LECTURE 2. Cultural Environments Facing Business PDF

CULTURAL ENVIRONMENTS
FACING BUSINESS
FACING BUSINESS
• Culture is an integral part of the operating
environment.
• Culture refers to the learned norms based on
attitudes, values, and beliefs of a group of
people.
– Based on nationality, ethnicity, religion, gender, work
organization, profession, age, political party
membership and income level.
FACING BUSINESS
• Major problems of cultural collision in
international business are when
– A company implements practices that work well than
intended.
– A company’s employees encounter distress because
of inability to accept or adjust to foreign behaviors.
Cultural Awareness
• Almost everyone agrees that national cultures
differ, but they disagree on what the differences
are.
• Problem areas that can hinder managers’
cultural awareness are
– Subconscious reactions to circumstances
– The assumption that all societal subgroups are similar
Identification And Dynamics Of Culture
THE NATION AS POINT OF REFERENCE

• 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.
THE NATION AS POINT OF REFERENCE

• Managers find country-by-country analysis
difficult because
– Subcultures exist within nations.
– Variations within some countries are great.
– Similarities link groups from different countries.
CULTURAL FORMATION AND DYNAMICS

• Cultural value systems are set early in life but
may change through
– Choice or imposition/ Cultural Imperialism
• When countries introduced their legal systems into their
colonies by prohibiting established practices and defining
them as criminals
– Contact with other cultures
• International business increases interaction
among countries, thus induces cultural change
LANGUAGE AS CULTURAL STABILIZER

• Language is a factor that greatly affects cultural
stability.
• A common language within countries is a
unifying force.
Importance of Major Language Groups:
Portion of World’s Native Speakers
15% Mandarin
Hindi
English
6%
Spanish
6% Bengali
Portuguese
54%
6% Russian
Japanese
3% German
3% Others
2% 3%
2%
Importance of Major Language Groups:
Portion of World Output by Language
12%
English
5%
Japanese
5% 42% French
German
6%
Spanish
Chinese (various)
9% Italian
Others
9%
12%
RELIGION AS A CULTURAL STABILIZER

• Many strong values are the result of a dominant
religion.
• Religion is a strong shaper of values.
• In areas in which rival religions vie for political
control, the resulting strife can cause so much
unrest that business is disrupted.
Behavioral Practices Affecting Business
SOCIAL STRATIFICATION SYSTEMS

• Groups affiliations can be
– Ascribed group membership – determined by birth
(gender, family, age, caste, ethnic, racial or national
origin)
– Acquired group membership – not determined by
birth
(religion, political affiliation, professional and other
association)

• Performance Orientation
– Business reward competence highly in some society.
– Egalitarian societies place less importance on ascribed
group memberships.

• Gender-Based Groups
– Country-by-country attitudes vary toward
• Male and female roles
• Respect for age
• Family ties

• Age-Based Groups
– Many cultures assume that age and wisdom are
correlated.
– These cultures usually have a seniority-based system
of advancement.

• Family-Based Groups
– Family is the most important group membership.
– The difficulty of growing and sustaining family-run
companies also retards the development of
indigenously owned large-scale operations, which are
often necessary for many products and may be
important for long-term economic development.

• Occupation
– In every society, people perceived certain occupations
as having greater economic and social prestige than
others.
WORK MOTIVATION
• Materialism and Leisure
– The desire for material wealth is
• A prime motivation to work
• Positive for economic development
– National norms differ in preference for performance
and growth versus quality of life and the
environment.
WORK MOTIVATION
• Materialism and Leisure
– The motives for working vary in different countries
– “A little bit more” but “not quite enough”
WORK MOTIVATION
• Expectation of Success and Reward
– Employees’ work attitudes may change as they
achieve economic gains.
– The same task performed in different countries will
have different probabilities of success, different
rewards for success, and different consequences of
failure.
WORK MOTIVATION
• Assertiveness
– People are more eager to work if
• Rewards for success are high
• There is some uncertainty of success
WORK MOTIVATION
• Need Hierarchy
– According to the hierarchy of needs theory, people try
to fulfill lower-order needs sufficiently before moving
on to the higher ones.
– Once a need is fulfilled, it is no longer a motivator.
The Hierarchy of Needs and Need-Hierarchy
Comparisons
5. SELF-ACTUALIZATION
4. ESTEEM
3. AFFILIATION
2. SECURITY
1. PHYSIOLOGICAL
RELATIONSHIP PREFERENCES
• Power Distance
– There are national variations in preference for
autocratic or consultative management.
– Power distance – relationship between superiors
and subordinates.
• Power Distance
– When power distance is high…
• People prefer little consultation between superiors and
subordinates
• Autocratic or paternalistic management style
– When power distance is low…
• People prefer and usually have consultative styles
• Individualism vs. Collectivism
– Individualism
• low dependence on the organization
• desire for personal time, freedom and challenge
– Collectivism
• dependence on the organization
• desire for training, good physical conditions, and benefits
• Individualism vs. Collectivism
– “Safe” work environments motivate collectivists.
– Challenges motivate individualists.
The Hierarchy of Needs and Need-Hierarchy
Comparisons
HIGH INDIVIDUALISM
5. SELF-ACTUALIZATION
4. ESTEEM
HIGH COLLECTIVISM
3. AFFILIATION
2. SECURITY
1. PHYSIOLOGICAL
RISK-TAKING BEHAVIOR
• Nationalities differ in how happy people are to accept
things the way they are and how they feel about
controlling their destinies.
– Ease of handling uncertainties
– Degree of trust among people
– Future orientation
– Attitudes of self-determination and fatalism
• Uncertainty Avoidance
– Countries with high uncertainty avoidance
• Plan to work for the company for a long time
• Superiors may need to be more precise and assured in the
directions they give to subordinates
• Few consumers are prepared to take the social risk of trying
new a new product first
• Trust
– Where trust is high, there tends to be a lower cost of
doing business because managers do not have to
spend time foreseeing every possible contingency
• Future Orientation
– When future orientation is higher, companies may be
able to better motivate workers through delayed
compensation, such as retirement programs.
• Fatalism
– The effect on business in countries with a high degree
of fatalism is that people plan less for contingencies.
– Highly fatalistic people are less swayed by bosses’
persuasive logic than by relationships
INFORMATION AND TASK PROCESSING

