2. 2
There are many common misconceptions about national culture
Source: HBR (2013); Press Search; McKinsey Analysis
Hierarchy, speed of decision making and workplace culture vary significantly and can cause
integration failures even between companies within the western world
It’s East versus West- Not Really!!
MNCs send their employees on international rotation programs assuming it will give them
the necessary cultural exposure, however they are restricted to closed group communities
where their interaction is limited to expats from their own country – e.g. Korean villages in
India
Confusing international experience with cultural agility
The Biblical image of Tower of Babel has become a reality. Culturally diverse team members
can talk past one another and team work breaks down, little knowledge is actually shared
and even universal knowledge like mathematics is open to interpretation
Tower of Babel syndrome
We need to go beyond stereotypes - gathering quality, rigorous knowledge and applying this
flexibly – using it to inform us, but not to limit our thinking
Stereotyping people
Communication is only one of the many factors to be addressed while managing cross
cultures
Assuming cross culture = cross communication
3. 3
Wal-Mart lost 1 billion dollars
Half of managers in MNCs believe national
culture has led to financial losses
National culture is important and has a big impact on business
51 49
We have suffered
financial losses
due to cross
cultural problems
No
observed
13
53
34
Agree
Strongly
agree
Don’t agree
Over 87% of managers believe that better
cross-border collaboration would improve
their profit, revenue, and market share
49% believe cross-cultural problems have
led to financial losses
1 EIU survey of 572 executives of MNCs (2012)
▪ Wal-Mart acquired two German store chains
for USD 1125 Mn in 1990s
▪ Started using US management practices in
these stores – and senior managers did not
do enough to acknowledge German habits,
preferences and labor patterns
▪ The first head of German operations insisted
on using English as the business language
▪ It was losing about USD 150 Mn annually
▪ Finally Walmart exited with losses of over
USD 1bn with the sale of operations to
Metro AG
SOURCE: Press search
4. 4
A bit about me (practical experiences in different cultures)
2011
▪ Moved to France
– MBA with INSEAD
– 52 nationals in our ‘11J intake
2012-2017
▪ Moved back to Ukraine, but…
▪ Transitioned to Big3 consulting, so:
– 1.5 years in Nordics
– Projects in Baltics, Balkans,
Central & Southern Europe
2008-2010
▪ Moved back to Ukraine
– Transitioned to consulting
– Worked in Ukraine & Russia
1985-2000
▪ Born in Kiev/Ukraine
– Russian-speaking family
– 5 generations of Ukrainians,
(Cherkassy, Fastov & Sumy)
2001-2008
▪ Moved to USA (Philadelphia, but
also Chicago & San-Fran a bit)
– Bachelor’s studies
– First professional job
6. 6
How can we talk about culture objectively?
Hofstede's
cultural
dimensions
Trompenaars
and Hampden-
Turner's 7
Dimensions of
Culture
Lewis Model -
Cultural
Dimensions
… and many
more theories
• Late 60’s-early
70’s theory
• 5 dimensions
• Published in
1997
• 7 dimensions
(in appendix)
• Published in
1996
• 3 categories:
– Linear-
Active
– Multi-Active
– Reactive
Theory Hofstede's cultural dimensions
Power
distance
index
Individualism
Index
Uncertainty
avoidance
index
Masculinity
Long term
orientation
▪ Extent to which people view inequality
as normal
▪ This refers to the strength of the ties
people have to others within the
community
▪ This relates to the degree of anxiety
that society members feel when in
uncertain or unknown situations
▪ This refers to how much a society
sticks with, and values, traditional
male and female roles
▪ This refers to how much society
values long-standing – as opposed to
short-term – traditions and values
7. 7
Power distance
index
A high PD score
indicates that society
accepts an unequal
distribution of power,
and that people
understand "their
place" in the system
Example: In very
high power distance
countries like
Malaysia (104),
important meetings
are usually closed
door with only a
select few people in
attendance.
