Chapter 8

Intercultural Management

1. Cultural Factors in International Business Management

1.1 The role of culture in international business management

Case study : At & T and MCI vs. Telefonos de Mexico SA

Cultural sensitivity/cultural empathy—an awareness and honest caring about other individual's culture.

Cultural awareness enables managers to develop appropriate policies and determine how to plan, organize, lead, and control in a specific international setting.

1.2 Types of organizational culture

Academy culture—highly skilled, stable environment, e.g. universities, hospitals, large corporations

Baseball culture—highly prized skills, fast-paced & high-risk organizations,

e.g. investment banking, advertising Club culture—fit into the group, value seniority, e.g. the military, law firms Fortress culture—massive reorganization, large

uncertainty with opportunities, e.g. banks, large car companies

1.3 Joint venture culture

Culture fulfills the following functions in joint ventures:

1)Integration—a general consensus

2)Coordination—shared values and norms

3)Motivation—

4)Identification—we-feeing

1.4 The influence of national culture

National culture is an important influence on the development of joint ventures.

National cultural differences are not paramount factor but rather an extra limiting variable in joint venture success.

The different levels of culture— individual, organizational, national —don’t exist in isolation.

2. Corporate Culture

Definition

It is the way things work in a corporation. In generalterms, it is the look, the feel, the atmosphere of an organization and people within it. It is based on one’s perceptions and assumptions of how things get done within that particular organization.

2.1 Understanding corporate cultures

The culture of an organization is typically created unconsciously, based on the values of the top management or the founders of the organization. (leader-centric)

Culture’s inputs and outputs Inputs—feedback from society, professions, laws,

stories, heroes, values on competition or service, etc. based on our values, assumptions and norms

Outputs—organizational behaviors, technologies, strategies, image, products, services, appearance, etc.

2.2 The contents of corporate culture

Corporate culture operates at both conscious and unconscious levels

▼ Conscious/visible—artifacts ( cf. P159 last para.)

▼ Unconscious/invisible—deeply tooted beliefs, value and norms shared by the members of the organization

3. Development of Teamwork

Teamwork means cooperation among employees and employers. Team members must be flexible, adaptable, and able to work together to further their companies’ goals to succeed and stay competitive.

3.1 Selection of the team 1) the composition of the team needs to be appropriate to

the size of the team and the team’s objective.

2) the location of team members is another key consideration.

3) functional expertise is not sufficient for the success of a team. It is also complemented by excellent interpersonal, communication, and leadership skills.

4)setting a global mindset is required to ensure effectiveness.

5) an individual’s attitude towards continuous learning should be a major criterion for selecting.

3.2 Establishment of credibility and trust Tasks of the team leader: foster relationship and team consciousness, provide

direction, and ensure that the vision, mission, and goals of the team are understood and shared.

How soon trust is established: Highly industrialized countries—trust is established

quickly

Other cultures—slowly, initial skepticism and distrust

The effects of status, achievements and performance on credibility building:

China, Japan, Spain, France, Germany—status helps building credibility

US, UK, Sweden—credibility established by performance

Relationship and distance Formal cultures—maintaining correct distance Informal cultures—showing personal familiarity

(Study the case)

3.3 Conflict of the team

The diverse perspectives, personalities, styles, weaknesses, and strengths of the members will always induce conflicts. In the two areas conflicts often arise:

1) attitudes toward work and personal time

2) sharing and exchanging information

(Study the case and figure out what leads to the conflicts.)

3.4 Formation of team culture

1) The team should have moved from a low-context to a high-context communication style through personal , face-to-face communication with each other. A soiled trust and credibility should have existed.

2) The team should have established its identity, a high degree of cohesion, and a sense of collectivism.

3) The team should be aware of its tendency to exclude “outsiders.”

4. Strategies for International Marketers

Definition of Intercultural Marketing

The strategic process of marketing among consumers whose culture differs from that of the marketer's own culture at least in one of the fundamental cultural aspects, such as language,religion, social norms and values, education, lifestyle.

Relationship between culture and marketing

1) culture defines acceptable purchasing and product-use behaviors for both consumers and business.

2) each element of culture influences each component of the marketing mix.

3) marketing also influences culture, esp. by contributing to cultural borrowing and change.

4.1 Intercultural acculturation in international marketing

Intercultural acculturation is a dual process

— Marketers must thoroughly orient themselves to the values, beliefs, and customs of the new society to appropriately position and market their products.

—To gain acceptance of a culturally new product in a foreign society, they must develop strategies that encourage members of that society to modify or even break with their own traditions.

4.2 Alternative multinational strategies: global vs. local

1) local strategy: use national borders as a segmentation strategy

--modifying the product, the promotion mix, or any other aspect of marketing strategy to appeal to local cultures;

--examples: McDonald’s Levi’s, Nescafe

2) global strategy: use shared needs and values as segmentation strategy

--marketing a product in essentially the same way everywhere in the world

--examples: Patek Philippe, Platex, GM, Gillette, Estee Lauder, Unilever, Parker pen, Fiat

3) mixed strategy: augment global strategies with local executions