International Business: The New Realities, 5e (Cavusgil)

Chapter 3 The Cultural Environment of International Business

1) ________ refers to the values, beliefs, customs, arts, and other products of human thought and
work that characterize the people of a given society.
A) Ethnicity
B) Heritage
C) Culture
D) Race

2) Jordan is employed in an American investment firm and is currently working with some
Japanese clients on a new project. He uses a lot of hand gestures during meetings which his
clients find very distracting and rude. This has also led to many misunderstandings between
Jordan and his Japanese clients in the recent past. Which of the following best describes such a
situation?
A) risk aversion
B) organizational anarchy
C) cross-cultural risk
D) acculturation

3) Which of the following is true with regard to culture?

A) It captures how the members of the society live.
B) It is absolute.
C) It does not define the collective behavior of each society.
D) It is inherited.

4) Culture is not ________.

A) about beliefs and values of society
B) relative
C) a collective phenomenon
D) inherited

5) Socialization is defined as ________.

A) the process of segregating people into different racial groups in a society
B) the process of adjusting and adapting to a culture other than one's own
C) the process of learning the rules and behavioral patterns appropriate to one's given society
D) a situation or event in which a cultural misunderstanding puts some human value at stake

6) Acculturation is defined as the process of ________.

A) segregating ethnic minorities by distinct groups
B) adjusting and adapting to a culture other than one's own
C) learning the behavioral patterns and rules of one's own society
D) forcing minority cultures to adopt the values of the dominant culture

Phone Center (Scenario)

The Technix Computer Corporation recently finished construction of a customer service phone
center in New Delhi, India. Phone center agents will be responsible for answering technical
1
Copyright © 2019 Pearson Education, Inc.
questions from customers around the globe. Technix has hired 55 local computer experts as
phone agents, and a training session is underway. Technical specialists and call center specialists
from the United States have flown to India to train the new Indian employees. Hank Patelli, a
senior manager of a Technix phone center in Michigan, will oversee the New Delhi phone center
for six months until a local manager is hired and trained to replace him.

7) After the first training session, a number of the Michigan employees expressed frustration that
the Indian employees lacked technical knowledge because none of them asked questions or
offered answers. Which of the following would be the best way for Hank to handle the situation?
A) Remind the American employees that the Indians may be showing respect by remaining
silent.
B) Order the Indian employees to interact more during the session.
C) Host a traditional American barbeque so the American and Indian employees can get
acquainted.
D) Ignore the complaints of the American employees and continue the training sessions as
planned.

8) Ashok, one of the Indian employees, asks Hank if the weekend training session could be
rescheduled because it is a Hindu festival day. What will be the most likely outcome if Hank
agrees to Ashok's request?
A) Instances of absenteeism will become more pervasive among Indian employees.
B) Hank will develop a relationship of trust and understanding with the Indian employees.
C) Hank's decision will create divisiveness between the American and Indian employees leading
to irreparable damages.
D) Ashok will replace Hank as manager after six months when Hank returns to the United States.

9) Culture refers to the inherited attitudinal traits of an individual.

10) Cultural values and attitudes can be transmitted through a variety of sources including
parents, teachers, friends, government leaders, movies, television, and the Internet.

11) Nonverbal communication belongs to the deep cultural makeup that we are unaware of.

12) Religion belongs to the folk cultural makeup that we are aware of.

13) Businesses based in societies characterized by high uncertainty avoidance encourage

managers to take risks and make quick decisions.

14) In a short essay, explain some of the obstacles that international firms often face when
dealing with employees, customers, and business partners from other cultures.
Answer: Today, firms conduct business in environments characterized by unfamiliar languages,
as well as unique beliefs, norms, and behaviors. Managers need to be able to reconcile these
differences to create profitable ventures. Managers not only need to develop empathy and
tolerance toward cultural differences but also must acquire a sufficient degree of factual
knowledge about the beliefs and values of foreign counterparts. Cross-cultural proficiency is
paramount in many managerial tasks, including: managing employees, developing products and
services, communicating and interacting with foreign business partners, and negotiating and
2
Copyright © 2019 Pearson Education, Inc.
structuring international business ventures.
Let's consider specific examples of how cross-cultural differences may complicate company
activities.
∙ Pay-for-performance system. In some countries, merit is not the
main basis for promoting employees. In China and Japan, a person's
age is the most important determinant. But how do such workers
perform when Western firms evaluate them using performance-based
measures?
∙ Lifetime employment. In some Asian countries, firms are very
protective of their employees who may work for the same company all
their lives. The expectations that arise from such devoted
relationships can complicate dealings with outside firms. Western
managers may struggle to motivate employees who expect they will
always have the same job.
∙ Union-management relationships. In Germany, union bosses hold the
same status as top-level managers and are allowed to sit on
corporate boards. Many European firms have a business culture in
which workers are relatively equal to managers. This approach can
reduce the flexibility of company operations because it makes it
harder to lay off workers.
∙ Developing products and services. Cultural differences necessitate
adapting marketing activities to suit the specific needs of target
markets.
∙ Providing services. Firms that engage in services such as lodging
and retailing substantially interact with customers, implying
greater cultural interaction and the potential for cognitive and
communication gaps. Imagine a Western lawyer who tries to establish
a law office in China. How about a Western restaurant chain operating
in Russia. Both firms will encounter substantial cultural challenges.
Differences in language and national character have the same effect
as trade barriers.
∙ Organizational structure. Some companies prefer to delegate
authority to country managers, which results in a decentralized
organizational structure. Other firms have centralized structures, in
which power is concentrated at regional or corporate headquarters.
Firms may be bureaucratic or entrepreneurial. How do you deal with a
bureaucratic partner or manage distantly located, decentralized
subsidiaries?
∙ Teamwork. Cooperating with partners and host-country nationals to
achieve common organizational goals is critical to business success.
But what should managers do if foreign and domestic nationals don't
get along? The Chinese home appliance manufacturer Haier
(www.haier.com) delayed acquiring overseas firms because
management felt it lacked the ability to manage foreign nationals
and integrate differing cultural systems.
Diff: 3: Hard
Skill: Concept
3
Copyright © 2019 Pearson Education, Inc.
Objective: 3-1; 3-4: Understand culture and cross-cultural risk, Appreciate culture's effect in
international business
AACSB: Analytical Thinking; Diverse and Multicultural Work

