Chapter 1 Culture Management

Chapter One
Culture &
Cross Cultural Management
Learning Outcomes
1. DEFINE the term “culture”

2. DISCUSS about determinants of culture.
3. DEFINE how culture could affect international
management.
4. DEFINE changes in culture in working settings and
management.
5. DEFINE the purpose, challenges and reactions to
cross cultural management.
6. DISCUSS about some advices for managers in cross

cultural management
4-2
1. What is culture?
v Language, food, building, statue, fashion,

music & art, religion, cuisine, social habits.
v Patterns of behaviors and interactions:
shaking hands, nodding head.
v Alcohol prohibiting or not?
4-3
A model of culture: concentric
circles
Explicit artifacts and
products of the society Outer layer:
observable, e.g.
Norms and values language, food,
that guide the society
buildings, art.
Middle layer: helps
Implicit, basic people understand
assumptions that guide how they should
people’s behavior
behave.
Inner layer:
intangible, helpful for
problem-solving and
well interactions with
4
other people.
4-4
Culture is …
uction to Part One
Figure I.1 Navigating the seas of international business

Source: Adapted from Schneider and Barsoux (2003): 21.
Culture operates on three levels

Culture operates on three levels, the first being on a level where it is observable and tangible.
Here, artefacts and attitudes can be observed in terms of architecture, rituals, dress codes,
making contact, contracts, language, eating and so on. Operating at a second level, culture
is to do with norms and values. Beliefs – or norms – are statements of fact about the way things 4-5
are. These are the cultural rules, as it were, which explain what is happening at level one
and determine what is right or wrong. Values are to do with general preferences as to what
a way of thinking that is learnt within a social environment. Family, the social environ-
ment, school, friends, work – all these help to form this code and determine how people see
themselves and the world. The national culture and the particular region which people live
Diverse definitions of culture
in also help to shape a person’s cultural profile.
Although culture is reflected in individual behaviour, it is a way of thinking shared by
individuals in a particular society that makes culture what it is.
Table I.1 Diverse definitions of culture
Topical Culture consists of everything on a list of topics, or categories, such as social

organization, religion and economy
Historical Culture is social heritage, or tradition, that is passed on to future generations
Behavioural Culture is shared, learned human behaviour; a way of life
Normative Culture is ideals, values, or rules for living
Functional Culture is the way humans solve problems of adapting to the environment or
living together
Mental Culture is a complex of ideas, or learned habits, that inhibit impulses and
distinguish people from animals
Structural Culture consists of patterned and interrelated ideas, symbols, or behaviours
Symbolic Culture is based on arbitrarily assigned meanings that are shared by a society
Source: Bodley (1994): 9.

4-6
3
The Nature of Culture
v Culture is acquired knowledge that people use to

interpret experience and generate social behavior. This
knowledge forms values, creates attitudes, and
influences behavior.
Or:
v Culture is a system of values and norms that are
shared among a group of people and that when taken
together constitute a design for living.
v Society is a group of people who share a common set
of values and norms 4-7
What Are Values And Norms?
v Values are abstract ideas about what a group believes to
be good, right, and desirable
v Norms are the social rules and guidelines that prescribe
appropriate behavior in particular situations
v Values provide the context within which a society ’s
norms are established and justified and form the bedrock
of a culture
v Norms include
Ø folkways - the routine conventions of everyday life
Ø mores - norms that are seen as central to the functioning
of a society and to its social life 4-8
4-9
How Are Culture, Society,
And The Nation-State Related?
v The relationship between a society and a nation state
is not strictly one-to-one
v Nation-states are political creations
Ø can contain one or more cultures
v A culture can embrace several nations
4-10
The characteristics of Culture
Learned
Adaptive Shared
Culture
Patterned Trans-generational
Symbolic
4-11
4-12
2. Determinants of culture
4-13
What Is A Social Structure?
v Social structure - a society’s basic social organization

