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BADM 633 - Wk 2

International Business Culture

Terry Ryan

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ASSESSMENTS

By the end of this course, students will: Be able to compare and contrast the myriad

differences in different global cultures; Recognise not only the obvious distinctions, but

also the minor but important subtleties in various cultures;

Demonstrate the ability to identify and research cultural differences; and,

Apply these learnings in practical business-world scenarios.

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PARTICIPATION Participation is not the same as attendance Nor is participation just responding to questions directed to you Pls. be prepared to ask questions next week (Mr Brien Lewis - Canada) You can comment and ask some questions tonight, too . . .

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Letter to the Editor – WSJ (25 Aug)

Regarding your editorial

"The Biggest Trade Barrier" (Aug. 20): How

many U.S. jobs have been lost or deferred by

President Obama's delays on the free-trade

agreements with Colombia, South Korea and

Panama? Do the people in Illinois realize that

Caterpillar has lost out on creating more jobs

to alleviate their 9.5% unemployment

problem because their former junior senator

has held up this agreement for three years?

Meanwhile, China is developing its own

heavy-equipment manufacturing and Canada

is capturing heavy-equipment orders in

Caterpillar's market because it is smart

enough to pass free-trade agreements.

If passing the free-trade agreements will

support tens of thousands of U.S. jobs,

President Obama could help his pathetic

ratings by pushing the treaties instead of

falsely whining about Congress causing the

delay.

Oliver Watson

Orange, Calif.

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Potential Considerations

– Language (or nuances of language)

– History

– Religion

– Attitudes and Values

– Non-verbal Communication/Body Language

– Social Organization

– Security

– Education

– Political Life

– Cuisine

– Esthetics: Design/Dress Customs

– Sports

In What Cultural Areas Would You Expect to Encounter Differences?

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Social Stratification

All societies are stratified on a hierarchical basis into social categories, or social strata

While all societies are stratified to some extent, they differ by:the degree of mobility between social stratathe significance attached to social strata in business contacts

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Social Stratification

Social mobility is the extent to which individuals can move out of the strata into which they are bornA caste system is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime A class system is a form of open social stratification in which the position a person has by birth can be changed through his or her achievement or luck

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Social Stratification

The social stratification of a society is significant if it affects the operation of business organizations Class consciousness is a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with othersIn cultures where class consciousness is high, the way individuals from different classes work together may be very prescribed and strained

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Religious And Ethical Systems

Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacredEthical systems are a set of moral principles, or values, that are used to guide and shape behaviorReligion and ethics are often closely intertwinedFour religions dominate society -Christianity, Islam, Hinduism, and BuddhismConfucianism is also important in influencing behavior and culture in many parts of Asia

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Religious And Ethical Systems

Map 3.1 World Religions

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Christianity

Christianity is the world’s largest religion and is found throughout Europe, the Americas, and other countries settled by Europeans Perhaps the most important economic implication of Christianity is the Protestant work ethic In 1804, Max Weber suggested that it was this ethic and its focus on hard work, wealth creation, and frugality, that was the driving force of capitalism

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Islam

Islam, the world’s second largest religion, extends the underlying roots of Christianity to an all-embracing way of life that governs one's being In the West, Islamic fundamentalism is associated in the media with militants, terrorists, and violent upheavals, but in fact Islam teaches peace, justice, and toleranceFundamentalists, who demand rigid commitment to religious beliefs and rituals, have gained political power in many Muslim countries, and blame the West for many social problemsThe key economic implication of Islam is that under Islam, people do not own property, but only act as stewards for God and thus must take care of that which they have been entrusted with, so while Islam is supportive of business, the way business is practiced is prescribed

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Indonesia Is a Model Muslim Democracy Last week's election caps a decade of successBy PAUL WOLFOWITZ WSJ - JULY 17, 2009

It's rare when any political leader wins a 60% mandate in a free and fair election, which is why commentary on last week's Indonesian election has focused on the personal success of President Susilo Bambang Yudhoyono. However, Indonesia's success in building democratic institutions in just 10 years is equally remarkable. It is yet another demonstration of the appeal of free institutions, in this case to people with East Asian value systems and in a country with the largest Muslim population in the world.

Ten years ago it wasn't hard to find skeptics about the democratic experiment in Indonesia. The financial collapse that brought about President Suharto's resignation in 1998 pushed more than a quarter of the country's population below the official poverty line. East Timor's violent separation from Indonesia severely damaged the country's international reputation and threatened the breakup of the entire country.

Radical Islamist movements were also gaining strength and causing bloody clashes with Christians in Eastern Indonesia. Then came the Sept. 11, 2001, terrorist attacks on America and an al Qaeda threat in Indonesia, including a bombing in Bali in October 2002.

Against that background, it seems hard to believe how well Indonesia is doing today. Per capita incomes are more than double what they were when I arrived there as U.S. ambassador 25 years ago. Since 2000, Indonesia's economy has grown at an average of more than 4% a year. Last year the rate was 6%.

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Hinduism

Hinduism, practiced primarily on the Indian sub-continent, focuses on the importance of achieving spiritual growth and development, which may require material and physical self-denialSince Hindus are valued by their spiritual rather than material achievements, there is not the same work ethic or focus on entrepreneurship found in some other religionsPromotion and adding new responsibilities may not be the goal of an employee, or may be infeasible due to the employee's caste

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Buddhism

Buddhism, which has about 350 millions followers, stresses spiritual growth and the afterlife, rather than achievement while in this world Buddhism does emphasize wealth creation, and so entrepreneurial behavior is not stressedHowever, because Buddhism does not support the caste system, individuals do have some mobility and can work with individuals from different classesShintoism - In Japan, both Buddhism and Shintoism are practiced, sometimes in parallel, at other times, sequentially.

