INTERNATIONAL BUSINESS

Session 3

Culture

The way in which a group of people solves problems and reconciles dilemmas.

A code of attitudes, norms and values,

our way of thinking.

Determines how we see ourselves and how we see the world.

Is not right or wrong; it is not inherited, but learned.

Language

Communication

Religion

Values/ Attitudes/ Beliefs

Social Structure

Artifacts and Products

Norms and Values

Basic Assumptions

explicit

implicit

Cross-Cultural Proficiency is Paramount in Managerial Tasks

Developing products and services Communicating and interacting with

foreign business partners Screening and selecting foreign

distributors and other partners Negotiating and structuring international

business ventures Interacting with current and potential

customers from abroad Preparing for overseas trade fairs and

exhibitions Preparing advertising and promotional

materials

What are your top 10 values?

Age/seniority Authority Belongingness Collectiveness Competition Compromise Cooperation Devotion Directness Efficiency Equality Independence Family harmony Family security

Freedom Go-between Group consensus Group harmony Independence Indirectness Individualism Hospitality Openness Parental guidance Patience Quality Self-reliance Time

United States Japan Arab Countries

Priorities of Cultural ValuesTable 4-1Priorities of Cultural Values: United States, Japan, and Arab Countries

1. Freedom2. Independence3. Self-reliance4. Equality5. Individualism6. Competition7. Efficiency8. Time9. Directness10.Openness

1. Belonging2. Group harmony3. Collectiveness4. Age/seniority5. Group

consensus6. Cooperation7. Quality8. Patience9. Indirectness10.Go-between

1. Family security2. Family

harmony3. Parental

guidance4. Age5. Authority6. Compromise7. Devotion8. Patience9. Indirectness10.Hospitality

Note: “1” represents the most important cultural value, “10” the least.

Adapted from Table 4-1: Priorities of Cultural Values: United States, Japan, and Arab Countries

Mini-Quiz on Culture

1. At what time should you arrive for a 10:00 meeting: in USA? China? Spain?

2. If given a gift, should you open it: in Saudi Arabia? China?

3. Should you give bad news in the morning: in USA? Korea?

4. Is it a bad sign if you didn’t really speak about business in your first meeting: in UK? Japan?

5. Should you send a young executive to a meeting: in USA? Japan?

How to Categorize and Understand Cultures

Key Researchers:

Hofstede, Geert Hall, Edward Trumpenaars, Fons

Develop Frameworks for Understanding Cultures

Which definition do you agree with more?

A company is….

1. a system designed to perform functions and tasks in an efficient way. People are hired to perform these functions with the help of machines and other equipment. They are paid for the tasks they perform.

2. a group of people working together. They have social relations with other people and with the organization. The functioning is dependent on these relations.

A company is…..

… a system

… a group

Mini-Case

Six months after the ABC mining company had signed a long-term contract with a foreign buyer to buy bauxite in 20 annual installments, the world price of bauxite collapsed. Instead of paying $4 a ton below world market prices, the buyer now faced paying $3 above.

The buyer faxed ABC to say it wished to renegotiate. The final words of the fax stated: “You cannot expect us as your new partner to carry alone the now ruinous expense of these contract terms.”

Options

A contract is a contract. We had a deal. We won. A contract symbolizes the underlying relationship.

Where circumstances transform the mutual spirit, the terms must be renegotiated to preserve the relationship.

A contract symbolizes the underlying relationship. But such rigid terms are too brittle for turbulent environments. We need to be flexible.

A contract is a contract. Had the price risen we wouldn’t have complained. We would, however, consider a second contract who’s terms would help offset their losses.

Hofstede’s Five Dimensions

Social Orientation Power Orientation Uncertainty Orientation Goal Orientation Time Orientation

Social Orientation

Individualism Collectivism

Relative importance of theinterests of the individual versus

interests of the group

Power Orientation

Power Respect Power Tolerance

Appropriateness of power/authority within

organizations

Uncertainty Orientation

Uncertainty Acceptance Uncertainty Avoidance

An emotional responseto uncertainty and change

Goal Orientation

Aggressive Goal Behavior Passive Goal Behavior(masculine) (feminine)

What motivates peopleto achieve different goals

Time Orientation

Long-term Outlook Short-term Outlook

The extent to whichmembers of a culture

adopt a long-term or a short-termoutlook on work and life

Other Cultural Orientations

Inner-directed vs. Outer-directed High context vs. Low context Neutral vs. Emotional Achievement vs. Ascription

Achievement culture: people are accorded status based on how well they perform their jobs

Ascription culture: status is attributed based on who or what the person is

Synthesis of Country Clusters

Adapted from Figure 4–8: A Synthesis of Country Clusters

Power Distance Index

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Hofstede Results Comparison

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Czech Republic Bulgaria Poland Hungary Austria Germany

Hofstede’s Dimensions