Cultural factors significantly influence international business decisions. Managers must understand differences in cultural behaviors and values across countries. Culture encompasses various learned traits like values, norms, aesthetics, customs, language and religion. Frameworks like Hofstede's and Trompenaars' classify cultures based on dimensions such as individualism-collectivism, power distance, and time orientation. Managers must avoid ethnocentrism by considering perspectives beyond their own culture and redefining problems in local cultural contexts.

1. Cultural Environment
1

2. Learning Objectives
• To understand the significance of culture in
international marketing decisions
• To elucidate the concept of culture and its
constituents
• To explain comparisons of cross-cultural
behaviour
• To discuss cultural orientation in international
marketing
• To explicate self reference criteria and
ethnocentrism
2

3. Social factors
• Human Development Report An independent, analytically and
empirically grounded discussions of major development issues,
trends and policies published by the United Nations Development
Programme (UNDP)
• Social Indicators: United Nations Tables of the latest indicators of
social development for housing, health, education, illiteracy, income
and economic activity, youth and elderly population, urban and rural
population, and unemployment.
• Social Progress Index An aggregate index of social and
environmental indicators that capture three dimensions of social
progress: Basic Human Needs, Foundations of Wellbeing, and
Opportunity.
• UNESCO Institute for Statistics The United Nations Educational,
Scientific and Cultural Organization (UNESCO) Institute provides
statistical data & country profiles that focus on four themes: culture
and communications, education, literacy, and science and
technology.
3

4. Development Indicators
• Human Development Index The United
Nation's (UN's) Human Development Index
measures poverty, health, education, gender,
environment and other factors. This website
includes country reports, data and news.
• World Bank Open Data Data for
development indicators for countries and
country groups. Includes social, economic,
financial, natural resources, and
environmental indicators. Search by "Country
or ""Indicator."
4

5. Human Rights
• Business & Human Rights Resource CenterBrowse by
"Countries" for articles and reports on issues related to
discrimination, the environment, poverty, health, and security.
Also find company news, reports and correspondence.
• Country Reports on Human Rights PracticesU.S.
Department of State reports that cover internationally
recognized individual civil, political, and worker rights, as set
forth in the Universal Declaration of Human Rights and other
international instruments.
• International Religious Freedom ReportAnnual report to
Congress on International Religious Freedom. Describes the
status of religious freedom in each foreign country,
government policies violating religious belief and practices of
groups, religious denominations and U.S. policies to promote
religious freedom around the world.
5

6. Culture and Customs
• Country Comparison Tool Professor Geert Hofstede,
Professor Emeritus of Organizational Anthropology
and International Management at Maastricht University
in the Netherlands, conducted one of the most
comprehensive studies of how values in the workplace
are influenced by culture. Five dimensions are used to
measure the values that distinguished countries from
each other.
• Country Insights Answers to questions about
business culture, customs & communication from the
Canadian Centre for Intercultural Learning.
• Kwintessential Country Guides & Profiles Basic
facts on the social life, customs & business etiquette of
countries.
6

7. Significance of Culture
•A firm operating internationally comes across a wide
range of diverse cultural environments, which
significantly influence international business decisions.
•Managers operating internationally need to appreciate
the differences among cultural behaviors of their
business partners and consumers across various
countries.
7

8. The Concept of Culture
•Culture is the way of life of people, including
their attitudes, values, beliefs, arts, sciences,
modes of perception, and habits of thought and
activity.
• Cultural differences across the countries
significantly influence business decisions.
8

9. Constituents of Culture
A variety of learned traits that influence human behavior can
contribute to the culture of a social group, the major
constituents, includes:
• value system
• norms
• aesthetics
• customs and traditions
• language
• religion
9

10. Value System
Shared assumptions of a group about how things ought to be or
abstract ideas about what a group believes to be good, desirable,
or right.
10

11. Norms
• Guidelines or social rules that prescribe
appropriate behaviour in a given situation.
11

12. Aesthetics
• Ideas and perceptions that a cultural group
upholds in terms of beauty and good taste. It
includes areas related to music, dance,
painting, drama, architecture, etc
12

