Chapter 5.

The Cultural Environment of International Business

The significance of cross-cultural risk in international companies is covered in Chapter 5 of the

book International Business: Strategy, Management, and the New Realities". Cross-cultural risk
is introduced in the chapter as an instance or occurrence where a cultural misunderstanding puts
a human value at risk. Businesses that operate in environments with different value systems,
beliefs, attitudes, and behaviors are exposed to cross-cultural risk. Cross-cultural risk is one of
the four major hazards in international business, and the chapter explains this as well as highlight
some of its forms.

The chapter describes how many manifestations of cross-cultural risk, such as ethnocentric
orientation, polycentric orientation, and geocentric orientation, might occur. When we adopt an
ethnocentric perspective, we evaluate other civilizations using the standards of our own culture.
With a polycentric approach, a manager develops a stronger sense of belonging to the country in
which they conduct business than to their own. A manager with a geocentric approach may
comprehend a firm or market without considering national boundaries. Managers should aim for
a geocentric orientation, the chapter urges.

The chapter continues with a definition of culture and its elements. Culture is a phenomenon that
encompasses all shared attitudes, values, and actions. Both objective and subjective components
are included. Physical objects like tools, roads, television programming, and architecture are
examples of objective cultural characteristics. Norms, ideas, concepts, traditions, and other
important symbols are examples of subjective aspects. Hofstede, a renowned organizational
anthropologist from the Netherlands, is quoted in the chapter. Hofstede defines culture as the
"software of the mind," or how people think and reason collectively.

Additionally, the chapter defines what culture is not. It states that culture is relative and neither
right nor evil. diverse cultures have diverse perspectives on the world. Culture is about groups,
not about individual conduct. A collective phenomenon of shared values and meanings is
referred to as culture. Finally, culture is created by the social context rather than being passed
down via generations. As people mature, they pick up cultural attitudes and values.

Cross-cultural competence is emphasized as being crucial for managerial duties in this chapter.
Cross-cultural proficiency is required for a variety of tasks, including creating products and
services, corresponding with and interacting with foreign business partners, negotiating and
structuring international business ventures, interacting with current and potential clients, and
creating advertising and promotional materials. Several difficulties that cross-cultural variations
could bring about in international business are highlighted in the chapter. For instance, when
foreign and domestic nationals do not get along, collaboration may be challenging. Japanese
workers frequently anticipate staying with the same company throughout their careers, which
presents difficulties for foreign businesses. Information sharing may be hindered by differences
in preferences for centralized, bureaucratic structures. Union-management relationships are
typically more equitable in European companies. Additionally, several cultures have differing
views on ambiguity, which can be challenging for those who find it difficult to operate alone or
with little direction.

Three methods of interpreting culture are discussed as the chapter ends. These consist of idioms,
stereotypes, and metaphors. A specific tradition or institution that is closely linked to culture and
can be used to explain attitudes, values, and actions is referred to as a metaphor. Stereotypes are
unfounded assumptions about a group of people that frequently ignore true, more profound
distinctions. Idioms are words or phrases that have a symbolic value in addition to their literal
meaning. The chapter gives instances of metaphors from many cultures, such as American
football in the US, Swedish stuga, Japanese garden, Turkish café, Israeli kibbutz, and Spanish
bullfight. The chapter acknowledges that stereotypes can be incorrect and result in erroneous
inferences about other people, and it emphasizes the need of looking at descriptive actions rather
than evaluative preconceptions.

People often prioritize their self-interest in individualistic civilizations, but social harmony and
collaboration are more significant in collectivist societies. While there are noticeable gaps
between the powerful and the weak in high power-distance civilizations, these gaps are much
less in low power-distance societies. While low uncertainty avoidance cultures are more open to
taking risks, high uncertainty avoidance societies develop systems that reduce risk and guarantee
financial security. While feminine cultures place more significance on nurturing roles,
interdependence among people, and helping others, masculine cultures place more value on
competition, assertiveness, ambition, and the amassing of riches. Relationship-oriented cultures
stress relationships and rapport while deal-oriented cultures prioritize the task at hand and are
impersonal. Religion has a big impact on culture, and manners and customs are ways of acting
and conducting oneself in social and professional settings.