• Perception of Cues
– Cues are perceived selectively
INFORMATION AND TASK PROCESSING

• Obtaining information
– Low-context culture – most people consider to be
relevant only firsthand information that bears directly
on the decision they need to make
– High-context culture – most people believed that
peripheral information is valuable to decision-making
and infer meanings from things said indirectly
COMMUNICATIONS
• Spoken and Written Language
– Cross-border communications do not always
translates as intended.
• Empleados – white-collar workers
• Obreros – laborers
COMMUNICATIONS
• Silent Language
– Silent language includes color associations, sense of
appropriate distance, time and status cues, and body
language
– Managers should know that perceptual cues –
especially those concerning time and status – differ
among societies
Dealing with Cultural Differences
ACCOMODATION TO FOREIGNERS
• Host cultures do not always expect foreigners to
adjust to them.
CULTURAL DISTANCE: USEFULNESS AND

LIMITATIONS
• When doing business in a similar culture,
companies
– Usually have to make fewer adjustments
– May overlook subtle differences
CULTURE SHOCK
• The frustration that results when having to learn
and cope with a vast array of new cultural cues
and expectations.
• Some people get frustrated when entertaining
different culture.
CULTURE SHOCK
• Reverse culture shock
– Some people encounter culture shock when they
return to their home countries
COMPANY AND MANAGEMENT

ORIENTATION
• Polycentrism
– Polycentrist management is so overwhelmed by
national differences that it won’t introduce workable
changes
– The company believes that business units in different
countries should act very much like local companies.

ORIENTATION
• Ethnocentrism
– It is the belief that one’s own culture is superior to
others.
– Etnocentrist management overlooks national
differences and
• ignores important factors
• believes home country objectives should prevail
• thinks change is easy

ORIENTATION
• Geocentrism
– Geocentric management often uses business practices
that are hybrids of home and foreign norms.
STRATEGIES FOR INSTITUTING CHANGE

• Value System
– The more change upsets important values, the more
resistance it will engender.
• Cost Benefit of Change
– A company must consider the expected cost-benefit
relationship of any adjustments it makes abroad.
– The cost of change may exceed its benefit.

• Resistance to Too Much Change
– Resistance to change may be lower if the number of
changes is not too great.
• Participation
– Employees are more willing to implement change
when they take part in the decision to change.

• Reward Sharing
– Employees are more apt to support change when
they expect personal or group rewards.
• Opinion Leaders
– Managers are seeking to introduce change should first
convince those who can influence others.

• Timing
– Companies should time change to occur when
resistance is likely to be low.
• Learning Abroad
– International companies should learn things abroad
that they can apply at home.
END…

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CULTURAL ENVIRONMENTS

THE NATION AS POINT OF REFERENCE

THE NATION AS POINT OF REFERENCE

CULTURAL FORMATION AND DYNAMICS

LANGUAGE AS CULTURAL STABILIZER

RELIGION AS A CULTURAL STABILIZER

SOCIAL STRATIFICATION SYSTEMS

SOCIAL STRATIFICATION SYSTEMS

SOCIAL STRATIFICATION SYSTEMS

SOCIAL STRATIFICATION SYSTEMS

SOCIAL STRATIFICATION SYSTEMS

SOCIAL STRATIFICATION SYSTEMS

INFORMATION AND TASK PROCESSING

INFORMATION AND TASK PROCESSING

CULTURAL DISTANCE: USEFULNESS AND

COMPANY AND MANAGEMENT

COMPANY AND MANAGEMENT

COMPANY AND MANAGEMENT

STRATEGIES FOR INSTITUTING CHANGE

STRATEGIES FOR INSTITUTING CHANGE

STRATEGIES FOR INSTITUTING CHANGE

STRATEGIES FOR INSTITUTING CHANGE

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