15) In a short essay, explain why international business managers should engage in critical
incident analysis to avoid the self-reference criterion. Describe why an examination of values
and attitudes toward culture is important in this analysis.
Answer: International business managers should avoid cultural bias. Problems arise when
managers simply assume that foreigners think and behave just like the folks back home. Such
ethnocentric assumptions lead to poor business strategies in both planning and execution.
Managers new to international business can find the behavior of a foreigner odd and perhaps
improper. For example, it is easy to be offended when a foreigner does not appreciate our food,
history, entertainment, or everyday traditions. In this way, cultural bias can be a significant
barrier to successful interpersonal communication.
A person's own culture conditions how he or she reacts to different values, behavior, or systems,
so most people unconsciously assume that people in other countries experience the world as they
do. They view their own culture as the norm; everything else may seem strange. This is known
as the self-reference criterion-the tendency to view other cultures through the lens of our own
culture. Understanding the self-reference criterion is a critical first step to avoiding cultural bias
and ethnocentric mistakes.
Critical incident analysis is a very useful technique that managers use to analyze awkward
situations in cross-cultural encounters. The technique encourages a more effective approach to
cultural differences by helping managers become more objective and develop empathy for other
points of view.
An examination of values and attitudes toward culture is important in this analysis. Values
represent a person's judgments about what is good or bad, acceptable or unacceptable, important
or unimportant, and normal or abnormal. Our values guide the development of our attitudes and
preferences. Attitudes are similar to opinions but are often unconsciously held and may not have
a rational basis. Prejudices are rigidly held attitudes, usually unfavorable and usually aimed at
particular groups of people. Typical values in North America, northern Europe, and Japan
include hard work, punctuality, and the acquisition of wealth. People from such countries may
misjudge those from developing economies who may not embrace such values.
Diff: 3: Hard
Skill: Synthesis
Objective: 3-1, 3-6: Understand culture and cross-cultural risk, Understand managerial
implications of culture
AACSB: Analytical Thinking

16) With regard to the iceberg concept of culture, ________ is the most deeply embedded.
A) conversational patterns
B) cooking
C) courtship practices
D) literature

17) ________ belongs to the folk cultural makeup that we are aware of.
A) Fine arts
B) Methods of problem solving

4
Copyright © 2019 Pearson Education, Inc.
C) Nonverbal communications
D) Diet

18) ________ are ways of behaving and conducting oneself in public and business situations
A) Manners and customs
B) Creative expressions
C) Values and attitudes
D) Symbolic productions

19) Which of the following situations illustrate a polychronic perspective?

A) When a North American talks to a Latin American, he or she may unconsciously back up to
maintain personal space.
B) In Islamic countries close interaction between men and women is not encouraged in public
places.
C) Latin Americans have a flexible perception of time and may not arrive exactly at the pre-
determined time for appointments.
D) People in young countries like Australia, Canada, and the United States are relatively focused
on schedules, punctuality, and time as a resource.
20) Values in a culture ________.
A) represent the symbolic, material, and creative productions unique to a society
B) are rigidly held attitudes, usually unfavorable and usually aimed at particular groups of people
C) represent a person's judgments about what is good or bad, acceptable or unacceptable,
important or unimportant, and normal or abnormal
D) are similar to opinions but are often unconsciously held and may not have a rational basis

21) Prejudices in a culture ________.

