1. “Understanding Foreign Cultures”
Objective:
• Develop an appreciation for differences in cultures and societies across the globe
• Identify the impact of culture on business strategy and its implementation
• Introduce research based frameworks that classify global cultural dimensions
• Develop and recommend some practical guidelines for doing business in a foreign
cultural setting

2. 10 1 Culture Understanding Foreign Cultures
Objective: Upon completion of you should be able to understand the following main points
• What is meant by culture?
• Why is it important to learn about culture?
• What are the different levels of culture in society?
1.0 Introduction
If you were asked to describe your own culture, what would you say? Describing one’s culture
is, in fact, not an easy task. It is a bit like asking a fish in water what it is like to swim in the
water. Washed up on the beach, the fish quickly recognizes the differences, but may not be
able to describe it. Its immediate objective is to get back into the water. Culture serves as a
lens through which we perceive the other. Like the water surrounding the fish, culture distorts
how we see the world and how the world sees us. Therefore, understanding the differences in
culture is the first step to succeeding in international business encounters.
2.0 What is Culture?
Culture is one of the least-understood aspects of doing business abroad. Culture manifests
itself in many forms and is present in all interactions within a society. Culture has been
defined in many ways – from a pattern of perception that influences communication, to a site
of contestation and conflict. Typically, definitions of culture tend to focus on one of the
following theoretical frameworks.
• Culture as a social organization: the way in which human activity is coordinated,
organized, the way in which people are expected to behave
• Culture as an abstract concept: Focusing on people’s characteristic ideas, values,
patterns of perceptions, ways of thinking
• Culture as shared aspects of a society: i.e., aspects that all its members, or a
subgroup of its members, share, are familiar with, and pass on to the next generation
e.g., shared and learned patterns of behavior and perception)
Three elements can be used to briefly define a culture. The first element, that a culture is
learned by people, means that culture is not a hereditary trait, such as hair color. Rather,
culture is a framework with which a person evaluates his or her environment and makes
decisions. The second element, that culture is shared by all members of society, is what
makes a framework into a culture rather than a personal preference. It should be noted,
though, that the society in question must be strictly defined when discussing culture. For
example, in the United States, there is a general national culture that can be described as
individualistic, but there are subcultures, such as African-Americans, that can be described as
collectivist. The third element, that one element of a culture affects other elements of the
culture, relates each element of a culture to the other elements. For example, a person's
social status within a culture will affect the vocabulary he or she uses.
In sum, culture is made up of material objects (artifacts) and immaterial aspects such as
knowledge, beliefs, values, attitudes, meanings, timing, spatial relations, concepts of universe
etc. It is dynamic in the sense that the material objects and immaterial aspects of a culture
are created, maintained and changed by a social group, over generations, through individual
and group action.
2.1 What are the different levels of culture in society?
At the broadest level a country has a national culture which reflects nationally consistent
attitudes and behavior. Recognizing regional cultures helps us to appreciate w hy certain
industries flourish in different regions, and why trading partners may be more eagerly sought
across some borders than others. Within this different classes, professionals have their own
professional culture which is based on the training and the requirements of their profession,
for example lawyers, doctors and engineers might have certain attitudes which are more
reflective of their professional training rather than broad based national cultural
considerations. A third dimension of culture is organizational culture. Organizational culture

3. reflects the work ethic and the patterns of inter and intra organizational interaction between
employees.
2.2 Why is learning about culture important?
Business executives who hope to profit from their travel have to learn about the history,
culture and customs of the countries to be visited. Business manners and methods, religious
customs, dietary practices, humor and acceptable dress vary widely from country to country.
Understanding and heeding to cultural variables such as these is critical to success in
international business travel and in international business. Lack of familiarity with the business
practices, social customs and etiquette of a country can weaken a company's position in the
market, prevent it from accomplishing its objectives and ultimately lead to failure.
Take away
By now you should have understood that culture is a powerful undercurrent in international
business. Culture manifests itself in many forms and is present in all interactions within a
society. Culture has been defined in many ways – from a pattern of perception that influences
communication, to a site of contestation and conflict. There are different cultural spheres of
influence: national, professional and organizational. It is therefore important to assess their
potential impact and devise strategies for using them creatively.
Questions
1. Explain the different levels of culture in society?
2. Culture becomes a collective experience because it is shared with people who live
in and share the same social environment.
TRUE FALSE
3. Which of the following is not true about culture?
a. Cultural assumptions can be observed in artifacts and behaviors
b. Culture can be detected at different levels of society which require
different approaches
c. Culture is a system of shared meaning which explains the behavior
observed
d. It is easy to study a culture that an individual is a member of without any
biases

