International Business Environment-Culture

8/3/2019 International Business Environment-Culture

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International BusinessEnvironment

Culture

Culture

International Business

Spring 2009

Week 2

Copyright 2009 Daniel E. OConnell


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Learning Objectives

To define and demonstrate the effect ofcultures various dimensions on business.

To examine ways in which cultural

knowledge can be acquired and individuals

and organizations prepared for cross-culturalinteraction.

To illustrate ways in which cultural risk posesa challenge to the effective conduct of

business communications and transactions. To suggest ways in which businesses act as

change agents in the diverse cultural

environments in which they operate.


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Culture is more often a source of

conflict than of synergy. Culturaldifferences are a nuisance at bestand often a disaster.

- Geert Hofstede,Professor Emeritus,Maastricht University


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Cultural Risk

Risks of:

Business mistakes

Poor customer relations

Wasted negotiations


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Challenge for Managers

Identify cross-cultural andintracultural differences

Identify similarities across culturesand develop strategies to exploitthem

Identify whether the organizationcan be a change agent

Acculturation


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Exploiting Similarities AcrossCultures: An Example

Mattel, Inc., a global toycompany

Famous brands include:

Barbie Hot Wheels Fisher-Price American Girl

Only 20% of productsadapted for local markets

Growth of large retailers

like Walmart provides aglobal distribution network


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Change Agents

By introducing new products orideas and practices, aninternational business entitybecomes a change agent.

this may shift consumption from oneproduct to another, or

it may lead to massive social change

Example: U.S. pop culture


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A Key to Success:

Acculturation

Acculturation is theprocess of adjusting andadapting to a specificculture other than onesown.


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Cultural Industries

Many countries fight to protect the qualityand reputation of cultural products

The EU and the WTO both provide for

some protection regarding the labeling offood with geographic names

Examples:

Champagne

Bordeaux


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Elements of CultureLanguage Religion Aesthetics

Values and Attitudes

Manners/CustomsEducation

Material elements Social Institutions


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Cultural Knowledge

Cultural knowledge can be defined by the wayit is acquired:

objective or factual information is obtainedthrough communication, research, and

education. experiential knowledge can be acquired only

by being involved in a culture other than onesown.

Interpretive knowledgeis the ability tounderstand and fully appreciate the nuancesof different cultural traits and patterns.


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Acquiring International ExperienceManagers ranking of factors involved in

acquiring international expertise

FactorAssignments overseas

Business travel

Training programs

Non-business travelReading

Graduate courses

Precareer activities

Undergraduate courses

Considered Critical85%

83

28

2822

13

9

1

Considered Important9%

17

57

5472

52

50

48


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Cultural Analysis

Before introducing products andservices into new countries,businesses should perform cultural

analysis

Models can be used to identify andevaluate variables on how consumers

in different cultures may perceive,evaluate and adopt new behaviors


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Hofstedes 5 Cultural Dimensions

Power distance

Individualism

Masculinity

Uncertaintyavoidance

Long-term

orientation


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Power Distance

The extent to which less powerfulmembers of organizations andinstitutions accept and expect that

power is distributed unequally


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Individualism

A measure of the degree to whichindividuals are integrated into groups

High individualism indicates looserelationships with groups

Low individualism = collectivism


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Masculinity

Distribution of roles between genders

Cultures that are assertive andcompetitive are consideredmasculine

Cultures that are caring and modestare considered feminine


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Uncertainty Avoidance

A measure of societys tolerance ofuncertainty and ambiguity


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Cultural Dimension Scores for 12

countries

Uncertainty

AvoidanceIndividualism

Power Distance Masculinity1000 0

100 100

50 50

50 50

JapanFrance

Mexico

BrazilGermany

Netherlands

U.S.A

Great Britain

Arab Countries

West Africa

Indonesia

Hong Kong

Japan

Arab Countries

Mexico

Brazil

France

Germany

Great Britain

U.S.ANetherlands

Hong KongWest Africa

Indonesia


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An Example: The United States


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What it Means PDI (Power Distance Index): 40

The world average is 55 Low PDI indicates a greater equality between societal

levels, including government, organizations and families

IDV (Individualism): 91

Highest score of all countries World average is 43 Indicates an individualistic attitude and relatively loose

bonds with others People look out for themselves and family

MAS (Masculinity): 62 World average is 50 Indicates a higher degree of gender differentiation in

roles Forces women to adopt a masculine role


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What it means (cont.)

UAI (Uncertainty Avoidance): 46 World Average is 64 Lower average indicates a society with fewer

rules and does not try to control outcomes and

results It has a greater tolerance for ideas, thoughtsand beliefs

LTO (Long Term Orientation): 29 World average is 45

The low LTO indicates a belief in meetingobligations and reflects an appreciation ofcultural traditions


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China

What can you conclude about China?


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Strategies for Success in DifferentCultures

Embrace localculture

Build relationships

Employ locals

Help employeesunderstand you

Adapt products Coordinate by

region


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Assignment

Review Ch. 2, Culture

Read and answer questions on Case1, Case Study on Culture and theImplementation of ManufacturingStrategy in Mexico (Handout)

International Business Environment-Culture

Documents

Transcript of International Business Environment-Culture