To minimize miscommunications and successfully traverse cultural differences, it is crucial to

take these cultural elements into account when conducting foreign business. For instance, it
could be vital to prioritize developing connections and trust before attempting to conduct
business in a collectivist culture. It might be vital to respect persons in positions of power in a
high-power distance culture. It could be vital to stress the value of helping others in a feminine
culture. It's also critical to understand the various mannerisms and conduct that are required in
other cultures, such as acceptable greetings, gift-giving, and working hours.

In conclusion, successful global business requires an awareness of cultural elements. Businesses

can prevent miscommunications and forge lasting relationships with customers and partners from
other cultures by being aware of the differences between individualistic and collective societies,
high and low power distance, high and low uncertainty avoidance societies, masculine and
feminine cultures, deal vs. relationship orientation, manners and customs, and religion.
Chapter 6. Political and Legal Systems in National Environments

The chapter "Political and Legal Systems in National Environments" of the book "International
Business: Strategy, Management, and the New Realities 2" explores this subject. This chapter
offers information on the various political and legal systems that exist in various nations and how
they may impact a business’s operations and financial success.

The definition of national risk given at the beginning of the chapter is exposure to possible loss
or detrimental effects on business operations and profitability resulting from changes in a
country's political and/or legal contexts. The author emphasizes that every nation has a
distinctive political and legal framework that could present difficulties for business strategy and
performance.

The next section of the chapter explains what causes country risk. Politics or law may be the
immediate reason, but economic, social, or technical advancements may be the real culprit.
Political or legislative activities may hurt business even though they were not intended to, laws
may be unpredictably stringent, and so forth. For instance, the Chinese government restricts
publications that challenge the country's leadership. As a result, organizations like Yahoo must
keep an eye on the content that appears on its website to avoid having its China operations closed
down by the Chinese government. Another frequent element that raises the vulnerability of a
nation is weak law enforcement.

The definitions of political and legal systems are then covered in the chapter. A political system
is made up of the formal institutions that make up a government and the relationships between
these entities. Legislative bodies, political parties, lobbying organizations, and labor unions are
all included in this. A legal system, on the other hand, is a framework for interpreting and
upholding rules and laws. It consists of structures and practices for maintaining law and order
and settling conflicts.

Totalitarianism, socialism, and democracy are the three main categories of political systems that
are explained in this chapter. The author emphasizes that these divisions are not mutually
exclusive and that socialism can be found in most democracies. A political system known as
totalitarianism places complete political and economic control under the hands of the
government. Membership in the state party, which is run by a dictator, is essential for
advancement. Secret police, propaganda, restrictions on free speech, and criticism all serve to
maintain power. China, Germany, the Soviet Union, and Spain are a few nations that practice
totalitarianism. Totalitarianism is still practiced in various Middle Eastern and African countries
today.

There is a lot of government interference, red tape, and bureaucracy in many former authoritarian
governments. Contrarily, social democracy can be found in many parts of the world, including
Western Europe, Brazil, and India. The state owns the capital and wealth, which are generally
employed for use rather than profit. Individual welfare is subordinate to group welfare. The
primary means of production, distribution, and commercial activity are under the jurisdiction of
the government.

Two fundamental aspects of democracy are limited government and private property rights.
Private property rights refer to the freedom to amass private wealth and to possess property and
other assets. Land, structures, stocks, contracts, and patents are all examples of property.
promotes initiative, aspiration, and creativity. A limited government is one that solely carries out
necessary tasks that benefit all citizens, such as ensuring the nation's security, the rule of law,
international relations, and the provision of the most basic infrastructure. The chapter makes the
connection between democracy and economic freedom and emphasizes how actual research
indicates that democracy, which promotes greater economic freedom, raises economic living
standards. Systems with a free market economy, a robust "rule of law," and little government
interference in business are conducive to economic freedom.

