The document outlines the significance of cultural understanding in international business, emphasizing that cultural differences impact decision-making and strategies. It describes various cultural characteristics, influences of language and religion, and outlines Hofstede's and Trompenaars' cultural classifications which help managers navigate cross-cultural interactions. Additionally, it highlights the importance of adapting business practices to local customs and values to ensure successful international operations.

1. The Cultural Environment of
International Business
Dr. Ahmad Faraz Khan

2. Learning
Objectives
• To understand the significance of culture in international
business decisions
• To elucidate the concept of culture and its constituents
• To explain comparisons of cross-cultural behaviour
• To discuss cultural orientation in international business
• To understand cultural shock

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

4. 4
Expanding Operations Across
Borders
Two distinct tasks emerge:
• to understand cultural differences and
the ways they manifest themselves
• to determine similarities across
cultures and exploit them in strategy
formulation

5. 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.

6. 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.

7. 7
Culture Defined
Culture is an integrated
system of learned
behavior patterns that are
characteristic of the
members of any given
society.

8. 8
Characteristics of Culture
• Culture is learned, shared, and transmitted from one generation
to the next.
• Culture can be passed from parents to children, by social
organizations, special interest groups, the government, schools,
and churches.
• Culture is multidimensional, consisting of a number of common
elements that are interdependent.

9. 9
Acculturation
Acculturation is the
process of adjusting and
adapting to a specific
culture other than one’s
own. It is one of the keys
to success in international
operations.

10. 10
Elements of
Culture
Language (verbal
and nonverbal) Religion
Values System
Norms
Customs and
Traditions
Aesthetics

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

12. 12
The Four Roles of
Language
• Language aids in information gathering and evaluation.
• Language provides access to local society.
• Language capability is increasingly important in company
communications.
• Language provides more than the ability to communicate
because it extends beyond mechanics to the
interpretation of contexts that may influence business
operations.

13. Language … some lessons for managers
Even though English is considered lingua-franca for non English speaking
countries, it fails to provide non-verbal cues … for example:
Coca – Cola was named Ke-kou-ke-la in China which translates in Mandarin
to ‘Bite the wax tadpole’. Subsequently, Coke found a close phonetic
equivalent Ko-kou-ko-Le which translates to ‘Happiness in the mouth’ after
researching 40,000 Chinese characters.
The Swedish vacuum cleaner Manufacturer Electrolux introduced the same
print ad which was successful in Britain in the US Market with the tag line ‘
Nothing sucks like an Electrolux’. Later they found this to be a disaster in
the US because ‘sucks’ in American means ‘really Bad’. i.e. Electrolux is a
‘really bad vacuum cleaner’

14. 14
Nonverbal language
Distinctions must be made in five key topics:
Time
Space
Material Possessions
Friendship Patterns
Business Agreements

15. 15
Body Language Is Not A Universal Language

16. Religion
Religious beliefs significantly influence people behaviour
and 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 behaviour : concerning principles of right
and wrong in human behaviour.

17. 17
Dominant Religions
Christianity
Islam
Hinduis
m
Buddhism
Confucianism

18. Religion : lessons for managers
Considerable influences international business decisions.
For. Eg. Location of commerical buildings and office interiors
need to be as per Fen shui in China and Vastu Shastra in India,
as it concerns free flow of cosmic energy and keeps evil spirits
away.
Advertisements and corporate communications must keep
religious sentiments in mind. For eg. Islam does not permit
shaving. So Shaving equipment makers like Gillette need to be
sensitive while advertising their product in Islamic countries.

19. 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.

20. Value system
 Value systems vary among managers across
different countries :
Eg. US managers : high achievement orientation vs Japanese
managers how have a growth and size orientation vs Indian
Managers who have moralistic orientation.

