International Business Environments Operations 14 e Daniels Radebaugh

Chapter 2 The Cultural Environments Facing Business Copyright © 2013 Pearson Education, Inc. publishing

Learning Objectives To understand methods for learning about cultural environments p To analyze the major causes of cultural difference and change p To discuss behavioral factors influencing countries’ business practices p To understand guidelines for cultural adjustment p Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -3

Introduction Learning Objective 1: To understand methods for learning about cultural environments Copyright ©

Introduction Culture refers to the learned norms based on values, attitudes, and beliefs of a group of people p Culture is an integral part of a nation’s operating environment p n every business function is subject to potential cultural differences Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -5

Introduction Cultural Factors Affecting International Business Operations Copyright © 2013 Pearson Education, Inc. publishing

Introduction Companies need to decide when to make cultural adjustments p Fostering cultural diversity can allow a company to gain a global competitive advantage by bringing together people of diverse backgrounds and experience p Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -7

Introduction p But, cultural collision can occur when a company implements practices that are less effective or when employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -8

Cultural Awareness p Problem areas that can hinder managers’ cultural awareness… n n p Subconscious reactions to circumstances The assumption that all societal subgroups are similar Managers that educate themselves about other cultures have a greater chance of succeeding abroad Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -9

Culture and the Nation-State p The nation is a useful definition of society because similarity among people is a cause and an effect of national boundaries n n n laws apply primarily along national lines language and values are shared within borders rites and symbols are shared along national lines Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -10

Culture and the Nation-State p Country-by-country analysis can be difficult because n n p subcultures exist within nations similarities link groups from different countries Need to focus on relevant groups Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -11

How Cultures Form and Change Learning Objective 2: To analyze the major causes of

How Cultures Form and Change p Cultural value systems are established early in life but may change through n n choice or imposition p cultural imperialism contact with other cultures p cultural diffusion p creolization Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -13

Language: Cultural Diffuser and Stabilizer A common language within a country is a unifying force p A shared language between nations facilitates international business p n n Native English speaking countries account for a third of the world’s production English is the international language of business Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -14

Language: Cultural Diffuser and Stabilizer Distribution Of The World’s Major Languages Copyright © 2013

Language: Cultural Diffuser and Stabilizer Major Language Groups: Population and Output Copyright © 2013

Religion: Cultural Stabilizer Religion impacts almost every business function p Centuries of profound religious influence continue to play a major role in shaping cultural values and behavior p n many strong values are the result of a dominant religion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -17

Religion: Cultural Stabilizer Distribution Of The World’s Major Religions Copyright © 2013 Pearson Education,

Behavioral Practices Affecting Business Learning Objective 3: To discuss behavioral factors influencing countries’ business practices Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -19

Social Stratification p Social ranking is determined by n an individual’s achievements and qualifications n an individual’s affiliation with, or membership in, certain groups Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -20

Social Stratification p Group affiliations can be n n p Ascribed group memberships p based on gender, family, age, caste, and ethnic, racial, or national origin Acquired group memberships p based on religion, political affiliation, professional association Two other factors that are important n education and social connections Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -21

Work Motivation The motivation to work differs across cultures p Studies show p n n n the desire for material wealth is a prime motivation to work p promotes economic development people are more eager to work when the rewards for success are high masculinity-femininity index p high masculinity score prefers “to live to work” than “to work to live” Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -22

Work Motivation p Hierarchy of needs theory n p fill lower-level needs before moving to higher level needs The ranking of needs differs among cultures Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -23

Work Motivation The Hierarchy of Needs and Need-Hierarchy Comparisons Copyright © 2013 Pearson Education,

Relationship Preferences Relationship preferences differ by culture p Power distance p n n p high power distance implies little superiorsubordinate interaction p autocratic or paternalistic management style low power distance implies consultative style Individualism versus collectivism n n high individualism – welcome challenges high collectivism – prefer safe work environment Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -25

Risk Taking Behavior p Risk taking behavior differs across cultures n n Uncertainty avoidance p handling uncertainty Trust p degree of trust among people Future orientation p delaying gratification Fatalism p attitudes of self-determination Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -26

Information and Task Processing p Cultures handle information in different ways n n n Perception of cues Obtaining information p low context versus high context cultures Information processing Monochronic versus polychronic cultures Idealism versus pragmatism Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -27

Communications Cross border communications do not always translate as intended p Spoken and written language p Silent language p n n n Color Distance Time and punctuality Body language Prestige Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -28

Communications Body Language Is Not A Universal Language Copyright © 2013 Pearson Education, Inc.

Dealing with Cultural Differences Learning Objective 4: To understand guidelines for cultural adjustment Copyright

Dealing with Cultural Differences Do managers have to alter their customary practices to succeed in countries with different cultures? p Must consider p n n Host society acceptance Degree of cultural differences p cultural distance Ability to adjust p culture shock and reverse culture shock Company and management orientation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -31

Dealing with Cultural Differences p Three company and management orientations n n n Polycentrism p business units abroad should act like local companies Ethnocentism p home culture is superior to local culture p overlook national differences Geocentrism p integrate home and host practices Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -32

Strategies for Instituting Change Value Systems p Cost-Benefit Analysis of change p Resistance to too much change p Participation p Reward Sharing p Opinion Leadership p Timing p Learning Abroad p Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -33

The Future of National Cultures p Scenario 1: n p Scenario 2: n p Outward expressions of national culture will continue to become homogeneous while distinct values will remain stable Scenario 3: n p New hybrid cultures will develop and personal horizons will broaden Nationalism will continue to reinforce cultural identity Scenario 4: n Existing national borders will shift to accommodate ethnic differences Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 -34

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