CHAPTER 1

FACTORS THAT INCREASE GLOBALIZATION:

1- Increase in and application of technology.

2- Liberalization of cross-border exchange and resource movement.
3- Development of services that support IB
4- Increase in global competition
5- Changes in political situations and govt. policies
6- Expansion of cross national cooperation.
Gain reciprocal advantages.
Multinational problem solving
Areas outside national territories.
7- Growth of consumer pressure.

COST OF GLOBALIZATION:

1: Threats To National Sovereignty

The question to local objective and policies

The question to small economies’ overdependence.

The question to cultural homogeneity.

2: Environmental Stress

3: Growing Income Inequality and Personal Stress.

WHY COMPANIES ENGAGE IN IB

Expanding sales

Reducing sales

Acquiring resources

MODES OF OPERATION IN IB

Merchandise import and export

Services import export

Investment: FDI FPI

 Chapter 2

Core values are the fundamental beliefs of a person or organization. These guiding principles dictate
behavior and can help people understand the difference between right and wrong.

Peripheral values = Values that reflect, but are not as deeply embedded or as fundamental as,
central values.

Cultural Collision is a clash in cultures or values. Cultural collusion is a situation that plays out in
classrooms where students misbehave while educators implicitly usher out urban school students who
do not bring the proper social/cultural capital to school.

the existence of a variety of cultural or ethnic groups within a society.

"cultural diversity has increased, exposing kids to new tastes and experiences"

Deal-Focus vs. Relationship-Focus – This is the "Great Divide" between business cultures. Deal-
focused (DF) people are fundamentally task oriented while relationship- focused folks are more people-
oriented. Deal-focus people can be assumed as aggressive, bad-mannered, and assertive. On the
contrary, relationship-focus people will concentrate in build strong relationship before jump to the
work part. In addition, relationship-focus people are calmer and more flexible in doing business.

Change by choice may, take place as a reaction to social and economic changes that present new
alternatives. For example, when rural people choose to accept factory jobs, they change their customs
by working regular hours that don't allow the social interaction with their families during work hours
that farm work allowed. Change by imposition, sometimes called cultural imperialism, has occurred, for
example, when countries introduced their legal systems into their colonies by prohibiting established
practices and defining them as criminal.

For example, McDonald's serves neither beef nor pork in India so as not to offend its Hindu and Muslim
populations, and El AI, the Israeli national airline, does not fly on Saturday, the holy day in Judaism. But
not all nations that practice the same religion have the same constraints on business. For example,
Friday is normally not a workday in predominantly Muslim countries because it is a day of worship;
however, Turkey is a secular Muslim country that adheres to the Christian work calendar in order to be
more productive in business dealings with Europe. Areas in which rival religions vie for political control
the resulting strife can cause so much unrest that business is disrupted through property damage,
difficulty in getting supplies, and the inability to reach customers. In recent years, violence among
religious groups has erupted in such countries as India, Iraq, Nigeria, and Northern Ireland.

SOCIAL STRATIFICATION SYSTEM:

A person's ranking is partly determined by individual factors and partly by the person's affiliation or
membership in given groups. Affiliations determined by birth-known as ascribed group memberships-
include those based on gender, family, age, caste, and ethnic, racial, or national origin. Affiliations not
determined by birth are called acquired group memberships and include those based on religion,
political affiliation, and professional and other associations. Social stratification affects such business
functions as marketing. For example, companies choose to use people in their advertisements that their
target market admires or with whom they associate.

Performance Orientation Some nations, such as the United States, base a person's eligibility for jobs
and promotions primarily on competence, creating a work environment driven more by competition
than by cooperation.

Gender-Based Groups There are strong country-specific differences in attitudes toward males and
females.

Age-Based Groups: Many cultures assume that age and wisdom are correlated. These cultures usually
have a seniority-based system of advancement.

Family-Based Groups: In some societies, the family is the most important group membership. An
individual's acceptance in society largely depends on the family’s social status or respectability rather
than on the individual's achievement.

Work Motivation

Materialism and Leisure According to Weber, the Protestant ethic-an outgrowth of the Reformation
reflected the view that work is a way to gain salvation. Adhering to this view, people preferred to
transform productivity into material gains rather than into leisure time.

Expectation of Success and Reward One factor that motivates a person's behavior toward working is
the perceived likelihood of success and reward. Generally, people have little enthusiasm for efforts that
seem too easy or too difficult, where the probability of either success or failure seems almost certain.

Assertiveness The average interest in career success varies substantially among countries. For example,
one study compared the attitudes of employees from 50 countries on what it called a Masculinity and
femininity index. Employees with a high masculinity Score were those who admired the successful
achiever, had little sympathy for the unfortunate, and preferred to be the best rather than on a par with
others. They had a money-and-things orientation rather than a people orientation, a belief that it is
better "to live to work" than "to work to live," and a preference for performance and growth over
quality of life and the environment.

Need Hierarchy The hierarchy of needs is a well-known motivation theory. According to the theory,
people try to fulfill lower-order need sufficiently before moving on to higher ones.

Relationship Preferences

Power Distance:

Power distance is a term describing the relationship between superiors and subordinates. Where power
distance is high, people prefer little consultation between superiors and subordinates-usually wanting
and having an autocratic or paternalistic management style in their organizations. Where power
distance is low, people prefer and usually have consultative styles.

