Culture refers to the learned norms, values, attitudes and beliefs of a group of people. Cultural diversity can provide competitive advantages for companies but also risks cultural collisions if companies fail to consider cultural differences or make needed adjustments. Cultures form and change through social situations that provide new alternatives, or through cultural imperialism and diffusion. Behavioral practices like social stratification, work motivation, relationship preferences, risk tolerance, and information processing differ across cultures and can impact business. Companies must consider factors like power distance, individualism vs collectivism, uncertainty avoidance, and communication styles when operating across cultures to avoid culture shock and effectively institute change.

1. Culture• Refers to the learned norms based on values, attitudes and beliefs of a group of people.
Culture is an integral part of a nation’s operating environment. The People Factor Cultural Diversity:
fostering cultural diversity can allow a company to gain a global competitive advantage. Cultural
collision: 1. collision may arise under two conditions When a company implements practices that are
less effective than intended 2. When a company’s employees encounter distress Sensitivity &
Adjustment: companies need to decide when to make cultural adjustments by assessing the differences.
How Cultures Form & Change • Change by choice: a reaction to social and economic situations that
present people with new alternatives. Change by imposition (cultural imperialism): ➢ Cultural diffusion:
the spread of cultural beliefs and social activities from one group to another. ➢ Creolization: elements
of different cultures are blended together to create a new culture. Behavioral Practices Affecting
Business. 1. Social Stratification Social Stratification: dictate a person’s class or status within that
culture. Social ranking is determined by. 2. Work Motivation Materialism and Motivation> Expectation
of Success and Reward people > Performance and Achievement (Masculinity Femininity Index): Work
Motivation Hierarchies of Need: people fill lower level needs before moving to higher level needs. The
ranking of needs differs among cultures. 3. Relationship Preferences • Power Distance: general
relationship between superiors and subordinates. ❑ High Power: people prefer little
consultation between superiors and subordinates (e.g. Mexico, South Korea) ❑ Autocratic
management style (ruling with unlimited authority) Paternalistic management style (regulating
conduct by supplying needs) Low power: people prefer consultative style (e.g. Austria, Finland)
Relationship Preferences Individualism vs Collectivism: 4.Risk Taking Behavior- Uncertainty Avoidance:
handling uncertainty >Trust: degree of trust among people> Future Orientation: delaying
gratification>Fatalism :attitudes of self determination (fatalistic people believe in “the will of God” over effect
logic). 5. Information and Task Processing • Cultures handle information in different ways ❑ Obtaining
Information❑ Low context versus High context cultures Information Processing: Monochromic versus
Polychronic Cultures Idealism versus Pragmatism. High-Context vs Low-Context Cultures •High-context
Culture: ➢Emphasize on establishing and strengthening relationships in the communication process.
➢Non-verbal communication is as important as verbal communication ➢Ex- Asians, Arabians, Latin
Americans •Low-context Culture: ➢Emphasize on exchanging information and is less focused on
building relationships ➢ Ex- Americans, Canadians, Australians, Germans.• Monochronic Cultures: ➢
Like to do just one thing at a time orderliness They do not value interruptions The Germans tend to be
monochromic. Polychronic Cultures: ➢a ringing phone and a meeting all going on at the same time
French and the Americans tend to be polychronic. •Idealism: cultures that prefer to establish overall
principles before they try to resolve small issues. •Pragmatism: cultures in which people focus more on
details than on abstract principles. • Spoken and written language> Silent language---Color, Distance,
Time and punctuality Body language, Prestige. 6. Communication Dealing with Cultural Differences:
Host society acceptance: the extent to which a culture is willing to accept the introduction of anything
foreign. Degree of cultural differences: Ability to adjust> Culture Shock> Company and management
orientation: orientations. Three company and management orientation •Polycentrism: Business units
abroad should act like local companies Ethnocentrism: Home culture is superior to local culture
Overlook national differences Geocentrism: Integrate home and host practices. Strategies for
Instituting Change •Value systems •Cost-benefit analysis of change •Resistance to too much change
•Participation•Rewardsharing•Opinionleadership•Timing•Learningabroad.