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Cultural invironment
Cultural invironment
Cultural invironment
Cultural invironment
Cultural invironment
Cultural invironment
Cultural invironment
Cultural invironment
Cultural invironment
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Cultural invironment
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Cultural invironment

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  • 1. CULTURAL ENVIRONMENT
  • 2. <ul><li>Nature of Environment </li></ul><ul><li>• In its narrow sense, culture is understood to refer to </li></ul><ul><li>such activities as dance, drama, music, & festivals </li></ul><ul><li>• In its true sense, culture is understood as that </li></ul><ul><li>complex whole which includes knowledge, belief, art, </li></ul><ul><li>morals, laws, customs , & other capabilities & habits </li></ul><ul><li>acquired by an individual as a member of a society </li></ul><ul><li>• “ Culture consists of”, writer Elbert W Steward & </li></ul><ul><li>James A Glynn, “the thought & behavioural patterns that members of a society learn through language & other forms of symbolic interaction </li></ul>
  • 3. <ul><li>• Cultures change gradually, picking up new ideas & </li></ul><ul><li>dropping old ones, but many of the cultures of the </li></ul><ul><li>past have been persistent & self-contained </li></ul><ul><li>Most scholars of culture would agree on its following </li></ul><ul><li>characteristics :- </li></ul><ul><li>• Learned – Culture is not inherited or biological </li></ul><ul><li>based, it is acquired by learning & experience </li></ul><ul><li>• Shared – People as members of a group, </li></ul><ul><li>organisation, or society share culture; it is not </li></ul><ul><li>specific to specific individuals </li></ul><ul><li>• Trans-generational – Culture is trans- generational, passed from one generation to the next </li></ul>
  • 4. <ul><li>• Symbolic – Culture is based on the human capacity </li></ul><ul><li>to symbolise or use one thing to represent another </li></ul><ul><li>• Patterned – Culture has structure & is integrated; </li></ul><ul><li>a change in one part will bring changer in another </li></ul><ul><li>• Adaptive – Culture is based on the human capacity </li></ul><ul><li>to changer or adapt, as opposed to the more </li></ul><ul><li>genetically driven adaptive process of animals </li></ul><ul><li>• Culture is understood as human means of adapting </li></ul><ul><li>to circumstances & transmitting this coping skill & </li></ul><ul><li>knowledge to subsequent generations </li></ul><ul><li>• Culture gives people a sense of who they are, of </li></ul><ul><li>belonging of, of how they should behave, & of what </li></ul>
  • 5. <ul><li>they should be doing </li></ul><ul><li>• Culture impacts behaviour, morale & productivity </li></ul><ul><li>at work, & includes patterns that influence company </li></ul><ul><li>attitudes & actors. </li></ul>
  • 6. <ul><li>Levels of Culture </li></ul><ul><li>• The inter-national manager needs to be aware of the </li></ul><ul><li>three levels of culture that influence overseas </li></ul><ul><li>operations </li></ul><ul><li>• These include national culture, & the occupational </li></ul><ul><li>& organisadtional cultures (see Fig. below) </li></ul><ul><li>A. National Culture </li></ul><ul><li>B. Business Culture </li></ul><ul><li>C. Occupational & Organisational </li></ul><ul><li>Cultures </li></ul>
  • 7. National Culture Business Culture Occupational Culture Organisational Culture Multinational Management Levels of Culture in Multinational Management
  • 8. <ul><li>National Culture </li></ul><ul><li>• National culture is the dominant culture within the </li></ul><ul><li>political boundaries of a country </li></ul><ul><li>• Formal education is usually taught & business is </li></ul><ul><li>generally conducted in the language of the dominant </li></ul><ul><li>culture </li></ul><ul><li>• Political boundaries, however, do not necessarily </li></ul><ul><li>reflect cultural boundaries </li></ul><ul><li>• Many countries, such as India, Canada, & Singapore </li></ul><ul><li>have more than one major cultural group within </li></ul><ul><li>their political boundaries </li></ul>
  • 9. <ul><li>• States with relatively homogeneous cultures have </li></ul><ul><li>various sub-cultures representing regional & rural/ </li></ul><ul><li>urban cultural differences that effect business </li></ul><ul><li>activities </li></ul><ul><li>• Most inter-national businesses take place within the </li></ul><ul><li>constraints of political boundaries of the nation-state </li></ul><ul><li>• As such, the dominate culture of the nation-state </li></ul><ul><li>probably has the greatest impact on inter-national </li></ul><ul><li>business </li></ul><ul><li>• It usually influences not only the language of </li></ul><ul><li>business transactions but also the nature & types of </li></ul><ul><li>law that govern business. </li></ul>
  • 10. <ul><li>B. Business Culture </li></ul><ul><li>• For an inter-national manager, business </li></ul><ul><li>culture – the way Indians, Germans, Koreans </li></ul><ul><li>& others do business – is more important </li></ul><ul><li>• Business culture represents norms, values, & </li></ul><ul><li>beliefs that pertain to all aspects of doing </li></ul><ul><li>business in a particular environment </li></ul><ul><li>• Business cultures tell the correct, acceptable </li></ul><ul><li>way to conduct business in a society </li></ul><ul><li>• Business culture also provides the guides for </li></ul><ul><li>everyday business interactions </li></ul><ul><li>• What to wear to a meeting, when & how to use </li></ul><ul><li>business cards, whether to shake hands or </li></ul>