4. 10 1 Culture Understanding Foreign Cultures
Objective: Upon completion of you should be a ble to understand the following main points
• What are some of the different dimensions of culture?
• How do these values relate to workplace setting?
1.0 Introduction
For an international business with operations in different countries, a question of considerable
importance is how does a society’s culture affect the values found in the workplace? The
questions points to the need to vary management process and practices according to the
culturally determined work-related values. For example, if the cultures of the united states
and France result in different work-related values, an international business with operations in
both countries should vary its management process and practices to take these differences
into account.
2.0 What are some of the conceptual dimensions of culture?
There have been many studies of how culture relates to values in the workplace. Various
psychologists and cultural anthropologists have defined factors that provide dimensions for
comparing cultures. Here are some of the commonly used approaches:
• The six questions approach
• The four dimensions approach
• The Hofstede Model
a. The Six Questions Approach:
Florence Kluckholn and Fred Strodtbeck (1961) developed a set of six questions that
compare cultures across six dimensions:
• What do members of a society assume about other people? That is, are other
people good, bad or a combination?
• What do members of a society assume about the relationship between a
person and nature? That is, do they believe in establishing a harmonious
relationship with nature or are they willing to turn nature to their advantage?
• How do people act in a society? Are they individualistic or do they perform
tasks in groups ?
• How are plans formulated and accomplished in a society ? is the status quo
accepted or is it challe nged, plans formed and implemented according to pre-
established schedules ?
• What is the conception of space in a society ? how close to people stand to
each other when communicating ? what are the differences in terms of public
and private space ?
• What is the dominant temporal orientation of a society ? past, present or
future ?
•
b. The Four Dimensions Approach:
Another classification scheme was developed by Edward T. Hall (1990). His work
emphasizes four dimensions along which cultures can be compared.
• The amount of information that needs to be transferred if a message is to be
stated.
• The concept of space, which is similar to the earlier classification (Kluckholn).
• The importance assigned to time and schedules.
• The speed of information flow between individuals and organizations.
c. The Hofstede Model:
The third major conceptual approach to viewing cultures was developed by Geert
Hofstede, an IBM employee, who surveyed IBM employees across 40 countries to define
cultural dimensions. He developed and presented a framework that had four main factors:

5. • Power Distance: This denotes the degree to which individuals in a society
automatically accept hierarchical or power differences among individuals.
• Individualism vs. Collectivism: Individualistic cultures stress individual
performance and achievement, whereas collectivist cultures tend to view work,
performance and achievement as group processes and outcomes. This aspect
especially impacts organizational culture.
• Uncertainty Avoidance: This attribute measures the degree to which individuals
in a society are comfortable in working within uncertain circumstances. It also
examines their relative degree of comfort in working with long term acquaintances
rather than strangers.
• Masculinity vs. Femininity : Masculine cultures tend to be aggressive and favor
the acquisition of material wealth. On the other hand feminine cultures are
comparatively subdued.
Hofstede’s results are interesting for what they tell us in a general way about differences
between cultures. It represents a starting point for managers trying to figure out how cultures
differ and what that means for management practices. But cultures do not stand still; they
evolve over time and therefore, managers should use the results with caution, for they are not
necessarily accurate.
Take away
By now you should have understood that there are different approaches to understanding
culturally determined values. The most popular of these is the Hofstede model containing four
factors; power distance – dealing with social inequality, including the relationship with
authority; individualism and collectivism – orientation towards the individual or groups;
uncertainty avoidance – dealing with uncertainty, controlling aggression and expressing
emotions and masculinity versus femininity – valuing gender specific roles as well as
masculine values (ambition etc) vs. feminine values (nurturing etc).
Questions
1. Power distance refers to the extent to which less powerful members of institutions
expect and accept unequal distribution of power.
TRUE FALSE
2. Describe the four-dimension approach to comparing different cultures?
4. Societies in which ____________________ is strong are characterized by higher
level of anxiety and aggressiveness that creates, among other things, a strong
urge to work hard.
a. Risk avoidance
b. Power distance
c. Uncertainty avoidance
d. Interaction clashes