A) represent the symbolic, material, and creative productions unique to a society
B) are rigidly held attitudes, usually unfavorable, and usually aimed at particular groups of
people
C) guide the development of our attitudes and preferences
D) represent a person's judgment about what is important and what is not

22) In polychronic cultures, ________.

A) members are easily distracted and are inclined to do many tasks at once
B) people view time as linear and punctuality as a virtue
C) managers make commitments, set deadlines, and adhere to a strict schedule of meetings and
activities
D) managers and investors are impatient and want quick returns

23) The culture of which of the following countries has a close conversational distance?
A) Russia
B) Sweden
C) Brazil
D) United States

24) The purpose of material productions in a society is to ________.

A) enable people to cope with their environments
5
Copyright © 2019 Pearson Education, Inc.
B) help unite people
C) distinguish the dominant culture from minority cultures
D) segregate people based on race and ethnicity

25) ________ are letters, figures, colors, or other characters that communicate a meaning.
A) Rituals
B) Symbols
C) Norms
D) Customs

26) In cultures with a monochronic view of time, people view time as linear, managers make
commitments, set deadlines, and adhere to a strict schedule of meetings and activities.

27) Company logos, trademarks, national flags, and historical monuments are considered
symbolic productions.

28) How is culture like an iceberg? In a short essay, explain the relationship between the iceberg
theory and international business relationships.
Answer: Anthropologists use the iceberg metaphor to call attention to the many dimensions of
culture-some obvious and some not so obvious. Above the surface, certain characteristics are
visible, but below, unseen to the observer, is a massive base of assumptions, attitudes, and values
that strongly influence decision making, relationships, conflict, and other dimensions of
international business. We are usually unaware of the nine-tenths of our cultural makeup that
exists below the surface. In fact, we are often not aware of our own culture unless we come in
contact with another one.
In cross-border business, we step into different cultural environments characterized by unfamiliar
languages, and unique value systems, beliefs, and behaviors. We encounter customers and
business partners who display differing lifestyles, norms, consumption behavior, shopping, and
use patterns. These differences influence all dimensions of international business. Understanding
cultural differences is necessary in the creation and maintenance of international business
relationships.
Diff: 3: Hard
Skill: Concept
Objective: 3-2: Learn the dimensions of culture
AACSB: Analytical Thinking; Diverse and Multicultural Work

29) How do cultural perceptions of time relate to international business? In a short essay, provide
examples of contrasting cultural time perceptions.
Answer: Time has a strong influence on business. It affects people's expectations about
planning, scheduling, profit flows, and promptness in arriving for work and meetings. Japanese
managers tend to prepare strategic plans for long periods, such as a decade. The planning horizon
for Western companies is much shorter, typically a few years. Some societies are more oriented
to the past, others to the present, and still others to the future.
People in past-oriented cultures believe plans should be evaluated in terms of their fit with
established traditions, customs, and wisdom. Innovation and change do not occur very often and
are justified to the extent they fit with past experience. Europeans are relatively past-oriented,
and prefer to conserve traditional ways to doing things.

6
Copyright © 2019 Pearson Education, Inc.
Young countries like Australia, Canada, and the United States are relatively focused on the
present. They tend to have a monochronic orientation to time-a rigid orientation in which people
are focused on schedules, punctuality, and time as a resource. They view time as linear, like a
river flowing into the future, carrying workers from one activity to the next.
In such cultures, where people are highly focused on the clock, managers make commitments,
set deadlines, and follow a strict schedule in meetings. Punctuality is a virtue and time is money.
Throughout the day, workers glance at their watches, their computer's clock, or the clock on the
wall. Investors are impatient and want quick returns. Managers have a relatively short-term
perspective when it comes to investments and making money. Company profitability is measured
on a quarterly basis. In this way, people in the United States have acquired a reputation for being
hurried and impatient. Indeed, the word business was originally spelled busyness.
Some cultures have a polychronic perspective on time. In such societies, instead of performing
single tasks serially, people are inclined to do many things at once. In this way, members of
polychronic cultures are easily distracted. They can change plans often and easily, and long
delays are sometimes needed before taking action. Punctuality per se is relatively unimportant,
and managers consider time commitments flexible. They do not strictly follow the clock and
schedules. They put more value on relationships and spending time with people.
Diff: 3: Hard
Skill: Concept
Objective: 3-2: Learn the dimensions of culture
AACSB: Analytical Thinking; Diverse and Multicultural Work

30) An idiom ________.

A) refers to the objective analysis of a situation
B) refers to the perception about someone or something that may or may not be true
C) is a highly ambiguous rhetoric device used in high-context cultures
D) is an expression whose symbolic meaning is different from its literal meaning

31) Which of the following is true about language?

A) Language does not entail facial expressions and gestures.
B) National languages, dialects, and translation facilitate straightforward communication.
C) Language has both verbal and nonverbal characteristics.
D) Business jargons are common across cultures

32) Advertising themes often convey unfavorable and embarrassing interpretations. This is most
likely because ________.
A) popular slogans used in international advertising do not use idiomatic expressions
B) advertising themes often lose their original meaning in translation or give the wrong
impression
C) language is rarely subtle
D) colloquial expressions are more likely than not to puzzle native speakers

33) ________ is the most common primary language in the world.