  • 11. <ul><li>embrace – are all examples of business </li></ul><ul><li>etiquette taught by business culture </li></ul><ul><li>• Each national culture has its own business </li></ul><ul><li>culture </li></ul><ul><li>• The more pervasive national cultures </li></ul><ul><li>constrain & guide the development of business </li></ul><ul><li>culture in a society </li></ul><ul><li>• Business closely interweaves with the broader </li></ul><ul><li>cultural values, norms, & beliefs </li></ul><ul><li>• Examples include the priorities given to age </li></ul><ul><li>& seniority, the role expectations of women, & </li></ul><ul><li>expectations concerning of sub-ordinates by </li></ul><ul><li>bosses </li></ul>
  • 12. <ul><li>C. Occupational & Organisational Culture </li></ul><ul><li>• Organisation-specific & occupation-specific </li></ul><ul><li>cultures tend to develop within national & </li></ul><ul><li>business cultures </li></ul><ul><li>• Organisational culture (or its sister-term </li></ul><ul><li>corporate culture) refers to the philosophies, </li></ul><ul><li>ideologies, values, assumptions, beliefs, </li></ul><ul><li>expectations, attitudes, & norms that knit an </li></ul><ul><li>organisation together & are shared by its </li></ul><ul><li>employees </li></ul><ul><li>• Members of organisations tend to internalise </li></ul><ul><li>cultural nuances & like to initiate newcomers </li></ul>
  • 13. <ul><li>i nto such mores </li></ul><ul><li>• Some of the practices are so thoroughly internalised </li></ul><ul><li>that no one questions them – they are taken for </li></ul><ul><li>granted, that is, they get institutionalised </li></ul><ul><li>• Besides institutionalisation, glorification tends to </li></ul><ul><li>occur in organisation cultures, heroes emerge, </li></ul><ul><li>especially among the founding fathers of the firm, </li></ul><ul><li>whose sacrifices, valorous deeds, & ingenuity are </li></ul><ul><li>embellished into stories & sagas </li></ul><ul><li>• The firm itself may come to be regarded as a source </li></ul><ul><li>of pride in some sense unique & employees begin to </li></ul><ul><li>feel a strong bond with it, & they begin to identify </li></ul><ul><li>with it </li></ul>
  • 14. <ul><li>• The organisation turns into a source of clan & the </li></ul><ul><li>organisational members become ethnocentric </li></ul><ul><li>• Clannish organisations often pose problems to inter- </li></ul><ul><li>national managers </li></ul><ul><li>• Most Indian companies had developed the clan </li></ul><ul><li>culture which led to the collapse of several joint </li></ul><ul><li>ventures between Indian companies & overseas </li></ul><ul><li>firms </li></ul><ul><li>• Mention may be made of the breaking up the </li></ul><ul><li>marriage between Tatas & IBM & Daimler Benz, of </li></ul><ul><li>Godrej with P&G & GE, of DCM with Toyota, of </li></ul><ul><li>LML with Piaggio & of Mahindra with Ford </li></ul>
  • 15. <ul><li>• Different occupational groups, such as physicians, </li></ul><ul><li>professors, lawyers, accountants, & crafts-people </li></ul><ul><li>have distinct cultures, called occupational cultures </li></ul><ul><li>• Occupational cultures are the norms, beliefs & </li></ul><ul><li>expected ways of behaving of people in the same </li></ul><ul><li>occupational groups, regardless of which </li></ul><ul><li>organisations they work for </li></ul><ul><li>• The occupational cultures cannot be ignored by the </li></ul><ul><li>inter-national manager, notwithstanding the </li></ul><ul><li>dominance of national & business cultures </li></ul><ul><li>• People with similar jobs often had very similar </li></ul><ul><li>culture norms </li></ul><ul><li>• Moreover, people from different occupational </li></ul>
  • 16. <ul><li>groups were often more similar to one another than </li></ul><ul><li>to people from their own national cultures. </li></ul>
  • 17. <ul><li>Elements of Culture </li></ul><ul><li>• Culture is a very complex & multifaceted concepts </li></ul><ul><li>comprising many elements </li></ul><ul><li>• All these elements have evolved over time. </li></ul><ul><li>Though the elements of culture are many, we focus here </li></ul><ul><li>on language, religion, education, aesthetics, attitudes, </li></ul><ul><li>customs, & manners & supernatural beliefs. </li></ul><ul><li>(See Fig. below) </li></ul>
  • 18. Culture Attitudes Aesthetics Religion Education Supernatural Beliefs Language Customs & Manners Elements of Culture
  • 19. <ul><li>Language & Culture </li></ul><ul><li>I) The Influence of Language on Culture </li></ul><ul><li>ii) The Influence of Culture on Language </li></ul><ul><li>iii) High & Low-context Languages </li></ul>
  • 20. <ul><li>i) The Influence of Language on Culture </li></ul><ul><li>• Language refers to an abstract system of word </li></ul><ul><li>meanings & symbols of all aspects of culture </li></ul><ul><li>• Language includes speech, written characters, </li></ul><ul><li>numerals, symbols & gestures of non-verbal </li></ul><ul><li>communication </li></ul><ul><li>• How does language influence culture? </li></ul><ul><li>• Language establishes the categories on which </li></ul><ul><li>our perceptions of the world are organised </li></ul><ul><li>• It establishes categories in our minds that </li></ul><ul><li>force us to distinguish those things that we </li></ul><ul><li>consider as similar from those that are not </li></ul>
  • 21. <ul><li>• Speakers of any two languages will not perceive </li></ul><ul><li>reality in exactly the same way </li></ul><ul><li>• Besides reflecting its world view, a language reveals </li></ul><ul><li>a culture’s basic value structures </li></ul><ul><li>• For the Americans, it is the individual, not the </li></ul><ul><li>group, that is important </li></ul><ul><li>• Many anthropologists argue that the language fails </li></ul><ul><li>to capture nuances of human thoughts & </li></ul><ul><li>behaviours </li></ul><ul><li>• For example, humans possess the ability to make </li></ul><ul><li>millions of colour distinctions, yet languages differ in </li></ul><ul><li>the number of colours that are represented by their </li></ul><ul><li>respective vocabularies </li></ul>
  • 22. <ul><li>• The English language distinguishes between yellow </li></ul><ul><li>& orange, but some other languages cannot </li></ul>
