International-cultural-environment

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  • 1. 1 International Business Ranjani Srinivasan Chapter 7: International Cultural Environment
  • 2. Chapter 7 INTERNATIONAL CULTURAL ENVIRONMENT Chapter 7: International Cultural Environment
  • 3. Learning Objectives  To understand the significance of culture in international business decisions  To elucidate the concept of culture and its constituents  To explain comparisons of cross-cultural behaviour  To discuss cultural orientation in international business  To appreciate emic versus etic dilemma and its operationalization Chapter 7: International Cultural Environment
  • 4. Significance of Culture A firm operating internationally comes across a wide range of diverse cultural environments, which significantly influence international business decisions. Managers operating internationally need to appreciate the differences among cultural behaviours of their business partners and consumers across various countries. Chapter 7: International Cultural Environment
  • 5. Self Reference Criterion (SRC) An unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decision-making. SRC significantly influences ability of international managers to objectively evaluate environmental factors and make business decision. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 6. Approach to Eliminate SRC Step 1:Define the business problem or goal in home-country traits, habits, or norms. Step 2:Define the business problem or goal in foreign country cultural traits, habits, or norms. Make no value judgments. Step 3:Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. Step 4:Redefine the problem without the SRC influence and solve for the optimum business goal situation. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 7. The Concept of Culture Culture is the way of life of people, including their attitudes, values, beliefs, arts, sciences, modes of perception, and habits of thought and activity. Cultiral differences across the countries significantly influence business decisions. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 8. Constituents of Culture A variety of learned traits that influence human behaviour can contribute to the culture of a social group, the major constituents, include: • value system • norms • aesthetics • customs and traditions • language • religion Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 9. Characteristics of culture       Learned Shared Trans-generational Symbolic Patterned Adaptive Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 10. Value System Shared assumptions of a group about how things ought to be or abstract ideas about what a group believes to be good, desirable, or right. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 11. Value system   Value systems vary among managers across different countries : Eg. US managers : high achievement orientation vs Japanese managers how have a growth and size orientation vs Indian Managers who have moralistic orientation. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 12. Norms Guidelines or social rules that prescribe appropriate behaviour in a given situation. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 13. Norms      For eg. In Japan, aggressive selling is not perceived in the positive spirit. Eg. Indian use hands or different types of spoons for eating. Chinese and Japanese use chopsticks. Europeans and American use forks and knives to cut the food before eating. Lessons: International managers need to know what is acceptable , unacceptable in foreign culture. They also need to know cultural tolerance to business customs that may be grouped as : Cultural Imperatives; Cultural Exclusives; Cultural Adiaphora
  • 14.         Culture Imperatives It refers to norms that must be followed / avoided in a foreign country. For Eg. Too much eye contact in Japan is considered to completely offensive. On the other hand in the Gulf , strong eye contact necessary with an Arab, to establish trustworthiness. Cultural Exclusives: Social patterns which are considered appropriate for locals and in which foreigners are expected not to participate. Eg. Foreigners should stay away from discussions on local country politics, social customs and practices. Cultural Adiaphora : social customs in which a foreigner may participate, so that the Intl. manager may decide whether to participate or avoid. Eg. Bowing in Japanese culture is not expected of foreigners, but such display may be appreciated .
  • 15. Aesthetics Ideas and perceptions that a cultural group upholds in terms of beauty and good taste. music, It includes areas related to dance, painting, drama, architecture, etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 16. Aesthetics       Eg. Colours have different aesthetic value in different cultures: Africa : bright colours are favourites Japan : pastel colours preferred as they express harmony. China : red is lucky colour but associated with witchcraft in Africa. America : blues and greys are perfect for official environments. But blue is evil in Africa Death colours : Black signifies death in America, Europe; In India, Japan & other Asian countries it is white, For Latin Americans Purple means death; Dark red is the mourning colour in the Ivory Coast.
