BACC 121

Course Learning Outcomes:

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At the end of the course, the Business
Administration Louisians are expected to:

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To define and demonstrate the effect of
culture’s 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.
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 To suggest ways in which business act as
change agents in the diverse cultural
environments in which they operate.
INTERNATIONAL  To evaluate the ways in which training
programs assist international managers to
BUSINESS develop the international business skills of
their employees.
AND TRADE
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 Analyze the strategies corporation can take

work with cultural differences in order to
BACC 121 expand their business internationally.

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 For the only way in which a durable peace
can be created is by world-wide restoration
of economic activity and international trade.
James Forrestal

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MODULE FIVE: The Cultural Environment
The Culture Environment
OVERVIEW:

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As firms expand their operations across borders, they acquire new customers and new partners in
new environments. Two distinct tasks become necessary: first, to understand cultural differences
and the ways they manifest themselves and, second, to determine similarities across cultures and
exploit them in strategy formulation. Success in new markets is very much a function of cultural
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adaptability: patience, flexibility, and appreciation of others’ beliefs.

LEARNING OBJECTIVES:
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 To define culture and identify the four characteristics of culture that companies doing
business abroad need to recognize.
 Name several elements of culture.
 Name and distinguish among the cultural dimensions proposed by Hofstede and
Trompenaars.
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 Identify the primary and secondary sources that can be used to learn about foreign
countries’ cultures.
 Describe the cultural aspects of doing business in various countries, including East Asian
countries, Arab countries, and Latin America.
 Explain why culture is important in global management and marketing

MODULE OUTLINE:

I. What is Culture?

Culture gives an individual an anchoring point, an identity, as well as codes of conduct.

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 culture is defined as an integrated system of learned behavior patterns that are
characteristic of the members of any given society. It includes everything that a group
thinks, says, does, and makes—its customs, language, material artifacts, and shared systems
of attitudes and feelings.
 Acculturation the process of adjusting and adapting to a specific culture other than
one’s own
 High-context cultures in which behavioral and environmental nuances are an
important means of conveying information.
 Low-context cultures in which most information is conveyed explicitly rather than

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through behavioral and environmental nuances
Characteristics:
 It includes the behavior pattern and norms of that group—the rules, the assumptions, the

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perceptions, and the logic and reasoning that are specific to a group.
we expect people to behave as we do and for the same reasons.
A global firm must ascertain the level of importance of various aspects of culture in the
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foreign markets it serves and recognize these aspects when doing business overseas.
Companies’ operations need to recognize and adjust to the cultural environment in the
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countries the global company serves.

Value is defined as something that we prefer over something else—whether it’s a behavior or a
tangible item. Values are usually acquired early in life and are often nonrational—although we
may believe that ours are actually quite rational. Our values are the key building blocks of our
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cultural orientation.

Elements of Culture

 Verbal Communication - Language has been described as the mirror of culture, It is

multidimensional by nature.
Roles in International Business

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 1. Language aids in information gathering and evaluation. Rather than rely completely
on the opinions of others, the manager is able to see and hear personally what is
going on.
2. Language provides access to local society
3. Language capability is increasingly important in company communications, whether
within the corporate family or with channel members.
4. Language provides more than the ability to communicate.
Non-Verbal Communication - Managers also must analyze and become familiar with the
hidden language of foreign cultures. Five key topics—time, space, material possessions,

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friendship patterns, and business agreements—offer a starting point from which managers
can begin to acquire the understanding necessary to do business in foreign countries.
 Religion defines the ideals for life, which in turn are reflected in the values and
attitudes of societies and individuals.
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– Christianity the largest organized world religion with over 2 billion
followers; Protestantism encourages work and accumulation of
wealth.
– Islam a religion that has over 1 billion followers from the west coast
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of Africa to the Philippines, as well as in the rest of the world and is
supportive of entrepreneurism but not of exploitation.
– Hinduism with 860 million followers, a way of life rather than a
religion, with economic and other attainment dictated by the castes
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into which its followers are born.

– Buddhism a religion emphasizing spiritual attainment rather than
worldly goods that extends through Asia from Sri Lanka to Japan and
has 360 million followers.
– Confucianism a code of conduct, stressing loyalty and relationships
with 150 million followers throughout Asia
Values and Attitudes

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 Values are shared beliefs or group norms that have been internalized by individuals.
Attitudes are evaluations of alternatives based on these values. Differences in cultural
values affect the way planning is executed, decisions are made, strategy is implemented,
and personnel are evaluated.
Example: Dealing in China and with the Chinese, the international manager will have
to realize that making deals has more to do with cooperation than competition. The
Chinese believe that one should build the relationship first and, if successful,
transactions will follow. The relationship, or guanxi, is a set of favor exchanges to
establish trust.

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Manners and Customs
Understanding manners and customs is especially important in negotiations, because
interpretations cased on one’s own frame of reference may lead to a totally incorrect conclusion.