The command (centrally planned) economies, which are prevalent in nations like China, India,
Russia, and some of those in Central Asia, Eastern Europe, and the Middle East, are also
explained in this chapter. In command economies, the state decides everything, including what
products the nation produces, how much is produced, how much is sold for, and how it is
distributed. All wealth belongs to the state,

In conclusion, a nation's political and legal climate can have a big impact on the success of
foreign companies doing business there. Political and legal concerns can result from a number of
things, including sudden changes in legislation, lax law enforcement, and government
censorship. Companies must comprehend a nation's political and legal structures in order to
reduce risks and create winning strategies for doing business abroad.
"China's gateway to Europe – the New Silk Road | DW Documentary"

The film "China's Gateway to Europe - the New Silk Road" offers an intriguing look at China's
Belt and Road Initiative, a significant economic and infrastructure development initiative that
aims to establish a contemporary Silk Road linking China to Europe and beyond. To promote
trade and economic cooperation between China and other nations in these regions, the project
entails constructing railways, highways, ports, and other infrastructure throughout Asia, the
Middle East, and Europe.

The size of the project is one of the documentary's most remarkable features. One of the biggest
construction projects in history, China is investing hundreds of billions of dollars in
infrastructure across many nations. With China establishing itself as a major economic force in
the area and beyond, the New Silk Road is anticipated to have a significant impact on
geopolitical dynamics and trade patterns worldwide.

The video, however, also emphasizes some of the difficulties and problems related to the Belt
and Road Initiative. One problem is the risk of debt traps, as some nations borrow significant
amounts of money from China to fund infrastructure projects that could not result in enough
economic activity to repay the loans. In some of the project's participating nations, there are also
worries about the project's potential for corruption and its effects on the environment.

The geopolitical ramifications of the New Silk Road are another topic that is discussed in the
documentary. The United States and other Western nations may lose some of their influence in
the region as a result of China's growing economic might, which could have enormous
repercussions for world politics and trade. Some critics contend that China is attempting to
establish itself as a global powerhouse and increase its geopolitical influence by leveraging the
Belt and Road Initiative.

It is evident that the Belt and Road Initiative is a component of a larger plan to boost China's
economic and political clout on the global stage given China's aggressive trade policies with its
neighbors and distant countries. China has been under fire for alleged unfair trade practices,
including stealing intellectual property and dumping inexpensive goods on international markets,
which has strained relations with the US and other nations.

The Belt and Road Initiative of China has also come under fire for putting some countries in a
debt trap, which could eventually lead to China exercising more political and economic influence
over these countries. In addition, there are worries about the project's environmental
implications. Some experts have issued warnings that the development of extensive
infrastructure may have detrimental effects on the region's ecosystems and wildlife.
Overall, it is evident that China's assertive trade policies and the Belt and Road Initiative will
have a substantial impact on international politics and commerce. The New Silk Road may
benefit many countries in the region economically, but it also raises significant concerns about
the long-term viability of China's economic growth model, the possibility of geopolitical unrest,
and the environmental effects of massive infrastructure projects. It will be crucial for decision-
makers and analysts to closely monitor the Belt and Road Initiative's development and any
potential implications on the world economy and political scene.

What are your thoughts on China's aggressive actions concerning trade with their
neighbors and far-flung nations?

On the one hand, China's investments in trade and infrastructure initiatives like the New Silk
Road plan can help the participating nations economically and advance regional development. It
can also be viewed as a strategy for China to strengthen its position and acquire competitive
advantages on the world stage.

On the other side, China has also come under fire for its acts for being overly pushy and
neglecting the interests and sovereignty of other countries. Concerns concerning debt traps and
unequal partnerships, where China gains more from the projects than the host nations, have been
voiced by some nations.

