Cultural Impact in BRIC Countries

Asa Ottosson, Martin Meister, & Orton K.C. Tsun
An analysis of cultural influences in attempting entry to the markets of rapidly growing nations Brazil, Russia, India, and China.

Boston University MET AD655 - OL April 22, 2012

Spring Session 2

2012

2012 Spring 02 MET AD 655 OL – Assignment #2

Page 1

Index
Introduction ............................................................................................................................................... 2 Background and facts of the Nations........................................................................................................ 2 Brazil...................................................................................................................................................... 2 Russia .................................................................................................................................................... 3 India ...................................................................................................................................................... 4 China ..................................................................................................................................................... 4 BRIC ........................................................................................................................................................... 5 Case Studies .............................................................................................................................................. 5 Brazil – Wal-Mart .................................................................................................................................. 5 Russia – Wal-Mart ................................................................................................................................. 7 India – Wal-Mart ................................................................................................................................... 8 China – Wal-Mart .................................................................................................................................. 9 Brazil - Lenovo ..................................................................................................................................... 11 Russia - IKEA ........................................................................................................................................ 12 India - ABB ........................................................................................................................................... 14 China - KFC .......................................................................................................................................... 15 Conclusion .................................................................................................................................................. 16 References ................................................................................................................................................... 21

with an estimate population of 200 million people toward the year 2007.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 2 Introduction The acronym BRIC was coined by Goldman Sachs Economist Jim O’Neill in 2001 projecting that the countries of Brazil. Germany. In its history the country has been an important source of raw materials and natural resources like coffee. and China. reaching almost $50 billion (Diaz. Italy. Asia. sugar. beef. 2009). and the Middle East. Russia. Japan. In recent years the Brazilian market opened to foreign investment. India. Brazil received the third highest foreign direct investment (FDI). The purpose of this paper is to analyze the significance of the BRIC countries to determine what constitutes their growth potential then through cited case studies of the world’s largest retailer – Wal-Mart attempts to enter each of the BRIC markets then dissect the attempts of other companies in entering those countries to understand the cultural impacts and challenges experienced by foreign businesses when entering that market concluding with an assessment of whether or not the BRIC countries will fulfill the expectation of surpassing the developed markets based on the direction of the geopolitical and cultural environments defining similarities and differences with Hofstede’s 4 cultural value dimensions. Background and facts of the Nations Brazil Brazil is the 5th largest economy in the world. soy beans. Europe. and timber (Malinak. and Canada in terms of global influence and economic power by the year 2050. As of 2010. United States. 2011). orange juice. all being in an advanced stage of economic development will surpass the developed G7 economies of France. Brazil is also a . United Kingdom. and by coincidence also the 5th country by population and area. becoming an appealing destination for companies from North America.

Paraguay. while the poor population has decreased by 10 percent (Landmann & Di Si. 2010. Bolivia. Ecuador. 2012). and Peru as associate members. p. Russia is one of the best educated populations in the world having one of the highest shares of workers with a tertiary education 51%. . the second-largest coal reserves. In 1991 the USSR was splintered into Russia and 14 independent republics (CIA. awaiting the ratification of Brazil and Paraguay (Ball et al. which can represent greater opportunities for foreign products and innovative technologies. According to an economic report issued form the United Nations in 2007. Gorbachev introduced Perestroika (restricting) and Glasnost (openness) in 1985-91. along with Argentina. and the eighth-largest crude oil reserves. In terms of landmass.098. Brazil also has an impressive 52 percent of the population belonging to the middle class. much of the country lacks proper soils and climates (either too cold or too dry) for agriculture.8 times the size of the U.242 sq km. The GDP per capita is US$ 16. Chile.S. right after the United States 60% and ahead of many EU countries such as France 29% and Germany 24%.700 (2011). or 1. Russia is the largest country in the world.. Russia Communists formed the USSR under V. the Russian economy stagnated in the following decades until M. This socio-economic metric enhances the attractiveness of the Brazilian market. 120-121). Lenin in the early 1900s. Russia is the secondlargest producer of natural gas holding the world's largest natural gas reserves. despite its size. and Uruguay as members. age structure 71. Colombia. Approximately 73% of the Russian people live in urban areas (CIA. 2010). Venezuela has also been accepted as a new member.7 years.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 3 member of South America´s economic free trade area . 2012).2% in the age 15-64 years with a median age of 38. 17.Mercosur.

