Culture

International Business Spring 2009 Week 2

International Business Culture Environment

Copyright 2009 Daniel E. OConnell

Learning Objectives

To define and demonstrate the effect of cultures various dimensions on business. To examine ways in which cultural knowledge can be acquired and individuals and organizations prepared for cross-cultural interaction. To illustrate ways in which cultural risk poses a 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.

Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster. - Geert Hofstede, Professor Emeritus, Maastricht University

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

Culture is important because it affects all aspects of business

Cultural Risk

Risks of:
Business mistakes Poor customer relations Wasted negotiations

Challenge for Managers

Identify cross-cultural and intracultural differences Identify similarities across cultures and develop strategies to exploit them Identify whether the organization can be a change agent Acculturation

Exploiting Similarities Across Cultures: An Example

Mattel, Inc., a global toy company Famous brands include: Barbie Hot Wheels Fisher-Price American Girl

Only 20% of products adapted for local markets

Growth of large retailers like Walmart provides a global distribution network

Change Agents

By introducing new products or ideas and practices, an international business entity becomes a change agent.
this may shift consumption from one product to another, or it may lead to massive social change

Example: U.S. pop culture

A Key to Success: Acculturation

Acculturation is the process of adjusting and adapting to a specific culture other than ones own.

Cultural Industries

Many countries fight to protect the quality and reputation of cultural products The EU and the WTO both provide for some protection regarding the labeling of food with geographic names Examples:
Champagne Bordeaux

Elements of Culture
Language Religion Aesthetics Values and Attitudes Manners/Customs Education

Material elements

Social Institutions

Cultural Knowledge

Cultural 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 ones own.

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

Acquiring International Experience

Managers ranking of factors involved in acquiring international expertise
Factor
Assignments overseas Business travel Training programs Non-business travel Reading Graduate courses Precareer activities Undergraduate courses

Considered Critical Considered Important

85% 83 28 28 22 13 9 1 9% 17 57 54 72 52 50 48

Cultural Analysis

Before introducing products and services into new countries, businesses should perform cultural analysis Models can be used to identify and evaluate variables on how consumers in different cultures may perceive, evaluate and adopt new behaviors

Hofstedes 5 Cultural Dimensions

Power distance Individualism Masculinity Uncertainty avoidance Long-term orientation

Power Distance

The extent to which less powerful members of organizations and institutions accept and expect that power is distributed unequally

Individualism

A measure of the degree to which individuals are integrated into groups High individualism indicates loose relationships with groups Low individualism = collectivism

Masculinity

Distribution of roles between genders Cultures that are assertive and competitive are considered masculine Cultures that are caring and modest are considered feminine

Uncertainty Avoidance

A measure of societys tolerance of uncertainty and ambiguity

Cultural Dimension Scores for 12 countries

100
Japan France Mexico Brazil U.S.A Great Britain Germany France Japan Brazil Arab Countries Mexico Hong Kong West Africa Indonesia

100
Netherlands

Uncertainty Avoidance 50

Germany
Netherlands U.S.A Great Britain

Arab Countries West Africa Indonesia Hong Kong

Individualism 50

50 Power Distance

100

50 Masculinity

An Example: The United States

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

What it means (cont.)

UAI (Uncertainty Avoidance): 46

LTO (Long Term Orientation): 29

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, thoughts and beliefs
World average is 45 The low LTO indicates a belief in meeting obligations and reflects an appreciation of cultural traditions

China

What can you conclude about China?

Strategies for Success in Different Cultures

Embrace local culture Build relationships Employ locals Help employees understand you Adapt products Coordinate by region

Assignment

Review Ch. 2, Culture Read and answer questions on Case 1, Case Study on Culture and the Implementation of Manufacturing Strategy in Mexico (Handout)