v Consider
Ø the degree to which the basic unit of social
organization is the individual, as opposed to the
group
Ø the degree to which a society is stratified into
classes or castes
4-14
How Are Individuals
And Groups Different?
v A group is an association of two or more people who
have a shared sense of identity and who interact with
each other in structured ways on the basis of a
common set of expectations about each other’s
behavior
Ø individuals are involved in families, work groups,
social groups, recreational groups, etc.
v Societies place different values on groups
4-15
How Are Individuals
v In Western societies, there is a focus on the individual
Ø individual achievement is common
Ø dynamism of the U.S. economy
Ø high level of entrepreneurship
v But, creates a lack of company loyalty and failure to
gain company specific knowledge
Ø competition between individuals in a company instead of
than team building
Ø less ability to develop a strong network of contacts
within a firm
4-16
How Are Individuals
v In many Asian societies, the group is the primary unit
of social organization
Ø discourages job switching between firms
Ø encourages lifetime employment systems
Ø leads to cooperation in solving business problems
v But, might also suppress individual creativity and
initiative
4-17
What Is Social Stratification?
v All societies are stratified on a hierarchical basis into

social categories, or social strata
Ø individuals are born into a particular stratum
v Must consider
1. mobility between strata
2. the significance placed on social strata in
business contexts
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1. Social mobility - the extent to which individuals can

move out of the strata into which they are born
v caste system - closed system of stratification in
which social position is determined by the
family into which a person is born
Ø change is usually not possible during an
individual's lifetime
v class system - form of open social stratification
Ø position a person has by birth can be
changed through achievement or luck
4-19
2. The significance attached to social strata in business

contacts
v class consciousness - a condition where
people tend to perceive themselves in terms of
their class background, and this shapes their
relationships with others
v an antagonistic relationship between
management and labor raises the cost of
production in countries with significant class
differences
4-20
How Do Religious And
Ethical Systems Differ?
v Religion - a system of shared beliefs and rituals that
are concerned with the realm of the sacred
v Ethical systems - a set of moral principles, or values,
that are used to guide and shape behavior
v Four religions dominate society
1. Christianity
2. Islam
3. Hinduism
4. Buddhism
5. Confucianism is also important in influencing
behavior and culture in many parts of Asia
4-21
How Do Religious And
Ethical Systems Differ?
4-22
World religion map
4-23
What Is Christianity?
v Christianity
Ø the world’s largest religion
Ø found throughout Europe, the Americas, and other
countries settled by Europeans
Ø the Protestant work ethic (Max Weber, 1804)
vhard work, wealth creation, and frugality is the
driving force of capitalism
4-24
What Is Islam?
v Islam
Ø the world’s second largest religion dating to AD
610
Ø there is only one true omnipotent God
Ø an all-embracing way of life that governs one's
being
Ø associated in the Western media with militants,
terrorists, and violent upheavals
vbut, in fact teaches peace, justice, and tolerance
Ø fundamentalists have gained political power and
blame the West for many social problems
Ø people do not own property, but only act as
stewards for God
Ø supportive of business, but the way business is
practiced is prescribed 4-25
What Is Hinduism?
v Hinduism
Ø practiced primarily on the Indian sub-continent
Ø focuses on the importance of achieving spiritual
growth and development, which may require
material and physical self-denial
Ø Hindus are valued by their spiritual rather than
material achievements
Ø promotion and adding new responsibilities may not
be important, or may be infeasible due to the
employee's caste
4-26
What Is Buddhism?
v Buddhism
Ø has about 350 millions followers
Ø stresses spiritual growth and the afterlife, rather
than achievement while in this world
Ø does not emphasize wealth creation
Ø entrepreneurial behavior is not stressed
Ø does not support the caste system, individuals do
have some mobility and can work with individuals
from different classes
4-27
What Is Confucianism?
v Confucianism
Ø ideology practiced mainly in China
Ø teaches the importance of attaining personal
salvation through right action
Ø high morals, ethical conduct, and loyalty to others
are stressed
Ø three key teachings of Confucianism - loyalty,
reciprocal obligations, and honesty - may all lead to
a lowering of the cost of doing business in
Confucian societies
4-28
Political Philosophy
v Political system is a system of government in a nation.

