International Business Strategy301REN

Cultural Environment

ofInternational Business

Unit: 5 Knowledgecast: 1

• Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process

• Assess current developments in the organisational environment and alternative responses related to strategy

Module Learning Outcomes

The Four Risks of International Business

CULTURE

• Culture: The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.

• Cross-cultural risk: A situation or eventwhere a cultural miscommunication puts some human value at stake. It arises in environments characterized by unfamiliar languages and unique value systems, beliefs, and behaviors.

Managers’ (Cultural)Orientations

• Ethnocentric orientation: Using one’s own culture as the standard for judging other cultures

• Polycentric orientation: A mindset in which the manager develops a greater affinity for the country in which he or she works than for the home country

• Geocentric orientation: A global mindset in which the manager is able to understand a business or market without regard to national boundaries• Managers should strive for a geocentric

orientation.

Key issues-Culture Is…

• Not right or wrong: It is relative. There is no cultural absolute. Different nationalities simply perceive the world differently.

• Not about individual behavior: It is about groups. It is a collective phenomenon of shared values and meanings.

• Not inherited: It derives from the social environment. We are not born with a shared set of values and beliefs; we acquire them as we grow up.

Culture as an Iceberg

Impact of Culture on Managerial Tasks

• Developing products and services

• Preparing advertising and promotional materials

• Preparing for overseas trade fairs and exhibitions

• Screening and selecting foreign distributors

• Communicating and interacting with foreign partners

• Negotiating and structuring ventures

• Interacting with current and potential customers from abroad

Some Cultural Differences in Entrepreneurship

It is said that when someone starts a new business… • in Hong Kong, the whole family works

ceaselessly to make it a success.• in the United States, friends put up their

money for the entrepreneur. • in Turkey, friends will ask the entrepreneur

to hire their sons and nephews. • in India, the administrative system will

impose a staggering amount of red tape.

Interpretations of Culture

• Stereotypes are generalizations that may or may not be factual, often overlooking real, deeper differences.

• People from the United States are said to be:– Argumentative and aggressive when compared to

Japanese people, who tend to be reserved and humble.

– Individualistic lovers of personal freedom when compared to Chinese people, who tend to be group oriented.

– Entrepreneurial when compared to Saudi Arabian people, who use time-honored methods to get things done.

– Direct and interested in immediate returns when compared to Mexican people, who invest time in building relationships.

More on CultureIdioms that Symbolize Cultural Values

Language as a Key Dimension of Culture

• Language is the “mirror” or expression of culture; it is essential for communications and provides insights into culture.

• Linguistic proficiency is a great asset in international business.

• Language has both verbal and nonverbal components (i.e., facial expressions and gestures).

• There are nearly 7,000 active languages, including over 2,000 in both Africa and Asia.

Blunders in International Advertising

Examples of Differences in Meaning Between British and U.S. English

• Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process

• Assess current developments in the organisational environment and alternative responses related to strategy

Knowledgecast Summary

SeminarArticle Review• M. Ayhan Kose and Eswar S. Prasad (2010), Emerging

Markets Come of Age, Finance and Development Journal, 2010

• Prepare to review this article in your seminar for this unit. You should make written notes to bring to the seminar to support your contributions.

Guide Questions.a. What are the key changing drivers of global growth?b. Are emerging economies really in control of their destiny ?

WHY?c. What are the factors responsible for the relative resilience

of emerging economies during the global recession

Environmental Audit – Preparation

Assignment Preparation – Research• You have an opportunity to use this time to continue to

gather information regarding the environmental audit of your case study organisation, which will be invaluable in preparing you for the first assignment.

Assignment Preparation – Rehearsal• You should also use this opportunity to rehearse your

presentation of finding from the environmental analysis of your case organisation in a mock presentation.

• Remember to have several practice sessions and reflect on your individual and group performance.

Group Activity