02 cultural environment

2-*The Cultural Environments Facing Business

Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

IntroductionFirms operating internationally operate in diverse cultural environmentThese differences may cause misjudgements and wrong decisionsIt is needed to appreciate these cultural difference and integrate them in their business practicesCultural understanding and sensitivity need to be developed and integrated with business strategy2-*

Introduction- When colouring in 800,000 pixels on a map of India, Microsoft coloured eight of them a different shade of green to represent the disputed Kashmiri territory. The difference in greens meant Kashmir was shown as non-Indian, and the product was promptly banned in India. Microsoft was left to recall all 200,000 copies of the offending Windows 95 operating system software to try and heal the diplomatic wounds. It cost them millions. 2-*

IntroductionPepsodent tried to sell its toothpaste in South East Asia by emphasizing that it "whitens your teeth." They found out that the local natives chew betel nuts to blacken their teeth which they find attractive.- The concept of Big Brother was somehow taken to the Middle East. The show was pulled of the air after its first few episodes due to public protests and pressure from religious bodies stating the show's mixed sex format was against Islamic principles. 2-*

IntroductionThe film "Hollywood Buddha" showed the lead actor sitting on the Buddha's head causing outrage and protest on the streets of Sri Lanka, Malaysia and Burma as its an act of clear degradation against something holy.McDonalds faced its stores vandalized after people came to know the usage of beef extract for cooking fries. Indian Hindus considers cow as sacred animal 2-*

Culture as ObstacleSelf Reference Criterion (SRC): unconscious reference to self culture, beliefs, values, experiences in taking business decisionsNot knowing and understanding the interpretation and reaction of different cultural perspectivesEthnocentrism:A belief that ones culture is superior to othersMaking strategies that worked in home countries hoping that they will work in foreign countries tooConsumer EthnocentrismConsumers belief that buying foreign goods is un-patriotic, or un-healthy

2-*IntroductionCulture refers to the learned norms based on values, attitudes, and beliefs of a group of peopleIt is the way of life and thinking of a group of people that binds them together as one identifiable entityCulture is an integral part of a nations operating environmentevery business function is subject to potential cultural differences

Culture2-*CharacteristicsLearnedSharedTrans-GenerationalSymbolicPatternedAdaptiveConstituentsValue SystemNormsBeliefsTraditions and CustomsLanguageReligion

Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*Language: Cultural Diffuser and StabilizerA common language within a country is a unifying forceA shared language between nations facilitates international businessNative English speaking countries account for a third of the worlds productionEnglish is the international language of business


Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*Religion: Cultural StabilizerReligion impacts almost every business functionCenturies of profound religious influence continue to play a major role in shaping cultural values and behaviormany strong values are the result of a dominant religion


Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*Culture and the Nation-StateThe nation is a useful definition of society because similarity among people is a cause and an effect of national boundarieslaws apply primarily along national lineslanguage and values are shared within bordersrites and symbols are shared along national lines


Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*Culture and the Nation-StateCountry-by-country analysis can be difficult because subcultures exist within nationssimilarities link groups from different countriesNeed to focus on relevant groups


Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*IntroductionCompanies 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


Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*IntroductionBut, 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


How Cultures Form and ChangeCultural value systems are established early in life from parent to child, teacher to student, peer to peer, and so on but may change throughChoice or imposition (cultural imperialism) Change can be by choice or it can be imposed early in life this type of change is called cultural imperialismcontact with other culturescultural diffusionchange as a result of contact with other culturesCreolization:resultant mixed cultural elements

2-*Cross-Cultural BehaviorPower distance high power distance implies little superior-subordinate interaction autocratic or paternalistic management styleHierarchical organization structures with no or less challenge to authorityMalaysia, India, France on higher sidelow power distance implies consultative styleUK, Dutch, Austria have less power distanceFlat organization structure and more comfortable in subordinates challenging the authority of superior

2-*Cross-Cultural BehaviorIndividualism versus collectivismIndivisualismPeople look after themselves and their immediate familyIndependent behavior and strong involvement of employees for individuals growthhigh individualism welcome challengesUS, UK, France are high on individualism and Pakistan, Singapore and Malaysia are low CollectivismTendency of people to work in groups and to look after each other in exchange of loyaltyGroup interest precedes individual interesthigh collectivism prefer safe work environment

Cross-Cultural BehaviorRisk taking behaviorUncertainty avoidanceLow on handling uncertainty Greece, Portugal, Japan are most Uncertainty avoiding countries Trustdegree of trust among peopleFuture orientationdelaying gratificationFatalismBelieving that every event in life is inevitableless likely to accept the basic cause-and-effect relationship between work and reward

