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International BusinessEnvironment
Culture
Culture
International Business
Spring 2009
Week 2
Copyright 2009 Daniel E. OConnell
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Learning Objectives
To define and demonstrate the effect ofcultures various dimensions on business.
To examine ways in which cultural
knowledge can be acquired and individuals
and organizations prepared for cross-culturalinteraction.
To illustrate ways in which cultural risk posesa challenge to the effective conduct of
business communications and transactions. To suggest ways in which businesses act as
change agents in the diverse cultural
environments in which they operate.
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Culture is more often a source of
conflict than of synergy. Culturaldifferences are a nuisance at bestand often a disaster.
- Geert Hofstede,Professor Emeritus,Maastricht University
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Cultural Risk
Risks of:
Business mistakes
Poor customer relations
Wasted negotiations
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Challenge for Managers
Identify cross-cultural andintracultural differences
Identify similarities across culturesand develop strategies to exploitthem
Identify whether the organizationcan be a change agent
Acculturation
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Exploiting Similarities AcrossCultures: An Example
Mattel, Inc., a global toycompany
Famous brands include:
Barbie Hot Wheels Fisher-Price American Girl
Only 20% of productsadapted for local markets
Growth of large retailers
like Walmart provides aglobal distribution network
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Change Agents
By introducing new products orideas and practices, aninternational business entitybecomes a change agent.
this may shift consumption from oneproduct to another, or
it may lead to massive social change
Example: U.S. pop culture
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A Key to Success:
Acculturation
Acculturation is theprocess of adjusting andadapting to a specificculture other than onesown.
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Cultural Industries
Many countries fight to protect the qualityand reputation of cultural products
The EU and the WTO both provide for
some protection regarding the labeling offood with geographic names
Examples:
Champagne
Bordeaux
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Elements of CultureLanguage Religion Aesthetics
Values and Attitudes
Manners/CustomsEducation
Material elements Social Institutions
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Cultural Knowledge
Cultural knowledge can be defined by the wayit is acquired:
objective or factual information is obtainedthrough communication, research, and
education. experiential knowledge can be acquired only
by being involved in a culture other than onesown.
Interpretive knowledgeis the ability tounderstand and fully appreciate the nuancesof different cultural traits and patterns.
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Acquiring International ExperienceManagers ranking of factors involved in
acquiring international expertise
FactorAssignments overseas
Business travel
Training programs
Non-business travelReading
Graduate courses
Precareer activities
Undergraduate courses
Considered Critical85%
83
28
2822
13
9
1
Considered Important9%
17
57
5472
52
50
48
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Cultural Analysis
Before introducing products andservices into new countries,businesses should perform cultural
analysis
Models can be used to identify andevaluate variables on how consumers
in different cultures may perceive,evaluate and adopt new behaviors
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Hofstedes 5 Cultural Dimensions
Power distance
Individualism
Masculinity
Uncertaintyavoidance
Long-term
orientation
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Power Distance
The extent to which less powerfulmembers of organizations andinstitutions accept and expect that
power is distributed unequally
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Individualism
A measure of the degree to whichindividuals are integrated into groups
High individualism indicates looserelationships with groups
Low individualism = collectivism
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Masculinity
Distribution of roles between genders
Cultures that are assertive andcompetitive are consideredmasculine
Cultures that are caring and modestare considered feminine
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Uncertainty Avoidance
A measure of societys tolerance ofuncertainty and ambiguity
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Cultural Dimension Scores for 12
countries
Uncertainty
AvoidanceIndividualism
Power Distance Masculinity1000 0
100 100
50 50
50 50
JapanFrance
Mexico
BrazilGermany
Netherlands
U.S.A
Great Britain
Arab Countries
West Africa
Indonesia
Hong Kong
Japan
Arab Countries
Mexico
Brazil
France
Germany
Great Britain
U.S.ANetherlands
Hong KongWest Africa
Indonesia
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An Example: The United States
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What it Means PDI (Power Distance Index): 40
The world average is 55 Low PDI indicates a greater equality between societal
levels, including government, organizations and families
IDV (Individualism): 91
Highest score of all countries World average is 43 Indicates an individualistic attitude and relatively loose
bonds with others People look out for themselves and family
MAS (Masculinity): 62 World average is 50 Indicates a higher degree of gender differentiation in
roles Forces women to adopt a masculine role
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What it means (cont.)
UAI (Uncertainty Avoidance): 46 World Average is 64 Lower average indicates a society with fewer
rules and does not try to control outcomes and
results It has a greater tolerance for ideas, thoughtsand beliefs
LTO (Long Term Orientation): 29 World average is 45
The low LTO indicates a belief in meetingobligations and reflects an appreciation ofcultural traditions
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China
What can you conclude about China?
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Strategies for Success in DifferentCultures
Embrace localculture
Build relationships
Employ locals
Help employeesunderstand you
Adapt products Coordinate by
region
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Assignment
Review Ch. 2, Culture
Read and answer questions on Case1, Case Study on Culture and theImplementation of ManufacturingStrategy in Mexico (Handout)