2

Culture gives an individual an anchoring point, an identity as well as codes of conduct.

Culture is learned, shared and transmitted from one generation to the next.

Collective programming of the mind. Culture is multidimensional, consisting of a

number of common elements that are interdependent.

Culture is inherently conservative resisting change and fostering continuity

2

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Defined as an integrated system of learned behaviour patterns that are distinguishing characteristics of members of any given society.

It includes customs, languages, material artifacts and shared systems of attitudes and feelings.

Culture is inherently conservative, resisting change and fostering continuity.

3

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Adjusting and adapting to a specific culture other than one’s own-is one of the keys to success in international operations

Balanced Manager-Leverages opposite forces

And gains a Competitive Advantage.Edward T HallsHigh Context Cultures-AsiaLow Context Cultures-North America

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Language-Verbal and non verbal Religion-Ideals for life West-Capitalism-Protestant Work Ethic India-Religious tolerance/inclusiveness Values and attitudes Japanese-Gaijin-foreigners Manners and customs-Focus group Material Elements-Economic, Social,

financial and marketing infrastructures Aesthetics

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Education India emphasizes Sciences Social institutions Social stratification Reference groups

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MNC’S have 4 distinct predispositions Ethnocentric predisposition-values &

interests of parent company to guide strategic decisions.

Polycentric predisposition-strategic decisions tailored to suit the cultures of the countries.

Regiocentric predisposition-firm to blend its own interests with those of its subsidiaries on a regional basis.

Geocentric –Intergrate a global systems approach.

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Uses a mix of these predispositions based on the demands of the current environment.

Committed to globalization imperative. Understand the importance of being an

insider, for customers who prefer to buy local.

Understand that some local subsidiaries want more decentralization and some want less.

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Shared values and beliefs that enables members to understand their roles and the norms of the organization.

Important characteristics Observed behavioral regularities as typified

by a common language, terminology & rituals.

Norms as reflected by things such as amount of work to be done and the degree of cooperation between management and employees.

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Dominant values that the organization advocates and expects participants to share

Such as high product & service qualityPhilosophy regarding how employeesAnd customers should be treated.Do’s and don’ts of employee behaviour

regarding productivity, customer relations and intergroup cooperation.

Overall organizational climate of the enterprise.

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Substantial differences between the organizational cultures of different subsidiaries.

Four main cultural types globally. Family culture-Strong emphasis on

hierarchy and orientation to the person.-Asia, Turkey.

Eiffel Tower Culture-Strong emphasis on hierarchy and orientation to task.-Western Europe

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Guided Missile Culture-Strong emphasis on equality in the workplace and orientation to task.-US, UK.

Incubator culture-Strong emphasis on equality and orientation to the person.-Start up firms in Silicon Valley, California.

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Fallacy-OC tends to moderate or erase the impact of national culture.

Fact-Far from reducing national differences Organizational Culture maintains & enhances them.

Managerial aspect- Manage the substantial differences between

the organizational cultures of different subsidiaries.

Manage the subsequent coordination problems

13

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Success in the international arena is greatly determined by an MNC’s ability to manage both multiculturalism and diversity.

Workforces have a variety of cultures & subcultures-Women, men young and old people, blacks , whites, Latins Asians Arabs Indians and others.

Evolution of International Corporations Phase 1-Domestic Corporations-Cultural

Sensitivity is marginally important

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Phase 2-International Corporations-Cultural sensitivity is very important

Phase 3-Multinational Corporations-somewhat important

Phase 4-Global Corporation-Critically important

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Domestic Multicultarism-Culturally distinct populations

Singapore-Chinese, Eurasian, Indian & Malay

Group Multicultarism

Homogeneous groups-Similar backgrounds

Token groups-All but one have the same background

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Bicultural groups-Two distinct cultures

Multicultural groups-Three or more ethnic backgrounds.

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Team members not selected on basis of ethnicity. Innovative task-multicultural membership.

Facilitate better understanding of cross cultural differences

Team leader must define overall growth. Cultural dominance is counterproductive Minimize early judgements based on ethnic

stereotypes. Managers to give feedback to teams.

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Data gathered from 116000 respondents from over 70 countries.

Individuals worked in the local subsidiaries of IBM.