Material Culture
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Example: for giving gifts in China modest gifts to give such as coffee, table books, pens.
Taboo gifts anything from Taiwan. In India you can give gifts such as sweets, nuts, and fruit
taboo gifts are leather objects and snake images.

Material culture refers to the results of technology an is directly related to how a society organizes
its economic activity. It is manifested n the availability and adequacy of the basic economic, social,
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financial and marketing infrastructure for the international business in a market. The level of
material culture can aid segmentation efforts if the degree of industrialization of the market is used
as a basis.
 Economic infrastructure these are the transportation, energy, and
communication systems in a country
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 Social infrastructure these are housing, health, educational, and other social
systems in a country.
 Financial infrastructure facilitating financial agencies in a country; example
banks
 Marketing infrastructure facilitates the marketing agencies in a country;
example market research firms, channel members.
AESTHETICS
Culture expressed in the arts and in the particular symbolism of colors, form, and music. What is
and what is not acceptable may vary dramatically even in otherwise highly similar markets. Color is
often used as a mechanism for brand identification, feature reinforcement, and differentiation.
Black, for instance, is considered the color of mourning in the U.S. and Europe, whereas white has

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 the same symbolic meaning in Japan and most of the Far East. International firms have to take into
consideration local tastes and concerns in designing their outlets. They may have general policy of
uniformity in building or office space design, but local tastes often warrant modifications.
Respecting local cultural traditions may also generate goodwill toward the international marketer.
Education
Education, either formal or informal, plays a major role in the passing on and sharing of culture.
Educational level of a culture can be assessed using literacy rates, enrollment in secondary
education, or enrollment in higher education available from secondary data sources. International
firms also need to know about the qualitative level of education, namely, varying emphases on
particular skills and the overall level of the education provided.

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Social Institutions
The family unit, which in western industrialized countries consists of the parents and children, in a
number of cultures is extended to include grandparents and other relatives. This affects
consumption pattern and must be taken into account. Family relations and a strong obligation to

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family are important factors to consider in human resource management in those regions.
Understanding tribal politics in countries such as Nigeria may help the manager avoid unnecessary
complications in executing business transactions.

 Social Stratification the division of a particular population into classes.

Reference groups, groups such as the family, co-workers, and professional and trade
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association that provide the values and attitudes that influence and shape behavior,
including consumer behavior.
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CROSS-CULTURAL ANALYSIS
The differences in cultural lifestyle can be clustered into countries and regions using dimensions of
culture. Knowledge of similarities along these dimensions allows the marketer to establish regional
and national marketing programs. Understanding the implications of the dimensions helps
businesspeople prepare for international business encounters. For example, in negotiation in
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Germany, one can expect a counterpart who is thorough, systematic, very well prepared, but also
rater dogmatic and less flexible and willing to compromise.
Geert Hofstede
Father of modern cross-cultural science and thinking, is a social psychologist who focused on a
comparison of nations using statistical analysis of two unique databases.

 Individualism refers to people’s tendency to take care of themselves and their

immediate circle of family and friends, perhaps at the expense of the overall society.
 Collectivism group goals take precedence over individuals’ goals. Basically, individual
members render loyalty to the group, and the group takes care of its individual
members.

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  Power distance refers to how openly a society or culture accepts or does not accept
differences between people, as in hierarchies in the workplace , in politics and so on.
Example, in Japan, Mexico and Philippines, high power distance cultures openly
accept that a boss I “higher” and as such deserves a more formal respect and
authority.
 Masculinity refers to how a culture ranks on traditionally perceived “masculine”
values: assertiveness, materialism, and less concern for the others. Men tend to be
more focused on performance, ambition and material success.
 Feminine Cultures emphasize “feminine values”: concern for all, an emphasis on the
quality of life, and an emphasis on relationships.
 Uncertainty avoidance refers to how much uncertainty a society or culture is willing
to accept. It can also be considered an indication of the risk propensity of people

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from a specific culture. People who have high uncertainty avoidance generally prefer
to steer clear of conflict and competition. They tend to appreciate very clear
instructions. At the office, sharply defined rules and rituals are used to get tasks
completed. Stability and what is known are preferred to instability and the

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unknown. Company cultures in these countries may show a preference for low-risk
decisions, and employees in these companies are less willing to exhibit
aggressiveness. Japan and France are often considered clear examples of such
societies.
Time orientation refers to whether a culture has a long-term or short-term
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orientation. It resulted in the effort to understand the difference in thinking
between the East and the West. Long-term orientation values persistence,
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perseverance, thriftiness, and having a sense of shame. Short-term orientation
values tradition only to the extent of fulfilling social obligations or providing gifts or
favors. These cultures are more likely to be focused on the immediate or short-term
impact of an issue.
Fons Trompenaars
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 Universalism cultures, people, place, importance on laws, rules, values, and

obligations. To treat people fairly, one follows the accepted rules. Universalist
cultures include the U.S. Canada, the United Kingdom, the Netherlands, Germany,
Scandinavia New Zealand, Australia, and Switzerland.
 Particularism people follow the dictates of each circumstance and relationship.
Countries include Russia, countries in Latin America and China.
 Neutral cultures people take great care to control their emotions. Reason is valued
over feeling. This include the United Kingdom, Sweden, The Netherlands, Finland
and Germany.
 Emotional cultures spontaneous emotional expressions are accepted and
welcomed. This include Poland, Italy, France, Spain, and countries in Latin America.