6. 10 2 Culture Understanding Foreign Cultures
Objective: Upon completion of this section you should be able to understand the following
main points
• What is the importance of cultural understanding in conducting international business?
• What are the implications of cultural differences in international business?
1.0 Introduction
How well prepared are you to conduct business in cultures other than your own? Are you
familiar with the cultural factors that play a fundamental role in international business
transactions? You need to appreciate that different cultures require different behavior patterns
by exporters. Factors like products, strategies and technologies which are appropriate in one
culture might be dismal failures in another one. One of the primary challenges offered by
international business is the ability to operate effectively in foreign cultural settings. The
challenge for business managers is to transcend blinders imposed by home cultures, a
somewhat difficult but essential task if operations in foreign cultures are to succeed.
2.0 Importance of culture in international business
Before entering a new market, it is important to understand how culture can affect your
research. For instance, in Muslim countries, social norms require people to insist that they
would not drink alcoholic beverages. In actuality, alcoholic beverages are popular in some
areas of Muslim countries.
P.S. Raju created a model that illustrates four levels at which culture can affect business
transactions. Three of the levels are discussed below.
• Buying behavior: This has to do with the perceptions people of a culture hold
regarding imported products, the value of brand equity in a society, the existence and
strength of brand loyalty, and the impact of social norms on buying behavior.
• Consumption characteristics: Issues in consumption include the product versus
service consumption in the culture, social class and reference group influences, and
urban versus rural sector consumption patterns. An example of this would be food
consumption in Brazil. In the urban areas, Brazilians are beginning to eat on the run,
favoring snacks and quick meals. In the rural areas, however, the traditional large, sit-
down meal is still predominant.
• Disposal: Resale, recycling, and remanufacturing considerations constitute the
disposal level. In addition, some cultures are strongly influenced by social
responsibility and environmental implications of product disposal.
2.1 What are the implications of cultural differences in international business?
International business is different from national business because countries and societies are
different. Societies differ because their cultures vary. Their cultures vary because of profound
differences in social structure, religion, language, education, economic philosophy, and
political philosophy. Two important implications for international business flow from these
differences. The first is the need to develop cross-cultural literacy. There is a need to
appreciate not only that cultural differences exist but also to appreciate what such differences
mean for international business. A second implication for international business centers on the
connection between culture and national competitive advantage.
Cross-Cultural Literacy:
One of the biggest dangers confronting a company that goes abroad for the first time is the
danger of being ill informed. International businesses that are ill-informed about the practices
of another culture are likely to fail. Doing business in different cultures requires adaptation to
conform with the value systems and norms of that culture. Adaptation can embrace all aspects
of an international firm’s operations in a foreign country. The way in which deals are
negotiated, the appropriate incentive pay systems for salespeople, the structure of the
organization, the name of a product, the tenor of relations between management and labor,

7. the manner in which the product is promoted, and so on, are all sensitive to cultural
differences. What works in one culture might not work in another culture.
To combat the dangers of being ill-informed, international businesses should consider
employing local citizens to help them do business in a particular culture. They must also
ensure that home -country executives are cosmopolitan enough to understand how differences
in culture affect the practice of international business. Transferring executives overseas at
regular intervals to expose them to different cultures will help build a cadre of cosmopolitan
executives.
Culture and competitive Advantage:
The value systems and norms of a country influence the costs of doing business in that
country. The costs of doing business in a country influence the ability of firms to establish a
competitive advantage in the global marketplace. It can be argued that the class-based
conflict between workers and management found in British society, when it leads to industrial
disruptions, raises the costs f doing business in that culture. Similarly, the ascetic “other
worldly” ethics of Hinduism may not be as supportive of capitalism as the ethics embedded in
Protestantism and Confucianism. Also, Islamic laws banning interest payments may raise the
costs of doing business by constraining a country’s banking system.
For the international business, the connection between culture and competitive advantage is
important for two reasons. First, the connection suggests which countries are likely to produce
the most viable competitors. Second, this connection has important implications for the choice
of countries in which to locate production facilities and do business.
2.2 Anecdote
Wal-Mart
As a global company, Wal-Mart is expanding its branches all over the world. With
extraordinary adaptability to different consumer purchase behaviors in foreign countries, it has
achieved great success, with $165 billion sales in 1999.
In China, people are used to getting everything in one stop and buying larger quantities. To
match their buying pattern, Wal-Mart's supercenters in China provide a broad array of
merchandise, from fermented bean curd to Gerber baby products to German Bosch tools made
in China. In this way, some foreign Wal-Mart supercenters can ring up 15000 sales on heavy
days, twice as many as a U.S. supercenter.
Take Away
It is important to understand that cultural differences will have an effect on the way you do
business overseas. The greater the involvement of your firm abroad, the greater will be your
reliance on an understanding of foreign cultures for your firm's growth and survival. The
challenge for business managers is to transcend blinders imposed by home cultures, a
somewhat difficult but essential task if operations in foreign cultures are to succeed.
Questions
1. In each cross-cultural interaction, there are cues that signal potentially powerful
undercurrents which can either undermine or propel business efforts
TRUE FALSE
2. Briefly describe the two implications for international businesses that arise out of
cross-cultural differences?