Largest organizationally based study ever conducted.

Four dimensions of Hofstede’s study.

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Power Distance The extent to which less powerful members

of institutions and organizations accept that power is distributed unequally.

High PD=Centralized Latin America, Asia Low PD=Decentralized North America

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The extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid these.

High UA-Germany, Japan and Spain Low UA-Denmark, UK.

22

Individualism is the tendency of people to look after themselves and their immediate family only.

Collectivism is the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty.

High individualism and high GNP US, Canada Australia, Denmark & Sweden High Collectivism & Low GNP-Indonesia,

Pakistan, South American Countries.

23

Maculinity-A situation in which the dominant Values in society are success, money and

thingsFemininity-A situation in which dominant

values in society are caring for others and the quality of life.

High maculinity index-Germanic countriesLow maculinity index-Norway

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Dutch Researcher Fons Trompenaars’ research conducted over a 10 year period and published in 1994.

Research questionnaires to over 15000 managers from 28 countries.

Five relationship orientations that are analogous to Hofstede’s dimensions.

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Universalism is the belief that ideas and practices can be applied everywhere without modification

US,UK, Australia Germany Particularism is the belief that

circumstances dictate how ideas and practices should be applied.

Venezuela, former Soviet Union, Indonesia, China.

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Individualism refers to people regarding themselves as individuals

US, former Czechoslovakia, Argentina former Soviet Union

Communitarianism refers to people regarding themselves as part of a group.

Malaysia, Korea

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A neutral culture is one in which emotions are held in check.

Japan, UK An emotional culture is one in which

emotions are openly and naturally expressed.

Mexico, Netherlands, Switzerland.

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A specific culture is one in which individuals have a large public space they readily let others enter and share and a small private space they guard closely and share with only close friends and associates.

Austria, US, UK Switzerland. A diffuse culture is one in which public space

and private space are similar in size and individuals guard their public space carefully.

Venezuela, China and Spain.

29

An achievement culture is one in which people are accorded status based on how well they perfom their functions

US,UK,Austria Switzerland. An ascription culture is one in which status

is attributed based on who or what a person is

Venezuela, Indonesia,China

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Values Orientation Theory

Cross Cultural understanding can be analysed by a given culture’s orientation to five key aspects of human life.

Human Nature (People seen as intrinsically good, evil or mixed).

Man-Nature Relationship (The view that humans should be subordinate to nature, dominant over nature or live in harmony with nature).

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Time (Primary value based on past/tradition,Present/enjoyment or future/posterity/delayed gratification.

Activity (being, becoming/inner developmentor doing/striving/industriousness)

Social Relations (Hierarchial, collateral/collective-egalitarian or individualistic)

Initially believed in biological equality of races later reversed.

His belief that we are a product of a strange mix of biology and culture is applicable to both psychology and anthropology.

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High Context and low context cultural factors

High Context cultures there are many contextual elements that help people to understand the rules. As a result much is taken for granted. French contracts tend to be short as much of information is available within high context French Culture

Much Non Verbal Communication Similarity with Particularism

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Low Context Culture Very little is taken for granted. More

explanation is needed, there is less chance of misunderstanding

American contracts tend to be longer in order to explain the detail

Highly mobile environments where people come and go .

More focus on verbal communication Similarity with Universalism

34

PRC has a long tradition of isolation 1979-Deng Xiaoping opened to the world Now a member of WTO and trading partner

of US. Primary criterion for doing business is

technical competence. Emphasis on punctuality. Patience is critically important as numerous

meetings Guanxi-good connections

35

Important to be a good listener Collective society. Much less animated and avoid open

displays of emotion Negotiations viewed with a long term

perspective In negotiations reciprocity is important. Critical to give face and save face when

doing business negotiations

36

Meetings start with shaking of hands, not vigorous and a slight nod of the head.

Body language & body posture should be formal and attentive

Business Cards exchanged on initial meeting. One side of the card should be translated and Chinese letters should be printed using gold ink.

Establish a contact to act as intermediary. They can act as reference, interpreter and navigate through bureaucracy, legal system and local business networks.

37

Fatalistic approach to time A belief that destiny depends more on the will of a

supreme being. Status largely determined by family position and

social contact and connections. Action based on emotion Elaborate and ritualized form of greetings and leave

takings. Business related discussions may not occur till third

or fourth meeting. Arabs attach a great deal of importance to status

and rank.