and expected to reach the second place in GDP by PPP within the next 20 years (World Business. telecommunications (8%). India is also the secondmost attractive destination for FDI (after China) according to UNCTAD WIP survey 2010/2012. At this moment they are the third largest economy by GDP Purchasing Power Parity (PPP). . China is not only growing in terms of its economic influence but often cited as the next rising global superpower being the third country after the United States and the former Soviet Union to independently launch a successful manned space mission in 2003 and possessing the world’s largest standing army. with an estimated population at 1. Since the introduction of marketbased economic reforms in 1978. India has a young population with approximately 65% in the age group 15 to 64 years and a median age in the country at 26 years. one of the main reasons is more than a decade of economic reforms that started in 1991 (Kumar. China China is the world’s most populous country with a population of over 1.3 billion also being the second largest country in landmass (after Russia). The Indian economy has shown a great and fast integration to the world in recent years. China has become the world’s fastest-growing major economy despite being a single-party state governed by the Communist Party of China. and is the world’s largest exporter and second-largest importer of goods. 2012). China ranked 2nd after the United States by both nominal GDP and PPP. 2007). and Computer Software & Hardware (7%). with Indian´s economy growing at about 9 percent annum GDP in 2011. This liberalization has continued.2 billion. particularly in the areas of services (20%). The India market has significant potential and offers prospects of high profitability.2012 Spring 02 MET AD 655 OL – Assignment #2 India Page 4 India is the second most populous country in the world.

internal space utilization. The initial objective of Wal-Mart was to reach the number one retailer position in the Brazilian market in the shortest time and displace the current number one company – French retailer Carrefour. .S. Case Studies Brazil – Wal-Mart Major U. retailer Wal-Mart entered the Brazilian market in 1995. the fifth largest in the world (Kotabe. Comprehension of the cultural differences between countries is crucial in International Business and identifying the appeal to enter the BRIC countries.. This is highly attractive to businesses in developed markets where ability for cost reduction is relatively small or flat and the demand for certain products is low due to market saturation. an aggressive and very profitable investment bank that also had the control of the Brahma. the leading beer company in Brazil and at the time. analysis was conducted of foreign businesses attempts for entry and their success or lack of success due to cultural impacts. Wal-Mart held 60 percent with 40 percent to Lojas. 2003). through implementation of their expertise and practices via an extensive set of operational manuals proven successful in their US operations. which was owned by the Banco Garantia. 1997). These manuals included product assortment.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 5 BRIC All four of the BRIC countries have shared characteristics that contribute to their notable success: A relatively large population (combined the BRIC countries account for 43% of the global population) implying potential for development towards market size and the recent opening of the market to foreign investors presenting early entry opportunities. and product mix (Kotabe et al. In this joint venture. through a partnership with the local company Lojas Americas. Brazil´s leading department store chain.

2009). we find that one of the principal problems of Wal-Mart was their adaptation and assimilation of the Brazilian managerial culture.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 6 After the first year of bringing their strategy of “everyday low prices” to the emerging Brazilian market. 2012). and local managers established prices below cost to artificially stimulate demand and inflate sales volume numbers in attempts to reach higher budgets (Kotabe et al. In this case. in this case the US controllers. Faulty product mix and store-space misallocations were examples of poor management policies. After 15 years of operation in Brazil. noting that culturally Brazilian workers like to develop close relationships and expect to receive direction from their bosses. 2003). the involved nature of workers wanting interaction with their managers (Malinak. 1997) with cited reasons such as high stock rate. and the flexibility of expected concepts such as jeitinho (The Economist.. unreliable supply lines. competitor´s reaction. a Columbia Business School professor. working closer with the management team could have avoided misunderstanding and bad decisions.. rather than follow some manual or guidebook. one of the reasons for the Wal-Mart´s Brazilian operation problems was “mainly because of not understanding the local culture” noting that imposing systems and procedures that worked in the US actually contradicts the relaxed attitude of Brazilian businesses. Wal-Mart broke ground and managed double-digit annual gain in sales despite the global downturn of 2008. traffic congestion. 2009) and jogo de cintura (Mello. Center the analysis on controllable forces. and government forces (Kotabe et al. This final success could be explained by the capacity of Wal-Mart to adapt to the local market through acquisition of two established retail chains and adopting . the company found that the results were not as expected (Friedland & Lee. According to Nelson Fraiman. 2003). faulty managementperformance measures. exceeding the 6 percent overall growth of the Brazilian retail market.

