International Business and Culture

7/31/2019 International Business and Culture

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International Business and Culture

What is Culture?

Behaviour patterns that members of a society learns through different

forms of symbolic interaction; e.g. Customs, habits, beliefs, values

Group based cultures ?

Nationality, religion, ethnicity, etc reflects in working environment

Cultural Diversity ?

Cultural Collision; interacting with different Cultures


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Topics

Cultural Awareness

Dynamics of Cultures

How Cultural behaviour effect businesses

How to encounter Cultural differences


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Cultural AwarenessUnderstanding cultures could be a complex task

Experts could advise only to an extent, e.g. Books, Articles, Social Media

But what about variable factors, such as; Economical and political

Moreover, People develop their own norms within a given social Culture

Investors only interested in understanding those cultural norms and set ofbehaviours that could effect their employees and customers.

Could attitudes of people be changed ?

Yes, For good; developing a niche market for a product that was unknownbefore, changing work culture to some extent

Example: Why Irish like cold cereals more than Spanish people ?

Simply because Kelloggs marketed their product better in Ireland

(Nothing to do with Culture)


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The Idea of NationSince International business includes transactions among different

nations, So understanding the concept of Nation and role of Culture in

it is imperative.

National Values and National Identity

Existence of National values and identity within a country doesnt meansthat all people share the same culture (Norms, Beliefs, Work ethics)

The Nation as a Culture Mediator

Concept of National Culture (Foreign investors to learn the NationalCulture)

National Culture of Saudi Arabia and Pakistan (Similarities andDifferences)


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Culture formation and changes

Cultural value systems are set early in life but are always subject to minoror radical changes through

Choice:

In reaction to changing social and economic situations, ALTERNATIVES

Example : Farming and factory work by choice for rural people

Imposition:

Forced introduction of certain elements of an alien culture. Alsocalled Imperialism.

Example: ?

Creolization:

When different cultures interact with each other

Example: UK Culture diffusion, changing social and work cultures


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Role of Language in Culture

There are about 6000 (Approximately) languages spoken worldwide,including tribal languages. Most common are English, French, Spanish

and Chinese.

Culture homogeneity among similar language speaking nations

How it helps International Businesses?

40% people speak English worldwide (As a second language if notNative).

Reasons ?

(Media, Education, Technology, amalgamation of English words into

foreign languages, Life style)

E.g. Philips and Nokia has adopted English as their operating Language.

Although, English is an International Language but with rising economyof China, the scenario might change.


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Religion in CultureReligion brings common norms that reflects in society practices

Most common religions; Islam, Christianity, Hindu, Buddhism

Major shift in west towards atheism, Thats why some times referred toas Post Christian nations.

How religion facilitates International business across the globe withcommon NORMS (religion)?

What about nations with similar religions but different social Norms?

Example: Saudi Arabia and Turkey

Where Religion brings harmony, it can also ignite the emotional angerwhere International businesses suffer.

Example: Boycott of Jewish products in Britain by strict Muslims


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Behavioural Practices and IBCultural Attitudes and values affect/influence greatly International

business from identifying Niche markets and targeting product to

organisational structure, finance and operations

Social Satisfaction Issues

Priority of individuals based on cultural values. A persons social status

dictate its organisational value. The factors determining the theserankings are referred to as Social Satisfaction.

Ascribed and Acquired:

Social ranking determined by as an individual. E.g. Gender, family Age,Caste. (Ascribed)

Social Ranking determined by affiliation with certain group. E.g. Religion,Political affiliation, professional. (Acquired)


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Behavioural Practices and IB Performance Orientation:

Performance based employment or promotion, by creating competition at thework place. More effective in US but could be a second or third on priority listin some countries where cooperation and team work is stressed overcompetition. E.g. Japan

Open and Closed Societies: More open a society, less ascribed groupmembership determining work culture. E.g. Malaysia Quota system.

Mix of open and closed societies, e.g. BrazilDubai Kafeel system, Quota System

Gender based: Different attitude towards hiring and compensation based ongender. E.g. Women in Saudi Arabia account for only 7% of the whole workforce and are not allowed in certain professions.

Age based: Again Different countries treat age-groups in different ways. How iteffects on IB ?

(Age restrictions on purchase of Alcohol, Cigarettes, controlled drugs, bankaccounts)

Britain enforcing strict laws on Age discrimination, A set age for retirement.


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Behavioural Practices and IB Family based groups:

Individuals position in society is determined by its family association.

E.g. China family businesses and strong ties.

WORK MOTIVATION

Extensive research suggests that motivated employees contribute towards

companys growth resulting in strengthening economy. MNEsparticularly interested in this issue when evaluating and selecting acountry for operational sites. E.g. Strong motivation and loyalty ofsome Latin American countries. Brazil

Motivation and Materialism: Personal success, promotion, religiousbeliefs.

