International Business Environments and Operations

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International Business

Environments and Operations

Global Edition Part Two

Comparative Environmental Frameworks

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Chapter Two

The Cultural

Environments

Facing Business

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Chapter 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 cultural guidelines for companies that operate internationally

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Culture

Learned norms based on values, attitudes, and beliefs of a group of people

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Cultural Diversity

A means of gaining global

competitive advantage by bringing together people of diverse

backgrounds and experience

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Cultural Collision

• Occurs in international business when:

 A company implements practices that are less effective

 Employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors

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Cultural Factors Affecting International

Business Operations

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Cultural Awareness

• Problem areas that can hinder managers’

cultural awareness…

 Subconscious reactions to circumstances

 The assumption that all societal subgroups are similar

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The Idea of a “Nation” – Delineating Cultures

The nation is a useful definition of society because:

• Similarity among people is a cause and an effect of national boundaries

• Laws apply primarily along national lines

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The Nation as a Cultural Mediator

• A national culture must be flexible enough to accommodate the diversity of various

subcultures, ethnic groups, races, and classes

• Yet every nation boasts certain human,

demographic, and behavioral characteristics that constitute its national identity

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Country-By-Country Analysis

• Managers find this difficult to implement because:

 Subcultures exist within nations

 Similarities link groups from different countries

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How Cultures Form and Change

• Change by Choice

 Reaction to social and economic situations

• Change by Imposition

 Imposed introduction into a culture of certain elements from an alien culture

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Language as Both a Diffuser and Stabilizer of Culture

A common language within a country is a unifying force

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Major Language Groups: Population and

Output

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Religion As A Cultural Stabilizer

Centuries of profound religious

influence continue to play a major role in shaping cultural values

and behavior

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Behavioral Practices Affecting Business

• Issues in Social Stratification

 Social ranking is determined by:

• Factors pertaining to you as an individual

• Factors pertaining to your affiliation with certain groups

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Group Affiliations Can Be:

• Ascribed or Acquired

 Include those based on gender, family, age, caste, ethnic, racial, or national origin

• A reflection of class and status

 Include those based on religion, political affiliation, and professional and other

associations

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Social Stratification and Employment Practices

• Performance Orientation

• Open and Closed Societies

• Gender-Based Groups

• Age-Based Groups

• Family-Based Groups

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Work Motivation

• Materialism and Motivation

• Expectation of Success and Reward

• Performance and Achievement: The Masculinity- Femininity Index

• Hierarchies of Needs

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Hierarchy of Needs

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Relationship Preferences

• Power Distance

• Individualism Versus Collectivism

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Risk-Taking Behavior

• Uncertainty Avoidance

• Trust

• Future Orientation

• Fatalism

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Information and Task Processing

• Perception of Cues

• Obtaining Information: Low Context versus High Context Cultures

• Information Processing

• Monochronic Versus Polychronic Cultures

• Idealism Versus Pragmatism

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Communication

• Spoken and Written Language

• Silent Language

• Distance

• Time and Punctuality

• Body Language

• Prestige

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Body Language Is Not A Universal

Language

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Degree of Cultural Differences

Cultural Distance

When a company moves within a cluster of culturally similar countries, it should

expect to encounter fewer cultural

differences and to face fewer cultural adjustments.

Cultural Friction

A business interaction may be viewed

negatively because of possible changes in power relationships and the sovereignty that sets countries apart.

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Company and Management Orientations

• Polycentrism

 belief that business units in different countries should act like local companies

• Ethnocentrism

 conviction that one’s own culture is superior to that of other countries

• Geocentrism

 requires companies to balance knowledge of their own organizational cultures with both home and host country needs, capabilities, and constraints

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Strategies for Instituting Change

• Value Systems

• Cost-Benefit Analysis of change

• Resistance to too much change

• Participation

• Reward Sharing

• Opinion Leadership

• Timing

• Learning Abroad

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Future: What will happen to national cultures?

• Scenario 1.

 New hybrid cultures will develop and personal horizons will broaden

• Scenario 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 identity

• Scenario 4.

 Existing national borders will shift to accommodate ethnic differences

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