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International Business Cultures / Languages and

Communication

Annisa Deviana AzharyGhea AmaliaJessica FelicianaRavina Tara

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Do you think culture affect the international business?

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Expanding Operations Across Borders

Two distinct tasks emerge:

to understand cultural differences and the ways they manifest themselves

to determine similarities across cultures and exploit them in strategy formulation

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Culture Defined

Culture is an integrated system of learned behavior patterns that are characteristic of the members of any given society.

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Characteristics of CultureCulture is learned, shared, and transmitted from one generation to the next.

Culture can be passed from parents to children, by social organizations, special interest groups, the government, schools, and churches.

Culture is multidimensional, consisting of a number of common elements that are interdependent.

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Acculturation

Acculturation is the process of adjusting and adapting to a specific culture other than one’s own. It is one of the keys to success in international operations.

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High- versus Low-Context Cultures

High-context culturecontext is at least as important as what is actually saidwhat is not being said can carry more meaning than what is saidfocuses on group development

Japan and Saudi Arabia are examples

Low-context culturemost of the information is contained explicitly in wordswhat is said is more important that what is not saidfocuses on individual developmentThe U.S. is an example

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Change AgentsBy introducing new products or ideas and practices, an international business entity becomes a change agent.

this may shift consumption from one product to another, orit may lead to massive social change

Many governments take action to protect their culture-specific industries.

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Cultural UniversalsCultural universals are manifestations of the total way of life of any group of people.

These include elements such as bodily adornment, courtship rituals, etiquette, concept of family, gestures, joking, mealtime customs, music, personal names, status differentiation, and trade customs.

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Elements of CultureLanguage (verbaland nonverbal) Religion

Material Elements

Manners andCustoms

Aesthetics

EducationSocial Institutions

Role of Language in CultureThere are about 6000 (Approximately) languages spoken worldwide, including tribal languages. Most common are English, French, Spanish

and Chinese.

► Culture homogeneity among similar language speaking nations How it helps International Businesses?

► 40% people speak English worldwide (As a second language if not Native).

Reasons ? (Media, Education, Technology, amalgamation of English words into

foreign languages, Life style)

E.g. Philips and Nokia has adopted English as their operating Language.

► Although, English is an International Language but with rising economy of China, the scenario might change.

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The Four Roles of LanguageLanguage aids in information gathering and evaluation.

Language provides access to local society.

Language capability is increasingly important in company communications.

Language provides more than the ability to communicate because it extends beyond mechanics to the interpretation of contexts that may influence business operations.

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Nonverbal languageDistinctions must be made in five key topics:

Time

Space

Material Possessions

Friendship Patterns

Business Agreements

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Body Language Is Not A Universal Language

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Dominant Religions

Christianity

Islam

Hinduism

Buddhism

Confucianism

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Manners and CustomsPotential ways in which negotiators may not be prepared:

the understanding of different ways of thinkingattention to the necessity to save faceknowledge and appreciation of the host countryrecognition of the decision-making process and the role of personal relations and personalitiesthe allocation of time for negotiations

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Material ElementsMaterial culture refers to the results of technology and is directly related to how a society organizes its economic activity.

It is manifested in the availability and adequacy of the basic economic, social, financial, and marketing infrastructure for the international business in a market.

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Material Elements Chart

transportation energy

communications

health banks research firms

EconomicInfrastructure

SocialInfrastructure

Financial andMarketing

Infrastructure

Material Culture

education

housing

Elements of Culture

▪Language ▪Religion ▪Aesthetics

▪Values and Attitude

▪Manners/Customs

▪Education

▪Material elements ▪Social Institutions

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Aesthetics

Good taste is expressed through colors, form, and music.

The meanings of colors and symbols vary from country to country.

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EducationEducation, either formal or informal, plays a major role in the passing on and sharing of culture.

International firms need to understand the varying emphases on particular skills and the overall level of education provided.

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Social InstitutionsSocial stratification is the division of a particular population into classes.

Reference groups provide the values and attitudes that influence behavior. Primary reference groups include the family and coworkers.

Social organization determines the roles of managers and subordinates and how they relate to each other.

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Cultural KnowledgeCultural knowledge can be defined by the way it is acquired:

objective or factual information is obtained through communication, research, and education.experiential knowledge can be acquired only by being involved in a culture other than one’s own.

Interpretive knowledge is the ability to understand and fully appreciate the nuances of different cultural traits and patterns.