they attempted entry to the Russian market via acquisition but their intended candidate – Kopeika. Russia – Wal-Mart In 2009.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 7 their localized approach. 2009). a chain named after the Russian word for "penny". moving away from doing all things the “American way”. But it did open an office in Moscow with public plans to expand” (Van Dyk. but they were also sold to a competitor instead.” Wal-Mart is not the only major international retailer to pull out of Russia in recent years after failing to establish a viable business in the country. the country’s biggest food retailer in terms of sales). French retailer Carrefour also announced it was pulling out after opening just one store in Moscow and another in the Southern city of Krasnodar. “The world's largest retailer has abandoned Russia. After just one year on December 13. In October 2009. A successful take-over of either Kopeika or Lenta would have given Wal-Mart a point of entry into the Russian market."Carrefour has decided to sell its activities in Russia and pull . These ideas commonly go to the other countries. Instead. was recently acquired by a local competitor (X5. Wal-Mart opened its first office in Russia with the intent to enter the Russian market as the global financial crisis ebbed and Russian consumers started spending again. 2010. A statement released coincided with the exit strategy read similar to Wal-Mart's reasoning . There were rumors that the Wal-Mart was looking for a way to enter the Russian market since 2002 but failed to “strike the iron while it was hot. Wal-Mart announced its plans to exit Russia. while insulating them from managerial and organizational problems. Wal-Mart never opened an actual store there. making a fluent exchange from one country to another (Bustillo. The other target for Wal-Mart was retail chain Lenta. 2011). instead. they used innovative ideas coming from the local workers. Just as Wal-Mart partnered with Lojas Americas in Brazil.

Instead of functional property rights. tying with Bangladesh. there exists a very complex system of mutual relationships between governors. Such relationships are implanted in the social fabric of their society and arguably. By 2009. The legacy of the Soviet Union still has an iron grip on the economy while Russia fared poorly on the corruption perception index. Despite the negative impact. out of 180 countries (Kramer. India – Wal-Mart In 2007. given the absence of sufficient organic-growth prospects and acquisition opportunities in the short-and medium-term that would have allowed Carrefour to attain a position of leadership" (Griffin. their culture. the sheer size of the market might just be too good to leave out of their global strategy. The problem is that removal of corruption entirely poses the risk that the economy could collapse. Corruption in Russia is interwoven into societal relations. the challenges experienced towards entry or growth in Russia is attributed to a high level of corruption. 2011). 2007). Today. Russian businessmen agree that corruption also creates a mechanism for overcoming its complicated legal and administrative systems. several financial magazines noted in speculation that they do not believe WalMart has left Russia for good. In conditions where transaction costs are unacceptably high. from garbage cleaning to school textbook supply. and the courts. the venture was realized with the first business-to-business . Corrupt networks between state authorities and businesses exist at every level throughout the society.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 8 out of the market. While it is not explicitly stated in either of the cases for Wal-Mart and Carrefour. 2007). Wal-Mart announced a joint venture with privately owned conglomerate Bharti Enterprises in India forming Bharti Walmart Private Limited as part of their strategy for entry into the Indian market. the corruption is actually “a salvation” (Cheloukhine et al. law enforcement officials. Kenya and Syria for 147th place.

chain stores.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 9 wholesale cash-and-carry store in northern India standing between 50. China on August 12. 1996 (Govindarajan.P. Two of the greatest challenges with entry into the Indian market is the need for a large variety of products that will be able to appeal to the highly diverse cultural and religious groups within India and despite the world’s second largest population. it did not prepare Wal-Mart for the real challenges of conducting business in China most notably.000 associates (Farhoomand. their entry into China was first through a joint venture with a Thailand-based company – C. shopping malls. the Indian consumer demands an increased variety in products and retail formats separate from the old systems of Mandis (markets established by the government for the sale of agricultural produce directly from the farmers) and Kirana (independently owned operations selling daily necessities and groceries stores. .000 products providing a one stop shopping experience (Patel. and while such an approach posed lesser risk. 2010).000 square feet in area selling a wide range of 60. 2006).000 to 100. only 30% resides in urban areas while 70% lives in dispersed rural areas.000 to 100. with their supply chain. expanded to over 94 stores in 51 cities employing over 43.K. China – Wal-Mart Wal-Mart opened its first store location in Shenzhen. India has since experienced an emergence of modern supermarkets. With the continual development of India’s market. Similar to Wal-Mart’s strategy in the other BRIC countries such as Brazil or the attempt in Russia. Pokphand Company in British-held Hong Kong (later returned to China in 1997) which provided them an opportunity to work provide brand exposure to the Chinese yet operate under the regulations of the U. and specialty stores making the time ripe for Wal-Mart to enter that marketspace. 2003) and as of 2006.

