Cultural Dimensions Uncertainty Avoidance Index UAI

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Cultural DimensionsUncertainty Avoidance Index
(UAI)

• Culture is more often a source of conflict than
  of synergy. Cultural differences are a nuisance
  at best and often a disaster.
• Prof. Geert Hofstede, Emeritus Professor,
  Maastricht University.

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Geert Hofstede Cultural Dimensions

• Power Distance Index (PDI)
• Individualism (IDV)
• Masculinity (MAS)
• Uncertainty Avoidance Index (UAI)
• Long-Term Orientation (LTO)

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Uncertainty Avoidance Index (UAI)

• Uncertainty avoidance is a dimension of the
  Hofstede dimensions. Hofstede defines uncertainty
  avoidance as "the extent to which the members of
  a culture feel threatened by uncertain or unknown
  situations."
• It indicates to what extent a culture programs
  its members to feel either uncomfortable or
  comfortable in unstructured situations.
• It try to minimize the possibility of such
  situations by strict laws and rules, safety and
  security measures, and on the philosophical and
  religious level by a belief in absolute Truth.

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Uncertainty Avoidance Index (UAI)

• A High Uncertainty Avoidance ranking indicates
  the country has a low tolerance for uncertainty
  and ambiguity. This creates a rule-oriented
  society that institutes laws, rules, regulations,
  and controls in order to reduce the amount of
  uncertainty.
• A Low Uncertainty Avoidance ranking indicates the
  country has less concern about ambiguity and
  uncertainty and has more tolerance for a variety
  of opinions. This is reflected in a society that
  is less rule-oriented, more readily accepts
  change, and takes more and greater risks.

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characteristics ofa high uncertainty avoidance
culture

• Generally older countries/cultures with a long
  history.
• The population is more ethnically homogeneous.
• Risk is avoided in business (i.e. Germany)
• Low tolerance for innovation, prefer to stick to
  traditional routines.
• Citizens are often critical of their own nation.

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characteristics ofa high uncertainty avoidance
culture

• People tend to be more superstitious.
• Smoking is more common.
• Higher maximum speed limits and a higher rate of
  motor vehicle accidents.
• Xenophobia is common and foreigners/minorities
  tend to be ostracized.
• Examples Greece, Portugal, Japan, Israel, Spain
  and Latin America.

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characteristics ofa low uncertainty avoidance
culture

• Typically the country is newer or more recently
  settled (but not always, as in the case of
  China).
• The population tends to be ethnically diverse.
• Risk is valued in business (i.e. U.S.A.)
• Frequent innovations.
• Citizens are proud of nation.
• Foreigners or minorities are encouraged to
  assimilate.
• Examples U.S.A., Singapore, Jamaica, Ireland,
  Sweden and China.

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Impact of Hofstedes Cultural Dimensions On
Management Issues
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Corporate Plans

• Corporate plan is a multidimensional concept - it
  has pieces or elements. Once these elements are
  identified, orchestrated and fitted properly,
  they give rise to a coherent and comprehensive
  whole, called corporate strategy.
• A comprehensive strategy statement must include
  all these elements and their linkages

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Corporate Plans

• The classical definition of corporate strategy,
  as given by Andrews (1971) states it is a
  pattern of major objectives, purposes or goals
  and essential policies and plans for achieving
  these goals, stated in such a way as to define
  what business the company is in or is to be.

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Corporate Plans

• Weak
• Seen as guidelines
• Depending on the priority and opportunities
• Aggressively expanded their existing business
• Strong
• Seen as important to follow
• Concentrated on the existing business

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Competition

• Weak
• Increase the opportunity of advantage or success
• Open mind and easy changed
• Business innovation, creativity and
  brainstorming.
• Strong
• Lost the opportunity of advantage or success
• Difficult to find out the best solution
• Low level of participation with other competitor
  to be setting rule.
• Cooperation between the two or more countries.

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Budgeting Systems

• Weak
• - Inflexible in allocate budgeting the firm
  can use
• budget for other purposes.
• To increase opportunity for earning but also
  increase
• risk of investment.
• To increase potential of competition lead to
  knowledge and innovation.
• To study about business investment is necessary
• in order to increase the flexible of
  budgeting
• management.

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Budgeting Systems

• Strong
• - Flexible in allocate budgeting but the firm
  will confront
• with the high of reserved cost.
• - The opportunity for earning is lower than
  flexible
• because of no investment.
• - No investment-No competition-No development
• - To save budget is secured only interest.

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Control Systems

• Weak
• Less rule - oriented
• Accounting measures as overall indicators of
  performance would be more appropriate
• Strong
• Rule , Regulation , Institutes Laws
• Want guidance for any situation
• The role of a manager might not be to make
  decision
• but the rules are followed

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Risk

• Example Strategy for investment
• Strong company Concern to payback period.
  Borrow long-term dept for long-term investment.
• Weak company Ignore the payback period. Borrow
  short-term dept for long-term investment.

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• Thank You for Your Attention

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Reference Web Site

• http//www.geert-hofstede.com/index.shtml
• http//en.wikipedia.org/wiki/Geert_Hofstede
• http//www.clearlycultural.com/
• http//www.via-web.de/home.html
• http//intermundo.net/
• http//homepage.psy.utexas.edu/HomePage/Class/Psy3
  65M/Merritt/HOFcharts.html