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Confucianism

Confucianism, an ideology practiced mainly in China, teaches the importance of attaining personal salvation through right actionHigh morals, ethical conduct, and loyalty to others is central in Confucianism Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies Quanxi has become one of the hottest topics in domestic academia. Although relationship and guanxi are the same in Chinese characters, significant differences exist between the “relationship” in the western academic context and what Chinese people are familiar with, the Chinese “guanxi”.

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Classroom Performance System

Which religion promotes the notion that a moral force in society requires the acceptance of certain responsibilities called dharma?

a) Islam

b) Buddhism

c) Hinduism

d) Confucianism

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Classroom Performance System

Which religion promotes the notion that a moral force in society requires the acceptance of certain responsibilities called dharma?

a) Islam

b) Buddhism

c) Hinduism

d) Confucianism

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Language

Language refers to the spoken and unspoken means of communicationLanguage is one of the defining characteristics of culture

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Spoken Language

Countries with more than one language often have more than one cultureThe most widely spoken language in the world is English, but Chinese is the mother tongue of the largest number of peopleEnglish is also becoming the language of international business, but knowledge of the local language is beneficial, and in some cases, critical for business success

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Spoken Language

Which form of English is predominant in the world?

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Spoken Language

Which form of English is predominant in the world?

Which Chinese language is dominant in China: Cantonese or Mandarin?

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Spoken Language

Which form of English is predominant in the world?

Which Chinese language is dominant in China. Cantonese or Mandarin?

What is similar (almost identical) about these two Chinese languages?

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Unspoken Language

Unspoken language refers to nonverbal communication such as facial expressions, personal space, and hand gestures Failing to understand the nonverbal cues of another culture can lead to communication failure

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Classroom Performance System

The most widely spoken language in the world is

a) Chinese

b) Spanish

c) Hindi

d) English

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Classroom Performance System

The most widely spoken language in the world is

a) Chinese

b) Spanish

c) Hindi

d) English

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Education

Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society Education is important in determining a nation’s competitive advantageGeneral education levels can also be a good index for the kinds of products that might sell in a country

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Culture And The Workplace

It is important for companies to understand how a society’s culture affects workplace valuesManagement processes and practices must be adapted to culturally-determined work-related valuesGeert Hofstede identified four dimensions of culture: power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity

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Culture And The Workplace

Power distance focuses on how a society deals with the fact that people are unequal in physical and intellectual capabilities Individualism versus collectivism focuses on the relationship between the individual and his or her fellows Uncertainty avoidance measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguityMasculinity versus femininity looks at the relationship between gender and work roles

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Culture And The Workplace

Table 3.1: Work-Related Values for 20 Selected Countries

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Culture And The Workplace

Hofstede later expanded his study to include a fifth dimension called Confucian dynamism which captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors

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Classroom Performance System

_______ focuses on how society deals with the fact that people are unequal in physical and intellectual capabilities.

a) power distance

b) individualism versus collectivism

c) uncertainty avoidance

d) masculinity versus femininity

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Classroom Performance System

_______ focuses on how society deals with the fact that people are unequal in physical and intellectual capabilities.

a) power distance

b) individualism versus collectivism

c) uncertainty avoidance

d) masculinity versus femininity

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PDI

Power Distance Index (PDI) that is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.

This represents inequality (more versus less), but defined from below, not from above. It suggests that a society's level of inequality is endorsed by the followers as much as by the leaders.

Power and inequality, of course, are extremely fundamental facts of any society and anybody with some international experience will be aware that 'all societies are unequal, but some are more unequal than others'.

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PDI

Where do these types of relationships exist? Family School Workplace State Ideas

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PDI Small PDI Large PDI

Power is legit, follow good & evil Might over right; power is right & good

Skills, wealth, power & status Skills, wealth, power & status

need not go together go together

Wealthy countries w/large middle Poorer nations w/small middle class

class

All should have equal rights Powerful have privileges

Political change is evolutionary Political change is revolutionary

More dialogue, less violence Less dialogue, more violence

Pluralistic governments based Autocratic or Oligarchic governments

majority votes based on cooptation

Smaller income differentials Large income differentials

Less perceived corruption; More perceived corruption;

scandals end political careers scandals usually covered up

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Cross-Cultural Comparisons

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Cultural Change

Culture evolves over time, although changes in value systems can be slow and painful for a societySocial turmoil is an inevitable outcome of cultural changeAs countries become economically stronger, cultural change is particularly common

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Implications For Managers

Societies differ because their cultures varyCultures vary because of profound differences in social structure, religion, language, education, economic philosophy, and political philosophy

There are three important implications that flow from these differences:1. There is a need to develop cross-cultural literacy2. There is a connection between culture and national competitive advantage3. There is a connection between culture and ethics in decision making

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Cross-Cultural Literacy

Cross-cultural literacy is critical to the success of international businesses Companies that are ill informed about the practices of another culture are unlikely to succeed in that culture Managers must also beware of ethnocentric behavior, or a belief in the superiority of one's own culture

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Culture And Competitive Advantage

The connection between culture and competitive advantage is important because:it suggests which countries are likely to produce the most viable competitorsit has implications for the choice of countries in which to locate production facilities and do business

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