v Political system can be assessed in two dimensions:
Ø The degree to which they emphasized collectiveism
(Plato, Marx) as opposed to individualism (Aristole).
Ø The degree to which they are democratic or
totalitarian.
4-29
v The degree to which they emphasized collectiveism
(Plato, Marx) as opposed to individualism (Aristole).
vCollectiveism refers to a political system that stresses
the primacy of collective goals over individual goals. An
individual’s right to do something may be restricted on the
grounds that it runs counter to “the good of society” or to
“the common good.”.
vindividualism refers to the philosophy that an individual
should have freedom in his or her economic and political
pursuits. The interests of the individual should take
precedence over the interests of the state
4-30
v The degree to which they are democratic or totalitarian.
vDemocracy refers to a political system in which
government is by the people, exercised either directly or
through elected representatives.
vTotalitarianism is a form of government in which one
person or political party exercises absolute control over
all spheres of human life and prohibits opposing political
parties.
ØFour major forms of totalitarianism exist in the world:
communist, theocratic, tribal & right-wing totalitarianism.
Until recently, the most widespread was communist
totalitarianism. 4-31
Economic Philosophy
v We can identify three broad types of economic systems—a market
economy, a command economy, and a mixed economy:
Ø In a pure market economy, all productive activities are privately
owned, as opposed to being owned by the state.
Ø In a pure command economy, the government plans the goods
and services that a country produces, the quantity in which they
are produced, and the prices at which they are sold
Ø In a mixed economy, certain sectors of the economy are left to
private ownership and free market mechanisms while other
sectors have significant state ownership and government
planning.
Ø In countries where individual goals are given primacy over
collective goals, we are more likely to find free market economic
systems
4-32
What Is The Role
Of Education In Culture?
v Formal education is the medium through which
individuals learn many of the language, conceptual,
and mathematical skills that are indispensable in a
modern society
Ø important in determining a nation ’ s competitive
advantage
vJapan’s postwar success can be linked to its
excellent education system
Ø general education levels can be a good index for
the kinds of products that might sell in a country
vex. impact of literacy rates
4-33
What Is The Role
Of Language In Culture?
v Language - the spoken and unspoken (nonverbal
communication such as facial expressions, personal
space, and hand gestures) means of communication
Ø countries with more than one language often have
more than one culture
vCanada, Belgium, Spain
4-34
What Is The Role
Of Language In Culture?
v Language is one of the defining characteristics of
culture
Ø Chinese is the mother tongue of the largest number
of people
Ø English is the most widely spoken language in the
world
Ø English is also becoming the language of
international business
Ø but, knowledge of the local language is still
beneficial, and in some cases, critical for business
success
Ø failing to understand the nonverbal cues of another
culture can lead to communication failure
4-35
Hand gestures
4-36
Hand gestures
4-37
Personal space
4-38
3. How Do Cultural Differences
Affect International Business?
v Understanding and adapting to the local cultural is
important international companies
Ø cross-cultural literacy - an understanding of how
cultural differences across and within nations can
affect the way in which business is practiced
vcross-cultural literacy is important for business
success
v A relationship may exist between culture and the costs
of doing business in a country or region
v MNEs can be agents of cultural change
Ø McDonald’s
4-39
Values in Culture
v Values
Ø Basic convictions that people have about
vRight and wrong
vGood and bad
vImportant and unimportant
Ø Learned from culture in which the individual is
reared
Ø Differences in cultural values may result in varying
management practices
4-40
3. How Do Cultural Differences Affect
International Business?
q Culture can affect technology transfer, managerial
attitudes, managerial ideology, and even business-
government relations and most importantly how people
think and behave. Next slide compares the most
important cultural values of the United States, Japan,
and Arab countries.
v Culture affects a host of business-related activities, even
including the common handshake: United States (Firm);;
Asian (Gentle;; shaking hands is unfamiliar and
uncomfortable for some;; the exception is the Korean,
who usually has a firm handshake);; British (Soft);; French
(light and quick) 41 4-41
Priorities of Cultural Values
Table 4-1
Priorities of Cultural Values: United States,
Japan, and Arab Countries
United States Japan Arab Countries
1. Freedom 1. Belonging 1. Family security
2. Independence 2. Group harmony 2. Family harmony
3. Self-reliance 3. Collectiveness 3. Parental guidance
4. Equality 4. Age/seniority 4. Age
5. Individualism 5. Group consensus 5. Authority
6. Competition 6. Cooperation 6. Compromise
7. Efficiency 7. Quality 7. Devotion
8. Time 8. Patience 8. Patience
9. Directness 9. Indirectness 9. Indirectness
10.Openness 10.Go-between 10.Hospitality
Note: “1” represents the most important cultural value, “10” the least.
4-42
Adapted from Table 4-1: Priorities of Cultural Values: United States, Japan, and Arab Countries
Cultural Diversity
How Culture Affects Managerial Approaches
v Centralized vs. Decentralized Decision Making

