1. Assignment on
Topics:What are the determinants of culture? In terms of Hofstede model
analyses how cultural dimensions varies in work places in different countries.
Course Core : CCR-502
Course Title : International Business
Prepared To:
Mr. Shafi U. Ahmed
Dhaka International University
Prepared by:
Name: ID:
Md: Jafrul Islam 26
Dhaka International University
Submission Date: 31
th
December, 2016

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What is culture?
“Culture is that complex whole which includes knowledge, belief, art, morals, law, custom and other
capabilities acquired man as a member of society”-Edward Taylor
Culture is the characteristics and knowledge of a particular group of people, defined by everything from
language, religion, cuisine, social habits, music and arts.
The Center for Advance Research on Language Acquisition goes a step further, defining culture as shared
patterns of behaviors and interactions, cognitive constructs and understanding that are learned by
socialization. Thus, it can be seen as the growth of a group identity fostered by social patterns unique to
the group.
A system of values and norms that are shared among a group of people and that when taken together
constitute a design for living. - Hofstede, Namenwirth and Weber.
A culture is a set value of norms among a certain group of people, and takes them together to constitute
the way these people live. In different countries of the world, culture is usually different. However, there
are various known determinants of culture, and social structure is one of them. The meaning of this is how
the society associates among themselves as well as the way the people are organized.
Culture, Society and the Nation State:
 A society is a group of people bound together by a common culture.
 There is not a strict one to one correspondence between a society and a nation state.
 Nation State:
 Is a political creation
 May contain a single culture or a severalcultures
Social Structure:
 Social structure refers to its basic social organization
 Two dimensions that are particularly important includes:
 The extent to which society is group or individually oriented
 Degree of stratification into castes or classes

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What is culture? What are the six determinants or factors that influence culture?
A culture is a set value of norms among a certain group of people, and takes them together to constitute
the way these people live. In different countries of the world, culture is usually different. However, there
are various known determinants of culture, and social structure is one of them. The meaning of this is how
the society associates among themselves as well as the way the people are organized. A society may
embrace either individual or group organization; in an individual organization, individual attributes are
much more emphasized, while in a group organization, the mostly held attributes are for the group. It is
therefore the responsibility of the organization to ensure observance of the organization as it pushes its
agenda of expansion in the given society. Education is another determinant of culture in a society, as
having a society that has embraced formal education may give an organization a competitive edge
through provision of the needed labor. Language is also another determinant of culture necessary as
knowledge of it eases communication breakdown. Finally, the last but not the least determinants of
Determinants of Culture:
Culture,
norms and
value
systems
Social
Subculture
Political
Philosophy
Language
Economic
Philosophy
Education
Religion

4. I n t e r n a t i o n a l B u s i n e s s Page 4
culture are economic and political philosophies. Knowledge of these philosophies helps to ensuring the
tactics it is going to use to encompass the market.
Why was Wal-Mart able to achieve success in Mexico?
Achievement of success in Mexico was achieved by the fact that Wal-Mart was able to learn the culture
of Mexicans and transform to it. Through such moves as transforming the shopping habits, establishing
fresh products and selling products in small quantities Wal-Mart was able to control market in Mexico. In
addition, the fact the Wal-Mart hired local managers to control their stalls who influenced the people to
incorporate American merchandising culture made them increase their competitive edge in Mexican soil.
What cultural differences did Wal-Mart encounter in trying to expand into other areas of the global
marketplace, specifically in South Korea and Germany?
What impact did these cultural differences have on the effectiveness of the entry strategy and
performance of Wal-Mart in these countries?
When Wal-Mart decide to increase their influence to both Germany and Korea,they faced so much
competition on these countries as there was established culture where the consumers preferred high
quality merchandise and were not attracted by the discounted strategy of Wal-Mart. The strategy by Wal-
Mart was therefore rendered obsolete by the culture background of these customers, which in turn led to
Wal-Mart enduring high loses which made them pull out of the market, as competition was too high.
What type of actions did Wal-Mart take in order to succeed in China?
Establishment of a branch in China was a new strategy all together, Wal-Mart decide to adapt to the
culture of merchandising practiced in China. They also adopted the culture of providing freshly harvested
food and when it came to animals like fish, they killed them in front of the customer, as it was the desire
of Chinese people to have their products fresh.
Does culture change? To what extent is it possible for a company like Wal-Mart to change the culture of
the country in which it is doing business?
It is evident that culture of a certain country can be changed when it comes to business. Mexico is an
example of a country that has changed its shopping habits due to the influence that Wal-Mart had on
them. Though they used to shop in small quantities with time, they endorsed the American merchandised
culture and today they account to be the most successfulventure abroad for Wal-Mart.
Is it always necessary to companies to localize their products to suit the cultural characteristics of a
country or does it depend on product and/or the country?
What is ethnocentric behavior? Did Wal-Mart display ethnocentric behavior in its involvement in
international markets? What is needed to overcome ethnocentric behavior?
Ethnocentric behavior is the belief that one’s culture is more important and those other groups. Wal-Mart
can be said to portray this behavior in its approach in investing in Korea and Germany as it aimed at these
country to conform to American culture of merchandising. Of importance in fighting this behavior is
having respect for other people’s culture. Having respected embraces diversity, which is an important
tool, is achievement of success in business. Therefore,it is also necessary to accept the culture of the
societies that an organization wishes to engage business and if necessary have culture reconciliation.

