Czinkota Chapter 2 Revised Fall 2009 Ppt 2003 Version


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Czinkota Chapter 2 Revised Fall 2009 Ppt 2003 Version

  1. 1. Culture Crossing Cultures: Balancing the Global with the Local Fall 2009
  2. 2. “ If you think education is expensive, try ignorance.” James Armstrong
  3. 3. Lecture Outline: <ul><li>CULTURE DEFINED </li></ul><ul><li>THE ELEMENTS OF CULTURE </li></ul><ul><li>SOURCES OF CULTURAL KNOWLEDGE </li></ul><ul><li>CULTURAL ANALYSIS </li></ul><ul><li>THE TRAINING CHALLENGE </li></ul><ul><li>MAKING CULTURE WORK FOR BUSINESS SUCCESS </li></ul>
  4. 4. Culture – Defined <ul><li>Culture : an integrated system of learned behavior patterns that are characteristic of the members of any given society. </li></ul><ul><ul><li>Includes: customs, language, material artifacts, shared system of attitudes & feelings </li></ul></ul><ul><li>Culture is learned, shared and transmitted from generation to generation </li></ul><ul><li>Primarily passed on from parents to children, but also transmitted by social organizations, government, schools, & churches </li></ul>
  5. 5. Culture – Defined <ul><li>Acculturation – adjusting and adapting to a specific culture other than one’s own </li></ul><ul><ul><li>Key to success in international business </li></ul></ul><ul><li>High-context cultures – context is at least important as what is being said (body language, tone, etc.) </li></ul><ul><ul><li>Saudi Arabia, Japan </li></ul></ul><ul><li>Low-contex t cultures – most information is contained in the spoken words </li></ul><ul><ul><li>U.S., Canada </li></ul></ul>
  6. 6. Culture – Defined <ul><li>In most countries, intra-cultural differences based upon nationality, religion, race and geographic areas has resulted in distinct “ subculture s” </li></ul><ul><li>International Manager’s task is to identify cross-cultural and intra-cultural differences and isolate potential opportunities & problems </li></ul><ul><ul><li>Hispanic subculture in the U.S. is growing </li></ul></ul><ul><ul><li>Huge challenge ahead in Mainland China with the numerous ethnicities! </li></ul></ul>
  7. 7. The Elements of Culture <ul><li>Major cultural elements include: </li></ul><ul><li>Language – verbal & non-verbal </li></ul><ul><li>Religion </li></ul><ul><li>Values & attitudes </li></ul><ul><li>Manners and customs </li></ul><ul><li>Material elements </li></ul><ul><li>Aesthetics </li></ul><ul><li>Education </li></ul><ul><li>Social institutions </li></ul>
  8. 8. Language - Verbal <ul><li>Mastery of language is acquire prior to acculturation into another culture </li></ul><ul><ul><li>What languages are necessary to be successful in Hong Kong? </li></ul></ul><ul><li>Use of language in international business: </li></ul><ul><ul><li>Information gathering & evaluation </li></ul></ul><ul><ul><li>Access to local society </li></ul></ul><ul><ul><li>Company communications – need for interpreter </li></ul></ul><ul><ul><li>Extends beyond communication mechanics to the interpretation of contexts </li></ul></ul><ul><li>Managers must have more than simple word recognition </li></ul><ul><ul><li>“ tabling a proposal” has distinctly different meanings in U.S. & U.K. </li></ul></ul>
  9. 9. Language - Nonverbal <ul><li>Managers must analyze and become familiar with “hidden languages” of foreign cultures: </li></ul><ul><ul><li>Time – relaxed or rigid? Hong Kong – transportation difficulties require more flexibility. </li></ul></ul><ul><ul><li>Space – how much space do people want around them? </li></ul></ul><ul><ul><li>Material possessions – what is the importance? </li></ul></ul><ul><ul><li>Friendship patterns – establishing personal rapport is a requisite to conducting business in some countries </li></ul></ul><ul><ul><li>Business agreements – lengthy negotiations or a simple hand shake? </li></ul></ul><ul><ul><li>Body language – use of hands, etc. when talking. Be careful of using hand signals! </li></ul></ul>
  10. 10. Religion <ul><li>Religion defines the ideals for life, which are reflected in values & attitudes of society </li></ul><ul><li>Religion can impact entrepreneurship, consumption and social organizations </li></ul><ul><li>Religious impacts can be direct or indirect </li></ul><ul><ul><li>Strict Muslim countries </li></ul></ul><ul><ul><li>Secular countries </li></ul></ul><ul><ul><li>Freedom of religion </li></ul></ul>