v Safety vs. Risk
v Individual vs. Group Rewards
v Informal Procedures vs. Formal Procedures
v High Organizational Loyalty vs. Low Organizational
Loyalty
v Cooperation vs. Competition
v Short-term vs. Long-term Horizons
v Stability vs. Innovation
4-43
Cultural Diversity
Centralized Decentralized
Decision Making vs. Decision Making
Ø In some societies, top managers make all important

organizational decisions
Ø In others, these decisions are diffused throughout the
enterprise, and middle- and lower-level managers
actively participate in, and make, key decisions
4-44
Cultural Diversity
Safety vs. Risk
Ø In some societies, organizational decision makers

are risk averse and have great difficulty with
conditions of uncertainty
Ø In others, risk taking is encouraged, and decision
making under uncertainty is common
4-45
Cultural Diversity
Individual Group
Rewards vs. Rewards
Ø In some countries, personnel who do outstanding

work are given individual rewards in the form of
bonuses and commissions
Ø In others, cultural norms require group rewards, and
individual rewards are frowned upon
4-46
Cultural Diversity
Informal Formal
vs.
Procedures Procedures
Ø In some societies, much is accomplished through
informal means
Ø In others, formal procedures are set forth and
followed rigidly
4-47
Cultural Diversity
High Organizational Low Organizational

vs.
Loyalty Loyalty
Ø In some societies, people identify very strongly with
their organization or employer
Ø In others, people identify with their occupational
group, such as engineer or mechanic
4-48
Cultural Diversity
Cooperation vs. Competition
Ø Some societies encourage cooperation between their

people
Ø Others encourage competition between their people
4-49
Cultural Diversity
Short-term Horizons vs. Long-term Horizons
Ø Some culture focus most heavily on short-term

horizons, such as short-range goals of profit and
efficiency
Ø Others are more interested in long-range goals, such
as market share and technological developments
4-50
Cultural Diversity
Stability vs. Innovation
Ø The culture of some countries encourages stability

and resistance to change
Ø The culture of others puts high value on innovation
and change
4-51
4. Cultural changes
q Is culture static or

dynamic?
q Do values change
over time?
q George England
found that personal
value systems are
relatively stable and
do not change
rapidly.
52 4-52
Cultural changes in management
q Changes are taking place in managerial values as a result of
both culture and technology. Eg. Japanese managers work
for Japanese firms in the United States
Ø Cultural values of Japanese managers working for Japanese
firms in the US:
• Lifetime employment à job security.
• Formal authority, obedience, and conformance to
hierarchic position à formal authority.
• Group orientation, cooperation, conformity, and
compromiseà maintaining a balance between a group and
a personal orientation.
• Reward based on seniority à less support.
• Paternalism à disagreed 4-53
5. Cross cultural management
v Cross-cultural management issues arise in a number of

situations, including:
Ø Within a firm: Work attitudes, achievement
motivation, time and future and ethics, etc.
Ø Between firms: M&As, joint ventures, alliances and
buyer-supplier relationships.
Ø Between a firm and customers: Dealing with
customers.
4-54
Cross-cultural business contexts
4-55
Image of Shwedagon Pagoda printed on
the Vietnamese traditional dress
http://vietnamnet.vn/vn/doi-
song/274317/in-hinh-chua-vang-len-ao-
dai-tap-chi-vietnam-airlines-bi-chi-
trich.html
http://tuoitrenews.vn/lifestyle/31751/vietn
am-airlines-recalls-inflight-magazine-
over-shwedagon-pagodarelated-cover-
controversy
Walmart in Japan
http://www.doanhnhansaigon.vn/kinh-te-quoc-te/wal-mart-be-tac-tai-nhat-
ban/1084765/
http://www.businessinsider.com/r-wal-mart-to-close-30-underperforming-stores-in-
japan-take-charge-2014-10
Home Depot & IKEA in China
http://www.ecoblader.com/2015/12/tham-hoa-marketing-cu-nga-sap-mat-cua-
home-depot-phan-1/
http://3d8.40d.myftpupload.com/2015/12/tham-hoa-marketing-cu-nga-sap-mat-
cua-home-depot-phan-2/
http://www.businesstoday.in/magazine/lbs-case-study/how-ikea-adapted-its-
strategies-to-expand-in-china/story/196322.html
http://www.businessinsider.com/ikea-home-depot-china-failed-2012-9
http://www.huffingtonpost.com/2012/09/13/home-depots-china_n_1882779.html
Starbucks in China
http://kinhdoanhnhahang.vn/tai-sao-starbucks-thanh-cong-o-thi-truong-trung-
quoc-con-nhung-hang-ca-phe-khac-thi-khong/
http://www.businessinsider.com/how-starbucks-is-different-in-china-2014-8
Cross-cultural management is the operational implementation of a
Objectives of cross culture
corporation’s international business strategy in culturally diverse markets.
management
The objectives of cross-cultural management are:
• Increase the company’s success in foreign markets by operating