  • 17. Traditions and Customs Traditions: passed The down elements from of culture generation to generation. Customs: An established pattern behaviour within a society. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment of
  • 18. Traditions and Customs      International managers need to know the customs and traditions of the culture being dealt with: Eg. Food Habits eg. Chocolate flavors preferred are different in different cultures : Eg. Americans and Germans prefer blends, French- Dark, Dutch –White. Coffee brews: Nescafe manufactures200 different varieties of coffee to suit local tastes. The concept of Indian vegetarianism is very complex for foreigners to understand. Vessels used for cooking both should be different. KFC offers vegetarian dishes in its Indian outlets. Pizza Hut offers Jain Pizza in India alone. Lessons: companies need to modify products/services to suit the local customs and traditions.
  • 19. Manners and Customs...         Manners in gift giving: A lot of preparation and sensitivity required while giving gifts. What and when is important. China : occasion : New Year Preferred Gifts: Modest gifts such as coffee table, books, ties, pens. Japan: Oseibo( January 1) Preferred Gifts : Brandy. Scotch, round fruits such as melons Manners and Customs in the Way Products are used should also be considered Example Orange juice: Breakfast item in US, Refreshment in France Moisturizers : After bath lotion in one, beauty 19 product in another.
  • 20. Language A systematic means of communicating ideas or feelings by the use of conventionalized signs, gestures, marks, or especially articulate vocal sounds.
  • 21. Language The Four Roles of Language Language aids in information gathering and evaluation. Language provides access to local society. Language capability is increasingly important in company communications. Language provides more than the ability to communicate because it extends beyond mechanics to the interpretation of contexts that may influence business operations. 21
  • 22. Languages Top Ten World Languages Language 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Chinese, Mandarin Spanish English Bengali Hindi Portuguese Russian Japanese German, Standard Chinese, Wu Population (in millions) 885 332 322 189 182 170 170 125 98 77
  • 23. Language … some lessons for managers    Even though English is considered lingua-franca for non English speaking countries, it fails to provide non-verbal cues … for example: Coca – Cola was named Ke-kou-ke-la in China which translates in Mandarin to ‘Bite the wax tadpole’. Subsequently Coke found a close phonetic equivalent Ko-kou-ko-Le which translates to ‘Happiness in the mouth’ after researching 40,000 Chinese characters. The Swedish vacuum cleaner Manufacturer Electrolux introduced the same print ad which was successful in Britain in the US Market with the tag line ‘ Nothing sucks like an Electrolux’. Later they found this to be a disaster in the US because ‘sucks’ in American means ‘really Bad’. i.e. Electrolux is a ‘really bad vacuum cleaner’
  • 24. Religion Religious beliefs significantly influence people behaviour and business decision making. Religion elements:  encompasses three distinct •Explanation: God seen as a ‘first cause’ behind the creation of the universe •A standard organization: Consisting of places of worships and rituals •Moral rules of good behaviour : concerning principles of right and wrong in human behaviour.
  • 25. Dominant Religions Christianity Islam Hinduism Buddhism Confucianism 25
  • 26. Religion : lessons for managers Considerable influences international business decisions. For. Eg. Location of commerical buildings and office interiors need to be as per Fen shui in China and Vastu Shastra in India, as it concerns free flow of cosmic energy and keeps evil spirits away. Advertisements and corporate communications must keep religious sentiments in mind. For eg. Islam does not permit shaving. So Shaving equipment makers like Gillette need to be sensitive while advertising their product in Islamic countries.
  • 27. Comparison of Cross Cultural Behavior An appreciation facilitates of cultural international conceptualize and differences managers implement to business strategies in view of cultural sensitivities in various countries. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 28. Hofstede’s Cultural Classification Power distance The extent to which less powerful members of an institution accept that power is distributed unequally. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 29. High Power Distance Countries •High social inequalities tolerated with differences in power and income distribution •Organizational structures are hierarchical based an inequality among superiors and subordinates •Decision making is centralized •Juniors blindly follow the orders of their superiors For instance, Malaysia, countries, India etc. Copyright @ Oxford University Press International Business R. M. Joshi Mexico, Arab Chapter 7: International Cultural Environment
  • 30. Low Power Distance Countries  Superiors and subordinates consider each other equal  Organizations are relatively flatter  Decision making is decentralized For instance, Austria, Sweden, Great Britain, the US etc. Lessons: In view of the power distance, the international manager has to asses the organizational dynamics, identify the key decision makers and accordingly formulate their business strategy for different countries.