11
13
18
22
28
31
31
33
34
35
35
35
36
38
39
40
40
40
45
46
47
49
49
50
54
54
55
56
57
57
58
58
60
60
61
63
63
64
64
64
65
66
66
67
68
68
68
69
70
70
70
71
73
74
77
77
78
78
80
80
80
81
81
85
86
90
93
94
95
95
104
Venezuela
Ecuador
Serbia
Indonesia
Mexico
Bangladesh
Surinam
China
India
West Africa
Arabic countries
Colombia
Croatia
Brazil
Vietnam
Hong Kong
France
Poland
Singapore
Slovenia
Bulgaria
Morocco
Guatemala
Malaysia
Panama
Russia
Romania
Philippines
United States
Sweden
Ireland
New Zealand
Switzerland
Great Britain
Norway
Jamaica
Estonia
Costa Rica
Luxemburg
Austria
Finland
Germany
Canada
Hungary
Netherlands
Denmark
Australia
Spain
Belgium
Turkey
Portugal
East Africa
Malta
Canada
Greece
Czech Republic
Salvador
Trinidad
Israel
Japan
Argentina
Korea (South)
Taiwan
Iran
Pakistan
Thailand
Italy
South Africa
Chile
Peru
Uruguay
Where do
you think
Ukraine fits?
8. 8
Individualism
Index
A high Individualism
score indicates loose
connections and vice
versa.
Example: Guatemala
scores low on
Individualism index
(6), this means that a
marketing campaign
designed around
benefits to the
community would be
well received.
2
6
8
11
12
13
14
14
15
16
16
17
18
19
20
20
20
20
20
23
25
25
26
27
27
27
30
30
30
32
33
35
36
37
38
38
39
39
41
46
46
46
47
48
51
54
55
58
59
60
60
60
63
65
67
68
69
70
71
71
73
74
75
76
79
80
80
80
89
90
91
Canada
Norway
Italy
Switzerland
Denmark
Sweden
Belgium
Ireland
Germany
South Africa
France
India
Poland
Austria
Czech Republic
Israel
Spain
Finland
Estonia
Luxemburg
Malta
Great Britain
Australia
United States
Hungary
Netherlands
New Zealand
Canada
Vietnam
Colombia
Venezuela
Panama
Costa Rica
Trinidad
Pakistan
Bangladesh
China
Taiwan
Singapore
West Africa
Indonesia
Peru
Thailand
Chile
Salvador
Ecuador
Korea (South)
Romania
Japan
Morocco
Arabic countries
Argentina
Mexico
Slovenia
Turkey
Philippines
Surinam
Hong Kong
Guatemala
East Africa
Malaysia
Uruguay
Croatia
Greece
Bulgaria
Russia
Portugal
Serbia
Jamaica
Iran
Brazil
Where do
you think
Ukraine fits?
9. 9
Uncertainty
avoidance index
Example: Belgium
scores high (94) on
this index, so before
a negotiation process
it would be advisable
to investigate the
various options and
then present a limited
number of choices.
8
13
23
29
29
30
30
35
35
36
40
44
46
48
48
49
49
50
51
51
52
53
54
55
58
59
59
60
60
60
64
65
67
68
68
69
70
70
70
74
75
76
76
80
80
81
82
82
85
85
85
86
86
86
86
86
86
87
90
92
92
92
93
94
94
95
96
100
101
104
112
Japan
Peru
Salvador
France
Surinam
Romania
Poland
Spain
Argentina
Serbia
Colombia
Costa Rica
Hungary
Korea (South)
Israel
Mexico
Croatia
Chile
Panama
Turkey
Bulgaria
Guatemala
Portugal
Greece
Uruguay
Russia
Belgium
Malta
South Africa
Vietnam
Sweden
Hong Kong
Great Britain
Malaysia
China
Slovakia
Norway
Philippines
New Zealand
Singapore
Ireland
India
Canada
Australia
Indonesia
Denmark
United States
Estonia
Italy
Venezuela
Taiwan
Czech Republic
Bangladesh
Iran
Arabic countries
Canada
Brazil
East Africa
Jamaica
Switzerland
West Africa
Ecuador
Thailand
Germany
Finland
Austria
Trinidad
Netherlands
Pakistan
Luxemburg
Morocco
Where do
you think
Ukraine fits?
10. 10
Masculinity
(vs. Femininity)
In low masculine
societies you see
women and men
working together
equally across many
professions.