in the most efficient way.
• Adapt corporate management processes to cultural differences
in international markets.
• Prevent errors and conflicts in international cooperation.
Increasing Success in Foreign Markets
The main aim of successful cross-cultural management activities is to

4-60
support the corporation in achieving its goals in an array of different
operational issues in international management. Cross-cultural experi-
ences or encounters are very situational and always unique, which makes
Challenges of cultural
it very difficult to develop valid recommendations on how to handle
management
them. The following aspects make cross-cultural management difficult.
Challenge 1: The more markets, the more complexity.

Challenge 2: Language plays a much more important role than
expected.
Challenge 3: Each situation is unique in cross-cultural
management.
Challenge 4: Ethnocentric view of managers leads to inability to
change.
Challenge 5: Gaining cross-cultural competence requires time,
experience, and a lot of energy.
Challenge 1: The More Markets, the More Complexity

4-61
Reactions to Cross-Cultural Challenges:
When in Rome, Shall I Do as the Romans Do?
https://www.youtube.com/watch?v=fIbOMDALCuk
It’s
disgusting! Judging your
It’s wrong! I friend’s culture from
Ethnocentrism
don’t want the position of your
anything to own culture
do with this.
Yeah, you Assessing & judging your

know what. I friend’s culture from a
different viewpoint = Cultural
can see why Judging & understanding relativism
she likes this their culture from within
dish their culture
WHEN IN ROME, SHALL I DO AS THE ROMANS DO? 31
Table 3.1. Reactions to Cross-Cultural Challenges*

Reaction to cross- Explanation Reasons
cultural challenges
Resistance Rejection to change one’s • Ethnocentrism
or corporate behavior to • Fear of change
accommodate to local stan- • Stereotypes
Ethnocentrism
dards or expectations • Requirements (company
(often accompanied by a rules, quality standards,
negative attitude toward etc.)
the host country)
Acceptance Acceptance of a certain Local way is better, easier,
aspect, procedure, observa- and more goal-oriented
tions as a given of the local
Cultural culture and local people,
but not to change one’s
relativism
own behavior
Adaptation Change of one’s own or • No other choice
corporate behavior to local • Local way is perceived
standards and expectations as more successful or
advanced
Source: Based from Shaules (2010).

*
Relax!!!
Ethnocentrism Video
https://www.youtube.com/watch?v=zSJFBeVFtak
4-66
6. The Strategy for Managing
Across Cultures
v There are four distinct strategic predispositions
toward doing things in a particular way
1. Ethnocentric
2. Polycentric
3. Regiocentric
4. Geocentric
4-67
Strategic Predispositions
v Ethnocentric predisposition
Ø A nationalistic philosophy of management whereby
the values and interests of the parent company
guide strategic decisions.
4-68
v Polycentric predisposition
Ø A philosophy of management whereby strategic
decisions are tailored to suit the cultures of the
countries where the MNC operates.
4-69
v Regiocentric predisposition
Ø A philosophy of management whereby the firm tries
to blend its own interests with those of its
subsidiaries on a regional basis.
4-70
v Geocentric predisposition
Ø A philosophy of management whereby the company
tries to integrate a global systems approach to
decision making.
4-71
Orientation of an MNC
Under Different Profiles
EPG model in International Human
Resource Management (IHRM)
v Ethnocentric orientation (E).
v Polycentric orientation (P).
v Regiocentric orientation (R).
v Geocentric orientation (G).

