This chapter discusses cultural environments and their impact on international business. It examines problems in cross-cultural learning and differences in business practices across countries. Major causes of cultural change are explored, like traditions, language, and religion. Factors like power distances, individualism, and uncertainty avoidance are examined in how they influence workplace relationships and risk-taking. The chapter concludes that companies must consider cultural guidelines and maximize their effectiveness when operating internationally across diverse cultural environments.

1. Chapter 2

2.  Discuss the problems and methods of learning about
cultural environments.
 Explain the major causes of cultural difference and
change.
 Examine behavioral factors influencing countries’
business practices.
 Examine cultural guidelines for companies that operate
internationally.


3.  When companies source, produce, and/or market products
in foreign countries, they encounter fascinating and often
challenging cultural environments. Chapter 2 explores the
basic concept of culture and its effect on international
business operations and strategy. It explores cultural
awareness as well as the causes of cultural differences,
rigidities and changes. In so doing it focuses on the impact
of cultural traditions on business activities, as well as the
mutually satisfactory reconciliation of cultural differences.
The chapter concludes with a discussion of the ways in
which firms can maximize their effectiveness while
operating in a world of complex, dynamic, cultural
diversities.

5.  Culture represents the specific learned norms of a
society, based on attitudes, values and beliefs. Major
problems of cultural collision may occur because a firm
implements practices that do not reflect local customs
and values and/or its employees are unable to accept or
adjust to foreign behaviors.

6.  Although people agree that cross-cultural differences
do exist, they often disagree on their impact. Are they
widespread or exceptional? Are they deep-seated or
superficial? Are they easily discerned or difficult to
perceive? Nonetheless, firms must develop awareness
about those cultures in which they operate. However,
the amount of effort needed to do this depends on the
similarities between or among countries and the types
of business operations undertaken.

7.  Cultures consist of people who share attitudes, values
and beliefs. Cultures are dynamic; they evolve over
time.
A. The Nation as a Point of Reference
B. Cultural Formation and Dynamics
C. Language as a Cultural Stabilizer
D. Religion as a Cultural Stabilizer

8. Similarity among people is both a cause and an effect of
national boundaries; in addition, laws apply primarily
along national lines. National identity is perpetuated
through the rites and symbols of a country and a common
perception of history. At the same time, various
subcultures and ethnic groups may transcend national
boundaries. In some instances, similarities may link
groups across different nations more closely than certain
groups within a nation.

10.  Culture is transmitted in a variety of ways, but by age
10 most children have their basic value systems firmly
in place. Nonetheless, individual and societal values
and customs often evolve in response to changing
economic and social realities. Change brought about by
imposition is known as cultural imperialism. The
introduction of certain elements of an outside culture
may be referred to as creolization,
indigenization, or cultural diffusion.

12.  While a common language within a country serves as a
unifying force, language diversity may undermine a
firm’s ability to conduct business on a national level.
Isolation from other groups, especially because of
language, tends to stabilize cultures. Some countries
see language as such an integral part of their cultures
that they attempt to regulate the use or inclusion of
foreign words.

13.  Religion can be a strong shaper of values and beliefs
and is a major source of both cultural imperatives and
taboos. Still in all, not all nations that practice the same
basic religion place identical constraints on business.
Historically, violence among religious groups has
disrupted local and international business activities in
both home and host country firms.

16. A. Social Stratification Systems
B. Motivation
C. Relationship Preferences
D. Risk-taking Behavior
E. Information and Task Processing

17.  People fall into social stratification systems according
to group memberships that in turn determine a person’s
degree of access to economic resources, prestige, social
relations and power. Ascribed group memberships are
defined at birth and are based on characteristics such as
gender, family, age, caste and ethnic, racial, or national
origin. Acquired group memberships are based on
one’s choice of affiliations, such as political party,
religion and professional organizations. Social
stratification affects both business strategy and
operational practices.

18. 1- Role of Competence
2- Gender Based Group
3- Age Based Group
4-Family Based Group
5-Occupation

19. Some nations base a person’s eligibility for jobs
and promotions primarily on competence, but in
others, competence is of secondary importance. In
more egalitarian societies, group membership is
less important, but in more closed societies, group
membership may dictate one’s access to education,
employment, etc.

20. There are strong country-specific
differences in attitudes toward males
and females, as well as vast
differences in the types of jobs
regarded as male or female.
Nonetheless, barriers to employment
based on gender are easing in many
parts of the world.

21. Many cultures assume age and
wisdom are correlated; thus, they
usually have a seniority-based system
of advancement. In others, there is an
emphasis on youth, particularly in the
realm of marketing. All in all, age
represents a complex, dynamic issue.

22. In societies where there is low trust
outside the family (e.g., China and
southern Italy), small family-run
companies are generally more successful
than large firms. However, this may
impede the economic development of the
country if large-scale operations are
necessary to compete globally.