  • 23. <ul><li>The Influence of Culture on Language </li></ul><ul><li>• The impact of culture seems to be more significant </li></ul><ul><li>than vice versa </li></ul><ul><li>• The vocabularies of all languages reflect cultural </li></ul><ul><li>nuances of the societies </li></ul><ul><li>• If a society is endowed with highly advanced tech- </li></ul><ul><li>nology (as it happens in rich countries), the language </li></ul><ul><li>of the society contains such technical jargons as </li></ul><ul><li>computers, laptops, BPO, call centres, e-mails, </li></ul><ul><li>internet, iPods, software, websites, & the like </li></ul>
  • 24. <ul><li>High & Low-context Languages </li></ul><ul><li>• Languages in which people state things directly & </li></ul><ul><li>explicitly are called low context </li></ul><ul><li>• The words provide the meaning </li></ul><ul><li>• There is no need to interpret the situation to under- </li></ul><ul><li>stand the import of the words </li></ul><ul><li>• Languages in which people state things indirectly & </li></ul><ul><li>implicitly are called high context </li></ul><ul><li>• In the high context language, communications have </li></ul><ul><li> multiple meanings that can be interpreted only by </li></ul><ul><li>reading the situation in which they occur </li></ul>
  • 25. <ul><li>• So important are the ideas of high & low context </li></ul><ul><li>that many people refer to the whole cultures as being </li></ul><ul><li>high & low context </li></ul><ul><li>• Most northern European languages, including </li></ul><ul><li>German, English & the Scandinavian languages, are </li></ul><ul><li>low context </li></ul><ul><li>• In contrast, Asian & Arabic languages are high </li></ul><ul><li>context </li></ul>
  • 26. <ul><li>Religion & Culture </li></ul><ul><li>• Religion refers to a specific & institutionalised set of </li></ul><ul><li>beliefs & practices generally agreed upon by a </li></ul><ul><li>number of persons or sects </li></ul><ul><li>• There are nearly 1,00,00 religions across the globe, </li></ul><ul><li>but the major ones among them are :- </li></ul><ul><li>1. Hinduism </li></ul><ul><li>2. Christianity </li></ul><ul><li>3. Islam </li></ul><ul><li>4. Buddhism </li></ul><ul><li>5. Confucianism </li></ul>
  • 27. <ul><li>• Religion has considerable impact on one’s life, </li></ul><ul><li>irrespective of the country to which he or she </li></ul><ul><li>belongs </li></ul><ul><li>• People go to any extent & practise abnormal </li></ul><ul><li>activities in the name of religion. </li></ul>
  • 28. <ul><li>Hinduism </li></ul><ul><li>• Critics argue that by emphasising moksha, dharma , </li></ul><ul><li>renunciation, & asceticism, Hinduism negates enter- </li></ul><ul><li>prenurialism & the wealth acquisitive nature of its </li></ul><ul><li>followers </li></ul><ul><li>• From the time of the Rig Veda, which contains many </li></ul><ul><li>prayers for riches, worldly wealth was looked upon </li></ul><ul><li>as morally desirable for the ordinary man, & indeed </li></ul><ul><li>essential to lead a full & civilised life </li></ul><ul><li>• India had not only a class of luxury-loving & </li></ul><ul><li>pleasure-seeking dilettante but also one of wealth- </li></ul><ul><li>seeking merchants & prosperous craftsmen, who if </li></ul>
  • 29. <ul><li>less respected than the Brahmins & warriors, had an </li></ul><ul><li>honourable place in society. </li></ul>
  • 30. <ul><li>2. Christianity </li></ul><ul><li>• Is the most widely practised religion in the world </li></ul><ul><li>• About one billion people, approximately 20 % </li></ul><ul><li> of the world’s population identify themselves as </li></ul><ul><li> Christians </li></ul><ul><li>• The vast majority of Christians live in Europe & </li></ul><ul><li> America, although their numbers are growing in </li></ul><ul><li> Africa </li></ul><ul><li>• Protestantism (one branch of Christianity, the </li></ul><ul><li> other being Catholicism) has considerable </li></ul><ul><li> implications for business </li></ul><ul><li>• Capitalism, which is the most dominant economic </li></ul><ul><li> philosophy to-day, has grown out of </li></ul><ul><li> Protestantism which advocates hard-work & </li></ul><ul><li>encourages wealth acquisition. </li></ul>
  • 31. <ul><li>3. Islam </li></ul><ul><li>• Is the second largest religion with followers spread </li></ul><ul><li>over more than 35 countries & inhabiting an almost </li></ul><ul><li>continguous stretch of land from the north west </li></ul><ul><li>coast of Africa through the Middle East, to China & </li></ul><ul><li>Malaysia in the Far East </li></ul><ul><li>• Islam prohibits receipt of payment of interest which </li></ul><ul><li>is considered usury </li></ul><ul><li>• Some critics argue that Islam discourages profit. </li></ul><ul><li>This is not true </li></ul><ul><li>• The Quran speaks approvingly of free enterprise & </li></ul><ul><li>of earning legitimate profit through trade & </li></ul><ul><li>commerce </li></ul>
  • 32. <ul><li>• Islam also advocates market based systems </li></ul><ul><li>• Given this proclivity, Muslim countries tend to </li></ul><ul><li>attract inter-national businesses so long as they </li></ul><ul><li>behave in a manner that is consistent with Islamic </li></ul><ul><li>ethics. </li></ul>
  • 33. <ul><li>4. Buddhism </li></ul><ul><li> • Has 250 million followers in Central & South East </li></ul><ul><li>Asia, China, Korea, & Japan </li></ul><ul><li> • Buddhists stress spiritual achievement & obviously </li></ul><ul><li>wealth creation is not encouraged </li></ul><ul><li> • In Buddhist societies, we do not see the same kind of </li></ul><ul><li>cultural stress on entrepreneurial behaviour that we </li></ul><ul><li>see in the Protestant West </li></ul>