  11. 11. Religion - Christianity <ul><li>Largest world religion – more than 2 billion </li></ul><ul><li>Catholicism, Protestantism </li></ul><ul><li>Major holidays tied to religion </li></ul><ul><ul><li>Pay attention to the calendar, i.e. Christmas gifts aren’t always exchanged on the same day </li></ul></ul><ul><ul><li>Make sure local holidays are taken into account for business scheduling purposes </li></ul></ul>
  12. 12. Religion - Islam <ul><li>More than 1.2 billion followers </li></ul><ul><li>Significant minority religion in many part of the world </li></ul><ul><li>Shariah law is followed </li></ul><ul><li>5 daily prayer periods </li></ul><ul><li>Ramadan – month of fasting </li></ul><ul><li>Pilgrimage to Mecca </li></ul><ul><li>High degree of “fatalism” – “Allah’s will” </li></ul><ul><li>Role of women in business can be affected </li></ul><ul><li>Beef & poultry – animals must be killed in the halal method & certified </li></ul><ul><li>Alcohol restrictions </li></ul><ul><li>Travel/work restrictions – Mecca & Medinah </li></ul><ul><li>Interest payments are illegal – considered “usury” </li></ul>
  13. 13. Religion - Hinduism <ul><li>More than 860 million followers, mainly in India, Nepal, Malaysia & Sri Lanka </li></ul><ul><li>In addition to religion, is a “way of life” predicated on the “caste” or class to which you are born </li></ul><ul><li>Caste system can affect business </li></ul><ul><ul><li>Individual efforts are hampered – you cannot rise above your caste </li></ul></ul><ul><ul><li>Workforce integration problems can occur </li></ul></ul><ul><ul><li>Drive for spiritualistic as opposed to materialistic achievement can hamper business success </li></ul></ul><ul><li>Families are important in Hindu society, extended families are the norm </li></ul><ul><ul><li>Affects purchasing power and consumption patterns </li></ul></ul>
  14. 14. Religion - Buddhism <ul><li>More than 360 million followers, primarily in Asia </li></ul><ul><li>Offspring of Hinduism, but no caste system </li></ul><ul><li>Life is seen as filled with suffering, and the solution is to achieve “nirvana” – the spiritual state marked by absence of desire </li></ul><ul><li>Emphasis is on spiritual achievement, not accumulation of worldly goods </li></ul><ul><ul><li>As a manager, can you motivate a Buddhist in the same way as you would followers of other religions? </li></ul></ul>
  15. 15. Religion - Confucianism <ul><li>More than 150 million followers, primarily in Asia </li></ul><ul><li>Characterized as a “ code of conduct ” more than a religion </li></ul><ul><li>Teachings stress loyalty and relationships </li></ul><ul><ul><li>Loyalty to central authority, placing the good of the group before that of an individual </li></ul></ul><ul><ul><li>Westerners perceive the subordination of the individual to the group as a violation of human rights! </li></ul></ul><ul><ul><li>Emphasis on relationships is evident in developing business ties in Asia. It may takes years for a business transaction to take place </li></ul></ul>
  16. 16. Values & Attitudes <ul><li>Values : shared beliefs or group norms that have been internalized by individuals </li></ul><ul><li>Attitudes : evaluations of alternatives based upon these values </li></ul><ul><li>Difference in cultural values can affect the way: </li></ul><ul><ul><li>Planning is executed </li></ul></ul><ul><ul><li>Decisions are made </li></ul></ul><ul><ul><li>Strategy is implemented </li></ul></ul><ul><ul><li>Personnel are evaluated </li></ul></ul>
  17. 17. Values & Attitudes <ul><li>Dealing in China – the international manager must realize that making deals is more about cooperation than competition. </li></ul><ul><ul><li>The Chinese believe in building relationships first, followed by business transactions </li></ul></ul><ul><ul><li>The relationship or “guanxi” is a set of favor exchanges to establish trust </li></ul></ul>