23. In every society certain occupations are perceived
as having greater economic and social prestige than
others. Although some perceptions are universal,
there are significant national and cultural attitudes
about the desirability of specific occupations as
well as the desire to work as an entrepreneur rather
than as an organizational employee

25.  Employees who are motivated to work long and hard
are generally more productive than those who are not.
On an aggregate basis, this will have a positive effect
on economic development and national
competitiveness

26. 1-Materialism and Leisure
2-Expectation of Success and Reward
3-Masculinity Index
4-Need Hierarchy

27.  People are motivated to work for various reasons,
including the desire for achievement. In some societies,
people desire less leisure time than others. In 1904
sociologist Max Weber claimed that predominantly
Protestant Western economies were the most economically
developed because of the emphasis on hard work and
investment. Weber identified this view of work as a path to
salvation as the Protestant ethic.
 In rural India, however, where minimal material
achievement is a desirable end, added productivity will
likely be taken in the form of leisure, rather than income.

28. Although the same tasks performed in different countries
will have different probabilities of success as well as
different rewards for success and different consequences
for failure, people will usually work harder at any task
when the reward for success is greater than the
consequence of failure.
The greatest enthusiasm for work exists when high
uncertainty of success is combined with the likelihood of
a very positive reward for success and little or none for
failure.

29. Hofstede’s study of employees from 50 countries defined a
high masculinity index as describing someone who holds the
belief that it is better to live to work than to work to live.
However, such attitudes, as well as a preference for promotion
and profitability over quality of life and environment, are not
shared by all. Those differences of opinion present major
challenges for international managers.
The masculinity index was conceived by
sociologist Geert Hofstede, and it describes the degree
to which masculine values like competitiveness and the
acquisition of wealth are valued over feminine values like
relationship building and quality of life.

30. Maslow’s hierarchy of needs states that people will try to
fulfill lower-order physiological needs before satisfying
(in order) their security, social, esteem and self-actualization
needs.
People from different countries attach different degrees of
importance to needs and may even rank some of the
higher-order needs differently

31. In social stratification systems, not everyone within a
given reference group is necessarily an equal. In
addition, there may be strong or weak pressures for
conformity within one’s group. Both of these
differences influence management style and marketing
behavior.
1. Power Distance
2. Individualism vs. Collectivism

32. describes the relationship between superiors and
subordinates. When power distance is high, the
management style is generally distant, i.e., autocratic or
paternalistic; when it is low, managers tend to interact
with and consult subordinates as part of the decision-making
process. [For example, Malaysians typically
exhibit high power distance, while Austrians typically
exhibit low power distance.]

33. Nationalities differ as to whether they prefer an autocratic
or a consultative working relationship, whether they want
set rules and how much they compete or cooperate with
fellow workers.
Individualism is the trait that indicates a person’s desire
for personal freedom, time and challenge and one’s low
dependence on the organization; self-actualization is a
prime motivator.
On the other hand, collectivism indicates a person’s desire
for training, collaboration and shared rewards, i.e., one’s
high dependence on and allegiance to the organization.
[For example, Americans tend to be individualistic, while
the Japanese tend to be collectivist.]

34.  Nationalities differ in their attitudes toward risk-taking.
Uncertainty avoidance, trust and fatalism
are examined here.
 1.Uncertainty Avoidance
2.Trust
3.Fatalism.

35. describes one’s acceptance of risk. When the score
is high, people need precise directions and long-term
assurances; when the score is low, people are
willing to accept the risk of trying new products or
moving to new jobs. [For example, Greeks tend to
exhibit high uncertainty avoidance, while Swedes
tend to be low on the scale.]

36. Trust represents one’s belief in the
reliability and honesty of another.
Where trust is high, there tends to be a
lower cost of doing business. [For
example, Norwegians tend to exhibit a
high degree of trust, whereas
Brazilians tend to be skeptical.]

37. Fatalism represents the belief that
events are predestined. Such a
belief may discourage people from
working hard to achieve an
outcome or accepting
responsibility.

39. People from different cultures obtain, perceive, and
process information in different ways; thus, they may also
reach different conclusions. 1.Perception of Cues.
2.Obtaining Information
3.Information Processing

40.  People identify things by means of their senses in
various ways with each sense. The particular cues used
vary both for physiological and cultural reasons. [For
example, the richer and more precise a language, the
better one’s ability to express subtleties.]

41. Language represents a culture’s means of
communication. In a low-context culture, people
rely on first-hand information that bears directly
on a decision or situation; people say what they
mean and mean what they say. In a high-context
culture, people also rely on peripheral
information and infer meaning from things
communicated indirectly; relationships are very
important. [For example, while Germany is
considered to be a low-context culture, Saudi
Arabia is considered to be a high-context culture.]


42. All cultures categorize, plan and quantify, but the ordering and
classification systems they use often vary.
In monochronic cultures (e.g., northern Europeans) people
prefer to work sequentially, but in polychronic cultures (e.g.,
southern European) people are more comfortable working on
multiple tasks at one time. Likewise, in some cultures people
focus first on the whole and then on the parts; similarly,
in idealistic cultures people will determine principles before
they attempt to resolve issues, but in pragmatic cultures they
will focus more on details than principles.