  • 31. Individualism vs. Collectivism Individualism: The tendency of people to look after themselves and their immediate family.  Strong work ethics  Promotions based on merit  Involvement of employees in the organization is calculative.  Ability to be independent of others is considered to be the key criterion for success in individualistic societies. Countries with high individualism include, the US, Great Britain, France, South Africa etc
  • 32. Collectivism: The tendency of people to belong to groups and to look after each other in exchange for loyalty. In such cultures, interest of groups have precedence over individual interest . For instance, Guatemala, Pakistan, Singapore, Malaysia etc. Lessons: International Business strategy is greatly influenced by individualism vs. collectivism in terms of decision making and market communication. For a product to be successful. In collective societies, it should have group individualistic societies. acceptability unlike in the
  • 33. Masculinity vs. femininity In masculine societies, the dominant values emphasize on work goals, such as earnings, advancement, success, and material belongings. e.g. Japan, Switzerland, Great Britain, the US etc. In feminine societies the dominant values are achievement of personal goals, such as quality of life, caring for others, friendly atmosphere, getting along with boss and others. e.g. Sweden, Norway, Denmark, Thailand etc. India falls in between. Summarily, in masculine societies, people ’live to work’, whereas in feminine societies people’ work to live’.
  • 34. Uncertainty avoidance The extent to which people feel threatened by ambiguous situations. In high uncertainty avoidance societies there is lack of tolerance for ambiguity and the need for formal rules. For instance, Greece, Portugal, Japan, France are the most uncertainty avoidance countries. Low uncertainty avoidance countries Singapore, Denmark, India, the US etc. include
  • 35. Trompenaars’ Cultural Classification Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 36. Universalism vs. Particularism  Universalism: The belief that ideas and practices can be defined and applied everywhere without modification e.g. the US, Australia, Germany, Sweden etc.  Particularism: The belief that unique circumstances and relationships, rather than abstract rules are more important considerations that determine how ideas and practices should be applied e.g. Venezuela, the US, Indonesia, China etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 37. Individualism vs. Communitarianism Individualism: people regarding themselves as individuals. For instance the US, Czechoslovakia, Argentina, the CIS, Mexico, and the UK . Societies with high individualism make frequent references to ‘I’ and ‘me’. And achievement and responsibility are personal. Communitarianism: people regarding themselves as part of a group. For instance, Singapore, Thailand, Japan, and Indonesia. In collectivist societies ‘we’ is used more frequently than ‘I’ and achievement is considered group achievement.
  • 38. Neutral vs. Affective Neutral Cultures: Cultures in which people tend to hold back their emotions and try not to exhibit their feelings. For instance, Japan, the UK, Singapore, Australia, etc. Will consider anger, delight or intensity in the workplace as ‘unprofessional’ Affective Cultures: Cultures where emotions are expressed openly. For instance, Mexico, Netherlands, Switzerland, China, Brazil, etc. Will consider holding back of emotions by colleagues to signify ‘emotionally dead’ or a ‘mask of deceit’.