A) Chinese
B) Arabic
C) Spanish
D) English
7
Copyright © 2019 Pearson Education, Inc.
34) ________ is the most populous Muslim country in the world.
A) Saudi Arabia
B) Iran
C) Egypt
D) Indonesia
35) In which of the following countries would alcoholic drinks be prohibited?
A) Saudi Arabia
B) Mexico
C) Spain
D) Italy

36) Which of the following religions has the largest number of adherents?
A) Islam
B) Christianity
C) Hinduism
D) Judaism

37) Which of the following is NOT true about Islam?

A) Islam prohibits gambling.
B) Islam condemns charging interest for money loaned.
C) Islam discourages free trade.
D) Islam prohibits drinking alcoholic drinks .

Restaurant Chain Internationalization (Scenario)

Harold Meyer is the vice president of a successful U.S. restaurant chain. He is getting ready to
transfer to the Gulf Arab region to help establish the restaurant chain in Saudi Arabia. He is in
the process of gathering information to learn about Saudi culture.

38) Which type of religious practices will Harold most likely have to study?
A) Christian
B) Jewish
C) Confucian
D) Islamic

39) Harold decides to drop alcoholic drinks from the restaurant chain menu in Saudi Arabia.
Which of the following might have led to his decision?
A) Alcoholic drinks are not allowed in Saudi Arabia.
B) Saudi consumers prefer local alcoholic drinks.
C) Imported alcoholic drinks are more expensive than local drinks.
D) Saudi consumers prefer European alcoholic drinks .

40) English is the most common primary language in the world.

41) Language has both verbal and nonverbal characteristics.

42) Business jargon unique to a culture can impede communication.

8
Copyright © 2019 Pearson Education, Inc.
43) In a short essay, describe some of the subtleties of language. Provide examples that relate to
international business situations.
Answer: Language is a major differentiator between cultural groups and castes and provides an
essential means for business leaders to effectively communicate with employees, suppliers and
customers. Language can be classified as verbal and non-verbal. National languages, dialects,
and translation tend to complicate verbal communication. It is sometimes difficult to find words
to convey the same meaning in a different language. For example, a one-word equivalent to
"aftertaste" does not exist in many languages. Even when a word can be translated well into other
languages, its concept and meaning may not be universal. For example, the Japanese word
muzukashii can be variously translated as "difficult," "delicate," or "I don't want to discuss it,"
but in business negotiations it usually means "out of the question." Advertising themes often lose
their original meaning in translation or give the wrong impression.
Diff: 3: Hard
Skill: Concept
Objective: 3-3: Appreciate the role of language and religion in culture
AACSB: Analytical Thinking; Diverse and Multicultural Work

44) Discuss the economic and business implications of religion.

Answer: Religion appears to have an effect on economic and business activities. For instance,
Islam encourages free trade through rules that prohibit restraints on market-based exchange, such
as monopolies and price fixing. Islam encourages the free flow of information that facilitates
efficient demand and supply. The Qur'an condemns charging interest for money loaned. Thus,
banks in Islamic countries have devised methods for financing debt without violating Sharia law.
The Qur'an prohibits drinking alcohol, gambling, and showing too much skin. These restrictions
affect firms that deal in alcoholic beverages, resorts, entertainment, and women's clothing. Many
multinational firms are reaching out to Muslim communities. Nokia launched a mobile phone
application that shows Muslims the direction toward Mecca, Islam's holiest site, when they pray.
Heineken, the Dutch brewing giant, rolled out the nonalcoholic malt drink Fayrouz for the
Islamic market. In general, MNEs are allowed to operate as long as they abide by Sharia law, do
not exploit people, and earn profits fairly
Religious affiliations help create bonds of trust and shared commitment, which facilitate lending
and trade. Religion can boost GDP in a country by reducing corruption, and by increasing
respect for law and order. Religion that promotes moral values should help foster successful
economic systems. Conversely, a lack of ethical values tends to coincide with economic decay.
A lawless society cannot sustain normal business activities for long. It is noteworthy, however,
that some societies with strong religious values-for example, most Middle Eastern countries and
their embrace of Islam, or southern Africa and in many Christian devotees-have not produced
high living standards for their citizens. This implies religion alone is insufficient to support
economic development. Other factors, such as strong private property rights, political and
economic freedom, and an entrepreneurial spirit, are also important.
Diff: 3: Hard
Skill: Concept
Objective: 3-3: Appreciate the role of language and religion in culture
AACSB: Analytical Thinking; Diverse and Multicultural Work

45) The Internet and other communications technologies imply greater likelihood of cross-

9
Copyright © 2019 Pearson Education, Inc.
cultural miscommunications and blunder.

46) Communications, information, and transportation technologies have decreased people's

ability to learn about and connect with unfamiliar cultures
47) Differences in language and national character have similar effects as trade barriers.