Productivity/Leisure Trade: You spend more time on work, earn moreand spend less because you have less time for leisure activities. E.g.Japan

Masculinity Index: Live to work rather then work to Llive


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Behavioural Practices and IBRelationship References

Power Distance: Interacting with Boss, Feedback, How comfortable therelationship is ?

Individualism Vs Collectivism:Low dependence on organisation in terms of benefits, allocatingappropriate leisure time, training is referred to as Individualism.

Substantial degree of dependence is labelled as Collectivism.

E.g. Japan (Team Working)

B h i l P ti


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Behavioural PracticesRisk Taking Behaviour

People tendency or attitude towards unseen and untried phenomenon

Uncertainty Avoidance: In countries where people are less likely to tryor adopt something new. E.g. Gillette based on research, they were

successful with new products in UK and Denmark.

Trust: Another important factor in risk taking behaviours

Consumer Financial matters

Workforce

Loyalty

Future Orientation: People mind set about future perceptions. Careerachievements, bonuses, promotions

h l


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Behavioural PracticesCommunications

Spoken and Written Language: Translating one language to another isnot a straightforward task.

e.g. in English speaking countries the term Employees refer to allworkforce but in Brazil Empleados refers to white collar workers andObreros means low skilled workers.

Example: IKEA

Silent Language: Message through non verbal cues.

Consumer Colour, Black is associated to death and sadness in

Western countries but in parts of Asia, the colour is White.

E.g. Motorola difficulty in assigning numbers to northern dialect

consumers as the numbers in their dialect sounded wrong. 7424sounded I die, my Wife die

Time and punctuality: Important interaction traits that effects IB.

E.g. Americans spot on time on meetings and a bit late on Dinners.


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Dealing with Cultural DifferencesOnce The company has done its home work on cultural aspects, its

now time to reorganise/restructure itself to succeed.

Usually the strategy varies based on 4 major variables

Accommodation: The extent to which culture is willing to

accept the introduction of foreign practices and work life. Howwell the people (Host) can accommodate the new mind-set. E.g.Bahrain selling Pork but on certain conditions

Cultural Distance: Whether differences are small or great. E.g.Apart from meat business, any other food business if successfulin Pakistan has greater chances to be successful in India andBangladesh than South Africa. Some times the case isinteresting; Take AUDI for instance, Successful in Europe but did

not do well at all in US.


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Dealing with Cultural Differences Cultural Shock: The ability of people to adjust to new

culture (work culture, life style) e.g. Strict Saudi laws could

be a cultural shock for foreign workers and investors.Cultural shock in layman term refers to the absorption ofso many traits and norms of one culture in short span oftime and trauma caused by it.

Management Operations: The management orientationof the company doing business in a new culture. Theseorientations/attitudes are of mainly 3 different types:

Polycentrism

Organisation/Individual believes that the businesses shouldact local (Host work life style). Mostly work but lacks the

perspective of innovation. How ?


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Dealing with Cultural DifferencesEthnocentrism

Believing on cultural superiority and what works at home will/should

work abroad. E.g. British sales Rep forced selling to Saudis.Sometimes work for businesses by serving/creating niche market.

Geocentrism

The middle way to both Poly & Ethno. Mixing best strategies fromboth and toping it up with some new ideas.

Strategies for Change

When businesses operate in foreign markets, their aim is to gain

competitive advantage by introducing distinctive strategies( innovation, creating/serving niche market, introducing work life

culture and making it work). One common issue that companiesusually acknowledge is that people dont usually welcome change.Lets look at some factors that that influence change.


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Approaches to ChangeValue System:The degree to which a host nation will

accept a change depends on the value system greatly. E.g.

In north east Africa (people consume seafood to a limitedextent. Despite efforts from Government and UNWFP,people mix the issue with religion and thus its hard tochange the mind-set/value system.

Cost-Benefit analysis: Companies need to consider thespending on bringing in change and the outcome. E.g.work life in line with social and cultural values.

Resistance to radical change: degree of radical changealso influence the performance of a business, e.g. GJmagazine (Mc Calls) publishers.


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Participation: get the stakeholders on board, make theirmind up for change so that the fears of consequencescould be reduced.

Reward Sharing: getting people on board by rewarding.People accept change when an incentive is associated to it.

Opinion Leadership: influencing opinion makinginstitutions/individuals

Timing: Change at the right time, e.g. the gossip ofredundancies

Prior Learning: Applying prior experiences to similar

scenarios in a diff. country

Documents

International Business and Culture