43. Monochronic Polychronic

44.  Once a company identifies cultural differences in the
foreign countries in which it operates, must it alter its
customary practices? A. Making Little or No
Adjustment
B. Communications
C. Culture Shock
D. Company and Management Orientations
E. Strategies for Instituting Change

45.  Some countries are relatively similar to one another
because they share the same language, religion,
geographical location, ethnicity and/or level of
economic development. If products and operations do
not run counter to deep-seated attitudes, or if the host
country is willing to accept foreign customs as a trade-off
for other advantages, significant adjustments may
not be required. Generally, a company should expect to
have to consider fewer adjustments when moving
within a culturally similar cluster than when it moves
from one distinct cultural cluster to another.

46. Problems in communications may arise when moving
from one country to another, even though both
countries share the same official language, as well as
when moving from one language to another.
1.Spoken and Written Language
2.Silent Language

47. Translating one language into another can be very
difficult because
(a) some words do translate directly,
(b) the common meaning of words is constantly
evolving,
(c) words may mean different things in different
contexts and
(d) a slight misuse of vocabulary or word placement
may change meanings substantially. Poor translations
may have tragic consequences

48. incorporates the wide variety of nonverbal cues through
which messages are sent—intentionally or unintentionally.
Color associations, the distance between people during
conversations, the perception of time and punctuality, a
person’s perceived status and kinesics (body language) are
all significant. Misunderstandings in any of these areas
can have a very negative impact

49.  Culture shock represents the trauma one
experiences in a new and different culture because
of having to learn to cope with a vast array of new
cues and expectations. Reverse culture
shock occurs when people return home, having
accepted the culture encountered abroad and
discovering that things at home have changed
during their absence.

50. Whether and to what extent a firm and its
managers adapt to foreign cultures depends
not only on the conditions within those
cultures but also on the policies of the
company and the attitudes of its managers.
1.Polycentrism
2.Ethnocentrism
3.Geocentrism

51.  represents a managerial approach in
which foreign operations are granted a
significant degree of autonomy in order
to be responsive to the uniqueness of
local cultures and other conditions

52. represents a belief that one’s own culture is
superior to others, and that what works at
home should work abroad. Excessive
ethnocentrism may lead to costly business
failures

53.  represents a managerial
approach in which foreign
operations are based on an
informed knowledge of both
home and host country needs,
capabilities and constraints.

54.  Companies may need to transfer new products
and/or operating methods from one country to
another in order to gain or maintain a competitive
advantage. To maximize the potential benefits of
their foreign presence, firms need to treat learning
as a two-way process and transfer knowledge from
host countries back home as well as from home to
host countries.

55. 1. Value System. The more change upsets
important values, the more resistance it will
encounter. Accommodation is much more likely
when changes do not interfere with deep-seated
customs.
2. Cost Benefit of Change. Some adjustments to
foreign cultures are costly to undertake, but their
benefits are only marginal. The expected cost-benefit
of any change must be carefully considered.

56. 3. Resistance to Too Much Change. Resistance
to change may be reduced if only a few demands
are made at one time; additional changes may be
phased in incrementally.
4. Participation. A proposed change should be
discussed with stakeholders in advance in order to
ease their fears of adverse consequences—and
hopefully gain their support.
 .

57. 5. Reward Sharing. A company may choose to
provide benefits for all the stakeholders affected
by a proposed change in order to gain support for
it.
6. Opinion Leaders. Characteristics of opinion
leaders often vary by country. By discovering the
local channels of influence, an international firm
may seek the support of opinion leaders to help
speed the acceptance of change.

58. 7. Timing. Many good business changes fail
because they are ill-timed. Attitudes and needs
change slowly, but a crisis may stimulate the
acceptance of change.
8. Learning Abroad. The essence for
undertaking transnational practices is to capitalize
on diverse capabilities by transferring learning
among all the countries in which a firm operates

59.  To Intervene or Not to Intervene
 Neither international firms nor their employees are
always expected to adhere to a host government’s
behavioral norms. Some firms choose not to operate in
locales where objectionable social and political
practices are the norm; others may operate in such
places while pressuring the host country to change; still
others may rationalize or simply tolerate the status quo.

60. A difficult question concerns international business
practices that may undermine a host country’s long-term
cultural identity. The Society for Applied Anthropology
advises governments and agencies on instituting change
in different cultures; its code of ethics considers whether
a project or planned change will actually benefit the
target population. However, the trade-off between
economic gains and the loss of cultural identity and
traditions is often very difficult to measure.

61.  The Globalization of Culture
 Although some tangibles have become more universal,
the ways in which people cooperate, solve problems
and are motivated tend to remain much the same.
Language differences continue to bolster ethnic
identities, and religious differences are as strong as
ever. Such disparities fragment the globe into regions
and countries into clusters of subcultures that may in
fact transcend national boundaries.