48) In the advanced economies, firms that engage in services such as lodging and retailing
account for a much lesser share of FDI than firms that manufacture products.

49) Cultural differences necessitate adapting marketing activities to suit the specific needs of
target markets.

50) In companies with decentralized organizational structure, power is concentrated at the

regional or corporate headquarters.

51) In China and Japan, a person's age is the most important determinant of employee promotion.

52) In a short essay, explain how a "pay-for-performance system" and "lifetime employment"
complicate company activities. Explain how these two cross-cultural differences reflect
Hofstede's long-term versus short-term orientation.
Answer: Effective handling of the cross-cultural interface is a critical source of firms'
competitive advantage. Managers not only need to develop empathy and tolerance toward
cultural differences but also must acquire a sufficient degree of factual knowledge about the
beliefs and values of foreign counterparts.
Pay-for-performance system: In some countries, merit is not the main basis for promoting
employees. In China and Japan, a person's age is the most important determinant. But how do
such workers perform when Western firms evaluate them using performance-based measures?
Lifetime employment: In some Asian countries, firms are very protective of their employees who
may work for the same company all their lives. The expectations that arise from such devoted
relationships can complicate dealings with outside firms. Western managers may struggle to
motivate employees who expect they will always have the same job.
These cross-cultural challenges reflect Hofstede's cultural dimensions of long-term versus short-
term orientation. Long-term versus short-term orientation refers to the degree to which people
and organizations defer pleasure or gratification to achieve long-term success. Firms and people
in cultures with a long-term orientation tend to take the long view to planning and living. They
focus on years and decades. The long-term dimension is best illustrated by the so-called Asian
values-traditional cultural orientations of several Asian societies, including China, Japan, and
Singapore. These values are partly based on the teachings of the Chinese philosopher Confucius.
They include discipline, loyalty, hard work, regard for education, respect for family, focus on
group harmony, and control over one's desires. Scholars credit these values for the East Asian
miracle, the remarkable economic growth and modernization of East Asian nations during the
last several decades. By contrast, the United States and most other Western countries emphasize
a short-term orientation.

53) Low-context cultures tend to ________.

A) emphasize nonverbal messages
B) conduct negotiations as efficiently as possible
10
Copyright © 2019 Pearson Education, Inc.
C) view communication as a means to promote smooth, harmonious relationships
D) prefer an indirect and polite face-saving style of communication
54) Which of the following is characteristic of collectivist societies?
A) In collectivist societies, each person tends to focus on his or her own self-interest.
B) In collectivist societies, compromise and conformity help maintain group harmony.
C) In collectivist societies, ties among people are relatively loose.
D) In collectivist societies, those who compete best are rewarded financially.

55) Which of the following countries is an example of a strongly collectivist society?

A) Ireland
B) Canada
C) Australia
D) China

56) High power-distance countries are characterized by ________.

A) organizations that grant a high degree of autonomy to lower-level employees
B) a strong desire to minimize gaps between the powerful and the weak
C) a relative indifference toward social inequalities
D) a relative equality in terms of income and power

57) Firms with high power distance are most likely to be characterized by ________.
A) concentrated power among executives and little autonomy for subordinates
B) an equal distribution of power among executives, managers, and lower-level employees
C) a minimal gap between the powerful and the weak
D) a highly flexible work environment

58) Which of the following is true about low-context cultures?

A) People belonging to low-context cultures do not prefer explicit communications.
B) Low-context cultures emphasize an indirect and polite face-saving style of communication.
C) Low-context cultures rely on elaborate verbal explanations, putting much emphasis on spoken
words.
D) People belonging to low-context cultures view communication as a means to promote
smooth, harmonious relationships.

59) Which of the following countries exhibit a high-context culture?

A) Japan
B) Germany
C) The United States of America
D) Switzerland

60) Titania is a country characterized by a high-context culture. This implies that ________.
A) the people of Titania tend to conduct negotiations as efficiently as possible
B) the people of Titania tend to use legalistic contracts to conclude agreements
C) business is primarily deal-oriented in Titania
D) personal relations and goodwill are valued in Titania

61) Business dealings in low-context cultures are characterized by ________.

11
Copyright © 2019 Pearson Education, Inc.
A) a high degree of sensitivity to the context
B) a high degree of mutual respect
C) efficient negotiations
D) complex rituals

62) Which of the following refers to the extent to which people can tolerate risk in their lives?
A) uncertainty avoidance
B) long-term versus short-term orientation
C) power distance
D) individualism

63) Which of the following managers portrays high uncertainty avoidance?