  • 34. <ul><li>5. Confucianism </li></ul><ul><li> • Numbering over 150 million are found in China, </li></ul><ul><li>Korea, & Japan </li></ul><ul><li> • The religion teaches the importance of attaining </li></ul><ul><li>personal salvation through right action </li></ul><ul><li> • Confucianism is built around a comprehensive </li></ul><ul><li>ethical code that sets down guidelines for relation- </li></ul><ul><li>ship with others </li></ul><ul><li> • The need for high moral & ethical conduct & loyalty </li></ul><ul><li>to others are central to Confucianism </li></ul><ul><li> • Confucianism has economic tenets too </li></ul><ul><li> • It teaches the followers to lower the costs of doing </li></ul>
  • 35. <ul><li>business & this has largely contributed to the eco- </li></ul><ul><li>nomic success of Japan, South Korea, & Taiwan </li></ul><ul><li>• Three principles are central to Confucianism – </li></ul><ul><li>loyalty, reciprocal obligations, & honesty. </li></ul>
  • 36. <ul><li>Education & Culture </li></ul><ul><li>• In its broad sense, education is the lifelong process of </li></ul><ul><li>learning through which members of a society </li></ul><ul><li>acquire knowledge & develop skills, ideas, values, </li></ul><ul><li>norms, & attitudes which they share with other </li></ul><ul><li>members of the society </li></ul><ul><li>• Economic progress of a country depends on the </li></ul><ul><li>education of its citizens </li></ul><ul><li>• This being a broad statement, specific economic </li></ul><ul><li>implications are as follows :- </li></ul><ul><li>1. Countries rich in educational facilities attract </li></ul>
  • 37. <ul><li>high-wage industries. By investing in </li></ul><ul><li>education, a country can attract (nay, create) </li></ul><ul><li>the kind of high-wage industries that are often </li></ul><ul><li>called “brain power” industries </li></ul><ul><li>2. The market potential of a country depends on </li></ul><ul><li>education. Educationally advanced countries, </li></ul><ul><li>such as England, France, & Germany are </li></ul><ul><li>more likely to be markets for computers & </li></ul><ul><li>high-tech equipment than are less educated </li></ul><ul><li>countries, such as Poland, the Czech </li></ul><ul><li>Republic, & Romania. It is also likely that </li></ul><ul><li>MNCs doing business in these countries will </li></ul><ul><li>find it easier to hire & train local managers in </li></ul><ul><li>Western Europe than in Eastern Europe </li></ul>
  • 38. <ul><li>3. The level of literacy & educational attainment </li></ul><ul><li>determines the nature of advertising, </li></ul><ul><li>packaging, quality of market research, & </li></ul><ul><li>distribution systems available or prevalent in </li></ul><ul><li>a country. </li></ul>
  • 39. <ul><li>Aesthetics & Culture </li></ul><ul><li>• Aesthetics relates to the artistic tastes of a culture </li></ul><ul><li>• Aesthetic values of Indians, for example, are </li></ul><ul><li>different from those of Canadians as reflected by </li></ul><ul><li>the art, literature, music, & artistic tastes </li></ul><ul><li>• One important manifestation of aesthetics is the </li></ul><ul><li>behaviour of people </li></ul><ul><li>• International managers should understand </li></ul><ul><li>aesthetic local values if he or she has to appreciate </li></ul><ul><li>another culture & the way in which business must </li></ul><ul><li>address these values in the international arena </li></ul>
  • 40. <ul><li>• Another aesthetically related area is colour </li></ul><ul><li>• In many Western countries, the colour black is </li></ul><ul><li>associated with mourning, while white is with joy & </li></ul><ul><li>purity </li></ul><ul><li>• In many Asian countries, white is the colour for </li></ul><ul><li>mourning </li></ul><ul><li>• Green is the favoured colour in Islam but it is </li></ul><ul><li>associated with sickness across much of Asia </li></ul><ul><li>• Music is deeply embedded in culture & should be </li></ul><ul><li>considered while promoting goods & services </li></ul><ul><li>• It can be used in clever & creative ways or in ways </li></ul><ul><li>that are offensive to the local population </li></ul><ul><li>• The architecture of buildings & other structures </li></ul>
  • 41. <ul><li>should also be researched to avoid making cultural </li></ul><ul><li>blunders due to the symbolism of certain shapes & </li></ul><ul><li>forms. </li></ul>
  • 42. <ul><li>Attitudes & Culture </li></ul><ul><li>• Attitudes are positive or negative evaluations, </li></ul><ul><li>feelings, & tendencies which make an individual </li></ul><ul><li>behave in a particular way towards people or </li></ul><ul><li>objects </li></ul><ul><li>• Attitudes include opinion about individual freedom, </li></ul><ul><li>democracy, truth & honesty, the role of sexes, </li></ul><ul><li>justice, love, marriage, & sex </li></ul><ul><li>• Of particular interest to us in this context are the </li></ul><ul><li>attitudes towards work, business, & time & the </li></ul><ul><li>future. </li></ul>
  • 43. <ul><li>Culture vis-a-vis Customs & Manners </li></ul><ul><li>• Customs are common & established practices </li></ul><ul><li>• Manners are behaviours that are regarded as </li></ul><ul><li>appropriate in a particular society </li></ul><ul><li>• Customs dictate how things are to be done; manners </li></ul><ul><li>are used in carrying them out </li></ul><ul><li>• Further, manners are pointers of an individual’s </li></ul><ul><li>character whereas customs are what society </li></ul><ul><li>collectively expects its members to do </li></ul><ul><li>• The inter-national manager should understand the </li></ul>
  • 44. <ul><li>manners & customs of host country citizens </li></ul><ul><li>• Failure to understand & respect local customs & </li></ul><ul><li>manners may land the manager in trouble, besides </li></ul><ul><li>losing business </li></ul><ul><li>• In Arab countries, for example, it is considered bad </li></ul><ul><li>manners to attempt to shake hands with a person of </li></ul><ul><li>higher authority unless this individual makes the </li></ul><ul><li>first gesture to do so, unlike in the US where a </li></ul><ul><li>person would not hesitate to offer his or her hand </li></ul><ul><li>regardless of the person’s rank </li></ul><ul><li>• Similarly, shaking hands with the opposite sex is not </li></ul><ul><li>appreciated in India, though the practice is </li></ul><ul><li>prevalent in some other countries </li></ul>