  18. 18. Manners & Customs <ul><li>Understanding manners & customs is important in negotiations </li></ul><ul><li>Interpretations based only on one’s own frame of reference may lead to an incorrect conclusion </li></ul><ul><ul><li>Americans interpret inactivity & silence as negative signs </li></ul></ul><ul><ul><li>Japanese expect that their silence will cause American partners to lower prices </li></ul></ul><ul><ul><li>Middle Easterners may take many days to negotiate a very simple deal, as they may want to discuss unrelated issues </li></ul></ul><ul><ul><li>Russians are aggressive in style, usually requiring last-minute changes </li></ul></ul>
  19. 19. Manners & Customs <ul><li>Potential way negotiators may not be prepared: </li></ul><ul><li>Insufficient understanding about different ways of thinking </li></ul><ul><li>Insufficient attention to the necessity to “save face” </li></ul><ul><li>Insufficient knowledge/appreciate of host country’s history, culture, government, image of foreigners </li></ul><ul><li>Insufficient recognition of the decision-making process and the role of personal relationships </li></ul><ul><li>Insufficient allocation of time for negotiations </li></ul>
  20. 20. Manners – Gift Giving <ul><li>China – Chinese New Year </li></ul><ul><ul><li>Recommended: coffee table books, pens, ties, cash (give gifts using both hands) </li></ul></ul><ul><ul><li>Avoid: clocks, anything from Taiwan </li></ul></ul><ul><li>India – Hindu Diwali festival </li></ul><ul><ul><li>Recommended: sweets, nuts, fruit, candle holders </li></ul></ul><ul><ul><li>Avoid: leather objects, snake images </li></ul></ul>
  21. 21. Manners – Gift Giving <ul><li>Japan - Oseibo </li></ul><ul><ul><li>Recommended: scotch, brandy, “Americana” </li></ul></ul><ul><ul><li>Avoid: gifts that come in sets of 4 or 9 </li></ul></ul><ul><li>Mexico – Christmas & New Year’s </li></ul><ul><ul><li>Recommended: desk clocks, pens, lighters </li></ul></ul><ul><ul><li>Avoid: sterling silver items, logo gifts, food baskets </li></ul></ul>
  22. 22. Manners – Gift Giving <ul><li>Saudi Arabia – Eid Holidays </li></ul><ul><ul><li>Recommended: fine compasses to determine prayer direction, cashmere </li></ul></ul><ul><ul><li>Avoid: pork products, liquor </li></ul></ul>
  23. 23. Customs <ul><li>Fung Shui – can have a great impact on businesses operating in Asia </li></ul><ul><ul><li>Conrad Hotel in HK initially experienced low occupancy after opening </li></ul></ul><ul><ul><li>Fung shui consultant suggested moving a piece of sculpture from the lobby to the outside, as one of the characters on the statue looked like it was trying to run out of the hotel </li></ul></ul><ul><ul><li>Shangri-La employs full-time fung shui consultants </li></ul></ul><ul><li>Extensive research and use of focus groups are ways to avoid this type of problem </li></ul><ul><li>Adjustment to cultural nuances also takes place through trial and error </li></ul><ul><ul><li>U.S. retailer Office Depot learned to scale down the size of stores </li></ul></ul>
  24. 24. Material Elements <ul><li>Infrastructure is a good indicator of potential product demand, and the extent of the “material culture” has an impact on business decisions </li></ul><ul><li>Economic infrastructure - consists of transportation, energy and communication systems </li></ul><ul><li>Social infrastructure – housing, health and educational systems </li></ul><ul><li>Financial/marketing infrastructure – provides the facilitating agencies for international operations (banks, research firms) </li></ul>
  25. 25. Aesthetics <ul><li>Cultures have guidelines for good taste, expressed symbolism of colors, form, music </li></ul><ul><li>What is or isn’t acceptable can vary greatly between cultures </li></ul><ul><li>Sex is a selling point in many countries </li></ul><ul><ul><li>In Japan, foreign models are used to convey the message </li></ul></ul><ul><ul><li>Europeans are used to naked models, while they will need to wear a bathing suit in U.S. ads </li></ul></ul>
  26. 26. Aesthetics – Colors & Symbols <ul><li>Black is color of mourning in the U.S. and Europe </li></ul><ul><li>White is the color of mourning in Japan and many parts of Asia </li></ul><ul><ul><li>United Airline’s blunder when opening their HK office </li></ul></ul><ul><li>Green is associated with death in Singapore </li></ul><ul><li>A British software company used an “owl” for a help icon, before it learned it was symbol of evil & insanity in some countries </li></ul>