A) Greg manages the market development fund team for a leading computer manufacturing firm.
He is entrepreneurial and makes decisions quickly under tough situations.
B) James is the business head of marketing in a leading automobile manufacturing company. He
coaches his team members to become accustomed to risk and organizational change.
C) Henry is the managing editor at Paes publications. He emphasizes careful evaluation of all
options and ensuring they are consistent with company policies, which often slows down the
progress.
D) David manages the technical team at TR Solutions. He is open to different opinions from
team members and is not threatened by differing opinions.

64) Feminine cultures tend to emphasize ________.

A) interdependence among people
B) accumulation of wealth
C) ambition
D) competitiveness

65) ________ refers to a distinctive tradition or institution strongly associated with a particular
society.
A) Cultural metaphor
B) Totem
C) Moiety
D) Cultural pluralism

66) In a deal-oriented culture, managers ________.

A) focus on the task at hand and prefer getting down to business
B) hold rigid attitudes, usually unfavorable and usually aimed at particular groups of people
C) emphasize affiliations with people
D) seek to build trust and rapport and get to know the other party in business interactions
Answer: A

Subjective dimensions of culture (Scenario)

In the last two years, the sales of consumer electronics in China have risen by 9.4 percent.
Moreover, the market is becoming increasingly competitive since a large number of Japanese,
European, and American manufacturers are building factories to face the competition from low-
cost Chinese manufacturers. Grande Co. is a U.S.-based consumer electronics manufacturer that
12
Copyright © 2019 Pearson Education, Inc.
has been negotiating with Chinese authorities for eight years to open a factory in the country.
Since Grande has spent significant time and energy on negotiation in the past eight years, they
should quit and set up a factory in a more responsive society.

67) Which of the following, if true, strengthens the conclusion of the above passage?
A) In China, companies belonging to deal-oriented cultures have been the most successful.
B) American companies best thrive in cultures that are deal-oriented.
C) For the Chinese, relationship is less important than business deals.
D) The management of Grande is characterized by a host country mind-set.

68) Which of the following can be inferred from the above passage?
A) The Chinese culture is more likely than not to be deal-oriented.
B) The Chinese culture is more likely than not to be relationship-oriented.
C) The American culture is more likely than not to be relationship-oriented.
D) The American culture is less likely to take an impersonal approach to business.

Restaurant Chain Internationalization (Scenario)

Harold Meyer is the vice president of a successful U.S. restaurant chain. He is getting ready to
transfer to the Gulf Arab region to help establish the restaurant chain in Saudi Arabia. He is in
the process of gathering information to learn about Saudi culture.

69) Harold learned that organizations in Saudi Arabia emphasizes loyalty to the family and tribe
and that ties among individuals are highly valued. Based on Harold's observation, Saudi Arabia
is ________.
A) a collectivist culture
B) an individualistic culture
C) characterized by low power distance
D) a feminine culture

70) Japan and China are examples of low-context cultures.

71) In collectivist societies, competition for resources is the norm, and those who compete best
are rewarded financially.

72) A cultural metaphor is a generalization about a group of people that may or may not be
factual.

73) In societies with low uncertainty-avoidance, companies emphasize stable careers and
produce many rules to regulate worker actions and minimize ambiguity.

74) In deal-oriented cultures, managers focus on the task at hand and prefer getting down to
business.

75) What are some of the criticisms of Hofstede's study? In a short essay, discuss the limitations
of the study.
Answer: While useful, the Hofstede framework has its weaknesses. The original research was
based on data collected around 1970. Much has changed since then, including successive phases
13
Copyright © 2019 Pearson Education, Inc.
of globalization, widespread exposure to global media, technological advances, and changes in
the role of women in the workforce. In addition, Hofstede's findings are based on the employees
of a single company-IBM-in a single industry, making it difficult to generalize. Hofstede's data
were collected using questionnaires, which is not effective for probing some of the deep issues
that surround culture. Finally, Hofstede did not capture all potential dimensions of culture.
Nevertheless, Hofstede's framework is useful as a general guide and for gaining deeper
understanding in cross-national interactions with business partners, customers, and value-chain
members.
Diff: 3: Hard
Skill: Concept
Objective: 3-5: Learn models and explanations of culture
AACSB: Analytical Thinking; Diverse and Multicultural Work

76) In a short essay, discuss the three cultures into which employees are socialized-national
culture, professional culture, and corporate culture.
Answer: Employees are socialized into three cultures: national culture, professional culture, and
corporate culture. Working effectively within these overlapping cultures is challenging. The
influence of professional and corporate culture tends to grow as people are socialized into a
profession and workplace.
Most companies have a distinctive set of norms, values, and modes of behavior that distinguish
them from other organizations. Such differences are often as distinctive as national culture, so
that two firms from the same country can have vastly different organizational cultures. For
example, Standard Chartered (www. standardchartered.com), a time-honored British bank, has a
conservative culture that may be slow to change. By contrast, Virgin (www.virgin.com), the
much younger British music and travel provider, has an experimental, risk-taking culture.
These cultural layers present yet another challenge for the manager: To what extent is a
particular behavior caused by national culture? In companies with a strong organizational
culture, it is hard to determine where the corporate influence begins and the national influence
ends. In the French cosmetics firm L'Oreal (www.loreal.com), the distinction between national
and corporate cultures is not always clear. The French have a great deal of experience in the
cosmetics and fashion industries, but L'Oreal is a global firm staffed by managers from around
the world. Their influence, combined with management's receptiveness to world culture, has
shaped L'Oreal into a unique organization, distinctive within French culture.
Diff: 3: Hard
Skill: Synthesis
Objective: 3-5: Learn models and explanations of culture
AACSB: Analytical Thinking; Diverse and Multicultural Work

77) Polycentric orientation refers to ________.

