This document discusses cultural factors that impact international business. It covers 6 main learning objectives: 1) how culture involves people and impacts diversity and collisions between cultures, 2) how nations shape culture but subcultures exist, 3) how language both unites cultures but also causes challenges, 4) how religion influences values and behaviors, 5) how behaviors differ based on cultural practices around social hierarchies, groups, performance, and families, and 6) how communications are impacted by language translations, non-verbal cues, concepts of time and distance, and body language. Understanding these cultural factors is important for international firms to be sensitive and make necessary adjustments.

1. MBA 3
IB
Module 1
GLOBAL BUSINESS
ENVIRONMENT:
CULTURAL
ENVIRONMENTS FACING
BUSINESS

2. INTRODUCTION
• Culture refers to learned norms based on the
values, attitudes and beliefs of a group of
people.
• People belong to different society, group based
on nationality, ethnicity, religion, gender, work,
profession, age, income level, political party
membership, etc

3. LEARNING OBJECTIVE 1: PEOPLE FACTOR
• Business involves people
• Every business sell to, buys from, and is owned and
regulated by people.
• IB Of course involves people from different cultures.
• Every business have
1. Cultural Diversity
2. Cultural Collision

4. I. Cultural Diversity: For gaining global competitive
advantage we require cultural diversity. By bringing
together people of diverse background and
experience, companies often gain a deeper
knowledge about product and services and ways in
which to produce and deliver them.
II. Cultural Collision: It occurs when divergent cultures
come in contact. In IB there are 2 major conditions
under this:

5. A. When company implements practices that are less
effective than intended
B. When company’s employees encounter distress due
to difficulty in accepting or adjusting to foreigners

6. HOW CAN WE MAKE OR MAINTAIN CULTURE?
• Sensitivity and Adjustments:
An International firm must be sensitive to cultural
differences. Thus it must realize that doing business as
usual is not always the best way of doing things. When
doing business in another country, a firm must determine
which of that nation’s business practices differ from its
own and then decide what adjustments are necessary.

7. CULTURAL AWARENESS
• Every society has its own daily routines and rules,
codes of social relations, languages and show
emotions and even concepts of luck.
• Even in different cultures we see different dance types.
E.G. Gujaratis are known for Garba but not all Gujaratis
like Garba.
• Almost everyone agrees that national cultures differ,
but they disagree on what the differences are.

8. • Building an awareness of other cultures is not an easy
task.
• Problem areas that can hinder manager’s cultural
awareness are:
I. Subconscious reaction to circumstances
II. The assumption that all societal groups are similar
• Managers that educate themselves about other cultures
have a greater chance of succeeding abroad

9. A LITTLE LEARNING GOES A LONG WAY
• The managers who want to succeed in foreign soil
need to educate themselves about their cultures.
• We can understand that we cannot memorize every
detail about their culture but those affecting the
business could be learnt to effectives run the business
• There are some shortcomings also when you try to
research about other cultures, Like…

10. I. Comparing countries according to research can be
risky because your respondents give you biased
answers.
II. Don’t look for average culture results. Sometimes we
have our own different personality even if we belong
to some specific culture.
III. Cultures change over a time, so current research on
culture may change in future.

11. LEARNING OBJECTIVE 2: NATION
• The nation is a useful definition of society because…
I. Similarity among people is a cause and effect of
national boundaries.
II. Laws apply primarily along national lines
• National identity is perpetuated through rites, symbols,
flags, parades, rallies, etc.
• There is a feeling of “ we” that casts foreigners as “
they”.

12. • Managers find country by country analysis difficult
because…
I. Sub cultures exists within nations
II. Similarities link groups from different countries

13. HOW CULTURES FORM AND CHANGE?
• Culture is transmitted in many ways- from parent to
child, teacher to students, social leader to followers,
peer to peer, etc.
• Psychologists believe that by age 10 most children
learn the basic value system.
• The culture develops concepts of Evil Vs. Good, Dirty
Vs. Clean, Ugly Vs. Beautiful, Rational Vs. Irrational,
etc.
• But cultures evolve or change over time.

14. SOURCES OF CHANGE
• Both individual and collective values and
customs evolve over time.
• Which may result from..
I. Choice
II. Imposition

15. I. Change by Choice:
• This may occur as a reaction to social and economic
situation that present people with new alternatives. For
ex. When rural people choose to accept factory jobs,
they change some basic customs by working regular
hours that don’t allow the sort of work- time interaction
that farm work allowed. (Forceful adoption of culture).

16. II. Change by Imposition:
• This is called cultural imperialism. It involves the
imposed introduction into a culture of certain elements
from an alien culture such as the forced change in law
by an occupying country which over time, becomes part
of the subject culture. (Forceful impose of culture)

17. LEARNING OBJECTIVE 3: LANGUAGE
• A common language within countries is a unifying force.
• National boundaries and geographic obstacles limit
people’s contact with other cultures and so does
language.
• Languages such as English, French and Spanish have
widespread acceptance.
• MNEs which are largely situated in English speaking
countries- they have to choose a functional language
which could be used by anyone i.e. English

18. • Many MNEs from Non English speaking countries, such
as Nokia from Finland and Philips from Netherlands,
have adapted English as their operating language too.
• You must have heard that English is the International
Language.
• Not surprisingly we all know that many English words
are used by people in other languages also.