Cross-Cultural BehaviorMasculinity Vs FemininityMasculinityDominant values emphasizes on work goals like earnings, advancements & material belongingsPeople live to work Less gender equalityJapan, US, ItalyFemininityEmphasizes on personal goals like quality of life, caring for others, friendly atmospherePeople work to liveMore gender equalityNetherlands, Norway, Sweden

Cross-Cultural BehaviorUniversalism Vs ParticularismUniversalismBelief that ideas and practices can be defined and applied everywhere without modificationFocus is more on formal rulesUS, Austria, Germany etcParticularismBelieves that circumstances and relationships decide how ideas and practices should be appliedFocus is on relationshipsVenezuela, China, Honk Kong, Indonesia

Cross-Cultural BehaviorNeutral Vs Affective : The way emotions are expressedNeutralPeople tend to hold their emotions and not explicitly exhibit their emotions/feelingsConsider showing emotions as unprofessionalJapan, UK, Singapore, Australia AffectiveEmotions are expressed openly and are more naturalHolding back emotions is considered as emotionally-dead or mask of deceitMexico, China, Brazil, Netherlands

Cross-Cultural BehaviorSpecific Vs Diffuse: Relative size of private and public spacesSpecificLarge public space and smaller private spaceWork and personal life are kept separate and private space is closely guarded and shared only with close friends and associatesAustralia, UK, USDiffusePublic and private space are more or less similarWork and personal lives are not completely separateVenezuela, China, Spain

Cross-Cultural BehaviorHigh Context Vs Low ContextIn high context cultures, implicit communication such as non-verbal and situational cues are extremely impIn lo-context cultures, the explicit communication is imp and relies heavily on words to convey meaningIn High context cultures organizations need to focus on subtle and non-verbal expression of peopleChina, Korea, Japan are high context cultures while German, Swiss, British are low context

Cross-Cultural BehaviorHomophilous Vs Heterophilus Cultures where people share same beliefs, speak same languages and practice the same religion are homophilous culturesIn heterophilous cultures there is fair amount of differentiation in language, beliefs, religionIn homophilous cultures, diffusion of new products and services takes much less time and uniform product mix can be adoptedJapan, Korea and Scandinavian countries have homophilous cultures whereas countries like India and China have Heterophilous cultures

Cross-Cultural BehaviorPolychronic (Fluid-Time) Vs Monochronic (Rigid-time) CulturesIn polychronic cultures people generally have relaxed attitudes towards time schedules, punctuality and meeting deadlines.Here people and relationships are more important than time schedules and deadlines which are flexibleIndia, Bangladesh, Malaysia, UAE, Brazil, Russia etc have polychronic cultures whereas Japan, China, US, Britain, Canada, Australia, Germany etc have monochronic cultures.

Cross-Cultural BehaviorExpressive Vs Reserved CulturesExpressive cultures excessively use all form of communication. They generallyspeak louder, interrupt frequently and are uncomfortable with silenceInterpersonal space is less and there is considerable physical contactThere are direct eye contact and lively facial expressions and gesturingIndia, UAE, Brazil, Egypt, Greece, Mexico, France, Belgium, Italy, Spain are expressive cultures whereas Japan, China, US, Russia, Britain, Germany etc may be said to be reserved

Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*CommunicationsCross border communications do not always translate as intended Spoken and written languageSilent languageColorDistanceTime and punctualityBody languagePrestige


2-*Dealing with Cultural DifferencesDo managers have to alter their customary practices to succeed in countries with different cultures?Must considerHost society acceptanceDegree of cultural differencescultural distanceAbility to adjustculture shock and reverse culture shockCompany and management orientation

2-*Dealing with Cultural DifferencesCompany and management orientations (EPRG)Ethnocentrismhome culture is superior to local cultureoverlook national differencesSarees, Idli/Vada/Sambhar Mix, Ethnic Indian Food

2-*Dealing with Cultural DifferencesPolycentrismbusiness units abroad should act like local companiesThey appreciate the substantial cultural difference existing in different countries and so single business strategy across countries wont work

2-*Dealing with Cultural DifferencesRegiocentrismBusiness Units adopts a region specific strategy within a region but not across all regionMc Donald not selling pork and selling all meat preparations made out of halal process in Middle East and other Islamic countries

2-*Dealing with Cultural DifferencesGeocentrismConsiders the whole world as a single market and attempts to device uniform global business strategiesTry to identify the cultural similarities and device integrated home and host practicesExcessive Ethnocentrism and Polycentrism can be dangerous. Geocentrism is often the safest and fastest strategy.J K Rowlings Harry Potter Series was read and liked across the globe with same passion

Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall2-*Strategies for Instituting ChangeValue SystemsCost-Benefit Analysis of changeResistance to too much changeParticipationReward SharingOpinion LeadershipTimingLearning Abroad