13. Traditions and Customs
Traditions: The elements of culture passed down
from generation to generation.
Customs: An established pattern of behavior
within a society.
13

14. Language
A systematic means of communicating ideas or
feelings by the use of conventionalized signs,
gestures, marks, or especially articulate vocal
sounds.
14

15. Religion
Religious beliefs significantly influence business decision
making.
Religion encompasses three distinct elements;
•Explanation: God seen as a ‘first cause’ behind the creation of
the universe
•A standard organization: Consisting of places of worships and
rituals
•Moral rules of good behavior
15

16. Comparison of Cross Cultural
Behavior
• An appreciation of cultural differences
facilitates international managers to
conceptualize and implement business
strategies in view of cultural sensitivities in
various countries.
16

17. Hofstede’s Cultural Classification
Power distance: High vs. Low
The extent to which less powerful members of
an institution accept that power is distributed
unequally.
17

18. High Power Distance
•High social inequalities tolerated with differences in power
and income distribution
•Organizational structures are hierarchical based an inequality
among superiors and subordinates
•Decision making is centralized
•Juniors blindly follow the orders of their superiors
For instance, Malaysia, Mexico, Arab countries, India etc.
18

19. Low Power Distance
• Superiors and subordinates consider each
other equal
• Organizations are relatively flatter
• Decision making is decentralized
For instance, Austria, Sweden, Great Britain, the
US etc.
19

20. Individualism vs. Collectivism
Individualism
The tendency of people to look after themselves and their immediate
family.
• Strong work ethics
• Promotions based on merit
• Involvement of employees is calculative
Countries with high individualism include, the US, Great Britain,
France, South Africa etc
20

21. Individualism vs. Collectivism (contd)
Collectivisms
The tendency of people to belong to groups and to look after
each other in exchange for loyalty. In such cultures, interest of
groups have precedence over individual interest
For instance, Guatemala, Pakistan, Singapore, Malaysia etc.
21

22. Masculinity vs. Femininity
In masculine societies, the dominant values
emphasize on work goals, such as earnings,
advancement, success, and material belongings.
e.g. Japan, Switzerland, Great Britain, the US etc.
In feminine societies the dominant values are
achievement of personal goals, such as quality of
life, caring for others, friendly atmosphere, getting
along with boss and others.
e.g. Sweden, Norway, Denmark, Thailand etc.
22

23. Uncertainty Avoidance
The extent to which people feel threatened by ambiguous
situations.
In high uncertainty avoidance societies there is lack of
tolerance for ambiguity and the need for formal rules.
For instance, Greece, Portugal, Japan, France etc.
Low uncertainty avoidance countries include Singapore,
Denmark, India, the US etc.
23

24. Tromponaars’ Cultural Classification
24

25. Universalism vs. Particularism
• Universalism: The belief that ideas and practices can
be defined and applied everywhere without
modification
e.g. the US, Australia, Germany, Sweden etc.
• Particularism: The belief that unique circumstances
and relationships, rather than abstract rules are more
important considerations that determine how ideas
and practices should be applied
e.g. Venezuela, the US, Indonesia, China etc.
25

26. Individualism vs. Communitarianism
Individualism: people regarding themselves as
individuals.
For instance the US, Czechoslovakia, Argentina, the CIS,
Mexico, and the UK .
Communitarianism: people regarding themselves as part
of a group.
For instance, Singapore, Thailand, Japan, and Indonesia.
26

27. Neutral vs. Affective
Neutral Cultures: Cultures in which people tend to hold
back their emotions and try not to exhibit their feelings.
For instance, Japan, the UK, Singapore, Australia, etc.
Affective Cultures: Cultures where emotions are
expressed openly.
For instance, Mexico, Netherlands, Switzerland, China,
Brazil, etc.
27