  • 45. <ul><li>Supernatural Beliefs </li></ul><ul><li>• All societies have a certain degree of control over </li></ul><ul><li>their physical & social environments </li></ul><ul><li>• People in all societies can understand & predict a </li></ul><ul><li>number of things </li></ul><ul><li>• Things like car cannot run without petrol, Sun </li></ul><ul><li>always rises in the east & sets in the west & apple </li></ul><ul><li>falls on the earth are predictable </li></ul><ul><li>• But, there are certain other things which are not </li></ul><ul><li>predictable :why a person dies on the spot in an </li></ul><ul><li>accident when the person sitting next to him/her is </li></ul><ul><li>unscathed? </li></ul>
  • 46. <ul><li>• Societies must develop supernatural belief systems </li></ul><ul><li>for explaining these unexplainable happenings </li></ul><ul><li>• The people explain the unexplainable by relying on </li></ul><ul><li>various types of supernatural explanations, such as </li></ul><ul><li>magic, religion, witchcraft, sorcery, & astrology </li></ul><ul><li>• Supernatural belief systems affect the conduct of </li></ul><ul><li>business by shaping attitudes about work, savings, </li></ul><ul><li>consumption, efficiency, individual responsibility & </li></ul><ul><li>decision making </li></ul><ul><li>• Followers of Hinduism believe in Vastu </li></ul><ul><li>• Vastu decides the direction of the factory gate, main </li></ul><ul><li>entrance of the premises, place where CEO should </li></ul><ul><li>sit, & whether or not the company should diversify/ </li></ul><ul><li> acquire another business </li></ul>
  • 47. <ul><li>Implications for Inter-national Business </li></ul><ul><li>• Global businesses are the repositories of </li></ul><ul><li>multi-cultures </li></ul><ul><li>• Multi-culturalism means that people from many </li></ul><ul><li>cultures (& frequently many countries) interact </li></ul><ul><li>regularly </li></ul><ul><li>• The scenario is highly complex with several national </li></ul><ul><li>cultures & sub-cultures interacting regularly </li></ul><ul><li>• Managing multi-culturalism is essential for every </li></ul><ul><li>inter-national firm </li></ul><ul><li>• Four tasks are crucial :-- </li></ul><ul><li> a) spreading cross-cultural literacy, b) culture & competitive advantage, c) managing diversity & d) strategy culture fit </li></ul>
  • 48. <ul><li>a) Spreading Cross-Culture Literacy </li></ul><ul><li>• One of the biggest dangers confronting a firm that </li></ul><ul><li>enters a foreign market for the first time is the </li></ul><ul><li>problem of being ill-informed </li></ul><ul><li>• Inter-national businesses that fail to understand </li></ul><ul><li>host-country cultures are likely to fail </li></ul><ul><li>• Doing business in different cultures requires </li></ul><ul><li>adaptation to conform with the nuances of that </li></ul><ul><li>culture </li></ul><ul><li>• An inter-national manager has to bear in mind that </li></ul><ul><li>local people often expect higher standards of </li></ul><ul><li>behaviour & tolerate far less deviation from local </li></ul>
  • 49. <ul><li>manners & customs from foreign companies than </li></ul><ul><li>from a native firm. </li></ul>
  • 50. <ul><li>Removing Cross-Cultural Illiteracy </li></ul><ul><li>• One way to appoint local citizens to do business in a </li></ul><ul><li>particular culture </li></ul><ul><li>• Firms should also be ensure that home-country </li></ul><ul><li>executives are cosmopolitan enough to understand </li></ul><ul><li>how differences in culture affect the practice of inter-national business </li></ul><ul><li>• Transferring executives overseas at regular intervals </li></ul><ul><li>to expose them to different cultures will help build a </li></ul><ul><li>cadre of cosmopolitan executives </li></ul><ul><li>• An inter-national business must also be constantly </li></ul><ul><li>on guard against the dangers of ethnocentric </li></ul>
  • 51. <ul><li>behaviour </li></ul><ul><li>• The ethnocentric person sees his or her own group </li></ul><ul><li>as the centre or defining point of culture & views of </li></ul><ul><li>all other cultures as deviations from what is normal </li></ul><ul><li>• Hand-in-hand with ethnocentrism goes a disregard </li></ul><ul><li>or contempt for the culture of other countries </li></ul><ul><li>• Unfortunately, ethnocentrism is all too prevalent; </li></ul><ul><li>many Indians are guilty of it, as are many </li></ul><ul><li>Americans, French, Japanese, Britishers, & so on </li></ul><ul><li>• Ugly as it is, ethnocentrism is a fact of life & the </li></ul><ul><li>inter-national businesses must be on continual guard </li></ul><ul><li>against it </li></ul><ul><li>• How do inter-national managers learn to live with </li></ul>
  • 52. <ul><li>other cultures? </li></ul><ul><li>• The first step is to realise that there are cultures different from their own </li></ul><ul><li>• They must then go on to learn the characteristics of those cultures so that they may adapt to them. </li></ul>
  • 53. Multi culture Managing diversity Compatibility between Strategy & culture Culture & Competitive advantage Spread Cross-culture literacy Multi Culture & Inter-national Business
  • 54. <ul><li>b) Culture & Competitive Advantage </li></ul><ul><li>• Culture may sound abstract but the norms & values </li></ul><ul><li>prevalent in a society do influence the costs of doing </li></ul><ul><li>business in that country </li></ul><ul><li>• These costs influence the ability of enterprises to </li></ul><ul><li>establish a competitive advantage in the global </li></ul><ul><li>market place </li></ul><ul><li>• Japan presents us with an example of how culture </li></ul><ul><li>can influence competitive advantage </li></ul><ul><li>• The country’s emphasis on group affiliation, loyalty, </li></ul><ul><li>reciprocal obligations, honesty, & education -- all boost the competitiveness of Japanese companies </li></ul>