8. 3. By using cultural differences as ________________ , companies can capture their
differences in creative ways so that the sum of the parts is greater than the whole.
a. weapon
b. negotiation tool
c. competitive advantage
d. learning opportunity
Reference:
For more information on Raju's levels of culture, look for this article:
P.S. Raju, "Consumer behavior in global markets: The A-B-C-D paradigm and its applications
to Eastern Europe and the Third World," Journal of Consumer Marketing, Vol. 12, No. 5, 1995.

9. 10 3 Culture Understanding Foreign Cultures
Objective: Upon completion of you should be able to understand the following main points
• How does a culture impact your business operations and strategies?
• How does one conduct business successfully in a foreign culture?
• What is the impact of culture on business negotiations?
1.0 Introduction
The impact of international business on American companies has been considerable. The
playing field for business is now global. Businesses of all sizes must search the world for
customers and suppliers. The changing perspectives towards international business makes it
necessary to understand that businesses are influenced by a wide variety of environments
both from a consumer and management point of view. Therefore, business managers and
negotiators must develop a broad perspective that includes the larger cultural context within
which they conduct business.
2.0 How does a Foreign Culture impact your business?
Operating in a foreign culture impacts your business in two key areas:
• Demand side impact
• Management impact
On the demand side, you are now dealing with customers who have different behavioral
patterns than those that you are accustomed to. Customers vary on many dimensions;
purchase behavior, communication aspects and product preferences are some of them.
In a foreign culture, management of your business operations becomes quite different from
what it is at home. Negotiating skills, levels of trust and the control of middleme n become
harder to determine as you operate in a different culture. Primarily, the implementation
aspects of business strategy becomes substantially different.
Personal interactions pose the most risk in terms of cultural influences on business success.
Some examples:
- In Japan, a manager's smile accompanied by the words, "I don't think so," carries
the same meaning as an American manager's "Absolutely not!"
- In Egypt, a training exercise that required the managers to stand on a blanket and
turn the blanket around without stepping off had to be cancelled. The reason? One of
the managers was a woman, and the men were forbidden to touch her.
Because each culture is so specific, it is best to research the individual culture as part of your
market research effort. When companies choose to ignore cultural differences, they are
operating on the assumption that business is business, and that managers, engineers or
bankers are the same throughout the world.
2.1 What is required to conduct business successfully in a foreign Culture?
A sensitive, experienced understanding of interaction in different cultures is often a
fundamental prerequisite in marketing products or services abroad. There are two aspects that
managers need to address:
• To gain a more than superficial understanding of people and their behavior.
• Make sure that their message is getting across to the foreign nationals.
Every culture has its own subtle relationships between words and actions. Getting people to
understand what one means and wants is one of the primary tasks of management. Such
communication is not only necessary, but it is also an important means of furthering incentive
based plans and productivity. Sensitivity to daily habits, such as the importance of four-hour
lunch breaks in some societies, or the physical distance between people engaged in
conversation can be among the most vital aspects of the business relationship.
It is important to recognize that culture affects business practices in many different spheres
such that it limits the relevance of simple recipes of doing business in any particular country.