Example: Sweden (5)
has the lowest
masculinity index and
if one has to open an
office there, the focus
should be on having
a team that was
balanced in terms of
skill rather than
gender, whereas in
Japan (95), you may
have more success
with a male team
lead.
5
8
14
16
19
21
26
28
30
31
34
36
37
37
38
39
40
40
40
40
42
42
42
43
43
43
44
45
45
45
46
46
47
47
48
49
50
50
50
52
53
53
53
54
55
56
56
57
57
57
58
58
61
62
63
63
64
64
64
66
66
66
68
68
69
70
70
73
79
88
95
Germany
Colombia
Mexico
Philippines
Jamaica
China
Ireland
Poland
Ecuador
South Africa
Great Britain
Belgium
Australia
Hong Kong
Czech Republic
India
Argentina
Bangladesh
United States
Trinidad
New Zealand
Greece
Hungary
Japan
Austria
Italy
Switzerland
Venezuela
Korea (South)
Costa Rica
Slovenia
Denmark
Estonia
Portugal
Finland
Bulgaria
Croatia
Russia
Vietnam
Sweden
Chile
Thailand
Uruguay
Salvador
Guatemala
Netherlands
Surinam
Taiwan
East Africa
Arabic countries
Brazil
Canada
Canada
Serbia
Malta
Turkey
Morocco
Spain
Norway
France
Romania
Israel
Indonesia
West Africa
Panama
Pakistan
Iran
Peru
Malaysia
Luxemburg
Singapore
Where do
you think
Ukraine fits?
11. 11
Long-term
(vs. short-term)
In countries with a
high score, delivering
on social obligations
and avoiding "loss of
face" are considered
very important.
Example: People in
the U.S. don't value
tradition as much as
many others, and are
therefore likely to be
willing to help you
execute the most
innovative plans as
long as they get to
participate fully.
13
16
19
19
23
25
29
30
30
30
31
31
31
32
33
34
38
39
40
40
41
43
44
44
46
48
50
56
61
65
75
80
80
87
96
118
Hungary
Norway
Brazil
Ireland
Thailand
Denmark
India
Netherlands
Finland
Switzerland
Singapore
New Zealand
France
Poland
Sweden
Germany
Austria
Australia
Bangladesh
Belgium
Italy
Hong Kong
China
Taiwan
Vietnam
Korea (South)
Japan
United States
Portugal
West Africa
Great Britain
Canada
Philippines
Spain
Canada
Czech Republic
Where do
you think
Ukraine fits?
14. 14
Negotiations are quick and straightforward; Facts more important
than any relationships
SOURCE: Press search
Attitudes
and Styles
▪ Highly focused on individualism and personal initiative
▪ Business relationships are only moderately important
▪ In the United States, money is a key priority
▪ American negotiators focus mostly on near-term benefits and are fiercely competitive
Sharing of
information
▪ There are hardly any significant delays in gathering information and discussing details
▪ They rarely take it negatively if you ask about sensitive details
▪ Americans expect straightforward answers
Pace of
negotiations
▪ 'Speed matters’ and ‘time is money’ are beliefs most members of this culture share.
▪ American negotiators may use pressure techniques that include opening with their best offer.
▪ Silence can be a particularly effective pressure tactic to use against the U.S. side.
▪ Americans will use walkouts only to make a final point, almost never as a tactic
Bargaining
▪ While most Americans are comfortable with moderate bargaining
▪ Negotiators in the U.S. often take firm positions at the beginning of the bargaining process.
▪ Prices may move by about 20 to 30 percent between initial offer and final agreement.
Decision
Making
▪ Levels of hierarchy in American companies vary considerably
▪ Older and more traditional ones can be quite hierarchical, while others often show flat
hierarchies
▪ Empirical evidence and other objective facts weigh more than personal feelings
▪ Americans are generally risk takers and will not shy away from making bold moves
15. 15
The French focus on logic and are very detail oriented; Negotiations
can take long but French dislike bargaining
SOURCE: Press search
Attitudes
and Styles
▪ Negotiators in this country are very passionate and can appear outright aggressive
▪ The French may not always show a win-win attitude
▪ Rely on logical reasoning more than emotions
▪ People may be unwilling to agree with compromises
Sharing of
information
▪ French negotiators may spend a significant time gathering information and discussing details
▪ They rarely take it negatively if you ask about sensitive details
▪ The French value Cartesian logic, that is not to take anything for granted until it is
demonstrated.
