Culture and IB

1. Business and Economics
INTERNATIONAL
BUSINESS MGF2351

2. Objectives
 Tutorial Program Week 3
 Group allocations: WHO IS NOT IN A GROUP?
 We need presenters for all the topics.
 Week 5 (Good Friday)
 Essay Tips

3. Key Terms
 Cross-cultural literacy- Awareness of cultural differences across and
within countries and their impact on business.
 Examples: Weekend in Middle-east is Friday, Role of Women, Time,
Visiting cards ( power, status).
 Culture has an IMPACT on COST OF CONDUCTING business.
 Class Consciousness (Upper class and labor class) leading to industrial
disputes.
 Religion, Ethics and Business Practice (Entrepreneurship, capitalism,
wealth creation, interest)
 Education and National Competitive Advantage

5. Work in pairs!
 Q1. Discuss how a nation’s culture is shaped by the dominant
religion, language, social structure and education. How would you
describe the national culture of Australia based on these factors
 Q2. Do you think that business practices in Indonesia are likely to
differ from business practices in Australia? If so how?
 Q3. What are the implications for international business of
differences in the dominant religion or ethical system of a
country?

6. Q1. Discuss how a nation’s culture is shaped by the dominant
religion, language, social structure and education. How would you
describe the national culture of Australia based on these factors?
 The costs of doing business rise as people grapple with unfamiliar ways of doing business.
 In Australia people get down to business first, and then get to know each other socially later, in
many Middle-Eastern countries it is important develop a good social relationship before trying to
discuss business issues.
 Different class structures and social mobility also raise the costs of doing business, for if there are
inhibitions against working with people from different classes, then the efficiency with which
information can flow may be limited and the cost of running a business increased.
 A country's religion can also affect the costs of business, as religious values can affect attitudes
towards work, entrepreneurship, honesty, fairness, and social responsibility. In Hindu societies
where the pursuit of material well-being can be viewed as making spiritual well-being less likely,
worker productivity may be lower than in nations with other religious beliefs.
 A country's education system can have important implications for the costs of business. In countries
where workers receive excellent training and are highly literate, the need for specific worker training
programs are decreased and the hiring of additional employees is facilitated.
http://www.youtube.com/watch?v=gWmv5RzJiuE

7. Q2. Do you think that business practices in Indonesia are likely
to differ from business practices in Australia? If so how?
 The cultural differences between a Muslim majority country like Indonesia and Christian
majority country such as Australia will cause business practices to differ dramatically.
 The public role women can take, appropriate etiquette (including simple things like not
passing objects with the left hand), holidays, and wining and dining all differ from patterns in
Australia.
 The underlying ideal and understanding of the role of business also differs. Since Muslims
are stewards of property for God, rather than owners, they are more likely to use their
resources carefully and may be less likely to give up or sell something to a person who may
not practice the same stewardship.
 The importance of fairness to all parties in all relations means that over-aggressiveness and
self-interest may not be well received, and breaking an agreement, even if
technically/legally permissible, may be viewed as inappropriate and the sign of a huge
character flaw.
 Finally, the prohibitions on interest payments in some Muslim countries means that the
wording of the terms of an agreement must be careful so that "fair profits" are not construed
as being "interest payments."

8. Q3. What are the implications for international business of
differences in the dominant religion or ethical system of a country?
• Differences in the dominant religion of a country affect relationships, attitudes toward
business, and overall economic development.
• First, differences in religion require inter-cultural sensitivity. This sensitivity requires
things like simply knowing the religious holidays, accepting that some unexpected things
may happen "because of god's will," or understanding how interpersonal relationships may
be different between "believers" and "non-believers." (Hence non-believers may be treated
differently.)
• Second, religious beliefs can significantly affect a country’s attitude toward
business, work, and entrepreneurship. In one country successfully beating a competitor
may be considered a great achievement while in another it may be thought of as showing
a lack of compassion, or disruptive to the society and persons involved, both attitudes that
may be derived from underlying religious beliefs. Likewise, hard work may be either
rewarded positively or viewed as something of secondary importance to spiritual peace
and harmony.
• Thirdly, different dominant religions may affect the overall competitiveness and potential
for economic growth of a nation, and hence attractiveness of a country for international
business.