38

Avoid doing business during month of Ramadan and major Eid festivals.

Handshakes amongst men always used & can last a long time, between men & women uncommon.

Doing business revolves around personal relationships, family ties trust & honour.

Place value on the spoken word as opposed to written agreements

39

Meetings should not be made too far in advance as changes in personal circumstances may impact appointment

Initial meetings all about relationship building Meetings can be chaotic Meetings are circular in nature and do not

follow a linear pattern of agendas or targets. Punctuality desirable, not essential Arabs were a trading people and are

excellent negotiators.

40

“Time is Money” and they believe that they control their own time.

Social interactions less affected by class stereotypes & upward social mobility more likely.

Less accustomed to conflict and do not accept that some positions are irreconcilable.

Business meetings may seem to have a “confrontational approach” where all the relevant issues are directly debated even at the expense of personal relationshops.

Ready to make concessions in negotiations. Tend to evaluate a person’s trustworthiness based

on past achievements.

41

Decentralized flattened organizations in the UNITED STATES.

Emphasis on faster decision making in the US.

Top level US executives must continually defend their decision to CEO or board of directors.

A great deal of motivation derived from professional accomplishment.

A firm pumping handshake considered to be cultured

42

People in East dress more formally, in the West more casual. Casual Fridays common in many companies.

For initial meeting dressing conservatively in good taste.

Business Cards exchanged without formal ritual

Communication styles are direct. NorthEast and Mid West people extremely

punctual, in Southern & Western States more relaxed.

43

Meetings have a linear agenda which is followed.

At the conclusion of the meeting will be a summary of what was decided and who will implement what.

Visual aids normally used to enhance the case

Statistics used to back up the claims Emphasis on getting a contract signed

rather than building a relationship.

44

The Japanese and “Face”They do not openly criticize or put anyone on

the spot. Saving face is crucial in Japanese Society.

Harmony in Japanese SocietyPlace great emphasis on politeness, personal

responsibility and working for the universal rather than the individual group.

45

Japanese non verbal communication They rely on facial expression, tone of voice

and posture to tell them what someone feels.The context in which something is said affects

the meaning of words.Japanese HierarchyVery conscious of age and status.Etiquettes and customs in JapanMeetings in Japan are very formal and

ritualized.The traditional form of greeting is the bow.

46

Gift giving etiquette is highly ritualistic and meaningful. Always give a small gift to seniormost person at end of meeting

Understanding of foreign ways Prefer to do business on basis of personal

relationships In business meetings etiquette appointments are

required and should be made several weeks in advance.

The most senior Japanese person will be seated furthest from the door, rest in descending rank.

47

Business Negotiation non confrontational Business attire is conservative Business cards are exchanged constantly.

48

South Korean Businessmen greet each other with a slight bow, sometimes accompanied by a handshake. Women also shake hands

Address people by their title and family name.

Business Cards exchanged frequently. Gift giving etiquette a part of doing

business. Gifts are always reciprocated Business meetings are booked well in

advance.

49

Punctuality is important in South Korea and being on time is recommended.

When entering a meeting room, the most senior member of delegation should enter room first and sit at the middle of the table.

50

Sources of Human Resources1. Home Country Nationals-Managers of

country where MNC is headquartered-expats. US & Europe use Home Country Nationals in les developed regions but preferred host country nationals in developed nations. Japanese use home country nationals in all geographic areas. They help in providing technical expertise and maintain financial control over the operation.

51

1. Host Country Nationals-Local Managers hired by MNC mainly at middle and lower level ranks. They are familiar with culture, know language, less expensive than home country personnel and hiring them is good public relations

2. Third Country Nationals-Managers who are citizens of countries other than the country in which the MNC is headquartered or the one in which they are assigned to work by the MNC.

52

Inpatriates-An individual from a host country or third country national who is assigned to work in the home country.

53

1. Adaptability to cultural change and to integrate with different people, cultures and types of business organizations

2. Physical and Emotional Health3. Age, Experience and Education4. Language Training5. Motivation for a Foreign Assignment6. Spouses and Dependents or Work-Family

issues7. Leadership ability

54

Testing and Interview procedures Extensive interviews of candidates and

their spouses by senior executives still ultimately provide the best method of selection.