  • 55. <ul><li>• The emphasis of group affiliation & loyalty </li></ul><ul><li>encourages individuals to identify strongly with the </li></ul><ul><li>companies in which they work </li></ul><ul><li>• This tends to foster an ethic of hard work & co- </li></ul><ul><li>operation between workers & management for the </li></ul><ul><li>good of the company </li></ul><ul><li>• In addition, the availability of a pool of highly skilled </li></ul><ul><li>labour, particularly, engineers, has helped Japanese </li></ul><ul><li>companies develop cost reduction techniques </li></ul><ul><li>• A different picture is found in Britain </li></ul><ul><li>• Here, the class-based conflict between workers & </li></ul><ul><li>management has disrupted industrial relations, </li></ul><ul><li>raising the cost, of doing business </li></ul>
  • 56. <ul><li>• For inter-national business, the connection between </li></ul><ul><li>culture & competitive advantage is important for </li></ul><ul><li>two reasons :- </li></ul><ul><li>• First, the conjunction suggest which countries are </li></ul><ul><li>likely to produce the most viable competitors </li></ul><ul><li>The Pacific Rim nations (South Korea, Taiwan, </li></ul><ul><li>Japan, & China), for example, are likely to produce </li></ul><ul><li>cost-effective competitors because of the </li></ul><ul><li>combination of free market economies, Confucian </li></ul><ul><li>ideology, group-oriented social structures, & </li></ul><ul><li>advanced education systems ; </li></ul><ul><li>• Secondly, the relationship between culture & </li></ul><ul><li>competitive advantage has important implications </li></ul>
  • 57. <ul><li>for the choice of countries in which to locate </li></ul><ul><li>production facilities & do business </li></ul><ul><li>• Obviously, a country that has strong cultural </li></ul><ul><li>support attracts a vast inflow of FDI </li></ul>
  • 58. <ul><li>c) Managing Diversity </li></ul><ul><li>• Managing diversity means establishing a hetero- </li></ul><ul><li>geneous work-force to perform to its potential in an </li></ul><ul><li>equitable work environment where no member (or </li></ul><ul><li>group of members) has an advantage or a </li></ul><ul><li>disadvantage </li></ul><ul><li>• Managing diversity is a challenge for an inter- </li></ul><ul><li>national manager </li></ul><ul><li>• The challenge is to create a work environment in </li></ul><ul><li>which each person can perform to his or her full </li></ul><ul><li>potential & therefore compete for promotions & </li></ul><ul><li>other rewards on merit alone </li></ul>
  • 59. <ul><li>• Success in the inter-national arena is greatly deter- </li></ul><ul><li>mined by an MNCs ability to manage diversity </li></ul><ul><li>• Inter-action helps bring employees together, thus </li></ul><ul><li>leading to diversity </li></ul><ul><li>• Most companies encourage interaction & therefore </li></ul><ul><li>go in exchange programmes </li></ul><ul><li>• Wipro introduced exchange programmes so that </li></ul><ul><li>American Management System (AMS) employees could come to Bangalore & vice versa </li></ul><ul><li>• HCL in its first three months sent 20 employees each </li></ul><ul><li>on both sides for an exchange programme so that the </li></ul><ul><li>two sides could work together as a team </li></ul><ul><li>• MphasiS encouraged its Chinese engineers to work </li></ul>
  • 60. <ul><li>alongside MphasiS engineers on its US accounts </li></ul><ul><li>• Similarly, for a Japanese project, the development </li></ul><ul><li>is co-located in Shanghai & Mumbai, involving </li></ul><ul><li>travel, co-ordination & knowledge sharing across </li></ul><ul><li>both locations </li></ul><ul><li>• All this goes a long way in buildings a rapport </li></ul><ul><li>between teams </li></ul><ul><li>• WIPRO has come out with an interesting concept of </li></ul><ul><li>‘ buddies’ </li></ul><ul><li>• This means that for every five employees of AMS, </li></ul><ul><li>there is one WIPRO employee as their buddy who </li></ul><ul><li>would guide them on WIPRO rules & regulations </li></ul><ul><li>• 40 per cent of Infoscions are non-Indians </li></ul>
  • 61. <ul><li>• At HSBC, 30 per cent are Asian & nearly 70 per cent </li></ul><ul><li>are Latin American. </li></ul>
  • 62. <ul><li>Diversity – Advantages & Disadvantages </li></ul><ul><li>• Diversity, though a challenging task to manage, </li></ul><ul><li>carries within it certain advantages </li></ul><ul><li>• One main benefit of diversity is the generation of </li></ul><ul><li>more & better ideas </li></ul><ul><li>• Because group member come from a host of </li></ul><ul><li>different cultures, they are often able to create </li></ul><ul><li>unique & creative solutions & recommendations </li></ul><ul><li>• A second major benefit is that culturally diverse </li></ul><ul><li>groups can prevent groupthink, which is social </li></ul><ul><li>conformity & pressures on individual members of a </li></ul><ul><li>group to conform & reach a consensus </li></ul>
  • 63. <ul><li>• When this occurs, group participants believe that </li></ul><ul><li>their ideas & actions are correct & those who </li></ul><ul><li>disagree with them are either uninformed or are </li></ul><ul><li>deliberately trying to sabotage their efforts </li></ul><ul><li>• Multi-cultural diverse groups are able to avoid this </li></ul><ul><li>problem, because the members do not think </li></ul><ul><li>similarly or feel the pressure to conform </li></ul><ul><li>• As a result, they typically question each other, offer </li></ul><ul><li>opinions & suggestions that are contrary to those </li></ul><ul><li>held by others & must be persuaded to change their </li></ul><ul><li>minds </li></ul><ul><li>• Therefore, unanimity is achieved only through a </li></ul><ul><li>careful process of deliberation </li></ul>