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

22. Norms
For ex. In Japan, aggressive selling is not perceived in the
positive spirit.
Eg. Indian use hands or different types of spoons for eating.
Chinese and Japanese use chopsticks.
Europeans and American use forks and knives to cut the food
before eating.
Lessons: International managers need to know what is
acceptable, unacceptable in foreign culture. They also need to
know cultural tolerance to business customs that may be
grouped as:
Cultural Imperatives; Cultural Exclusives; Cultural Adiaphora

23. Culture Imperatives
 It refers to norms that must be followed/avoided in a foreign country.
For Eg. Too much eye contact in Japan is considered to completely offensive.
On the other hand in the Gulf , strong eye contact necessary with an Arab, to establish
trustworthiness.
Cultural Exclusives:
Social patterns which are considered appropriate for locals and in which foreigners are
expected not to participate.
Eg. Foreigners should stay away from discussions on local country politics, social
customs
and practices.
Cultural Adiaphora : social customs in which a foreigner may participate (neither
mandates nor forbids). So, the Intl. manager may decide whether to participate or avoid.
Eg. Bowing in Japanese culture is not expected of foreigners, but such display may be

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

25. Traditions and Customs
International managers need to know the customs and traditions of the
culture being dealt with:
Eg. Food Habits eg. Chocolate flavors preferred are different in different cultures : Eg.
Americans and Germans prefer blends, French- Dark, Dutch –White.
Coffee brews: Nescafe manufactures 200 different varieties of coffee to suit local
tastes.
The concept of Indian vegetarianism is very complex for foreigners to understand.
Vessels used for cooking both should be different. KFC offers vegetarian dishes in its
Indian outlets. Pizza Hut offers Jain Pizza in India alone.
Lessons: companies need to modify products/services to suit the local customs and
traditions.

26.  Manners in gift giving:
 A lot of preparation and sensitivity required while giving gifts. What and when is
important.
 China : occasion : New Year
Preferred Gifts: Modest gifts such as coffee table, books, ties, pens.
 Japan: Oseibo( January 1)
Preferred Gifts : Brandy. Scotch, round fruits such as melons
 Manners and Customs in the Way Products are used should also be considered
 Example Orange juice:
 Breakfast item in US, Refreshment in France
 Moisturizers : After bath lotion in one, beauty product in another.
26
Manners and
Customs...

27. 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.

28. Aesthetics
Eg. Colours have different aesthetic value in different cultures:
Africa : bright colours are favourites
Japan : pastel colours preferred as they express harmony.
China : red is lucky colour but associated with witchcraft in Africa.
America : blues and greys are perfect for official environments. But blue is
evil in Africa
Death colours : Black signifies death in America, Europe; In India, Japan &
other Asian countries it is white, For Latin Americans Purple means death;
Dark red is the mourning colour in the Ivory Coast.

29. 29
Acquiring International
Experience
Manager’s ranking of factors involved in acquiring
international expertise
Factor Considered Critical Considered Important
Assignments overseas 85% 9%
Business travel 83 17
Training programs 28 57
Non-business travel 28 54
Reading 22 72
Graduate courses 13 52
Precareer activities 9 50
Undergraduate courses 1 48

30. Cultural Differences
• As individuals, we generally only
become aware of our own culture
when confronted by another.
• However, what we usually observe
are the artifacts of cultural
dissimilarity - the numerous and
often pronounced differences in
greeting rituals, dress codes,
forms of address and taste.

31. •The underlying system of values is, however, neither
readily observable nor readily comprehensible.
•The core differences in values between cultures go
back to questions of what works for ensuring survival
in relation to the natural environment.

32. 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.

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

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

35. Low Power Distance
Countries
• Superiors and subordinates consider each other equal
• Organizations are relatively flatter
• Decision making is decentralized
For instance, Austria, Sweden, Great Britain, the US etc.
Lessons: In view of the power distance, the international manager has to asses the
organizational dynamics, identify the key decision makers and accordingly
formulate their business strategy for different countries.

36. 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 in the organization is calculative.
• Ability to be independent of others is considered to be the key criterion for
success in individualistic societies.
Countries with high individualism include, the US, Great Britain, France, South Africa
etc

37. Collectivism:
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.
Lessons: International Business strategy is greatly influenced by
individualism vs. collectivism in terms of decision making and market
communication. For a product to be successful. In collective societies, it
should have group acceptability unlike in the individualistic societies.