Ethnocentric orientation
v Choose only from the citizens of the parent country to

work in host nations. Normally, higher-level foreign
positions are filled with expatriate employees from the
parent country.
v Why? The staff from the parent country would represent
the interests of the headquarters effectively and link well
with the parent country.
Polycentric orientation
v Limit recruitment to the nationals of the host country

(local people).
v Why?
Ø Reduce the cost of foreign operations gradually.
Ø Ensure that the company understands the local market
conditions, political scenario, cultural and legal requirements
better.
Geocentric orientation
v Recruit the most suitable persons for the positions

available, irrespective of their nationalities.
v Why?
Ø Utilize a globally integrated business strategy.
Regiocentric orientation
v Use managers from various countries within the

geographic regions of business. Although the managers
operate relatively independently in the region, they are
not normally moved to the company headquarters.
EPRG model in
International Marketing
EPRG model in
Domestic Export Marketing Multinational Global
Marketing Marketing Marketing
Low or no Limited Substantial Extensive
international international international international
commitment commitment commitment commitment
Focus on domestic Involves direct or Focus on different Focus on

consumers and indirect export international regions
home country countries market
environment segments/global
market
rather than
countries
Domestic focus Ethnocentric Polycentric
Regiocentric
Geocentric
Raising commitment/ involvement to international markets
The EPRG framework
v Ethnocentrism
Ø Associated with national arrogance & home country
superiority
Ø Assumes what succeeds in the home country will
also succeed in other countries
Ø Domestic and international companies
Ø Standardized approach to marketing
Ø Foreign markets are secondary to the domestic
market
Ø E.g. Nissan in 60s, Coke in the late 80s/early 90s
1-80 4-80
Ethnocentric Orientation
in International marketing
Marketing
programs were
developed at
headquarters.
Operations of
foreign Overseas
subsidiaries are operations
Domestic to support local are
strategies sales considered
are superior secondary to
& are domestic
applied in
overseas Home operations
market
Establish
offices in
key
Hire local markets
nationals &
maintained t ight
control by
measuring each
country on
bottom-line
profitability 4-81
The EPRG framework
v Polycentrism
Ø Opposite of ethnocentrism – each country market is
unique
Ø Highly localized / adapted approach to marketing
Ø Multinational companies – Local “kingdoms”
Ø E.g. Citicorp in the 90s;; IBM before 1972, Nestle
1-82 4-82
Polycentric Orientation in
Adapt Overseas
marketing markets
strategies to are
the specific screened
needs of individually
each
country
Host
country
Marketing
activities are
organized &
carried out
country by
country
4-83
Example
Ford Escort 1996 Ford Escort LX

EU 1996 US
4-84
The EPRG framework
v Regiocentrism
Ø Treat a world region as one homogeneous market
(e.g. NAFTA region;; the EU, etc.)
Ø Localization / adaptation for the region;;
ethnocentric or polycentric view of the rest of the
world
v Geocentrism
Ø World view – focused on standardizing programs
but will adapt if indicated by research
Ø Global / transnational company / a blurring of
national identity
Ø E.g. Toyota
© 2005 Prentice Hall

1-85 4-85
Regiocentric Orientation in
Coordinate
marketing in
Develop & the region
implement and
marketing standardize
strategy for A particular whenever
possible
all countries
in the region region
= A single
market
4-86
Example: Toyota
39% 45%
turnover turnover
from North from
American Japan
6% from other
regions.
4-87
Geocentric Orientation in
Maximize
network
corporation
à attain & Global
sustain
competitive products/brand
Implement advantage s à in large
global volumes à
marketing = scale
integrate The World economies
worldwide =
operations A standardized
A potential product, brand,
market image,
positioning,
advertising (if
Acquire & possible) with
share
knowledge minimal
among the adaptations in
global all markets
4-88
Example
Recent decade: only 1 system of global supply
chain, HR (regardless of national, religious ..),
marketing.
Semiconductor industry has R & D activities
and production primarily in the US, global
purchasing center in China, global logistics
services in India & website support services in
Ireland and Brazil.
Why?
- Globalization of the world economy
- Global customers
- The presence of competitors from India and
China
Culture in a flat world…
Ø Globalization & culture: Is the world really flat?
Ø What are the differences between eating a McDonald’s

hamburger in Vietnam and in US?
Ø http://www.seriouseats.com/2014/02/what-mcdonalds-in-ho-
chi-minh-means-for-future-of-vietnamese-food.html
4-90
Does geocentric strategy mean 4P’s

standardization or completely
standardized marketing mix?
• Globalization (Standardization):
– Developing standardized products marketed
worldwide with a standardized marketing mix
– Essence of mass marketing.
• Global localization (Adaptation):

– Mixing standardization and customization in a
way that minimizes costs while maximizing
satisfaction
– Think globally, act locally
4-92
STANDARDIZATION vs. ADAPTATION
The Faces of Coca-‐Cola