2-*The Future of National CulturesScenario 1: New hybrid cultures will develop and personal horizons will broadenScenario 2: Outward expressions of national culture will continue to become homogeneous while distinct values will remain stable Scenario 3: Nationalism will continue to reinforce cultural identityScenario 4: Existing national borders will shift to accommodate ethnic differences

*Chapter 2: The Cultural Environment Facing Business*What is culture? Culture refers to the learned norms based on values, attitudes, and beliefs of a group of people. Culture can be based on nationality, ethnicity, gender, religion, work organization, profession, age, political party membership, income level, and so on. International business activities incorporate people from all different groups and backgrounds, thus, every business function is subject to cultural differences. *Language acts both as a diffuser of culture and as a stabilizer. On one hand, a common language unifies a culture. However, when people from different areas speak the same language, culture spreads more easily. So, theres greater cultural homogeneity among all English-speaking countries and among all Spanish-speaking countries than there is between English-speaking countries and Spanish-speaking countries. When nations share a language, business is easier because theres no need for time consuming and expensive translations. Often, people studying languages choose the ones that are most useful in interacting with other countries.

*Religion also acts as a cultural stabilizer. Dominant religions can have a profound influence in shaping cultural values and behavior. Many religions even impact specific beliefs that may affect business, such as inhibiting the sale of certain products or the performance of work at certain times. McDonalds, for example, recognizes the Hindu and Muslim influences in India and chooses not to sell beef or pork in the country. Similarly, El Al, the Israeli national airline, does not fly on Saturday, the Jewish Sabbath.When rival religions or factions fight for political control in a country, business is often negatively affected. You might think of property damage, broken supply chains, or breaches in connections with customers as examples.

*We often use the idea of a nation when we talk about culture. In general, within national borders, people largely share such essential attributes as values, language, and race. There is a feeling of we that casts foreigners as they. Rites and symbolsflags, parades, ralliesand the preservation of national sites, documents, monuments, and museums promote a common perception of history and perpetuates national identity.

*Note though that subcultures do exist within nations and groups from different nations can actually be quite similar. International managers need to focus on relevant groupsdifferentiating, for example, between the typical attitudes of rural dwellers and those of urban dwellers, or those of young people versus old people.

*This Figure shows the cultural factors affecting international business operations.

*Most people recognize that cross-country differences exist, but they dont always agree on exactly what they are. It can be beneficial to foster cultural diversity in some cases. Bringing together people of diverse backgrounds and experience can give companies a deeper knowledge about products and services and ways in which to produce and deliver them.

*But keep in mind that cultural collision can create problems. Companies doing business in another country must determine which of that nations business practices differ from their own and then decide what adjustments, if any, are necessary in order to operate efficiently.

*Culture is learned from parent to child, teacher to student, peer to peer, and so on. So, while cultural value systems tend to be established early in life, they can change. Change can be by choice or it can be imposed this type of change is called cultural imperialism. Cultural value systems can also change as a result of contact with other cultures. This is known as cultural diffusion. When this change results in mixing cultural elements, the process is known as creolization.

*Relationships preferences and more specifically the interactions between bosses, subordinates, and peers also differ from country to country.Power distance refers to the general relationship between superiors and subordinates. Where it is high, people prefer little consultation between superiors and subordinates. Employees usually prefer one of two management styles: autocratic -ruling with unlimited authority - or paternalistic - regulating conduct by supplying needs. Where power distance is low, they prefer consultative styles.Individualism is characterized by a preference for fulfilling leisure time and improving skills outside the organization. It also implies a low preference for receiving compensation in the form of benefits and a high preference for personal decision making and on-the-job challenges.In contrast, collectivism encourages dependence on the organization and a preference for thorough training, satisfactory workplace conditions, and good benefits.

*Relationships preferences and more specifically the interactions between bosses, subordinates, and peers also differ from country to country.Power distance refers to the general relationship between superiors and subordinates. Where it is high, people prefer little consultation between superiors and subordinates. Employees usually prefer one of two management styles: autocratic -ruling with unlimited authority - or paternalistic - regulating conduct by supplying needs. Where power distance is low, they prefer consultative styles.Individualism is characterized by a preference for fulfilling leisure time and improving skills outside the organization. It also implies a low preference for receiving compensation in the form of benefits and a high preference for personal decision making and on-the-job challenges.In contrast, collectivism encourages dependence on the organization and a preference for thorough training, satisfactory workplace conditions, and good benefits.