In addition, tensions in the region have increased as a result of China's territorial disputes with
nearby nations in the South and East China Seas, raising concerns about its goals and intentions.

Overall, China's aggressive trade practices raise questions about its attitude to international
relations and regard for the rights and interests of other nations, even though they can have good
effects. To maintain honest and ethical business processes, it is crucial for all stakeholders to
engage in open dialogue, transparency, and respect for one another.
"12 Reasons NOT to Move to Japan"

1. Personal Space - The first reason in the "12 Reasons NOT to Move to Japan" video is
about personal space. The walls in many Japanese apartments and houses are often made
of thin wood or other lightweight materials that do not provide much sound insulation. It
can be challenging to find a quiet and secluded spot to relax or enjoy some privacy,
especially in urban areas. This means that it is easier to hear noise from neighboring
apartments or houses, which can be a problem for those who value their privacy or need a
quiet living space. Additionally, Japan is a densely populated country, and many urban
areas can be very crowded, making it difficult to find personal space in public areas.

Because every nation has its own cultural norms and living standards, it is challenging to
directly compare Japan and any other nation in terms of personal space and living
conditions. In contrast to Japan, several other nations offer greater living quarters. For
instance, the typical size of a house in Japan is about 1,000 square feet, compared to
2,600 square feet in the United States.

I can understand how some people may feel uncomfortable with the lack of personal
space in Japan, but I personally do not mind it too much.

2. No Room at the Inn - The challenge of getting housing in Japan is the second
justification in the "12 Reasons NOT to Move to Japan" video. The film claims that
Japan's dense population, limited land, and high cost of living all contribute to the
country's high housing demand. In the movie, it is said that it can be quite difficult to find
reasonable and adequate housing in big cities like Tokyo and Osaka, especially for
foreigners who might encounter additional difficulties due to language and cultural
issues.

In comparison to some other countries, the cost of housing in Japan can be relatively
high. According to a 2021 report by Numbeo, the average cost of renting a one-bedroom
apartment in the city center of Tokyo is approximately 143,370 JPY (about 1,300 USD)
per month, while the average cost outside of the city center is approximately 92,777 JPY
(about 840 USD) per month. These costs can be significantly higher than in some other
countries, particularly in less densely populated areas.

This is a common issue in many densely populated cities around the world, so it's not
unique to Japan. However, it could be challenging for people who prefer more spacious
living arrangements.

3. Land of the Rising Overtime - The fact that Japan is renowned as the "land of the rising
overtime" culture is the third justification given in the "12 Reasons NOT to Move to
Japan" video. This indicates that long hours, frequently well past the end of their planned
shift, and frequent unpaid overtime work are expected of employees. Japanese workers
 frequently feel under pressure to work longer hours in order to demonstrate their
commitment to both the firm and their jobs.

The health of the workforce as well as their work-life balance may suffer as a result of
this overworked culture. It might make it difficult for workers to pursue hobbies, spend
time with family and friends, or partake in other activities outside of work. It can also
cause exhaustion, stress, and burnout.

Compared to other countries, Japan is known for having some of the longest working
hours in the world, with the average employee working around 60 hours per week. In
contrast, in many Western countries, the standard workweek is 40 hours or less, with paid
overtime and a greater emphasis on work-life balance.

I can see how this could be a concern for some people who value work-life balance, but I
also appreciate the Japanese work ethic and dedication to their jobs.

4. Goodbye Independence - " is the fourth point in the "12 Reasons NOT to Move to
Japan" video, and it alludes to the collectivist mentality of Japan, where people are
expected to put the needs of the collective before their own. In Japan, people frequently
labor long hours and make sacrifices for the good of the team or company because they
place strong importance on group cohesion. For people who treasure their freedom and
autonomy, this can be difficult.

Furthermore, there is a strong hierarchy in Japan, and subordinates are expected to

respect and obey their superiors. For people accustomed to a more egalitarian society,
where everyone is treated equally, this might be frustrating.