The adjustment processa) Anticipatory adjustment-before expat

leaves for assignmentb) In country adjustment-On Site

55

1. Base Salary-according to base pay of home countries and paid in home currency, local currency or a combination of the two.

2. Benefits-Approximately one-third of compensation. Most MNC’s include expats in home office benefit programs. Extra vacation and special leaves.

3. Allowances-Cost of living allowances for relocation, housing,educaton and hardship.

56

Incentives-One time lump sum payment. It is a separate payment, distinguishable from regular pay and more readily available for saving or spending.

Taxes-Tax equalization. MNC’s pay the extra tax burden.

57

Help expat managers better understand the customs, cultures and work habits of the local culture.

Use of flexible cross functional teams Accelerated Resource Development and early

identification of high potential employees Employee welfare emphasis Efficiency emphasis Long termism which stresses innovation and

creativity rather than weekly and monthly productivity

58

Tailor made training programs for specific and communication needs of participants.

1. Environmental briefings-info on geography, climate housing and schools

2. Cultural orientation-Cultural institutions and value systems of host country

3. Cultural assimilators-Programmed learning approaches designed to provide participants with intercultural encounters

4. Language training5. Sensitivity training-attitudinal flexibility6. Field experience-Living and working with people

of a different culture.

59

1. Indirect and direct styles-High Context cultures,messages are implicit and indirect (France) as opposed to Low Context cultures (US) where messages are direct and focused.

2. Elaborate has high quantity of talk. Arab countries. Exacting has moderate amount of talk. England, Germany, Sweden. Succint has low amount of talk.Asia

3. Contextual focuses on speaker and role relationships.Asia. Personal focuses on speaker and personal relationships.

4. Affective language is process oriented and reciever focused.Asia. Instrumental language is goal oriented and sender focused.US

60

Cross Cultural Decision Maker Define the locus of decision making whether

centralized or decentralized. British decentralized, French , US & German centralized.

Large sized organizations with large capital investment & high degree of technology favour centralization & vice versa.

Some decisions purely on ROI basis Some decisions more on cultural differences like

Ford Fiesta to Ford IKon in India.

61

A Global Manager has commitment to TQM Decides how much decision making to delegate to

subordinates as TQM uses employee empowerment.

Decides on use of concurrent engineering/interfunctional teams of designers, engineers, production specialists and customers. Eg IBM AS/400 computer systems moved to J Walk.

Decides on Rewards and Recognition from increases in pay and benefits to use of discretionary bonuses, plaques and public recognition.

62

Has to deal with barriers1. Language barriers2. Cultural Barriers3. Perceptual barriers4. Deal with Non verbal communicationa) Kinesics-Facial expressionb) Proxemics-Physical spacec) Chronemics-Time used in a cultured) Chromatics-Use of color

63

Global Negotiation tactics1. Location-Important negotiations neutral site2. Buyer Seller Relations-Degree of objectivity3. Use of Extreme behaviours4. Use of promises and rewards5. Non verbal behaviorsa) Silent periodb) Touchingc) Conversational overlap

64

Blend of Three Management styles-Douglas Mcgregor

a) Authoritarian-work centered behaviour-Theory X-People are lazy and coercion and threats of punishment must be used to get them to work

b) Paternalistic leadership-work centered behavior +protective employee centered concern

Soft Theory X

65

Participative leadership-both work centred and people centred

Theory Y + Theory Z Theory Y-Under right conditions people will

work hard and seek increased responsibility and challenge.

Theory Z-Theory Y + modern Japanese techniques.

Workers seek opportunities to participate in management and are motivated by long term employment.