Around the World
Arabic
Read right to left
Chinese
“delicious/happiness”
Why Firms Modify Products
Firms modify products for the following reasons

?
• Legal Considerations
Ø Legal factors are usually related to safety or health
protection.
• Cultural Considerations
• Economic Considerations
Ø Personal incomes and infrastructures affect product
demand.
16-94
Copyright © 2011 Pearson Education
Does anyone want a world car?
“ We are the most international of the Japanese
companies. At the moment we are the most
diversified, and we will be more diversified in the
future. Still, I think it would be very hard to build a
one-type world car. In the end, I don’t think it
would be very efficient.”
Nobuhiko Kawamoto
President and CEO of Honda Motor Company from
1990-1998
4-95
Toyota’s viewpoint, Annual Report 1995
“As Toyota said in its 1995 annual report: “Our global

strategy used to center on “world cars,” which we
would modify slightly to accommodate demand in
different markets. Today our focus is shifting to models
that we develop and manufacture especially for
selected regional markets.”
Source: Yoram Wind, Jerry Yoram Win (1998). Driving Change: How
the Best Companies are Preparing for the 21st Century. p.236. The
Free Press
4-96
12
ANNUAL REPORT 2013
Toyota’s viewpoint, Annual Report 2013

Print Search Contents Page
Consolidated Performance Management and

Toyota Global Vision President’s Message Launching a New Structure Special Feature Review of Operations Financial Section Investor Information
Highlights Corporate Information
Prev Next
Making Ever-Better Cars [6 of 10] Enriching Lives of Communities Stable Base of Business
The definition of a better car varies depending on the location.

Etios Etios Valco Vios
India
• Steel plates protecting the underbody of the car from
Brazil
• Bioethanol-compatible flex fuel specifications
Indonesia Thailand
• A cut above the rest, with an elegant design that • Compact car developed from the ground up for emerg-
loose rocks on rough roads • Stability while driving on highways, and a comfortable evokes status ing markets
• Beverage holder capable of carrying seven one-liter ride on rough roads • One-touch power windows and other extras in high • Dynamic, elegant and clean exterior; pleasant interior
bottles • Dust proofing specifically for customers in Brazil, where demand locally offering value for money
• Air conditioner vents arranged side-by-side to circulate dust can be a problem • Extremely roomy interior and plenty of storage space • Optional package offering superior comfort in rear seats
cool air to the rear seats • Smooth ride and comfort on rough roads • Best-in-class fuel economy
• Best-in-class fuel economy with 17.6 kilometers per liter • Best-in-class fuel economy
of gasoline ((calculated accordingg to Indian standards)
• Optimizations factors
izationss based on 101 fa
facto
factors
to
ors specific to th
the
Indian marke
market
et
Accelerating the development of compact cars in for emerging markets, with the launch of the Innovative and the Middle East, and as of March 2012 a cumula- markets. The Vios is currently produced and sold in
emerging markets International Multipurpose Vehicle (IMV) series in 2004 tive total of 5 million IMVs have been sold worldwide. Thailand, Toyota’s largest production base in the ASEAN
Toyota has reorganized its automotive operations into heralding a particularly important turning point. The IMV The IMV series was developed as a globally inte- region, and there are plans to export it to more than 80
Source: http://www.toyota-global.com/investors/ir_library/annual/pdf/2013/ar13_e.pdf
four business units to propel the company toward series was developed for sale in more than 140 coun- grated model for all regions; however, starting in 2010 countries.
achieving the Toyota Global Vision. The Lexus brand is tries, and Toyota began manufacturing five base models with the launch of the Etios compact car, Toyota began 4-97
Toyota’s guiding philosophy since its foundation has
now independent, and Toyota brand operations are in five countries simultaneously. A local parts procure- to manufacture a range of cars that better reflect the been to contribute to communities the world over
divided into those in emerging markets and those in ment ratio of 100% was targeted, thereby keeping car needs of each region. With the launch of sedan and through localized operations. Our desire to exceed the
Meeting the Challenge
v The Globalization Imperative

Ø Belief that one worldwide approach to doing business
is key to efficiency and effectiveness.
Ø Many factors facilitate the need to develop unique
strategies for different cultures
vDiversity of worldwide industry standards
vContinual demand by local customers for
differentiated products
vImportance of being an insider as in case of
customers who prefer to “buy local”
vDifficulty of managing global organizations
vNeed to allow subsidiaries to use own abilities and
talents unconstrained by headquarters
4-98
Meeting the Challenge
Globalization vs.
National Responsiveness
v To adjust global strategies for local markets,

