INTERNATIONAL BUSINESS An Introduction

CHAPTER 4
The Culture Environment
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LEARNING OBJECTIVES

At the end of this chapter, the student should be able to:

Describe the foundation concepts of culture Discuss the elements of culture Discuss challenges in culture and how to overcome these challenges Explain how culture can have an effect in IB

Basic Concepts and Definition

Culture refers to the collective deposit of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations

Culture is communication, communication is culture.

Culture is the sum of total of the learned behavior of a group of people that are generally considered to be the tradition of that people and are transmitted from generation to generation.

Basic Concepts and Definition-cont.

The word of culture is actually derived from the Latin word cultura that simply means "to cultivate".

Nevertheless, the word "culture" is most commonly used in:

the set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group an integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for symbolic thought and social learning an excellence of taste in the fine arts and humanities

In todays world, because of technological advancement, the internet, the media, travel, and the opening of once-closed societies, culture attitudes have shifted somewhat, to become more dynamic and less geographically sensitive.

Ethnocentrism

is the tendency to believe that one's ethnic or cultural group is centrally important, and that all other groups are measured in relation to one's own.

Stereotypes

are generalizations or assumptions that people or a person make about the characteristics of another individual or all members of a group, based on an image about what people or individual in that group are like.

Hofstedes Dimension of Culture

Individualism versus collectivism
Power distance Uncertainty avoidance Masculinity versus femininity Long-term versus short-term orientation
This dimension looks at the relationship between individuals and others in their society.

This dimension quantifies how well individuals accept the different levels of power that may be evident among them.

looks at how well individuals accept ambiguous situations and risk.

ranks the extent to which a society embraces masculine values (assertiveness, status, financial rewards) versus feminine values (quality of life).

helps to distinguish the difference in thinking between the East and the West societies.

Source: http://cindyking.biz/wp-content/uploads/2009/08/BRICGeertHofstedeScores.jpg
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Two important points every international business person must remember: Understanding culture does not mean judging or ranking cultures or individuals. Applying too many generalizations is dangerous. To summarize.. culture is a system of values in which an abstract idea about what a group believes to be good, right, and desirable and norms in which the social rules and guidelines that prescribe appropriate behavior in particular situations.

Elements of Culture
Social Structure
All societies are stratified on a hierarchical basis into social categories, or social strata (usually defined by characteristics such as family background, occupation, and income). Why social stratification is significant in international business? class consciousness the way individuals from different classes work together

Elements of Culture
Two dimensions to consider in social structure:

the degree to which the basic unit of social organization is the individual, as opposed to the group the degree to which a society is stratified into classes or castes

The most rigid system is the caste system

Is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is very unlikely e.g. Indiauntouchables

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Elements of Culture Language

Language plays a lot of role in business and can affect the outcome of the deals. Negotiations between a buyer and seller typically will include price, delivery dates, shipping methods, and methods of payment. If either party is not completely fluent in the other partys language, confusion may arise which could lead to late payment or losses. Another language issue that may affect payment, as Hofstede indicates, is the meaning of words. Think about the classic example of the Spanish word maana. Another common issue is the Asian concept of saving face.
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Elements of Culture Religion

Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacred. Religions with the greatest following in the world are: Christianity (1.7 billion adherents) Islam (1 billion adherents) Hinduism (750 million adherents) Buddhism (350 million adherents) German Sociologist, Max Weber, says that there is a relationship between Protestantism in Christianity and the emergence of modern capitalism. In countries where Islam is the predominant religion, Sharia law is the body of Islamic law which regulates the public and some private aspects of life.
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Elements of The people of this faith recognize Culture Judaism is an Abrahamic religion.

Abraham as a Patriarch. During the Passover season businesses are not allowed to come in contact with or inventory any products that contain yeast, which means destroying the product or selling it prior to Passover. The impact of Hinduism on economy vis--vis other religions is incredible. The caste system, despite its social fallbacks, functioned much like medieval European Guilds, ensuring the management principles of division of labour on work and apprentice training. The two obvious economic behavioral implications of the Buddhist philosophy include the frugality and moderation of material consumption. The Confucian ethics emphasize the concept of guanxi, which is about building good network connections. In todays world, the Chinese will often cultivate guanxiwang or relationship network for help.

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Elements of Culture Government Involvement

Laws of a country built on a society and its religion will ultimately impact the business law structure of the country as well. The following are matters that international managers should take into consideration: code law (written law) versus common law (application of precedent) systems level of development of the business law system cultures that prefer to litigate over a dispute versus those that prefer to arbitrate or mediate systems that require that laws be written before business is conducted (Europe) versus those that wait until issues arise to legislate (US) inclusive versus exclusive statements.
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Overcoming Cultural Challenges

Cultural Risk While doing business, cultural risks presents itself due to the emergence of different expectations, misunderstandings and miscommunication between a buyer and the seller. Cultural Miscommunication can occur in four settings: Different Values Different Types of Communication Styles Different Concepts Of Time Different Use of Physical Space
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Overcoming Cultural Challenges Cultural Awareness and Culturally

Compatible Resource Deployment
Creating cultural awareness involves conducting workshops and sessions both in ones own country and in the related country abroad to create and awareness of each other's cultural practices. Culturally compatible resource deployment refers to having local, native onsite persons manage the onshore client relationship or even having a culturally compatible offshore workforce as done in UK and South Africa.

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Culture Affects International Business

THE REGIONAL LEVEL: associated with ethnic, linguistic, or religious differences that exist within a nation THE GENDER LEVEL: linked with gender differences (female vs. male)

THE NATIONAL LEVEL: related to the nation as a whole

THE GENERATION LEVEL: connected to the distinction between grandparents and parents, parents and children

THE SOCIAL CLASS LEVEL: associated with educational opportunities and differences in occupation

THE CORPORATE LEVEL: associated with the specific culture of an organization

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Cultural Etiquettes in Selected Countries

China
When conducting a business in China, it can take a number of extremely lengthy meetings before any substantial progress is made.

USA

The US has adopted a 'scientific' approach to business compared to other industrialized countries.

Japan United Arab Emirates (UAE)

Invest maximum amount of time and resources into the early stages of relationship building even though eventual results may seem a long way off.

In UAE, there is little separation between religions, life in general and business and they are all interlinked in a way that is alien to most western business people.
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THE END

Chapter 4 Culture

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