  27. 27. Education <ul><li>Both formal and informal education play a huge role in passing on and sharing culture </li></ul><ul><li>Educational levels can be assessed using literacy rates, enrollment in secondary education and higher education </li></ul><ul><li>International firms need to understand the qualitative aspects of education </li></ul><ul><ul><li>Japanese & S. Korean schools emphasize sciences – especially engineering </li></ul></ul><ul><li>High illiteracy levels suggest use of visual aides in lieu of printed material </li></ul><ul><li>International managers must overcome recruiting obstacles </li></ul><ul><ul><li>Japanese workers value loyalty, tend to stay with one company for their entire career. Makes it challenging for a foreign firm to recruit. </li></ul></ul>
  28. 28. Social Institutions <ul><li>Social institutions (families) affect the ways people relate to each other </li></ul><ul><ul><li>Western family is parents & children </li></ul></ul><ul><ul><li>Asian family often includes grandparents & other relatives </li></ul></ul><ul><li>Affects consumption patterns and should be taken into account when conducting market research </li></ul><ul><ul><li>Affect on Chinese hospitality & tourism consumption patterns? </li></ul></ul>
  29. 29. Social Institutions <ul><li>Social stratification – division of the population into classes (lower, middle, upper) </li></ul><ul><ul><li>Europe & the U.S. have strong middle classes, while many Asian countries have a big divide between upper and lower classes </li></ul></ul><ul><ul><li>Impacts workforce availability </li></ul></ul><ul><li>Reference groups – provide the values & attitudes that influence behavior </li></ul><ul><ul><li>Primary reference groups: family, coworkers, good friends </li></ul></ul><ul><ul><li>Secondary reference groups: professional associations, trade organizations </li></ul></ul>
  30. 30. Social Institutions <ul><li>Social organization also determines roles of managers & subordinates </li></ul><ul><ul><li>In some cultures managers & subordinates are separated by boundaries: social class, separate office facilities </li></ul></ul><ul><ul><li>Other cultures have equality </li></ul></ul><ul><ul><ul><li>Nissan U.S. – no reserved parking spaces, no private dining rooms, all employees wear the same uniform </li></ul></ul></ul><ul><li>Western business has impersonal structure for channeling power & influence: law, contracts </li></ul><ul><li>Chinese business relies on personal relationships to obtain clout </li></ul><ul><ul><li>“ Guanxi” – McDonalds in Beijing evicted 2 years into a 20-year contract, because they didn’t work to maintain the relationship </li></ul></ul>
  31. 31. Sources of Cultural Knowledge <ul><li>Objective/Factual knowledge – acquired from others through communication, research & education </li></ul><ul><li>Experiential knowledge – acquired by being involved in a culture other than one’s own </li></ul><ul><li>Interpretive knowledge – understanding and fully appreciating the nuances of different cultural traits & patters </li></ul><ul><ul><li>Requires “getting your feet wet” over a sufficient length of time </li></ul></ul>
  32. 32. Self-Reference Criterion <ul><li>The unconscious reference to one’s own cultural values </li></ul><ul><ul><li>The root of most international business problems ( cultural bias ) </li></ul></ul><ul><li>Way to reduce cultural bias : </li></ul><ul><ul><li>Define the problem/goal in terms of cultural traits, habits or norms </li></ul></ul><ul><ul><li>Isolate any self-reference criterion influence & examine how it impacts the problem </li></ul></ul><ul><ul><li>Redefine the problem without the self-reference criterion </li></ul></ul><ul><ul><li>Control “ethnocentrism” – the tendency to consider one’s own culture as superior to others </li></ul></ul>
  33. 33. Reference Czinkota, M.R., Ronkainen, I.A., and Moffett, M.H. (2005). International Business (7 th ed.) . Thomson-Southwestern.