9. Case Study: Matsushita(Panasonic) and Japan’s
Changing Culture
 Strong Japanese values especially Confucian values within the
organisation.
 In terms of Hofstede’s cultural dimensions (high uncertainty
avoidance)
 Change in Culture
 Eco stagnation
 Change in Leadership, Influenced by the American Culture

10. Q1. What were the triggers of cultural change in Japan during the 1990s?
How is cultural change starting to affect traditional values in Japan?
• A shift in traditional values began to emerge in Japan as the generation born
after 1964 started to come of age.
• This generation resisted many of the values shared by their parents and
instead embraced many Western traditions.
• Many watched as troubled companies reneged (went back) on lifetime
employment commitments made during the post-ward period and decided that
instead of being tied to a single company they wanted the freedom to move
around in the same way that their Western counterparts could.
•In this new cultural era, values characteristic of employees in the Western
world such as individual effort will become more important in Japanese
business, and that these new values will eventually make their way into other
parts of Japanese life as well.

11. Q2. How might Japan’s changing culture influence the way Japanese
businesses operate in the future? What are the potential implications of
such changes for the Japanese economy?
• The new generation, which resisted the lifetime employment concept of their parents, has pushed for
more freedom to move from company to company.
• This generation will make individual effort and initiative more important for success in Japan. These
values may promote more risk taking by Japanese companies and in doing so influence the highs and
lows of Japan’s economy in a more direct way.
3) How did traditional Japanese culture benefit Matsushita during the 1950s-
1980s? Did traditional values become more of a liability during the 1990s
and early 2000s? How so?
• Japan’s traditional culture helped Matsushita become a major economic power during the post-war years
and through the 1980s.
• Matsushita agreed to take care of its employees for life providing benefits such as subsidized housing
and retirement bonuses in exchange for loyalty and hard work.
• However, the prolonged economic slump that began in the 1990s made these commitments difficult to
keep. Matsushita was saddled with high expenses and no real way to cut them. It is similar to the more
recent challenges of GM to maintain the commitments it had made to its older workers.

12. Q4. What is Matsushita trying to achieve with the human resource changes it has announced? What
are the impediments to successfully implementing these changes? What are the implications for
Matsushita if (a) the changes are made quickly or (b) it takes years or even decades to fully implement
the changes?
• In 2000, Matsushita began to make changes to its employment policies offering workers choices between
traditional lifetime employment options with lower salaries to higher salaries with no long-term commitments.
These changes should give the company more flexibility to reduce its staff as needed as well as cut costs
during leaner times.
• Matsushita is implementing the changes in a gradual manner recognizing that especially among older
workers the new alternatives as not popular.
• The faster Matsushita moves towards a more Western approach to staffing the more flexibility it will have,
but should also recognize that it is important to maintain the values and traditions that are important to
Matsushita’s corporate culture.
Q5) What does the Matsushita case teach you about the relationship between societal culture and
business success?
• Societal culture and business culture are strongly intertwined. A society’s culture has a direct impact in a
company’s culture. The values and traditions that are important in societal culture will typically be important in
corporate culture as well.
• As societal culture changes over time, so should company culture. However, changes in the business
environment can also prompt changes in corporate culture which can then begin to influence societal culture
as well.

13. Internet use explodes in China
 https://www.youtube.com/watch?v=_cywVDheJj8
 Get into 4 groups
 Group 1- How has internet changed Culture in China? Are
Chinese internet users different from their Australian
counterparts?
 Group 2- What is an open democratic society. Does it exist in
China?
 Group 3-What is the Great Firewall? What is Google’s role? Is it
right? Why?
 Group 4- How does China’s culture influence the way
information is disseminated within the country? What does
this mean for people living in China?

14. Essay: 2000 words, 30%
Due: before 5.00 pm, Friday, May 1
“The overall attractiveness of a country as a potential market or investment
site for an international business depends on balancing the benefits, costs,
and risks associated with doing business in that country.”
Critically discuss the above statement in reference to one of the following
countries from the BRICS group: Brazil, Russia, India, China, and South Africa.
Essay Structure: Introduction, Body and Conclusion (Don’t use too many
headings, it is an essay not a report).
 Introduction: Clearly state the Aims, purpose, and the scope of the essay
& Outline the structure of analysis.
Body: Case details, Theoretical framework and analysis.
Conclusion: Summary and key implications for IB managers/ learning
References: Minimum 10 peer reviewed academic articles.

15. Thank You!
Next week :
Submit reference list and peer evaluation forms.
Group for week 4, ALL THE BEST 