19. LEARNING OBJECTIVE 4: RELIGION
• It is cultural stabilizer as centuries of profound religious
influence continue to play a major role in shaping
cultural values in society.
• Among people with strong religious convictions, the
role of religion in shaping behavior is even stronger.
• Many religions like- Buddhism, Christianity, Hinduism,
Islam etc influence specific beliefs that may affect
Business.

20. • E.G. Inhabiting the sale of certain products or the
performance of work at certain times like in
predominantly Muslim countries, Friday is a day of
worship and a non work day.

21. LEARNING OBJECTIVE 5: BEHAVIORAL
PRACTICES
• It should come as no surprise that cultural attitudes and
values affect business practices everything from
decisions about what products to sell to decisions
about organizing, financing, managing and controlling
operations.
• Business people define business functions differently
due to cultural variables.

22. SOCIAL STRATIFICATION
• Every culture values some people more than others
and such distinctions dictate a person’s class or status
within the culture.
• In business, this practice may entail valuing members
of managerial groups more than production group.
• The factors that determine rankings or social
stratification vary from country to country.

23. • Your ranking is determines by two sets of
factors:
I. Those pertaining to you as individual
II. Those pertaining to your affiliation with or
membership in certain group.

24. 1. ASCRIBED AND ACQUIRED MEMBERSHIPS
• Affiliation which are determined by birth are ascribed
group memberships such as gender, family, age, caste,
ethnic, racial or national origin.
• Acquired group memberships include those based on
religion, political affiliation and professional and other
associations.

25. 2. PERFORMANCE ORIENTATION
• In some nations such as US, companies tend to base a
person’s eligibility for employment and promotion
primarily on competence.
• In other countries however individual competence may
be of secondary importance, a person’s eligibility for
employment may reflect some other factor.

26. 3. OPEN AND CLOSED SOCIETIES
• The more open a society, the less the importance of
ascribed group memberships in determining rewards.
• For E.G. Malaysia has long maintained employment
quotas for three ethnic groups, Malays, Chinese and
Indians.
• Quality of jobs affects a lot

27. 4. GENDER BASED GROUPS
• In both china and India the practice of aborting girl child
reflect an extreme attitude towards gender but this
practice has relatively little impact on work place.
• In both countries women are prominent figures in both
business and government.

28. 5. AGE BASED GROUPS
• All countries treat age groups differently and every
country express its attitudes toward age in different
ways.
• For E.G. US advertisers bombard children with TV
advertisements but Sweden prohibits ads targeted to
children.

29. 6. FAMILY BASED GROUPS
• In some countries an individual’s position in society at
large depends on the family’s status.
• In such types of nations, owner of the business restricts
outsider professional manager to get hired in the
company and chooses manager from families.

30. 7. OCCUPATION
• In every country some occupations are considered
more prestigious than others
• In US, babysitting, delivering newspapers and
groceries traditionally go to teenagers as they have to
get training
• While such jobs are done by adults in developing or
under developed countries as they do not have more
opportunities.

31. LEARNING OBJECTIVE 6: COMMUNICATIONS
• Language affects culture as well as international
business.
• Problems in translating spoken and written language
• The problem actually occurs when you have to
communicate with someone from another country with
the same official language

32. 1. SPOKEN AND WRITTEN LANGUAGE
• Translating one language to another is not simple.
• Foe e.g. Spanish has no single word for all people who
work for business i.e. Employees
• Instead there is the word Empleados which means
white collar workers and another word Obreros which
means laborers

33. 2. SILENT LANGUAGE
• We constantly exchange messages through a host of non
verbal cues that forms what has been called silent
language
• In modern western countries black is associated with death.
In parts of Asia white has the same meaning, In Latin
America it is purple.
• For products to succeed, you have to consider this silent
languages
• For e.g. Motorola faced difficulty in China because of
certain numbers ending with 54- 7424, in China it sounds
as “ I die, my wife dies, my child dies”

34. 3. DISTANCE
• In US the customary distance for a business discussion
is 5 to 8 feet.
• When it is closer than this people feels uneasy.
• So how much distance you maintain during
conversation matters in a culture.

35. 4. TIME AND PUNCTUALITY
• US business people usually arrive early for business
appointments, a few minutes late for dinner at
someone’s home and a bit later for cocktail parties.
• In countries like Japan and England or Germany people
value time because they consider it as a scarce
resources.

36. 5. BODY LANGUAGE/ KINESICS
• The way people walk, touch and move their bodies.

37. 6. PRESTIGE
• A person’s position in his or her organization
• In some nations, executives perform their own services,
such as opening their own doors, fetching their own
coffee and answering their calls.