*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if theyre fatalistic and believe every event in life is inevitable, theyre less likely to accept the basic cause-and-effect relationship between work and reward.*Communication across cultures can be problematic when communications are not translated with the same meaning as intended. This problem can occur with not only with spoken and written language and but also with silent language. Even a slight misuse of words or phrases can have a significant impact on the meaning of a message. Moreover, its important to recognize that even when two countries share a language problems can exist. For example, some 4,000 words have different meanings in British and American English.Silent language refers to a host of nonverbal cues. How these physical cues or body language are perceived and interpreted varies between cultures. Many Western countries, for instance, associate black with death ,while white has the same connotation in some parts of Asia. Similar differences exist with perceptions of time and punctuality. In the United States, people usually arrive early for business appointments, a few minutes late for dinner at someones home, and a bit later still for large social gatherings. In other countries though, the concept of punctuality in any or all of these situations may be different.The appropriate distance people maintain during conversations and prestige also differs between countries. For Americans, the customary distance for a business discussion is 5 to 8 feet; for personal business, its 18 inches to 3 feet. The much smaller distances common in Latin America can make many Americans quite uncomfortable. Likewise, a U.S. manager who places great faith in objects as cues to prestige may underestimate the status of foreign counterparts who dont value large, plush offices on high floors. A foreigner may underestimate U.S. counterparts who perform their own services, such as opening their own doors, fetching their own coffee, and answering unscreened phone calls.

*These images show how a simple gesture is interpreted quite differently around the world.

*So, are managers required to change their customary practices to match those of the host culture? The answer is not always clear. In general, host cultures dont expect that foreign managers will totally conform with their norms and values, but it is important that they understand and respect the local culture. Managers need to consider how they will be received by the host country, and make adjustments accordingly. In many cases, host countries are willing to view foreigners differently. Managers should also be aware that closely clustered countries may not be as alike as they seem, and so adjustments may be necessary in some cases. Womens roles and behavior, for example, differ substantially from one Arab country to another even though Arab countries overall are similar culturally.Sometimes, managers going abroad experience culture shockthe frustration that results from having to absorb a vast array of new cultural cues and expectations, and then reverse culture shock when they return home.

*Companies and managers doing business abroad will typically take one of three basic approaches when dealing with foreigners. Those that take a polycentric approach believe that business units abroad should act like local companies. In contrast, those that take an ethnocentric orientation believe that the home culture is superior to the local culture, and therefore national differences can be overlooked. Finally, those that integrate both home and host practices have a geocentric orientation. Managers should recognize that excessive polycentrism or ethnocentrism can be dangerous. A geocentric approach is often the safest. *Companies and managers doing business abroad will typically take one of three basic approaches when dealing with foreigners. Those that take a polycentric approach believe that business units abroad should act like local companies. In contrast, those that take an ethnocentric orientation believe that the home culture is superior to the local culture, and therefore national differences can be overlooked. Finally, those that integrate both home and host practices have a geocentric orientation. Managers should recognize that excessive polycentrism or ethnocentrism can be dangerous. A geocentric approach is often the safest. *Companies and managers doing business abroad will typically take one of three basic approaches when dealing with foreigners. Those that take a polycentric approach believe that business units abroad should act like local companies. In contrast, those that take an ethnocentric orientation believe that the home culture is superior to the local culture, and therefore national differences can be overlooked. Finally, those that integrate both home and host practices have a geocentric orientation. Managers should recognize that excessive polycentrism or ethnocentrism can be dangerous. A geocentric approach is often the safest. *Companies and managers doing business abroad will typically take one of three basic approaches when dealing with foreigners. Those that take a polycentric approach believe that business units abroad should act like local companies. In contrast, those that take an ethnocentric orientation believe that the home culture is superior to the local culture, and therefore national differences can be overlooked. Finally, those that integrate both home and host practices have a geocentric orientation. Managers should recognize that excessive polycentrism or ethnocentrism can be dangerous. A geocentric approach is often the safest. *Companies that choose a geocentric approach to their operations will often combine both home and host practices requiring that people in both countries adapt to some degree. Companies may face some resistance to these changes, and so must manage the process carefully. There are various ways to implement changes. Companies may need to promote changes in value systems. A cost-benefit analysis of change can reveal whether a change makes sense. Moving too quickly can create additional resistance to change. Many companies find that encouraging stakeholders to become involved in change and sharing the rewards of making changes can be beneficial. Similarly, using the right channels of influence and the right timing can make a big difference in whether change is accepted. Finally, companies should recognize that they can gain important knowledge from other companies in the market. Emulating their methods can often be successful.*What will happen to national cultures in the future? Only time will tell. One scenario is that new hybrid cultures will develop and personal horizons will broaden. Another scenario suggests that outward expressions of national culture will continue to become homogeneous while distinct values will remain stable. A third scenario is that nationalism will continue to reinforce cultural identity. Finally, a fourth scenario suggests that existing national borders will shift to accommodate ethnic differences.

02 cultural environment

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