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Acquiring International Experience

Manager’s ranking of factors involved in acquiring international expertise

FactorAssignments overseasBusiness travelTraining programsNon-business travelReadingGraduate coursesPrecareer activitiesUndergraduate courses

Considered Critical 85%

832828221391

Considered Important 9%

17575472525048

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Cross-Cultural Behavior Model The key variable of the model is propensity to change, which is a function of three constructs:

cultural lifestyle

change agents

communication about the innovation

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Dimensions of CultureDifferences in cultural lifestyle can be explained by:

individualismpower distanceuncertainty avoidanceMasculinity

Asian countries tend to have high uncertainty avoidance and low masculinity.

Western countries tend to have low uncertainty avoidance and high masculinity.

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Cultural Dimension Scores for 12 countries

UncertaintyAvoidance

Individualism

Power Distance Masculinity1000 0

100 100

50 50

50 50

JapanFrance

MexicoBrazil

Germany

Netherlands

U.S.AGreat 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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Self Reference CriterionSelf reference criterion is the unconscious reference to one’s own cultural values and is the root of most international business problems.

Suggestions to reduce cultural bias include:Define the problem or goal in terms of domestic cultural traits, habits, or norms.Define the problem or goal in terms of the foreign cultural traits, habits, or norms. Isolate the self-reference criterion influence in the problem, and examine it to see how it complicates the problem.Redefine the problem without the self-reference criterion influence, and solve for the optimum-goal situation

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Cross-Cultural Training

Cultural training programs should include:

culture-specific informationgeneral cultural information on values, practices, and assumptionsself-specific information that identifies one’s own cultural paradigm

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Cross-Cultural Training (cont.)

Additional forms of training include:

mentoringarea studies programscultural assimilator programs, in which trainees must respond to scenarios of specific situations in a particular countrysensitivity trainingfield experience

Dealing with Cultural DifferencesOnce The company has done its home work on cultural aspects, its now

time to reorganise/restructure itself to succeed.

Usually the strategy varies based on 4 major variables

► Accommodation: The extent to which culture is willing to accept the introduction of foreign practices and work life. How well the people (Host) can accommodate the new mind-set. E.g. Bahrain selling Pork but on certain conditions

► Cultural Distance: Whether differences are small or great. E.g. Apart from meat business, any other food business if successful in Pakistan has greater chances to be successful in India and Bangladesh than South Africa. Some times the case is interesting; Take AUDI for instance, Successful in Europe but did not do well at all in US.

► Cultural Shock: The ability of people to adjust to new culture (work culture, life style) e.g. Strict Saudi laws could be a cultural shock for foreign workers and investors. Cultural shock in layman term refers to the absorption of so many traits and norms of one culture in short span of time and trauma caused by it.

► Management Operations: The management orientation of the company doing business in a new culture. These orientations/attitudes are of mainly 3 different types:

PolycentrismOrganisation/Individual believes that the businesses should act local

(Host work life style). Mostly work but lacks the perspective of innovation.

EthnocentrismBelieving on cultural superiority and what works at home will/should

work abroad. E.g. British sales Rep forced selling to Saudis. Sometimes work for businesses by serving/creating niche market.GeocentrismThe middle way to both Poly & Ethno. Mixing best strategies from both

and toping it up with some new ideas.

Strategies to ChangeWhen businesses operate in foreign markets, their aim is to

gain competitive advantage by introducing distinctive strategies

( innovation, creating/serving niche market, introducing work life culture and making it work). One common issue that companies usually acknowledge is that people don’t usually welcome change. Lets look at some factors that influence change.

► Value System: The degree to which a host nation will accept a change depends on the value system greatly. E.g. In north east Africa (people consume seafood to a limited extent. Despite efforts from Government and UNWFP, people mix the issue with religion and thus its hard to change the mind-set/value system.

Approaches to Change►Cost-Benefit analysis: Companies need to consider the spending on bringing in change and the outcome. E.g. work life in line with social and cultural values.

►Resistance to radical change: degree of radical change also influence the performance of a business, e.g. GJ magazine (Mc Call’s) publishers.

►Participation: get the stakeholders on board, make their mind up for change so that the fears of consequences could be reduced.

►Reward Sharing: getting people on board by rewarding. People accept change when an incentive is associated to it.

►Prior Learning: Applying prior experiences to similar scenarios in a diff. country

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Tips for Making Culture Work for Business Success

Embrace local cultureBuild relationshipsEmploy locals to gain cultural knowledgeHelp employees understand youAdapt products and practices to local marketsCoordinate by region