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Religious and Ethical Systems:
 Religion: a system of shared beliefs and rituals that are concerned with the realm of the sacred
 Ethical Systems: a set of moral principles, or values that are used to guide and shape behavior.
 Most of the world’s ethical systems are the product of religions.
 Among the thousands of religions in the world today, four are dominant in terms of number of
adherents:
 Christianity with 2.4 billion
 Islam with 1.6 billion
 Hinduism nearly 800 million
 Buddhism nearly 500 million
GeertHofstede’s scientific innovation, the dimension concept:
Geert Hofstede has defined “culture” as “the collective programming of the mind that distinguishes the
members of one group or category of people from others”. In 1980 he published his book “Culture’s
Consequences: International Differences in Work-Related Values”. As the title suggests, this book was
entirely devoted to the study of culture at the national level, in which values played a major role. The
book’s main innovation was its use of the concept (paradigm) of dimensions of culture: basic problems to
which different national societies have over time developed different answers.
National Culture:
National Culture is about the value differences between groups of nations and/or regions.
Using research data from a multinational company (IBM) with subsidiaries in more than 60 countries, he
identified four largely independent dimensions: Power Distance (large versus small), Uncertainty

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Avoidance (strong versus weak), and Individualism versus Collectivism and Masculinity versus
Femininity. The relative positions of 40 countries on these four dimensions were expressed in a score on a
0-100 point scale. Replications by Hofstede and other researchers have extended the number of countries
covered to 76.
Further research: he dimensions concept was widely adopted by other researchers, and is presently the
leading paradigm in cross-cultural research. Nearly all major research projects since the 1980s are using
the concept, sometimes called axes.
Validity: The usefulness of a dimension model depends on its validity: its ability to explain practical
differences between nations. The Hofstede dimensions of national culture have been validated in the
professional literature of the following disciplines:
 Cross-cultural psychology
 Structure of language, cognition, intelligence
 International and diversity management
Dimensions of national culture:
Organizational Culture:
Organizational Culture is about differences in practices between organizations and/or parts within
the same organization (sub-cultures).
Next to and separately from his studies in national culture, Geert Hofstede with a team of collaborators
has in the 1980s conducted an in-depth study of organizational cultures in ten Danish and ten Dutch
organizations. This study is described in a separate chapter in his books since 1991. It has also led to the
identification of six dimensions.
Dimensions of organizational culture:

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Culture in the Workplace:
 Six dimensions of culture influences workplace environment:
 Power distance index (PDI): The power distance index is defined as “the extent to which the
less powerful members of organizations and institutions (like the family) accept and expect that
power is distributed unequally.” In this dimension, inequality and power is perceived from the
followers, or the lower level. A higher degree of the Index indicates that hierarchy is clearly
established and executed in society, without doubt or reason. A lower degree of the Index
signifies that people question authority and attempt to distribute power.
 Individualism vs. collectivism (IDV): This index explores the “degree to which people in a
society are integrated into groups.” Individualistic societies have loose ties that often only relate
an individual to his/her immediate family. They emphasize the “I” versus the “we.” Its
counterpart, collectivism, describes a society in which tightly-integrated relationships tie
extended families and others into in-groups. These in-groups are laced with undoubted loyalty
and support each other when a conflict arises with another in-group.
 Uncertainty avoidance index (UAI): The uncertainty avoidance index is defined as “a
society's tolerance for ambiguity,” in which people embrace or avert an event of something
unexpected, unknown, or away from the status quo. Societies that score a high degree in this
index opt for stiff codes of behavior, guidelines, laws, and generally rely on absolute Truth, or the
belief that one lone Truth dictates everything and people know what it is. A lower degree in this
index shows more acceptances of differing thoughts/ideas. Society tends to impose fewer
regulations, ambiguity is more accustomed to, and the environment is more free-flowing.
 Masculinity vs. femininity (MAS): In this dimension, masculinity is defined as “a preference
in society for achievement, heroism, assertiveness and material rewards for success.” Its
counterpart represents “a preference for cooperation, modesty, caring for the weak and quality of
life.” Women in the respective societies tend to display different values. In feminine societies,
they share modest and caring views equally with men. In more masculine societies, women are
more emphatic and competitive, but notably less emphatic than the men.
 Long-term orientation vs. short-term orientation (LTO): This dimension associates the
connection of the past with the current and future actions/challenges. A lower degree of this index
(short-term) indicates that traditions are honored and kept, while steadfastness is valued. Societies
with a high degree in this index (long-term) views adaptation and circumstantial, pragmatic
problem-solving as a necessity. A poor country that is short-term oriented usually has little to no
economic development, while long-term oriented countries continue to develop to a point.

