Week 2 Objectives

1
Week 2 Objectives

• Understand the significance of culture for
  international business
• Understand the sociocultural components of
  culture
• Appreciate the significance of religion to
  businesspeople
• Comprehend the cultural aspects of technology
• Grasp the pervasiveness of the Information
  Technology Era
• Understand why businesspeople must follow the
  trends of formal education
• Appreciate the importance of the ability to speak
  the local language
• Recognize the importance of unspoken language in
  international business
• Discuss the two classes of relationships within a
  society
• Discuss Hofstedes four cultural value dimensions

2
Rules of Thumb for Cross Culture Business

• Be prepared
• Slow down
• Establish trust
• Understand the importance of language
• Respect the culture
• Understand the components of culture
• 6-3

3
What is Culture?

• Culture
• The sum total of beliefs, rules, techniques,
  institutions, and artifacts that characterize
  human populations.
• Consists of learned patterns of behavior common
  to the members of a given society.
• The unique lifestyle of a particular group of
  people.
• Ethnocentricity
• Considering your culture superior to all others
• 6-4

4
Living with Other Cultures

• First, realize that there are many different
  cultures.
• Then, learn the characteristics of those
  cultures.
• Spend a lifetime in a country.
• Undergo an extensive, highly sophisticated
  training program that covers the main
  characteristics of a culture.
• 6-5

5
Culture Affects All Business Functions

• Marketing
• Variation in attitudes and values requires firms
  to use different marketing mixes
• PG Japanese Camay commercials
• Disneyland Paris
• 6-6

• Human Resource Management
• Evaluation of managers
• Production and Finance
• Attitudes toward authority
• Attitudes toward change

6
Sociocultural Components

• Components of Culture
• Aesthetics
• Attitudes and beliefs
• Religion
• Material Culture
• Education
• Language
• Societal organization
• Legal characteristics
• Political structures

6-7
7
Aesthetics

• Art
• Colors, symbols, numbers convey meaning
• Nike air symbol
• Architectural styles different
• Feng shui
• Music and Folklore
• Musical tastes vary
• Folklore discloses way of life
• Cowboys in Chile or Argentina
• Mexican singing cricket
• 6-8

8
Attitudes and Beliefs

• Attitude Toward Time
• Problem for Americans
• Americans always prompt
• Mañana attitude
• Siestas
• Directness and drive
• Perceived to be rudeness
• Deadlines
• Liability in Asian cultures
• 6-9

• Attitudes toward Achievement and Work
• American live to work, Germans and Mexicans work
  to live.
• Demonstration effect
• Result of having seen others with desirable
  goods.
• Job prestige
• Disdain for physical labor

9
Attitudes and Beliefs

• Attitude Toward Change
• The American firm is accustomed to the rapid
  acceptance by Americans of something new.
• Europeans are fond of reminding Americans that
  they are a young nation lacking traditions.
• The more consistent a new idea is with a
  societys attitudes and experiences, the more
  quickly it will be adopted.
• 6-10

10
Religion

• Responsible for many of the attitudes and beliefs
  affecting human behavior.
• Work Ethic
• Protestant work ethic
• Europeans and Americans generally view work as a
  moral virtue and look unfavorably on the idle.
• Confucian work ethic
• In Asian countries, this is the same as
  Protestant ethic.
• 6-11

11
Asian Religions

• Hinduism
• Caste system is basis of the social division of
  labor.
• Buddhism
• Jainism
• Sikhism (Indian)
• Confucianism
• Inseparable from Chinese culture
• Taoism
• Shintoism (Japan)

6-12
12
Islam

• About 1.3 billion followers
• This youngest faith is the second largest after
  Christianity (2 billion adherents).
• Founder of Islam is Muhammad
• Muhammad was not only the prophet of God but also
  the head of state.
• In Muslim nations, there is no separation of
  church and state.
• Holy Book Koran
• 6-13

• Five Pillars of Faith
• Confession of faith
• Five daily prayers
• Giving charity
• Ramadan fast
• Pilgrimage to Mecca
• Jihad holy war
• Two divisions
• Sunni and Shiites
• Conflict gives rise to violent clashes

13
Religious Population of the World
Insert Figure 6.1
14
Material Culture

• Refers to all human-made objects
• Concerned with how people make things and who
  makes what and why.
• Technology
• Mix of usable knowledge that society applies and
  directs toward attainment of cultural and
  economic objectives
• 6-15

15
Material Culture - Technology

• Importance to International Companies
• Enables a firm to be competitive in world
  markets.
• Can be sold, or be embodied in the companys
  products.
• Can give a firm confidence to enter a foreign
  market.
• 6-16

• Enables the firm to obtain better than usual
  conditions for a foreign market investment.
• Enables a company with only a minority equity
  position to control a joint venture.
• Can change the international division of labor.
• Is causing major firms to form competitive
  alliances.