  • 64. <ul><li>• Decision-making may be very slow, unlike in a </li></ul><ul><li>homogeneous group, but the decision reached tend to be very effective </li></ul><ul><li>• There are problems associated with diversity, never- </li></ul><ul><li>theless </li></ul><ul><li>• Diversity may cause a lack of cohesion that results </li></ul><ul><li>in the firm’s inability to take concerted action, be </li></ul><ul><li>productive, & create a work environment that is </li></ul><ul><li>conducive to both efficiency & effectiveness </li></ul><ul><li>• These problems are rooted in people’s attitudes </li></ul><ul><li>• There are perceptual problem too </li></ul><ul><li>• When culturally diverse groups come together, they often bring pre-conceived stereotypes with them </li></ul>
  • 65. <ul><li>• A related problem is inaccurate biases </li></ul><ul><li>• Japanese firms, for example, depend on groups to </li></ul><ul><li>make decisions </li></ul><ul><li>• Entrepreneurial behaviour, individualism, & </li></ul><ul><li>originality are down-played </li></ul><ul><li>• Yet another potential problem with diverse groups </li></ul><ul><li>is inaccurate communication, which could occur for </li></ul><ul><li>a number of reasons </li></ul><ul><li>• One is misunderstandings caused by words used by </li></ul><ul><li>one but not clear to others </li></ul><ul><li>• Another problem is the way in which situations are </li></ul><ul><li>interpreted </li></ul><ul><li>• Many Japanese nod their heads when others talk, </li></ul>
  • 66. <ul><li>but this does not necessarily imply their approval </li></ul><ul><li>• They are merely being polite & attentive </li></ul><ul><li>• Different uses of time may also lead to </li></ul><ul><li>communication problems </li></ul><ul><li>• For example, many Japanese will not agree to a </li></ul><ul><li>course of action on-the-spot </li></ul><ul><li>• They will not act until they have discussed the </li></ul><ul><li>matter with their own people because they do not </li></ul><ul><li>feel empowered to act alone </li></ul><ul><li>• Many Latin managers refuse to be held to strict </li></ul><ul><li>time-tables, because they do not have the same time- </li></ul><ul><li>urgency that US managers do. </li></ul>
  • 67. <ul><li>Managing Diversity – Some Practical Measures </li></ul><ul><li>• Having discussed the diverse work-forces, & their </li></ul><ul><li>benefits & potential problems, it is appropriate to </li></ul><ul><li>list out some practical steps that managers can </li></ul><ul><li>take to manage diversity </li></ul><ul><li>• Here are some such steps :- </li></ul><ul><li>• Focus on bringing in the best talent, not on </li></ul><ul><li>meeting numerical goals. Geocentric policy </li></ul><ul><li>towards staffing should be the guiding </li></ul><ul><li>principle </li></ul><ul><li>• Hold managers accountable for meeting goals </li></ul><ul><li>of diversity </li></ul>
  • 68. <ul><li>• Establish monitoring programmes among </li></ul><ul><li>employees of same & different races </li></ul><ul><li>• Develop career plans for employees as part of </li></ul><ul><li>performance reviews </li></ul><ul><li>• Develop an age, gender, & race/ethnic profile </li></ul><ul><li>of the present work-force </li></ul><ul><li>• Promote minorities & other disadvantaged </li></ul><ul><li>sections to decision-making positions, not just </li></ul><ul><li>to staff jobs </li></ul><ul><li>• Diversify the company’s board of directors </li></ul><ul><li>• Provide extended leaves, flexible scheduling, </li></ul><ul><li>flexi-time, job sharing, & opportunities to </li></ul><ul><li>tele-communicate, particularly for </li></ul><ul><li>disadvantaged workers </li></ul>
  • 69. <ul><li>d) Culture Strategy Compatability </li></ul><ul><li>• A culture & strategy fit is essential for the success of </li></ul><ul><li>an inter-national business (see exhibit below) </li></ul>
  • 70. <ul><li>Strategy - Culture Fit </li></ul>Name of Company Strategy - Culture Fit P&G During 1980s, modified its bulky diapers in Japan to ‘trim-fit’ which helped regain 30 per cent market share. Trim-fit became best sellers in the US. Asian Paints Became APCO in Australia, as Australians are averse to the terms Asia. Coca-Cola Labels on bottles supplied to gulf contain ‘no-alcohol’. Nokia Introduced Hindi SMS for Indian
  • 71. <ul><li>users of cell phones </li></ul><ul><li>McDonald’s ‘Meat prepared after halal’ is </li></ul><ul><li>printed on the label before </li></ul><ul><li>exporting meat to Saudi Arabia </li></ul>
  • 72. <ul><li> • Cultural differences provide challenges to inter- </li></ul><ul><li>national managers in marketing products, managing </li></ul><ul><li>work-forces, & dealing with host-country govern- </li></ul><ul><li>ments </li></ul><ul><li>• But fortunately, similarities do exist among many </li></ul><ul><li>cultures, thereby reducing some of the needs to </li></ul><ul><li>customise business practices to meet the demands of </li></ul><ul><li>local cultures </li></ul><ul><li>• Countries that share cultural similarities form a </li></ul><ul><li>cultural cluster or simply called the convergence </li></ul><ul><li>Several development account for convergence </li></ul><ul><li>• Customers’ needs across societies are similar. </li></ul><ul><li> In order to meet identical needs, companies </li></ul>
  • 73. <ul><li>need to produce similar goods. Similar </li></ul><ul><li>production process are needed to produce such </li></ul><ul><li>products </li></ul><ul><li>• Growing industrialisation & economic </li></ul><ul><li>development enable organisations to have the </li></ul><ul><li>technical & financial capability to use similar </li></ul><ul><li>technologies </li></ul><ul><li>• Global competition & global trade contribute </li></ul><ul><li>to convergence. Inter-national competition </li></ul><ul><li>raises managerial awareness of what people in </li></ul><ul><li>other societies are doing. Japanese competition </li></ul><ul><li>with the other countries for example, enabled </li></ul><ul><li>companies elsewhere to initiate such </li></ul>