A) a host-country mind-set in which the manager develops a strong affinity with the country in
which she or he conducts business
B) the use of one's own culture as the standard for judging other cultures
C) a collectivist mind-set, which emphasizes conformity, duty, prescribed roles, and sacrifice for
the greater good
D) the tendency to rely on elaborate verbal explanations, putting much emphasis on spokenwords
78) Using one's own culture as a standard for judging other cultures is known as ________.
A) anthropocentric orientation

14
Copyright © 2019 Pearson Education, Inc.
B) ethnocentric orientation
C) geocentric orientation
D) polycentric orientation

79) As part of opening manufacturing units abroad, a U.S. apparel firm decided to send its
apparel production coordinator Chris to Bangladesh. Chris is distressed that people don't come to
meetings on time and finds it disrespectful when his team members stand too close to him. Chris
may trigger a cross-cultural risk by a(n) ________.
A) ethnocentric orientation
B) anthropocentric orientation
C) polycentric orientation
D) geocentric orientation

80) Which of the following situations is an example of geocentric orientation?

A) Marsha, CEO of QST Solutions, believes that top level executives at her company should be
Americans to avoid any communication gaps.
B) The Gram Group of retail stores decided to open branches in China and focus on changing
their policies to suit the Chinese population to maximize profits.
C) Derek, the VP of Banner Technologies, wants managers from the firm's India office to visit
the U.S. branch to provide training to American officials visiting India.
D) Chill & Break Inc., an American global coffee company, is used to judging other cultures by
the standards of its own culture.

Japanese Supercenter (Scenario)

The Tag-Mart chain of discount superstores is nearing completion of its new supercenter in
Tokyo. The Tokyo store is the first foreign store for the large U.S.-based company. Tag-Mart
offers a large variety of products at virtually unbeatable prices. A group of Tag-Mart
representatives has traveled to Tokyo to inspect the new store and hire a store manager. The top
two contenders for the position are Hisako Aoki and Takematsu Sato. Aoki has 25 years of
experience managing a local department store renowned for its customer service. Sato, born and
raised in Japan, earned a college degree in the U.S. before working six years as a manager at a
Texas Tag-Mart.

81) Which of the following best supports the selection of Sato over Aoki?
A) Sato is familiar with both Tag-Mart operations as well as the local customs in Japan.
B) Sato is no more skilled in employee training techniques than Aoki.
C) Sato is clearly more relationship-oriented than Aoki.
D) Sato is likely to discourage homogenization of cultures.

82) Which of the following, if true, most supports the decision to operate the Tokyo store in a
manner similar to Tag-Mart stores in the U.S.?
A) Customer service is of utmost importance to local shoppers.
B) Finding efficient and knowledgeable employees in Tokyo is difficult.
C) Other supercenter stores in Tokyo have gone out of business in the last year.
D) Local shoppers desire both efficiency and low prices.

83) Which of the following is most important for Tag-Mart's top management to determine while
15
Copyright © 2019 Pearson Education, Inc.
making a choice between Sato and Aoki as the new store manager?
A) How many shoppers are expected at the Tokyo Tag-Mart grand opening sale?
B) How many locally owned stores will Tokyo Tag-Mart compete against?
C) Would customers at the Tokyo Tag-Mart prefer strong customer service or a U.S.-style
shopping experience?
D) What is the average age and annual income of Tokyo Tag-Mart shoppers?

84) Which of the following is a cultural barrier inherent to service firms that internationalize via
FDI?
A) Service firms are unable to infiltrate international markets due to language issues.
B) The source of a firm's funding determines the location of its international subsidiaries.
C) A firm's corporate culture is overly influenced by its national culture.
D) Firms that internationalize via FDI usually make large spending cuts on advertising
campaigns

85) Managers can achieve effective cross-cultural interaction by ________.

A) resisting cultural homogeneity
B) keeping an open mind and being inquisitive
C) rushing into conclusions about other's behaviors
D) using business jargons to facilitate communication

86) Which of the following types of assumptions is the cause of most problems between business
managers and foreign employees?
A) geocentric assumptions
B) ethnocentric assumptions
C) polycentric assumptions
D) religious assumptions

87) Self-reference criterion is ________.