66

European Managers-Mostly participative1. French & German –Authoritarian approach2. British, Scandinavian & rest-Participative

approach Japanese Managers-Paternalistic approach Chinese Managers-New generation uses

participative leadership. Middle East –Leaning towards participative

leadership India-Equal mix of authoritarian and

participative leadership

67

Global Managers aim to bea) Transformational Leaders-visionary agents

with charismatic leadership1. Idealized influence2. Inspirational motivation3. Intellectual stimulation4. Individualized consideration

68

PRC has a long tradition of isolation 1979-Deng Xiaoping opened to the world Now a member of WTO and trading partner

of US. Primary criterion for doing business is

technical competence. Emphasis on punctuality. Patience is critically important as numerous

meetings Guanxi-good connections

69

Important to be a good listener Collective society. Much less animated and avoid open

displays of emotion Negotiations viewed with a long term

perspective In negotiations reciprocity is important. Critical to give face and save face when

doing business negotiations

70

Meetings start with shaking of hands, not vigorous and a slight nod of the head.

Body language & body posture should be formal and attentive

Business Cards exchanged on initial meeting. One side of the card should be translated and Chinese letters should be printed using gold ink.

Establish a contact to act as intermediary. They can act as reference, interpreter and navigate through bureaucracy, legal system and local business networks.

71

Fatalistic approach to time A belief that destiny depends more on the will of a

supreme being. Status largely determined by family position and

social contact and connections. Action based on emotion Elaborate and ritualized form of greetings and leave

takings. Business related discussions may not occur till third

or fourth meeting. Arabs attach a great deal of importance to status

and rank.

72

Avoid doing business during month of Ramadan and major Eid festivals.

Handshakes amongst men always used & can last a long time, between men & women uncommon.

Doing business revolves around personal relationships, family ties trust & honour.

Place value on the spoken word as opposed to written agreements

73

Meetings should not be made too far in advance as changes in personal circumstances may impact appointment

Initial meetings all about relationship building Meetings can be chaotic Meetings are circular in nature and do not

follow a linear pattern of agendas or targets. Punctuality desirable, not essential Arabs were a trading people and are

excellent negotiators.

74

“Time is Money” and they believe that they control their own time.

Social interactions less affected by class stereotypes & upward social mobility more likely.

Less accustomed to conflict and do not accept that some positions are irreconcilable.

Business meetings may seem to have a “confrontational approach” where all the relevant issues are directly debated even at the expense of personal relationshops.

Ready to make concessions in negotiations. Tend to evaluate a person’s trustworthiness based

on past achievements.

75

Decentralized flattened organizations in the UNITED STATES.

Emphasis on faster decision making in the US.

Top level US executives must continually defend their decision to CEO or board of directors.

A great deal of motivation derived from professional accomplishment.

A firm pumping handshake considered to be cultured

76

People in East dress more formally, in the West more casual. Casual Fridays common in many companies.

For initial meeting dressing conservatively in good taste.

Business Cards exchanged without formal ritual

Communication styles are direct. NorthEast and Mid West people extremely

punctual, in Southern & Western States more relaxed.

77

Meetings have a linear agenda which is followed.

At the conclusion of the meeting will be a summary of what was decided and who will implement what.

Visual aids normally used to enhance the case

Statistics used to back up the claims Emphasis on getting a contract signed

rather than building a relationship.

78

The Japanese and “Face”They do not openly criticize or put anyone on

the spot. Saving face is crucial in Japanese Society.

Harmony in Japanese SocietyPlace great emphasis on politeness, personal

responsibility and working for the universal rather than the individual group.

79

Japanese non verbal communication They rely on facial expression, tone of voice

and posture to tell them what someone feels.The context in which something is said affects

the meaning of words.Japanese HierarchyVery conscious of age and status.Etiquettes and customs in JapanMeetings in Japan are very formal and

ritualized.The traditional form of greeting is the bow.

80

Gift giving etiquette is highly ritualistic and meaningful. Always give a small gift to seniormost person at end of meeting

Understanding of foreign ways Prefer to do business on basis of personal

relationships In business meetings etiquette appointments are

required and should be made several weeks in advance.

The most senior Japanese person will be seated furthest from the door, rest in descending rank.

81

Business Negotiation non confrontational Business attire is conservative Business cards are exchanged constantly.

82

South Korean Businessmen greet each other with a slight bow, sometimes accompanied by a handshake. Women also shake hands

Address people by their title and family name.

Business Cards exchanged frequently. Gift giving etiquette a part of doing

business. Gifts are always reciprocated Business meetings are booked well in

advance.

83

Punctuality is important in South Korea and being on time is recommended.

When entering a meeting room, the most senior member of delegation should enter room first and sit at the middle of the table.