Overall, the film makes the case that Japan's emphasis on collective unity and deference
to authority can make it challenging for people to maintain their independence and
uniqueness.

In contrast, some other countries have laws that protect workers' rights to work
reasonable hours, take breaks, and have vacation time. For example, In the Philippines,
while some jobs do require working long hours or overtime, there are also labor laws in
place to ensure that workers are adequately compensated for their extra work. The Labor
Code of the Philippines mandates that employees who work beyond eight hours per day
or 40 hours per week must receive overtime pay, which is usually 125% of their hourly
rate.

This is a valid concern for anyone moving to a new country where they may not be as
familiar with the language or culture. It's essential to learn the language and customs to
integrate and feel more independent.
5. Standing Out - The fifth argument in the video "12 Reasons NOT to Move to Japan" is
"Standing Out," which alludes to the homogeneous nature of Japanese society and the
difficulty that comes with trying to stand out as a foreigner. The video makes the case
that it can be challenging to integrate into local culture when one is a foreigner in Japan
and feels like an outsider.

In the Philippines, being a foreigner is generally not a major issue as the country has a
relatively high level of cultural diversity. With over 100 million people, the Philippines is
home to a diverse range of ethnic groups, and as such, foreigners are not uncommon in
the country. Additionally, many Filipinos are fluent in English, which can make
communication with foreigners easier.

I can understand how this could be challenging for someone who prefers to blend in, but I
also appreciate the uniqueness and diversity of different cultures.

6. Stuck in the Past - The sixth reason mentioned in the "12 Reasons NOT to Move to
Japan" video is actually "The Gender Gap." Japan has been criticized for its gender
inequality in the workplace, with women often being paid less and have fewer
opportunities for advancement compared to men. This has resulted in a low female labor
force participation rate in Japan, which is a concern for the country's economy and
society as a whole.

In the Philippines, women are still underrepresented in politics and leadership positions,
and there are persistent issues with gender-based violence and discrimination. In Japan,
there are issues such as the "maternity harassment" of women in the workplace, where
pregnant employees may face discrimination or be pushed out of their jobs.

This could be a concern for someone who prefers modern and technologically advanced
societies, but I also appreciate the beauty and cultural significance of preserving the past.

7. It’s Complicated - The seventh reason in the "12 Reasons NOT to Move to Japan" video
is that life in Japan can be complicated, particularly for foreigners who may not be
familiar with the language, culture, and customs. The video mentions that paperwork and
administrative tasks can be confusing and time-consuming and that navigating the
complex social hierarchy and unwritten rules can be challenging.

Compared to some other countries, such as the United States or Canada, Japan's
bureaucracy and regulations can be more intricate and require more paperwork.
Additionally, Japan has a unique culture with its own set of customs and expectations,
which may take some time to understand and navigate. However, many foreigners find
the effort to be worth it, as Japan can offer a unique and rewarding experience.
8. An Apple a Day - The 8th reason in the "12 Reasons NOT to Move to Japan" video is
"An apple a day won't keep the doctor away." This refers to the high cost of medical care
in Japan, which can be a burden for people who need regular medical attention. Japan has
a national health insurance system that covers a portion of medical expenses, but patients
are still required to pay a significant portion of the cost out-of-pocket. Additionally, some
medical services, such as dental care and mental health treatment, are not covered by the
national insurance system and can be very expensive. As a result, people who have
chronic conditions or require ongoing medical care may find it difficult to afford the cost
of healthcare in Japan.

Access to quality healthcare is essential, so this could be a concern for anyone moving to
a new country.

9. Land of Opportunity - The ninth reason in the "12 Reasons NOT to Move to Japan"
video is "Land of Opportunity." The video discusses how it can be difficult for foreigners
to find work in Japan, especially if they do not speak Japanese fluently. While there are
some opportunities for English teachers and in certain industries, such as IT, the job
market can be competitive and limited for those who are not fluent in Japanese.
Additionally, the video highlights the long working hours and intense work culture in
Japan, which may not be suitable for everyone.