MNCs should
Ø Stay abreast of local market conditions;; don’t
assume all markets basically same
Ø Know the strengths and weaknesses of MNC
subsidiaries;; provide them assistance in addressing
local demands
Ø Give the subsidiary more autonomy;; let it respond
to changes in local demand
4-99
business goals successfully in very different environments. The mediation in
7. Advices for managers in cross
cross-cultural conflict is another main goal of managers with cross-cultural
cultural management
competence. The following aspects describe cross-cultural competence:
• Deep understanding of the differences between various cul-

tures; the economic, social, and religious backgrounds; and
differences with the home
• Recognition of one’s own ethnocentric perspective on manage-
ment processes
• Interest in the deepening of cross-cultural understanding
• Recognition of cultural shock (when abroad or in international
cooperation) and the ability of successful strategies to deal with this
• Early detection and prevention of cross-cultural conflict or
mediation in existing cross-cultural conflicts
• Openness to new ideas and innovative management processes
(product), (consumer) preferences, and values
4-100
Review and Discuss
1. What is meant by culture?

2. What is meant by value, norm?
3. Define the four basic predispositions MNCs have
toward their international operations.
4-101

Chapter 1 Culture Management

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Chapter 1 Culture Management

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Chapter One

1. DEFINE the term “culture”

6. DISCUSS about some advices for managers in cross

v Language, food, building, statue, fashion,

uction to Part One

Figure I.1 Navigating the seas of international business

Culture operates on three levels

Table I.1 Diverse definitions of culture

Topical Culture consists of everything on a list of topics, or categories, such as social

Historical Culture is social heritage, or tradition, that is passed on to future generations

Behavioural Culture is shared, learned human behaviour; a way of life

Normative Culture is ideals, values, or rules for living

Structural Culture consists of patterned and interrelated ideas, symbols, or behaviours

Source: Bodley (1994): 9.

v Culture is acquired knowledge that people use to

v Social structure -­ a society’s basic social organization

v All societies are stratified on a hierarchical basis into

1. Social mobility -­ the extent to which individuals can

2. The significance attached to social strata in business

v Political system is a system of government in a nation.

v Centralized vs. Decentralized Decision Making

Ø In some societies, top managers make all important

Safety vs. Risk

Ø In some societies, organizational decision makers

Ø In some countries, personnel who do outstanding

High Organizational Low Organizational

Cooperation vs. Competition

Ø Some societies encourage cooperation between their

Short-­term Horizons vs. Long-­term Horizons

Ø Some culture focus most heavily on short-­term

Stability vs. Innovation

Ø The culture of some countries encourages stability

q Is culture static or

v Cross-­cultural management issues arise in a number of

• Increase the company’s success in foreign markets by operating

Increasing Success in Foreign Markets

The main aim of successful cross-cultural management activities is to

Challenge 1: The more markets, the more complexity.

Challenge 1: The More Markets, the More Complexity

Yeah, you Assessing & judging your

Table 3.1. Reactions to Cross-Cultural Challenges*

Source: Based from Shaules (2010).

v Ethnocentric orientation (E).

v Polycentric orientation (P).

v Regiocentric orientation (R).

v Geocentric orientation (G).

v Choose only from the citizens of the parent country to

v Limit recruitment to the nationals of the host country

v Recruit the most suitable persons for the positions

v Use managers from various countries within the

Focus on domestic Involves direct or Focus on different Focus on

Ford Escort 1996 Ford Escort LX

© 2005 Prentice Hall

Ø Globalization & culture: Is the world really flat?

Ø What are the differences between eating a McDonald’s

Does geocentric strategy mean 4P’s

• Global localization (Adaptation):

The Faces of Coca-­‐Cola

Firms modify products for the following reasons

“As Toyota said in its 1995 annual report: “Our global

Toyota’s viewpoint, Annual Report 2013

Consolidated Performance Management and

The definition of a better car varies depending on the location.

v Social structure - a society’s basic social organization

1. Social mobility - the extent to which individuals can

Short-term Horizons vs. Long-term Horizons

Ø Some culture focus most heavily on short-term

v Cross-cultural management issues arise in a number of

The Faces of Coca-‐Cola