38. 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.
India falls in between.
Summarily, in masculine societies, people ’live to work’, whereas in
feminine societies people’ work to live’.

39. 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 are the most uncertainty avoidance countries.
Low uncertainty avoidance countries include Singapore, Denmark, India,
the US etc.

40. 40
Cultural Dimension Scores for 12 countries
Uncertainty
Avoidance
Individualism
100
0 0
50
Power
Distance
50
Masculinity
100 100
50 50
Japan
France
Mexico
Germany
Netherlands
U.S.A
Great
Britai
n
Brazil
Arab Countries
West Africa
Indonesia
Hong Kong
Germany
France
Japan
Brazil
Arab Countries
Mexico
U.S.A
Great
Britain
Netherlands
Hong Kong
West Africa
Indonesia

41. Trompenaars’ Cultural Classification

42. 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, considerations that
rather than abstract rules are more important
determine how ideas and practices should be applied
e.g. Venezuela, the US, Indonesia, China etc.

43. Individualism vs.
Communitarianism
Individualism: people regarding themselves as individuals.
For instance the US, Czechoslovakia, Argentina, the CIS, Mexico, and the UK .
Societies with high individualism make frequent references to ‘I’ and ‘me’. And
achievement and responsibility are personal.
Communitarianism: people regarding themselves as part of a group.
For instance, Singapore, Thailand, Japan, and Indonesia.
In collectivist societies ‘we’ is used more frequently than ‘I’ and achievement is
considered group achievement.

44. 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.
Will consider anger, delight or intensity in the workplace as ‘unprofessional’
Affective Cultures: Cultures where emotions are expressed openly.
For instance, Mexico, Netherlands, Switzerland, China, Brazil, etc.
Will consider holding back of emotions by colleagues to signify
‘emotionally dead’ or
a ‘mask of deceit’.

45. Specific vs.
Diffused
The relative size of ‘Public space and Private space ‘ and the degree to which
individuals feed comfortable sharing it with others differ considerably across
societies.
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

46. 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.

47. Other Cross-Cultural Classifications

48. 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.

49. 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.

50. 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.

51. 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.

52. 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.

53. 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.

54. 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.

55. Cultural Shock & Management
Approaches

56. 56
Acceptance
of
New
Culture
High
Low
Frustration
1 2 3 4 5 6
Months Living in New Culture
Understanding
Elation
Stages of Culture Shock

57. EPRG
Approach
Ethnocentric orientation
The belief which considers one’s own culture as superior to others.
The belief that the business strategy which has worked in the home
country would also be suitable in alien cultures.

58. Polycentric orientation
It is based on the belief that substantial differences exist among
various countries. Therefore, a single business strategy cannot be
effective across the world and customized business strategies need to
be adapted in different countries.

59. Regiocentric orientation
A firm treats the region as a uniform cultural segment and
adopts a similar business strategy within the region but not
across the region.
For example Mc Donald’s strategy is to not serve beef based products in India, but
serves beef based products in other countries. Also in the Middle East, it does not
serve pork and all meat based preparations are made out of halal process only.

60. Geocentric orientation
The approach considers the whole world a single market and attempts to
formulate integrated business strategies. A geocentric firm attempts to
identify cultural similarities across countries and formulates a globally
uniform business strategy.
Examples: the Harry Potter series of books and films, cartoon characters
and their serials, apparels like Jeans, T-shirts etc…

61. 61
Cross-Cultural Training
•Cultural training programs
should include:
• culture-specific
information
• general cultural information on
values, practices, and
assumptions
• self-specific information that
identifies one’s own
cultural paradigm

62. 62
Cross-Cultural Training (cont.)
• Additional forms of training include:
• mentoring
• area studies programs
• cultural assimilator programs, in which trainees
must respond to scenarios of specific
situations in a particular country
• sensitivity training
• field experience

63. 63
Tips for Making Culture Work for
Business Success
• Embrace local culture
• Build relationships
• Employ locals to gain cultural knowledge
• Help employees understand you
• Adapt products and practices to local markets
• Coordinate by region

68. Dhanyavaad!

69. https://old.amu.ac.in/emp/studym/
99994097.pdf