Pace of
negotiations
▪ Negotiations may be slow to start.
▪ Bargaining and decision making can take a long time
▪ Deadlocks or disputes are resolved by focusing on logical reasoning and facts
Bargaining
▪ The French are not fond of bargaining and strongly dislike haggling
▪ Prices rarely move by more than 25 to 30 percent between initial offers and final agreements.
▪ Corruption and bribery are rare in France, Both legally and ethically, it is advisable to stay
away from giving gifts of significant value.
Decision
Making
▪ The country’s business culture is quite hierarchical
▪ The French may examine every minute detail before arriving at a decision
▪ Decision making is a very slow and deliberate
▪ It is an accepted practice to work around rules and regulations if needed
▪ Decision makers are usually senior executives who accept responsibility
16. 16
Negotiations are slow with a lot of focus on bargaining; Strong focus
on business relationships and emotions can be used to close deals
SOURCE: Press search
Attitudes
and Styles
▪ They expect long-term commitments from their business partners
▪ The primary negotiation style is competitive
▪ The best way to proceed is to show your commitment to the relationship and refrain from
using logical reasoning or becoming argumentative
Sharing of
information
▪ They spend considerable time gathering information before the bargaining stage of a
negotiation
▪ Be careful with what you are willing to share yourself and protect your intellectual property.
Pace of
negotiations
▪ Negotiations to be slow and protracted. They are often an attempt to obtain concessions
▪ The Chinese generally employ a polychronic work style. They are used to pursuing multiple
actions and goals in parallel
▪ They prefer to bargain over several items at the same time
▪ Many businessmen make the mistake of “trying to speed things up”, by offering concessions
too early
Bargaining
▪ They are shrewd negotiators, and bargaining is the key style used by them.
▪ Prices may move by 40 percent or more between initial offers and final agreement.
▪ They do not employ aggressive tactics.
▪ Emotional techniques may be used to get favorable deals
Decision
Making
▪ Organizations are usually very hierarchical
▪ Decision making is normally a consensus-oriented group process in China
▪ They usually consider the specific situation rather than applying universal principles.
▪ Personal feelings and experiences weigh more strongly than empirical evidence
17. 17
Brazilians can be tough negotiators; spend a lot of time in small talk
before leaping into business; have a tendency to avoid conflict
SOURCE: Press search
Attitudes
and Styles
▪ Brazil’s culture is generally group oriented
▪ Value lasting and trusting personal relationships, and long term commitments
▪ Attitudes based on beliefs of male dominance remain strong in this country
▪ Power and status may sometimes be more desirable than financial gains
Sharing of
information
▪ Emotions are usually shown very openly
▪ They usually avoid open conflict
▪ May be reluctant to disagree openly with someone they like
Pace of
negotiations
▪ Brazilians do not ‘leap right into business’, but spend considerable time on small talk
▪ It is unrealistic to expect initial meetings to lead to straight decisions
Bargaining
▪ Brazilians can be tough and sometimes very aggressive negotiators
▪ Most will indulge in hard bargaining
▪ Prices may move by 40 percent or more between initial offer and final agreement
Decision
Making
▪ Most Brazilian companies are intensely hierarchical
▪ Decision makers are usually top executives, who may not consult others
▪ Dealings are mostly with subordinates who have no decision-making authority
18. 18
Attitudes
and Styles
Sharing of
information
Pace of
negotiations
Bargaining
Decision
Making
Summary on “must know” cross-cultural negotiations specifics
SOURCE: Press search
▪ Hot debates, hard at
compromises
▪ Logic prevails
▪ Win-win attitude not
frequent
▪ Demand strong reasoning
▪ Open to sensitive details
▪ Sluggish at information
search & discussions