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 Indulgence vs. restraint (IND): This dimension is essentially a measure of happiness;
whether or not simple joys are fulfilled. Indulgence is defined as “a society that allows relatively
free gratification of basic and natural human desires related to enjoying life and having fun.” Its
counterpart is defined as “a society that controls gratification of needs and regulates it by means
of strict social norms.” Indulgent societies believe themselves to be in control of their own life
and emotions; restrained societies believe other factors dictate their life and emotions.
According to the model, Eastern European countries, including Russia, have a low IVR score. Hofstede
argues that these countries are characterized by a restrained culture, where there is a tendency towards
pessimism. People put little emphasis on leisure time and, as the title suggests, people try to restrain
themselves to a high degree.
Key Points:
Cultural norms play a large part in interpersonal relationships at work. When you grow up in a certain
culture, you take the behavioral norms of your society for granted, and you don't have to think about your
reactions, preferences and feelings, provided that you don't deviate too much from the central tendency in
your society.
However,when you step into a foreign culture, things suddenly seem different, and you don't want to
cause offense. By using Hofstede's Cultural Dimensions as a starting point, you can evaluate your
approach, your decisions, and your actions, based on a generalsense of how people in a particular society
might think and react.

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Ethics inInternational Business:
 Business ethics are the accepted principles of right or wrong governing the conduct of business
people.
 An ethical strategy is a strategy or course of action that does not violate these accepted
principles.
Ethical Issues in International Business
 Many of the ethical issues and dilemmas in international business are rooted in the fact that
political systems, law, economic development and culture vary significantly from nation to
nation.
 In the international business setting, the most common ethical issues involve are:
 Employment practices
 Human Rights
 Corruption
 Moral obligation of Multinational Corporation
Employment Practices:
 Ethical issues associated with employment practices abroad include:
 When work condition in a host country is clearly inferior to those in the MNCs home country,
what standard should be applied?
 While few would suggest that pay and work condition should be the same across nation, how
much divergence is ethically acceptable?
Human Rights:
 Questions of human rights can arise in international business because human rights standards
vary between nations and basic human rights are not respected in many countries.
 Rights that are taken for granted in developed nations such as freedom of association, freedom of
speech,freedom of assembly, freedom of movement and freedom from political representation
are by no means universally accepted.
 The question that must be asked of firms operating internationally is: what is the
responsibility of a foreign multinational when operating in a country where basic human
rights are trampled on.

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Environmental Pollution:
 Ethical issues arise when environmental regulations in host nations are inferior to those in
the home nation.
 Developing nations often lack environmental regulations and according to critics, the result can
be higher levels of pollution from the operation of multinational than would be allowed at home.
 Environmental questions take on added importance because some parts of the
environment are a public good that no one owns but anyone can spoil.
 The tragedy of the commons occurs when a resource held in common by all but owned no one is
overused by individuals resulting in its degradation.
Corruption:
 Corruption has been a problem in almost every society in history and it continue to be a serious
problem in most of the developing world today.
 International businesses can, and have, gained undue advantage by making payment to Govt.
officials.
 The U.S passed the Foreign Corrupt Practices Act to fight corruption that outlawed paying bribes
to foreign government officials to gain business
 In 1997, OECD countries followed US lead and adopted the “Convention on combating bribery
of foreign public officials in international business transactions”
Moral Obligations:
 Multinational corporations have power that comes from their control over resources and their
ability to move production from country to country.
 Moral Philosophers argue that with power comes the social responsibility for corporations to give
something back to the societies that enable them to prosper and grow.
 Social responsibility refers to the idea that businesspeople should consider the social
consequences of economic actions when making business decisions.
 Advocates of this approach argue that businesses need to recognize their noblesse oblige
(benevolent behavior that is the responsibility of successfulenterprises)

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Ethical Dilemmas:
 Managers mustconfront very real ethical dilemmas
 The ethical obligations of a multinational corporation toward employment conditions, human
rights, corruption, environmental pollution and the use of power are not always clear cut.
 Ethical Dilemmas are situations in which none of the available alternatives seems ethically
acceptable.
Philosophical Approaches to Ethics: Rights
 Rights Theories recognizes that human beings gave fundamental rights and privileges which
transcend national boundaries and cultures.
 Rights establish a minimum level of morally acceptable behavior
 Moral theorists argue that fundamental human rights form the basis for the moral compass that
managers should navigate by when making decisions have an ethical component.
Rights under UN Universal Declaration:
 Rights and privileges of individuals are universal in nature and codified in the UN Universal
Declaration of Human Rights that says:
 Everyone, without any discrimination, has the right to equal pay for equal work.
 Everyone who works has the right to just and favorable remuneration ensuring for himself and
his family an existence worthy of human dignity and supplemented, if necessary,by other means
of social protection.
 Everyone has the right to form and to join trade unions for the protection of his interests.