28. Specific vs. Diffused
Specific Cultures: Cultures in which individuals tend to
have a large public space which is readily shared, and a
smaller private space.
For instance, Australia, the UK, the USA and Switzerland.
Diffused Cultures: Culture in which public and private
space are more or less similar and public space is
guarded more carefully.
For instance, Venezuela, China and Spain
28

29. Achievement vs. Ascription
Achievement Cultures: Culture in which status is accorded to high
achievers and high performers.
For instance Austria, the USA, Switzerland, the UK, Sweden and Mexico
etc.
Ascription Cultures: Culture in which status is accorded to those who
‘naturally’ evoke admiration from others such as elderly, seniors, highly
qualified and skilled people.
For instance, Venezuela, Indonesia, China, the CIS, and Singapore etc.
29

30. Other Cross-Cultural Classifications
30

31. High Context vs. Low Context
High Context Cultures: Culture in which high significance is given
to implicit communications, such as non-verbal and subtle
situational cues.
For instance, China, Korea, Japan and Arab countries.
Low Context Cultures: Cultures in which communication is more
explicit with heavy reliance on words to convey the meanings.
For instance, Germany, Switzerland, Scandinavia, North America
and Britain.
31

32. Homophilous vs. Heterophilous
Homophilous Cultures: Cultures where people share
beliefs, speak the same language, and practice the same
religion.
For instance, Japan, Korea and Scandinavian countries.
Heterophilous Cultures: Countries that have a fair
amount of differentiation in languages, beliefs, and
religions followed.
For instance, India and China.
32

33. Relationship vs. Deal-focused
Relationship-focused Cultures: Cultures in which strong
orientation towards building relationships and developing
mutual trust.
For instance, India, Japan, China, Singapore, Saudi
Arabia, United Arab Emirates, Egypt, Brazil, Mexico, and
Russia.
Deal-focused Cultures: Task-oriented cultures with
openness to hold direct business talks with strangers.
For instance, Britain, USA, Germany, Denmark, Australia,
Canada, Finland etc.
33

34. Formal vs. Informal Cultures
Formal Cultures: Status differences are large and valued and
formality is used to show respect.
For instance, India, UAE, Egypt, Brazil, Russia, Poland, Japan,
China,, Singapore, France, Belgium, Britain, Germany,
Denmark, Finland etc.
Informal Cultures: Status differences are not valued and
Informal behaviour is not considered disrespectful.
For instance, the USA, Canada, and Australia etc.
34

35. Polychronic vs. Monochronic
Polychronic Cultures: Cultures in which time schedules and deadlines
are flexible and relationships take precedence.
For instance, India, Thailand, Philippines, UAE, Egypt, Brazil, Russia
etc.
Monochronic Cultures: Cultures with rigid time schedules and
deadlines with high emphasis on punctuality.
For instance, Japan, China, Singapore, Britain, USA, Canada, Australia,
Germany, Denmark etc.
35

36. Expressive vs. Reserved Cultures
Expressive cultures: people are more expressive
with direct eye contact.
For instance, Russia, Poland, Romania, USA,
Australia, and Canada
Reserved cultures : people restrain their facial
expression and gesturing.
For instance, India, Japan, China, Singapore,
Britain, Germany, Denmark, Finland etc.
36

37. Parochialism vs. Simplification
Parochialism: Belief that views the rest of the
world from one’s own cultural perspective.
Simplification: Exhibiting same cultural
orientation towards different cultural groups.
37

38. Self Reference Criterion (SRC)
• An unconscious reference to one’s own
cultural values, experiences, and knowledge
as a basis for decision-making. SRC
significantly influences ability of international
managers to objectively evaluate
environmental factors and make business
decision.
38

39. Approach to Eliminate SRC
Step 1: Define the business problem or goal in home-
country traits, habits, or norms.
Step 2: Define the business problem or goal in foreign
country cultural traits, habits, or norms.
Make no value judgments.
Step 3: Isolate the SRC influence in the problem and
examine it carefully to see how it complicates
the problem.
Step 4: Redefine the problem without the SRC
influence and solve for the optimum business
goal situation.
39