▪ Negotiations are slow to
start
▪ Slack bargaining &
decision-making
▪ Bargaining and haggling
are not welcome
▪ No way for bribery
▪ 25-30% price movement
possible
▪ Hierarchy is crucial
▪ Very slow process
▪ Rules & regulations can
prevail
▪ Business first
▪ It’s all about money
▪ Individualism
▪ Short-term focus
▪ Straightforward style
▪ Open to sensitive details
▪ Rare delays
▪ Time is money
▪ Use of pressure
techniques
▪ Silence to be used as
pressure tactic against US
▪ Moderate bargaining is ok
▪ Firm positions at
negotiations start
▪ 20-30% price movement
possible
▪ Hierarchy in Business
varies
▪ Empirical evidence
prevails
▪ Risk-taking attitude
▪ Relationships & loyalty are
crucial
▪ Competitive style
▪ Long-term focus
▪ Profound research before
bargaining
▪ Be cautious about IP and
personal details
▪ Slow negotiations, way to
win concessions
▪ Polychronic work style
▪ Bargaining over several
items at once
▪ Shrewd negotiators
▪ No way for aggressive
tactics
▪ 40% price movement
possible
▪ Strong hierarchy
▪ Consensus-oriented
attitude
▪ Personal feelings prevail
▪ Group orientation
▪ Masculinity
▪ Power & Status desired
▪ Long-term focus
▪ Open conflict avoidance
▪ Open emotions
▪ Hard to disagree with
somebody they like
▪ Small talk is a must
▪ Initial meetings rarely lead
to straight decisions
▪ Tough negotiators
▪ Use hard bargaining
▪ 40% price movement
possible
▪ Usually strong hierarchy
▪ Top executives are
decision makers
19. 19
Some other learnings from own subjective observations
Do you think these look like stereotypes? Well, maybe they just are…
Nordics
Dutch
Australian
British
Germanic
Japanese
Mediterranean
Indian
▪ Logic-oriented: if a “story” sounds right, major quant proofs are less
relevant. Able & willing to make decisions fast.
▪ Uber-direct: talk what they think, with no intricacies or softening
elements, therefore can be considered rude.
▪ Easy-going: generally relaxed (sometimes too much), so can handle
stress well, but may fail at fast-paced crunch-time
▪ Proper: polite & cultured manners hide true thinking too much, translation
needed to read through their “understatements” (vs. Dutch)
▪ Punctual & Detailed: extreme punctuality and love of detail, with
quantified back-ups a must!
▪ Dolce Vita & Style: extreme attention given to (1) the way you relax and
(2) to your personal style. Style symbols play a strong role.
▪ Introverted: quite ritualistic and closed in terms of feeling & thinking.
Highly hierarchical. Requires detail & precision. Never say “No”.
▪ Indian time: always late at least 30 minutes, no value in punctuality.
Always say “yes”, though may not agree and may fail afterwards.
23. 23
Besides “national cultural” differences, there are, of course other things to
consider:
Functional cultures:
▪ Operations
▪ Commercial
– Marketing
– Sales
▪ Accounting
▪ Strategic team
▪ …
National cultural differences:
▪ Brits vs.
▪ Yankee’s vs.
▪ Germans vs.
▪ “Soviets” vs.
▪ Ukrainians vs.
▪ Japs vs.
▪ …
Industrial cultures:
▪ Entrepreneurs
▪ High-finance
▪ Techie’s (IT hard- & software)
▪ Hard-core
industrials
▪ Fashion
▪ Retailers
Personality traits
(below based on
Myers-Briggs):
▪ Extraversion/Introversion
▪ Sensing/Intuition
▪ Thinking/Feeling
▪ Judging/Perceiving
The way
we
interact
▪ Let’s discuss!
24. 24
In summary:
▪ National/cultural upbringing has a concrete impact on the way people communicate, think, perceive the
world, and judge others
▪ Specific nations have more pronounced traits here and there (e.g. XXX)
▪ It is not only national heritage, but also industrial culture, functional culture and personal traits that
play a role in the way we interact
▪ KNOW YOURSELF & YOUR AUDIENCE!
When you are preparing for a high-stake communication (short-term, e.g. pitch, or long-term, e.g.
partnership or long-term execution contract), tailor your behavior to your audience
▪ More reading materials here: https://drive.google.com/drive/folders/
0B_OHnMRMSVoneEdEU3VvWXRXRlE
Remember – perfect cultural approach does not substitute content, but
it can help avoid unnecessary barriers ☺
