International

Business
Environments & Operations

Chapter 2
The Cultural Environments
Facing Business
 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
 Learning Objective 1:

To understand methods for learning about

cultural environments
 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

Ethnocentricity Cultural literacy

Belief that one’s own Detailed knowledge of a
ethnic group or culture culture that enables a
person to function

X
is superior to that of

√
others effectively within it
Priorities of Cultural Values
BEHAVIOR
BELIEFS
VALUES
AND
THOUGHT
PATTERNS
 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
 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
 Why doesn’t
McDonald’s
sell
Beef and Pork
hamburgers in
India?
 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
 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
 Learning Objective 2:

To analyze the major causes of

cultural difference and change
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
 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.
 Impact of Cultural Diffusion
Positive Impacts Negative
 Access to Impacts
information and  Loss of local
ideas businesses
 Access to  Introduces new
products problem
 New  Loss of cultural
entertainment identity
 Learning Objective 3:

To discuss behavioral factors influencing

countries’ business practices
 Behavioral Practices
Affecting Business

1-Issues in Social Stratification

2- Work Motivation
3-Relationship Preferences
4- Risk-taking Behavior
5- Information and Task Processing
6-Communications
 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
 Social Stratification

Caste system
• A form of closed system of Five different levels of
stratification in which social
the Indian caste system
position is determined by:
1. Priest
~ the family into which a
2. Ruler, Warrior,
person is born
Landowner
• Change in that position is
3. Merchants
usually not possible during
4. Artisans, Farmers
an individual's lifetime
5. Outside class system -
Immobility and inherited
status known as ‘Untouchables’

• Examples: Japan, India

19
Types of Stratification Systems

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
 Social Stratification
British class system
Class system 1. The upper class – involve
wealthy and powerful
people
• A form of open social
stratification in which the
2. The upper-middle class –
position a person has by
members involve in
birth
important occupations and
can be changed through his
the prestigious professions
or her achievement or luck
3. The lower-middle class –
• Examples: US, Britain,
members involve in clerical
China
work and the less
prestigious professions 21
 Social Stratification:
Performance Orientation
 Employment : In US individual
competence --- to avoid discrimination
rules are set

 Whereas in Japan cooperation is

stressed

Age gender
 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
 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
 Work Motivation:
Masculinity-femininity index

high masculinity score prefers

“to live to work” than “to work
to live”

Austria High Masculinity

and Sweden Femininity
 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
 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
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.
 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)
 Low power distance High power Distance
culture culture
Boss and employees treat one Employees respect managers and
another as equals + equals rights managers expect obedience

Decentralisation of the power Centralisation of the power

The ideal boss is a democrat The ideal boss is an autocrat

-Subordinates expect to be -Subordinates expect to be told what to

consulted / do /
-Boss expect initiatives from -Boss is expected to take all the
employees initiatives

People disapprove of status- Privileges for managers are expected-

Narrow range of salaries Wide range of salaries

Less formal social interaction Formal social interaction

 Relationship Preferences:
Individualism and Collectivism

High individualism
countries: (e.g., U.S., Canada,
Sweden)
High collectivism countries: – (e.g.,
Indonesia, Pakistan)
 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
 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)
 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
 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
 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.
 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.
 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
Vocabulary AMERICAN BRITISH
Apartment Flat
American Argument Row
& British Lawyer Solicitor

English Bathroom Loo

Can Tin
sometimes Cookie Biscuit
have Diaper Nappy
different Elevator Lift
Eraser Rubber
words for
Flashlight Torch
the same Fries Chips
things -- Gas Petrol
Mail Post
Ways to Avoid Saying
No in Japanese
 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? "
 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
 Opening a meeting

Germany Formal intro. Sit down. Begin.

Finland Formal intro. Cup of coffee. Sit down. Begin.

Informal intro. Cup of coffee. Jokes. Begin.

USA
Formal intro. Cup of tea.
UK 10 min small talk. Casual beginning.

Formal intro. 15 min small

France talk. Begin.

Formal intro. Protocol seating. Green tea. 15/20 min sm

Japan talk. Signal from senior member. Begin.

Spain/ 20/30 min small talk while others arrive.

Begin when all are there.
Italy
Number

5 10 15 20 25 48
of
minutes
Adapted from Richard D. Lewis
 Communications
Body Language Is Not A Universal Language
Non-Verbal Gestures
Non-Verbal Gestures
Non-Verbal Gestures
 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
 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.
 Dealing with
Cultural Differences
Learning Objective 4:

To understand guidelines for

cultural adjustment
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
 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
Strategies for Instituting Change
 Value Systems
 Cost-Benefit Analysis of change
 Resistance to too much change
 Participation
 Reward Sharing
 Opinion Leadership
 Timing
 Learning Abroad
 Opinion Leaders
An Opinion Leader is Someone Who is
Knowledgeable About Products and Whose Advice
is Taken Seriously By Others.
Are Often Among Are Technically
the First to Buy Competent and
New Products Have Expert
Power

Opinion
Are Similar to Leaders Have Prescreened,
the Consumer Evaluated, and
in synthesize
Values and Product Information
Beliefs Are Socially
Active in
Their
Community
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