International Business

1
International Business

• Chapter Two
• The Cultural Environments Facing Business

2
Understanding Culture

• The chapter begins with an understanding of the
  Saudi, Arabian, or Muslim culture.
• The basis of all culture is people.people living
  in a geographic society/nation
• What is Culture? Sum total of all learned
  activities, a way of life..of societies or
  relatively homogeneous groups of people-who share
  attitudes, values, beliefs, and customs
• Why an international business manager should
  study the culture of a country?

3
Understanding Culture

• National cultures are dynamic, they evolve over
  time, change may occur by choice or by
  imposition. Three features are
• The Nation or Nation-State as point of reference
  (identity, symbolism, common history)
• Language as both a diffuser and stabilizer of
  culture (expression, sharing, bond)
• Religion as a cultural stabilizer (beliefs,
  ethics, spiritualism)

4
Behavioral Practices Affecting Business

• Issues in Social Stratification
• Work Motivation
• Relationship Preferences
• Risk-taking Behavior
• Information and Task Processing
• Communications

5
Social Stratification Systems

• Individuals status in a culture
• Ethnic and Racial
• Gender-based groups
• Age-based groups
• Family-based groups

6
Work Motivation

• Work vs. leisure-how it affects productivity
• Role of materialism, how it motivates people
• Achievement orientation
• Expectation of success and reward
• Hierarchy of Needs

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The Hierarchy of Needs
8
Relationship Preferences

• Power distance, i.e., the psychological and
  social distance between superiors and
  subordinates
• Individualism vs. collectivism
• Individualism represents a desire for personal
  freedom, time, and challenge.
• Collectivism represents a dependence on the
  organization as well as a need for a safe
  environment.
• Role of extended families/clans

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Risk-taking Behavior

• Uncertainty avoidance, i.e., ones tolerance of
  risk
• Trust, i.e., ones belief in the reliability and
  honesty of another
• Future orientation, i.e., the need for immediate
  vs. delayed gratification
• Fatalism, i.e., the belief that life is
  pre-destined, that events are the will of God

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Information and Task Processing

• Perception of Cues
• Obtaining information Low-Context cultures
  explicit, e.g., USA vs. High-Context cultures
  implicit, e.g., Saudi Arabia
• Information processing
• Monochronic work sequentially vs. Polychronic
  multi-task
• Idealism vs. Pragmatism

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Communications

• Spoken and Written Language
• Silent Language of color, time/punctuality,
  distance/space, and friendship
• Verbal vs. Nonverbal Language (kinesics body
  language and gestures)
• We need to be sensitive to linguistic differences
  in communication and definitely in translation

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Dealing with and adapting to Cultures

• Host society acceptance (i.e., accommodation of
  foreigners in a culture)
• Degree of cultural difference-cultural distance,
  diffusion, and imperialism
• Ability to adjust-adapting to culture shock and
  reverse culture shock
• Company and management orientations
• Polycentrism
• Ethnocentrism
• Geocentrism
• Should we change/influence a culture? If yes,
  how?

13
Hofstedes Cultural Value

• Individualism/collective index (IDV) Refers to
  preference of behavior that promotes ones self
  interest. Higher score (e.g., USA) means high on
  individualism.
• Power distance index (PDI) Measures the
  tolerance of social inequality, i.e., inequality
  between superiors and subordinates within a
  social system. Higher score (e.g., Arab
  countries) means more hierarchical.
• Uncertainty avoidance index (UAI) Refers to the
  intolerance of ambiguity and uncertainty among
  members of a society. Higher score (e.g., Greece)
  means less tolerance for uncertainty.
• Masculinity/feminity (MAS) Refers to ones
  desire for achievement and entrepreneurial
  tendencies. Higher score (e.g., Latin culture)
  means more assertiveness and masculinity.
• Future orientation Refers to the future or
  long-term orientation of the society

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Chapter 2 Discussion Questions

1. Define culture? Why an international business
   manager should study the culture of a country?
2. Explain how the dynamic interplay of nation,
   language and religion shapes the culture of a
   country.
3. Explain the six behavioral practices that affect
   the business in a country. I may ask you to
   explain any two or three of them.
4. How can we deal with, adapt to, and influence
   foreign cultures? Explain.
5. Explain the five cultural values of Hofstede.