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  Specific culture people keep their personal lives separate from their work live.
Additionally, there is the belief that relationship at work don’t have a major impact
on the work and that people can work together without having a good relationship
with each other. Include the U.S., The United Kingdom, Switzerland, Germany,
Scandinavia, and the Netherlands.
 Diffuse culture people see work and personal lives overlapping. Business people
socialize with colleagues and clients. This include Argentina, Spain, Russia, India,
China and Philippines.
 Achievement-oriented cultures people believe you are what you do. An individual is
judged accordingly. Performance is valued over identity. Countries include U.S.
Canada, Australia and Scandinavia.
 Ascription-oriented culture title, position and power influence how others view you.

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Your value is determined by who you are. Includes France, Italy, Japan, and Saudi
Arabia.
Examples Cultural Dimensions of doing business in Japan

• Business card etiquette is important.

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Upon meeting a Japanese executive, a slight bow and handshake are
appropriate.

– Information should be in English on one side of the card.

– The other side should have the same information in Japanese.
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• It is not appropriate to look directly into the eyes of your Japanese hosts.

• It is important for your Japanese hosts to know your title and rank.

• Japanese business has a group orientation, rather than an individualistic one.

• Japanese executives expect foreign business representatives to arrive prepared

and to have decision-making authority.
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• New potential business partners must have been referred to Japanese business
representatives through a third party.
Cultural Dimensions of doing business in Korea

• Elders are respected for their knowledge and wisdom.

• “Yangban” refers to the noble class’s culture of honor, reputation, and dignity
(similar to the concept of gravitas in Western cultures).

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 • “Inwa” involves harmony among unequals: loyalty is owed to parents and
authority figures, yet superiors are responsible for the well-being of their
subordinates.

• A personal relationship needs to occur before business matters can be discussed

with foreigners.
Cultural Dimensions of doing business in China

• Guanxi

– A philosophy denoting friendship among unequal (as between

subordinates and superiors) and the unlimited exchanges of favors; it is
utilitarian and not based on sentiment, emotions, or a group orientation

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– Exchanges are often uneven, an advantage for weaker member in the
guanxi relationship.

– Persons of low rank may be powerful and influential due to guanxi

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– Foreigners who want to conduct business in China may need to seek out
lower-level persons and obtain their favor in order to gain access to more
powerful superiors who are decision makers
Cultural Dimensions of doing business in Arab Countries

• Avoid sitting so that the sole of one’s shoe is shown.

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• The left hand is viewed as “unclean.”

• Good posture is imperative.

• Foreign business representatives should not inquire about the wives of Arab
business representatives.
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• Do not overly praise the possessions of Arab hosts, as this could create a
perception that you expect your hosts to give them to you.

• Arab business representatives will probably be reluctant to do business with

women.

• If a woman is accepted, modest dress is appropriate.

• Arab business representatives may frequently divert from the topic initially
discussed, then return to it.
Cultural Dimensions of doing business in Latin America

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 • Potential customers will want to develop a personal relationship before doing
business with foreign executives.

• Latin Americans are more flexible about time than are North Americans.

• Latin Americans are not as immersed in their work as the business people in the
United States.

Jargon is defined as language that is not well understood outside of a specified group. Therefore,
useful language for one group could be total jargon to another group.
Example:

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1. “Flying by the seat of my pants” = Going along with things; making decisions as you go.
Sentence: When people fly by the seat of their pants, they do not plan ahead. They
think about what they are going to do and make decisions as each choice comes up.

3. “Shotgun approach”
4. “Run it up the flag pole.”
5. “100 k.”
6. “Belly up.”
7. “Overview.”
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8. “If it ain’t broke, don’t fix it.”
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2. “On the same wave length.” =people having the same ideas and opinions as you do
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9. “Let’s throw it on the wall and see if it sticks.”
10. “Let’s see how it plays out.”
11. “It ain’t over until the fat lady sings.”
12. “Reinvent the wheel.”
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Building International Business and Trade Skills

Engage, Explore and Explain Activity

Reflection Paper
Comment on the assumption, ‘‘If people are serious about doing business with you, they
will speak English.’’
Elaborate and Evaluation Activity
Research Paper Word Format maximum of 5 pages.

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 If you are working for a small or entrepreneurial company, what are some of the challenges you may
face when trying to do business in a new country? What are some advantages?

V. References

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