10. 2.2 What is the impact of culture on business negotiations?
Successful negotiators have the ability to process information from three different perspectives
during negotiations. These three perspectives are:
• Monitoring your own words and actions
• Understanding the meanings the other side gives to those words
• Monitoring and understanding the words and actions of the other side
Culture has a strong bearing on how business negotiations are conducted and concluded. It is
important to ascertain the following aspects:
• Determining the background, status and expected negotiating approach of your
foreign partners
• Making sure that whatever is said is communicated clearly and is understood as such
• Understand issues of timing associated with talking; say whatever is appropriate at the
right time
• It also important to understand the organizational culture and the risk taking
tendencies of individuals as these have a strong bearing on the outcomes associated
with negotiations.
There are major differences in negotiating styles between Americans and most other cultures
especially East Asian nations. Therefore, it is important to develop an appreciation for the
negotiating approaches of these people before attempting to conclude a deal.
Take away
By now you should have understood that operating in a foreign culture impacts business in
demand side, where you are now dealing with customers who have different behavioral
patterns than those that you are accustomed to. On the management side the business
operations becomes quite different from what it is at home. Primarily, the implementation
aspects of business strategy become substantially different. Therefore, a sensitive,
experienced unders tanding of interaction in different cultures is often a fundamental
prerequisite in marketing products or services abroad. Managers should also have an idea of
the different negotiating approaches when dealing in cross-cultural situations.
Questions
1. What are the demand side impacts of conducting business in a foreign culture?
2. Managing a business consists of applying a set of principles and techniques that are
uniform and can be applied universally.
TRUE FALSE
3. In a cross-cultural business setting, an international negotiator should
a. Press a point if others are not prepared to accept it
b. Develop personal relationships while being careful not to be manipulative
c. Stake out extreme positions
d. Look at things from your own narrow perspective to win at any cost

11. 10 1 Culture Understanding Foreign Cultures
Case Studies:
Adapted from Brislin et al, “Intercultural Interactions: A Practical Guide”
a) Learning the Ropes
Helen Conner had been working in Japanese company involved in marketing cameras. She has
been there for 2 years and was well respected by her colleagues. In fact she was so respected
that she was often asked to work with new employees as they learned the ropes. One recent
and young employee, Hideo Tanaka was assigned to develop a marketing scheme for a new
model of camera. He worked quiet hard on it, but the new marketing scheme was not
accepted by his superiors because of industry wide economic conditions. Helen and Hideo
happened to be working at nearby desks when the news of the non-acceptance was
transmitted by company executives. Hideo said very little at that point. That evening,
however, Helen and Hideo happened to be at the same bar. Hideo had been drinking and
vigorously criticized his superiors at work. Helen concluded that Hideo was a very aggressive
male and that she would have difficulty working with him again in the future.
Questions
• Do you agree/disagree with Helen’s conclusion?
• What alternatives could you offer to explain what is happening in this case?
b) Betting on the Bull
George is an American working for a multinational company in Spain. He has expressed an
interest to his Spanish colleagues in attending a bullfight so when the first corrida (fight) of
the season was announced they invited him to accompany them. As the first bull was led out
George jokingly asked the others, “So who’s going to win?” I’ll put my money on the bull.” The
others remained silent and one of them remarked tartly, “You Americans know nothing.”
George did not know what he had said to offend them and felt very uneasy throughout the
corrida.
Questions
• What explanation would you attempt to give to George for this incident?
c) Invitation to a Social Gathering
Burt Rapson had just brought his family to the Philippines on his job assignment for a
multinational corporation. While not particularly religious Catholics, except for token
appearances for Christmas and Easter, they still felt that their children might benefit from
church membership, such as a sense of belonging and moral and ethical guidance. Because
the Philippines is largely a catholic country, it was easy for Bart to place is 7 year old daughter
in a Sunday school class that would prepare her for First Communion. As the actual day
approached, Bart planned for an after church party and invited colleagues from work and their
families. One Filipino colleague, Manuel, to whom Bart felt especially close, kept putting off an
answer, saying neither “yes” or “no”. Finally Bart said to him “my wife needs to know how
many people to cook for”. Manual did not answer but later called and said that he would be
going to another part attended by other Filipino with whom he regularly “partied”. Manuel also
said he would try to stop by sometime during Bart’s party.
Bart was quiet upset and complained, “if this is a Catholic country why would they not value a
First Communion party? “Why would Manuel not come to a once in a life time party to go to
friends he sees all the time?” Afterwards Bart was merely cordial to Manuel, showing no
indications of friendliness. Manuel was puzzled but had no idea what the problem was.

12. Questions
• If you were the company director and observed this strained relationships, what would
you do to improve the situation for both Bart and Manuel? Suggest at least 4
alternatives for him to consider.
References:
Cushner, K. and Brislin, R. W. (1996). Intercultural Interactions: A Practical Guide (3rd ed.)
Newbury Park, CA: Sage.
Martin, J. and Nakayama, T. (2000). Intercultural Communication In Contexts (2nd
ed.)
Mountain View, CA: Mayfield.
Website:
Virtual International Business Academy
http://globaledge.msu.edu/viba