Dutch- low power distance

Morocco- high power distance.

Individualism Versus Collectivism:

Studies have compared employees' inclinations toward individualism or collectivism. Attributes of

individualism are low dependence on the organization and a desire for personal time, freedom, and
challenge. Attributes of collectivism are dependence on the organization and a desire for training, good
physical conditions, and benefits.

China, Mexico- collectivism

Risk-Taking Behavior

Uncertainty Avoidance Studies on uncertainty avoidance show that in countries with the highest scores
on uncertainty avoidance, employees prefer set rules that are not to be broken even if breaking them is
sometimes in the company's best interest. Further, these employees plan to work for the company a
long time, preferring the certainty of their present positions over the uncertainty of better advancement
opportunities elsewhere.

Denmark, UK- low Belgium, Portugal- high

Trust

Future Orientation:

Countries also differ in the extent to which individuals live for the present rather than the future
because they see risks in delaying gratification and investing for the future. The future orientation is
higher in Switzerland, the Netherlands, and Canada than in Russia, Poland, and Italy.

Fatalism

If people believe strongly in self-determination, they may be willing to work hard to achieve goals and
take responsibility for performance. But a belief in fatalism, that every event is inevitable, may prevent
people from accepting this basic cause-and-effect relationship. The effect on business in countries with
a high degree of fatalism is that people plan less for contingencies.

Information and Task Processing

Cultures such as those in northern Europe are called monochronic; in such cultures, people prefer to
work sequentially (people will finish with one customer before dealing with another. Conversely,
polychronic southern European are more comfortable when working simultaneously on all the tasks
they face. For example, they feel uncomfortable when not dealing immediately with all customer who
need service.

Similarly, some cultures will determine principles before they try to resolve small issues (idealism),
whereas other cultures will focus more on details rather than principles (pragmatism). From a business
standpoint, the differences manifest information processing in a number of ways. For example, in a
society of pragmatists such as the United States, labor disputes tend to focus on specific issues-for
example, increase pay by a dollar per hour. In a society of idealists such as Argentina, labor disputes
tend to lead to less precise demands and workers depend instead on mass action, such as general
strikes or support of a particular political party, to publicize their principles.

COMMUNICATION:

Spoken and Written Language

First, some words do not have a direct translation.

For employees there is a word, empleados, in Spanish which means "white-collar workers," and another,
obreros, which means "Iaborers."

Second, languages and the common meaning of words are constantly evolving.

Third, words mean different things in different contexts.

Finally, grammar is complex, and a slight misuse of vocabulary or word placement may change
meanings substantially.

SILENT LANGUAGE:

In most western countries, black is associated with death. White has the same connotation in
parts of Asia and purple in Latin America. For product to succeed, their colors must match the
consumers' frame of reference. For example, United Airlines promoted a new passenger service
in Hong Kong by giving white carnations to its best customers there. The promotion backfired
because people in Hong Kong give white carnations only in sympathy for a family death.

Another aspect of silent language is the distance between people during conversations.
People's sense of appropriate distance is learned and differs among societies. In the United
States, for example, the customary distance for a business discussion is 5 to 8 feet. For personal
business, it is 18 inches to 3 feet.

Perception of time and punctuality is another w1spoken cue that differs by context and may
differ across cultures and create confusion. In terms of context in the United States,
participants usually arrive early for a business appointment, a few minutes late for a dinner at
someone's home, and a bit later for a cocktail party.
https://blog.busuu.com/what-hand-gestures-mean-in-different-countries/

Accommodation to Foreigners

Although the opening case illustrates the advantages of adjusting to the host country culture,
international companies sometimes have succeeded in introducing new products, technologies, and
operating procedures to foreign countries with little adjustment. That's because some of these
introductions have not run counter to deep-seated attitudes or because the host society is willing to
accept foreign customs as a trade-off for other advantages. Bahrain has permitted the sale of pork
products (otherwise outlawed by religious law) as long as they are sold in separate rooms of grocery
stores where Muslims call neither work nor shop.

Western female flight attendants are permitted to wear jeans and T-shirt in public V\ hen staying
overnight in Jeddah, Saudi Arabia, even though local women cannot.

Cultural Distance: Usefulness and Limitations

Some countries are relatively similar to one another, usually because they share many attributes that
help mold their cultures, such as language, religion, geographical location, ethnicity, and level of
economic development. For example, women's role and behaviors differ substantially from one Arab
country to another. The company also needs to consider how people in the host country perceive the
foreign company's entry and what it plans to do.

Culture Shock

When operating in a foreign country, a company may have to assign personnel abroad or at least send
personnel on trip to the foreign country. Exposure to certain practices may be traumatic to them. In
addition, even when people move to another country where differences are not traumatic to them, they
often encounter culture shock-the frustration that results when having to learn and cope with a vast
array of new cultural cues and expectation.

Company and Management orientations

Polycentrism In a polycentric organization, the company believes that business units in different
countries should act very much like local companies.

Ethnocentrism: Ethnocentrism is the belief that one's own culture is superior to others.

Geocentrism: Between the extremes of polycentrism and ethnocentrism are negotiated business
practices that are a hybrid of the host country practices, the company's accustomed practices, and some
entirely new practices.