and clarity
Widely shared meanings require little
interpretation and allow implicit communications
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After a IB identifies cultural differences in
foreign country

• Must it alter its customary practices to succeed
  there?
• How it can avoid misrepresenting its intent?
• Can individuals overcome adjustments problemswhen
  working abroad?
• What strategies can a IB follow to have its
  innovations accepted?

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Dealing With Cultural Differences

• Spoken and Written language
• Words may mean different things in specific
  contexts
• Translations may led to poor and misleading
• communication
• Silent Languageincorporates a wide variety of
  non-verbal cues intentional or unintentional.
• May lead to several uncomfortable situations
• Be tolerant of differing perceptions of time and
  space
• Understand the message sent by body language
• Be sensitive to accurate translations

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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

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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

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Cultural Dimensions of Consumers Behaviour

• Access Does the consumer have physical and/or
  economic access to the product or service?
• Buying Behaviour How is the decision to buy made
  by consumers in foreign markets?
• Consumption Characteristics What factors drive
  the consumption pattern?
• Disposal How do consumers dispose of the product
  ( in terms of resale, recycling, etc.)?

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Importance of Culture to International Business
Strategies

• Cultural forces are a major factor in shaping a
  companys global strategies
• Cultural analysis often pinpoints market
  opportunities
• Culture highly influence the behaviour towards
  innovations

The Cultural Environment Facing Business
analysis of the case
The case illustrate how cultural differences
affect business practices, and have an effect on
firm performance dimensions - profit, labor
cost, sustainable market position - and marketing
strategies
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Guidelines to Overcome Innovations Resistance
(Terpstra and David, 1991)

• Identify roadblocks toward changes
• Determine which cultural hurdles can be met
• Test and demonstrate the innovations
  effectiveness in the host country
• Seek out these values that can be used to back up
  the proposed innovation

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Cross Culture Negotiation
Stages of a negotiation process

• Non-task soundings first approach to a partner.
  Usually occurs by informal exchange to
  impressions
• Task-related information exchange systematic
  procedures to find complementary, areas of
  business interest, technical procedures
• Persuasion is the process of negotiating itself,
  with a giving-and-take approach, hopefully
  reaching a consensus
• Concessions and agreement formal process of
  settling the negotiation

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Cost/ Benefits of Change-Adaptation

• Efficiency parameters
• Identity of the trademark
• Participation and learning

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Chapter Review

• Understand cultural environments
• Explain major causes of cultural difference and
  change
• Examine behavioral factors influencing countries
  business practices
• Examine cultural guidelines for companies that
  operate internationally

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