16
Material Culture - Technology

• Cultural Aspects of Technology
• Includes skills in marketing, finance, and
  management
• People not always ready to adapt to changes
  technology brings
• Technological Dualism
• The side-by-side presence of technologically
  advanced and technologically primitive production
  systems.
• 6-17

• Appropriate Technology
• Choose the technology that most closely fits the
  society using it
• Can be labor-intensive, intermediate or
  capital-intensive
• Bommerang Effect
• Technology sold to copanies in another nation
  used to produce competing goods

17
Material Culture - Technology

• Information Technology Era
• By the year 2000 the Internet economy
• Already reached 850 billion.
• Exceeded the size of the automobile and truck and
  life insurance industries.
• Consumption
• Japanese wide use of automation
• 6-18

18
Education

• Equips a person to take his or her place in adult
  society
• Yardsticks
• Literacy rate
• Must verify definition used
• Kinds, quality and enrollment of schools
• Amount per capita spent on education
• Vocationally trained groups
• Study trends

6-19
19
Educational Mix

• European business schools patterned on American
  model because of
• Increased competition in the EU
• Return to Europe of American business school
  graduates
• Establishment of American-type schools with
  American faculties
• Trend in less developed countries to emphasize
  humanities, law and medicine

6-20
20
Education

• Brain Drain
• The emigration of highly educated professionals
  to industrialized nations
• Reverse Brain Drain
• The return of highly educated professionals to
  their home countries.
• Korea and Taiwan are luring home engineers and
  scientists
• 6-21

• Womens Education
• Fall in illiteracy rate
• Most governments now provide education for both
  genders
• Educated women have fewer, healthier, and better
  educated children
• Educated women achieve higher labor force
  participation and wages

21
Spoken Language

• Language is the key to culture, and without it,
  people find themselves locked out of all but a
  cultures perimeter
• Spoken languages demarcate cultures
• Switzerland four separate cultures
• Many languages can exist in a single country, but
  one usually serves as communication vehicle
• Lingua franca or link language
• English primary language of business
• 6-22

22
Language

• Must speak the local language
• Still need translators
• Use back translations to avoid errors
• Technical words do not exist in all languages
• Usually resort to English
• Many cultures avoid saying anything disagreeable
• 6-23

23
Unspoken Language

• Nonverbal communication, such as gestures and
  body language.
• Gestures vary tremendously from one region to
  another
• Closed doors convey different meanings
• Office size different in various cultures
• Conversational distance small in East
• Gift giving has specific etiquette in each
  culture
• Gift or bribe?
• 6-24

24
Questionable Payments

• Necessary in some countries to obtain action from
  the government
• Foreign Corrupt Practices Act prohibits American
  firms from making questionable payments

6-25
25
Societal Organization

• Kinship
• Extended family
• Includes blood relatives and relatives by
  marriage.
• This is a source of employees and business
  connections.
• Members responsibility
• Although the extended family is large, each
  members feeling of responsibility to it is
  strong.
• 6-26

• Associations
• Social units based on age, gender, or common
  interest, not on kinship.
• Age
• Manufacturers of consumer goods are well aware of
  the importance of segmenting a market by age
  groups.
• This segmentation often cuts across cultures.

26
Societal Organization

• Associations
• Gender
• As nations industrialize, more women enter the
  job market and assume greater importance in the
  economy
• Free association
• people joined together by a common bond
  political, occupational, religious or
  recreational
• 6-27

27
Understanding National Culture

• Hofstedes Dimensions of Culture
• Individualism versus Collectivism
• Large versus Small Power Distance
• Strong versus Weak Uncertainty Avoidance
• Masculinity versus Femininity
• 6-28

28
World Bank Anti-Corruption Program

• We believe that an effective anticorruption
  strategy builds on five key elements
• 1. Increasing Political Accountability2.
  Strengthening Civil Society Participation 3.
  Creating a Competitive Private Sector4.
  Institutional Restraints on Power 5. Improving
  Public Sector Management
• Source www.worldbank.org

29
Business Culture in Brazil

• Brazilians conduct business only through personal
  connections. There must also be an implicit
  understanding that the business relationship will
  be long-term.
• In Brazil, people quickly move to a first-name
  basis. Do not, however, use first names until you
  are invited to do so.
• Maintain steady eye contact at all times it is
  considered impolite to break eye contact.
• Source www.executiveplanet.com

• Do not give anything that is obviously expensive.
  Your generosity will only cause embarrassment or
  be misinterpreted as a bribe.
• Avoid giving items in black or purple, since
  these are the colors of mourning. Moreover,
  handkerchiefs are also associated with funerals.
• Brazilians also consider themselves Americans.
  Consequently, don't use the phrase 'in America'
  when referring to the United States.

30
USAID

• The ability to read and write or literacy is
  a basic skill for people to live and work in
  todays world. Yet more than 900 million adults
  are not literate, primarily in developing
  countries. More than 125 million children who
  should be in school are not. For this reason,
  USAID emphasizes programs of support for basic
  education and places a special emphasis on
  improving opportunities for girls, women and
  other underserved and disadvantaged populations.

Source www.usaid.gov
31
FCPA

• The FCPA covers
• all entities and individuals engaging in acts
  within the territory of the United States in
  furtherance of the prohibited conduct, and it
  covers
• U. S. citizens, resident aliens, entities
  established under U. S. law, and
• publicly held corporations, including their
  officers, directors, employees, shareholders and
  agents, whether foreign or domestic, that are
  registered with the SEC as an issuer that
  participates in corrupt practices in any fashion
  outside the United States.
• Source www.abanet.org

32
Buddhism

• As of June 2001, Buddhists in Taiwan had
  registered 4,037 temples, 39 seminaries, five
  universities, three colleges, four high schools,
  45 kindergartens, 30 nurseries, five orphanages,
  five retirement homes, one center for the
  mentally retarded, 64 institutions for
  proselytizing, three hospitals, four clinics, 118
  libraries, and 28 publishing houses with 26
  publications. There were also around 9,866
  Buddhist clergy serving the 5.48 million
  Buddhists of Taiwan.

Source www.gio.gov.tw
33
World Illiteracy Rates
Source www.uis.unesco.org