  • 39. Specific vs. Diffused The relative size of ‘Public space and Private space ‘ and the degree to which individuals feed comfortable sharing it with others differ considerably across societies . Specific Cultures: Cultures in which individuals tend to have a large public space which is readily shared, and a smaller private space. For instance, Australia, the UK, the USA and Switzerland. Diffused Cultures: Culture in which public and private space are more or less similar and public space is guarded more carefully. For instance, Venezuela, China and Spain
  • 40. Achievement vs. Ascription Achievement Cultures: Culture in which status is accorded to high achievers and high performers. For instance Austria, the USA, Switzerland, the UK, Sweden and Mexico etc. Ascription Cultures: Culture in which status is accorded to those who ‘naturally’ evoke admiration from others such as elderly, seniors, highly qualified and skilled people. For instance, Venezuela, Indonesia, China, the CIS, and Singapore etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 41. Other Cross-Cultural Classifications Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 42. High Context vs. Low Context High Context Cultures: Culture in which high significance is given to implicit communications, such as non-verbal and subtle situational cues. For instance, countries. China, Korea, Japan and Arab Low Context Cultures: Cultures in which communication is more explicit with heavy reliance on words to convey the meanings. For instance, Germany, Switzerland, Scandinavia, North America and Britain. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 43. Homophilous vs. Heterophilous Homophilous Cultures: Cultures where people share beliefs, speak the same language, and practice the same religion. For instance, Japan, Korea and Scandinavian countries. Heterophilous Cultures: Countries that have a fair amount of differentiation in languages, beliefs, and religions followed. For instance, India and China. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 44. Relationship vs. Deal-focused Relationship-focused Cultures: Cultures in which strong orientation towards building relationships and developing mutual trust. For instance, India, Japan, China, Singapore, Saudi Arabia, United Arab Emirates, Egypt, Brazil, Mexico, and Russia. Deal-focused Cultures: Task-oriented cultures with openness to hold direct business talks with strangers. For instance, Britain, USA, Germany, Denmark, Australia, Canada, Finland etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 45. Formal vs. informal cultures Formal Cultures: Status differences are large and valued and formality is used to show respect. For instance, India, UAE, Egypt, Brazil, Russia, Poland, Japan, China,, Singapore, France, Belgium, Britain, Germany, Denmark, Finland etc. Informal Cultures: Status differences are not valued and Informal behaviour is not considered disrespectful. For instance, the USA, Canada, and Australia etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 46. Polychronic vs. Monochronic Polychronic Cultures: Cultures in which time schedules and deadlines are flexible and relationships take precedence. For instance, India, Thailand, Philippines, UAE, Egypt, Brazil, Russia etc. Monochronic Cultures: Cultures with rigid time schedules and deadlines with high emphasis on punctuality. For instance, Japan, China, Singapore, Britain, USA, Canada, Australia, Germany, Denmark etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 47. Expressive vs. Reserved Cultures Expressive cultures: people are more expressive with direct eye contact. For instance, Russia, Poland, Romania, USA, Australia, and Canada Reserved cultures : people restrain their facial expression and gesturing. For instance, India, Japan, China, Singapore, Britain, Germany, Denmark, Finland etc. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 48. Parochialism vs. Simplification Parochialism: Belief that views the rest of the world from one’s own cultural perspective. Simplification: Exhibiting same cultural orientation groups. Copyright @ Oxford University Press International Business R. M. Joshi towards different cultural Chapter 7: International Cultural Environment
  • 49. EPRG Approach Ethnocentric orientation The belief which considers one’s own culture as superior to others. The belief that the business strategy which has worked in the home country would also be suitable in alien cultures. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 50. Polycentric orientation It is based on the belief that substantial differences exist among various countries. Therefore, a single business strategy cannot be effective across the world and customized business strategies need to be adapted in different countries. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment
  • 51. Regiocentric orientation A firm treats the region as a uniform cultural segment and adopts a similar business strategy within the region but not across the region. For example Mc Donald’s strategy is to not serve beef based products in India, but serves beef based products in other countries. Also in the Middle East, it does not serve pork and all meat based preparations are made out of halal process only .
  • 52. Geocentric orientation The approach considers the whole world a single market and attempts to formulate integrated business strategies. A geocentric firm attempts to identify cultural similarities across countries and formulates a globally uniform business strategy. Examples: the Harry Potter series of books and films, cartoon characters and their serials, Jeans, T-shirts etc… apparels like
  • 53. Emic vs. Etic Dilemma   The Emic school holds that attitudes, interests, and behaviour are unique to a culture and best understood in their own terms. It emphasizes studying the business research problem in each country’s specific context and identifying and understanding its unique facets. The Etic school emphasizes identifying and assessing universal attitudinal and behavioural concepts and developing ‘pan-cultural’ measures. Thus, etic is basically concerned with measuring universal behavioural and attitudinal traits.
  • 54. Operationalisation of Emic and Etic Emphasis is often placed an identifying and developing constructs that are feasible across countries and cultures, while conducting cross country research. Copyright @ Oxford University Press International Business R. M. Joshi Chapter 7: International Cultural Environment