A) the tendency to assume that all people from one culture are the same
B) the tendency to understand a culture without regard to country boundaries
C) the propensity to view other cultures through the lens of one's own culture
D) the propensity to understand culture as an inherited trait

88) In cross-border business, successful managers ________.

A) adhere to a self-reference criterion
B) are empathetic to cultural differences
C) overly emphasize the importance of business jargons in facilitating effective cross-cultural
communication
D) ritually avoid analyzing awkward situations in cross-cultural encounters

89) Cultural intelligence is defined as ________.

A) a person's ability to function effectively in situations characterized by cultural diversity
B) the method of analyzing awkward situations in cross-cultural encounters by developing
objectivity and empathy for other points of view
C) the measurement of the inequalities in power that exist among people
D) the information gathered by local firms about those entering foreign markets
16
Copyright © 2019 Pearson Education, Inc.
90) Cross-cultural proficiency is characterized by all of the following EXCEPT ________.
A) perceptiveness
B) flexibility and adaptability
C) valuing personal relationships
D) tolerance for ambiguity

91) Managers with a geocentric view of the world ________.

A) are generally better at understanding and accommodating similarities and differences among
cultures
B) ritually avoid analyzing awkward situations in cross-cultural encounters
C) have a strong preference for ambiguity
D) tend to view other cultures through the lens of his/her own culture

92) Cross-cultural risk is often intensified by managers with geocentric tendencies.

93) An ethnocentric orientation positively impacts the ability of managers to manage business
projects and new business practices abroad.

94) Ethnocentric orientation refers to a host-country mind-set in which the manager develops a
strong affinity with the country in which she or he conducts business.

95) Most companies have a distinctive set of norms, values, and modes of behavior that
distinguish them from other organizations.

96) Ethnocentric assumptions lead to poor business strategies in both planning and execution.

97) Managers with an ethnocentric view of the world are generally better at understanding and
dealing with similarities and differences among cultures.

98) Cross-cultural proficiency is characterized by four key personality traits: tolerance for
ambiguity, perceptiveness, valuing personal relationships, and flexibility and adaptability.

99) Cultural intelligence focuses on specific capabilities important for high-quality personal
relationships and effectiveness in culturally diverse settings and work groups.

100) Company employees are socialized by three cultures: national culture, professional culture,
and corporate culture. In a short essay, explain corporate culture. Provide examples of companies
that have distinctive corporate cultures.
Answer: Most companies have a distinctive set of norms, values, and modes of behavior that
distinguish them from other organizations. Such differences are often as distinctive as national
culture, so that two firms from the same country can have vastly different organizational
cultures. For ex-ample, Standard Chartered (www. standardchartered.com), a time-honored
British bank, has a conservative culture that may be slow to change. By contrast, Virgin
(www.virgin.com), the much younger British music and travel provider, has an experimental,
risk-taking culture.

17
Copyright © 2019 Pearson Education, Inc.
101) In a short essay, describe three guidelines that managers should follow to achieve cross-
cultural success.
Answer: GUIDELINE 1: Acquire factual knowledge about the other culture, and try to speak the
language. Successful managers acquire a base of knowledge about the values, attitudes, and
lifestyles of the cultures that they encounter. Managers study the political and economic
background of target countries-their history, current national affairs, and perceptions about other
cultures. Such knowledge increases understanding about the partner's mindset, organization, and
objectives. Sincere interest in the target culture helps establish trust and respect. It helps lay the
foundation for open and productive relationships. Even modest attempts to speak the local
language are welcome. Superior language skills help ensure international business success. In the
long run, managers who can converse in multiple languages are more likely to negotiate
successfully and have positive business meetings.
GUIDELINE 2: Avoid cultural bias. Problems arise when managers simply assume that
foreigners think and behave just like the folks back home. Such ethnocentric assumptions lead to
poor business strategies in both planning and execution. Managers new to international business
can find the behavior of a foreigner odd and perhaps improper. For example, it is easy to be
offended when a foreigner does not appreciate our food, history, entertainment, or everyday
traditions. In this way, cultural bias can be a significant barrier to successful interpersonal
communication. Ethnocentric assumptions lead to poor business strategies in both planning and
execution. Managers new to international business often find the behavior of a foreigner hard to
explain. For example, it is easy to be offended when our foreign counterpart does not appreciate
our food, history, sports, or entertainment or is otherwise inconsiderate. This situation may
interfere with the manager's ability to interact effectively with the foreigner, even leading to
communication breakdown. In this way, culture can be a significant barrier to successful cross-
cultural communication.
GUIDELINE 3: Develop cross-cultural skills. Working effectively with counterparts from other
cultures requires managers to make an investment in their professional development. Each
culture has its own ways of conducting business and negotiations, and solving disputes.
Managers are exposed to high levels of uncertainty. Concepts and relationships can be
understood in a variety of ways. To be successful in international business, managers should
strive for cross-cultural proficiency.

18
Copyright © 2019 Pearson Education, Inc.