  • 74. <ul><li>managerial practices as Just-in-Time (JIT) </li></ul><ul><li>inventory, Kaizen, open offices, & common </li></ul><ul><li>uniforms </li></ul><ul><li>• Inter-national strategic alliances contribute to </li></ul><ul><li>clusters. With inter-national co-operative </li></ul><ul><li>arrangements among competitors, an </li></ul><ul><li>increasing number of firms from diverse </li></ul><ul><li>nationalities combine with one another to form </li></ul><ul><li>one organisation. These joint ventures or </li></ul><ul><li>alliances provide a wealth of information on </li></ul><ul><li>the organisational practices of other societies. </li></ul><ul><li>Later, parent organisations use this knowledge </li></ul><ul><li>to change & improve their own organisations. </li></ul>
  • 75. <ul><li>• Business education also serves to harmonise </li></ul><ul><li>organisational practices. In particular, the </li></ul><ul><li>large number of inter-national students in US </li></ul><ul><li>& European MBA programmes helps spread </li></ul><ul><li>common business techniques. Many students </li></ul><ul><li>return to their home countries with the intent </li></ul><ul><li>of adopting management practices that best fit </li></ul><ul><li>their national cultures. For example, many of </li></ul><ul><li>the high-tech firms in India, Korea, & Taiwan </li></ul><ul><li>are staffed with top executives who were </li></ul><ul><li>educated in the US & stayed on to work for a </li></ul><ul><li>decade or more. Now, they are returning to </li></ul><ul><li>their homelands with technical & managerial </li></ul><ul><li>expertise </li></ul>
  • 76. <ul><li>Tackling the Cultural Factor – Strategies </li></ul><ul><li>• Many inter-national businesses utilise the country- </li></ul><ul><li>clustering approach in formulating their inter- </li></ul><ul><li>national strategies </li></ul><ul><li>• Many firms from New Zealand focus their first </li></ul><ul><li>exporting efforts on Australia. </li></ul><ul><li>• Similarly, Hong Kong firms have been very </li></ul><ul><li>successful in exploiting China’s markets </li></ul>
  • 77. <ul><li>Worldwide Integration Strategy </li></ul><ul><li>• Firms use either a world-wide integration strategy </li></ul><ul><li>or local (national) responsive strategy </li></ul><ul><li>• Standardised products are developed & are sold </li></ul><ul><li>throughout the world with few alternations. </li></ul>
  • 78. <ul><li>National Responsive Strategy </li></ul><ul><li>• A national responsive strategy allows subsidiaries to </li></ul><ul><li>enjoy substantial latitude in adopting products & </li></ul><ul><li>services to suit the particular needs & cultural </li></ul><ul><li>realities of the countries in which they operate. </li></ul>
  • 79. <ul><li>Types of National Responsiveness </li></ul><ul><li>There are three general categories of national </li></ul><ul><li>responsiveness :- </li></ul><ul><li>1. Product Adaptation </li></ul><ul><li>2. Individual Adjustment </li></ul><ul><li>3. Institutional Adaptation </li></ul>
  • 80. <ul><li>Product Adaptation </li></ul><ul><li>• This refers to the differentiation of a firm’s product </li></ul><ul><li>to capture a particular niche in the market </li></ul><ul><li>• Product differentiation also means adapting the </li></ul><ul><li>product to suit cultural differences in the host- </li></ul><ul><li>culture by modifying its characteristics, as for </li></ul><ul><li>example, Coca-Cola changing the name of its Diet </li></ul><ul><li>Coke to Coke Light in Japan because the word ‘diet’ </li></ul><ul><li>has a disagreeable connotation. </li></ul>
  • 81. <ul><li>Individual Adjustment </li></ul><ul><li>• This is sought to be accomplished through training </li></ul><ul><li>• Training should be provided to all personnel & their </li></ul><ul><li>families going on inter-national assignments, as they </li></ul><ul><li>would be exposed to a cultural environment which </li></ul><ul><li>may be very different from their own </li></ul><ul><li>• The managers & their families will face daily </li></ul><ul><li>challenges, excitement, frustration, uncertainty, & </li></ul><ul><li>anxiety </li></ul><ul><li>• The degree of success with which they respond to </li></ul><ul><li>these feelings & emotions & their ability to handle </li></ul><ul><li>them effectively will depend on the success of their </li></ul>
  • 82. <ul><li>training & more importantly, on their skills, </li></ul><ul><li>stamina, linguistic & communicative competence, </li></ul><ul><li>intelligence, level of interest & knowledge of the host </li></ul><ul><li>-culture, & their ability to empathise with members </li></ul><ul><li>of the host-culture </li></ul><ul><li>• A successful manager is one who communicates in </li></ul><ul><li>the host’s language, behaves in an appropriate </li></ul><ul><li>manner, observing all the local manners & customs, </li></ul><ul><li>& relates to every one in a manner that enables the </li></ul><ul><li>local people to accept him or her as one of them. </li></ul>
  • 83. <ul><li>Institutional Adaptation </li></ul><ul><li>• An inter-national firm seeks institutional adaptation </li></ul><ul><li>by adopting an appropriate organisational structure </li></ul><ul><li>& policies to fit into the host-culture </li></ul><ul><li>• An organisational design in one culture may be </li></ul><ul><li>totally inappropriate in another </li></ul><ul><li>• Human resources practices need to be modified to </li></ul><ul><li>take into account the differences in remuneration, </li></ul><ul><li>employment, promotion, & training methods </li></ul><ul><li>• In Islamic countries, for instance, work scheduling </li></ul><ul><li>would have to allow sufficient time & provide suit- </li></ul><ul><li>able facilities for employees to pray at certain times </li></ul>
  • 84. <ul><li>of the day </li></ul><ul><li>• Recruitment policies would have to recognise class </li></ul><ul><li>& ethnic distinctions in order to avoid causing </li></ul><ul><li>offence to employees & customers from different </li></ul><ul><li>class & ethnic backgrounds </li></ul>
  • 85.  

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