Japan's economy has historically been regarded as one of the most strong and prosperous
in the world, with a highly educated and skilled workforce, cutting-edge technologies,
and a strong emphasis on research and development. However, some have criticized the
nation's economic policies as being relatively exclusive and challenging to enter,
especially for international companies looking to enter the market. The population of
Japan is also quickly aging and shrinking, which could provide problems for the economy
of the nation in the future. Overall, although there are opportunities in Japan, it might not
be the easiest or friendliest market for foreigners to navigate.

Japan offers various job opportunities and a stable economy, so this is a positive aspect
for anyone considering moving there.

10. Making Friends - The tenth reason in the video "12 Reasons NOT to Move to Japan" is
about making friends. The video suggests that it can be difficult to make friends in Japan,
especially for foreigners, due to language and cultural barriers. Japanese people tend to
have their own established social circles and it can take time and effort to be accepted
into them. The video also notes that Japanese people may be hesitant to speak English
with foreigners, even if they know the language because they are afraid of making
mistakes.
 It's vital to remember that not everyone experiences this way and that with the
appropriate mindset and approach, making friends is achievable. Making lasting
friendships might result from taking language classes, joining social groups or clubs that
are related to one's hobbies, or even just being approachable and pleasant with coworkers
or neighbors. Additionally, tourists can meet locals and ex-pats who are interested in
meeting people from various cultures through the numerous international communities
and events that are held in Japan.

As for the comparison to other countries, it is difficult to generalize as the experience of

making friends can vary widely depending on factors such as cultural differences,
language barriers, and individual personalities. However, it is often said that making
friends can be easier in countries where the culture is more open and outgoing, such as
the United States or Australia, while it can be more difficult in countries where people are
generally more reserved, such as Japan or Finland.

This is a valid concern for anyone moving to a new country, but it's also an opportunity
to meet new people and make new friends.

11. Endless Rules - The eleventh reason mentioned in the "12 Reasons NOT to Move to
Japan" video is about the countless rules and regulations that exist in Japanese society.
Japan has a highly organized and structured social system, which can sometimes be
overwhelming for foreigners who are not accustomed to it.

In Japan, for instance, there are stringent restrictions governing how to dispose of waste,
how loud it should be, and how people should behave in public. For instance, taking off
one's shoes before entering a home or specific public area is as traditional. Additionally,
there are a lot of unwritten standards of behavior that visitors might not instantly
understand, such bowing at the proper moments or avoiding direct eye contact.

This could be frustrating for someone who prefers more freedom and flexibility, but it's
also a way to ensure social order and harmony.

While maintaining order and respect is the goal of these principles, they can be difficult
for outsiders to understand. However, it is feasible to adapt and understand Japanese
society's customs with time and effort.

12. The Forever Outsider - The last reason mentioned in the video is the feeling of always
being an outsider, even after spending a considerable amount of time in Japan. While
some foreigners may be able to integrate well into Japanese society, for many, there can
be a persistent sense of not truly belonging.

This feeling of being an outsider can come from a variety of factors, including language
barriers, cultural differences, and societal norms. Even if someone is fluent in Japanese
and has a deep understanding of the culture, they may still be seen as an outsider due to
their appearance or nationality.

It's crucial to remember that this emotion is not specific to Japan and can be felt by
visitors in any nation. In Japan, where homogeneity is cherished and foreigners are
frequently viewed as transitory inhabitants rather than long-term members of society, it
can be particularly noticeable.

Overall, the film outlines a number of potential difficulties that expats might encounter in
Japan. Some of these might be unique to Japan, while others are universal problems that
anyone moving to a new nation might run against. Anyone thinking about moving to
Japan—or any other country—should conduct thorough research and carefully weigh
these issues before making a choice.

Feeling like an outsider in a new country is a common experience, but it's also an
opportunity to learn and appreciate different cultures.