one can assume that just as managed to succeed in Brazil through adopting facets of the local culture there and failed to do so through their reluctance complying with that in Russia. it is deeply rooted in the Chinese culture and society and if there is an expectation for growth and success within the Chinese market. From a certain perspective. that some level of adoption to guanxi is possible. . In its simplest definition. many businessmen understand that it is a cost of conducting business to build a relationship via dinner invitations. Western cultures have similar practices with the adage of “It’s not what you know.” Provincial differences are often mitigated based on the relationships between the governing officials between provinces. Customs clearance for imports. these gestures can be interpreted as a form of corruption but similar to Russia. For obvious reasons. Noting that this “system” has existed for centuries. 2011). and interprovincial purchasing” (Tuffman.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 10 “Wal-Mart confronts the consequences of centuries of provincial autonomy and selfsufficiency… Local administrative bodies and physical infrastructure built to protect local interests pose difficulties for road transportation. private and commercial trucking. exchange of gifts. etc. More often than not. it becomes adopted in varying degrees. the officials have some connection whether they shared the same hometown or attended the same schools or mentored by the same senior official prior to assignment of their current post. 2006). In the remote situation where there isn’t a direct relationship between provincial authorities. Wal-Mart did not understand that the inefficiencies mentioned could be overcome with the Chinese cultural aspect – guanxi. guanxi means “relationship” but it’s a long-standing concept within Chinese culture stemming from Confucian beliefs (Chang. but who you know. and introduction through a mutual acquaintance. Wal-Mart did not indicate that it overcame its supplychain challenges through such measures but as they report continued growth and success in China.

2009). The greatest difficulties are the cultural stresses that surface in their relationships. Inversely.2012 Spring 02 MET AD 655 OL – Assignment #2 Brazil . “most Brazilians at the company´s local offices were frustrated by demands to come up with almost immediate results in a country with some of the world´s worst red tape” (Brooks. with expected rise in their market share up to 10 percent within the year 2014 (Monte. requiring that they spend most of the time in the office. Historically. government regulations and unions require that Lenovo hire Brazilians.Lenovo Page 11 To highlight some of the cultural challenges posed by the BRIC nations. and vacations. Chinese workers are used to low wages and inadequate laws to protect workers (Alto Nivel. One such difference is that Chinese companies are not accustomed to offering the labor protections that Latin-Americans workers normally have with local employers. This reality resulted in frequent conflicts between two cultures that hold vastly different expectations in the role of the employees (Brooks. Brazilian workers feel that their Chinese superiors have a suffocating management style. an executive of the firm said. lack of punctuality. . we looked upon Chinese owned Lenovo and their investment in fellow BRIC country – Brazil. Lenovo has a long history selling computers in Brazil when owned by the company IBM. This growth of the Chinese investment in Brazil has generated some cultural frictions between the Brazilian employees and their Chinese bosses. the Associated Press´s Latin American Desk Editor. 2011). 2011). Chinese executives complain about the lax work ethic of Brazilian employees. when a Chinese company went abroad they are accustomed to bringing their laborers with them (a practice associated again with the concept of guanxi). and stipends for meals and transportation. endless meetings. According to Jack Chang. Brazilian workers have benefits like one month of vacation time. so they could control them. annual salary bonuses. With Brazil. Lenovo is having increased friction between employees. By comparison. According to the Global Institute for Labor & Human Rights. 2011).

the founder of the Brazil-China Chamber of Trade. IKEA operates 12 stores in Russia. 2005). as Charles Tang. 2012). Brazilian people always expect to have good working relationships! In time the cultural tensions will work themselves out. 3 in Moscow. A special project organization is also responsible for the future expansion as part of the Russian organization (Jonsson. The expansion strategy used by IKEA to enter Russia is based on a standardized retail offering with an ability to adapt to different cultural settings and to use previous experiences and insights in order to support their entry to new markets. New product development. Kazan. Ufa. 2011). IKEA Trading. He concluded that differences in style do not affect the final bottom line (Brooks. Novosibirsk and Yekaterinburg (IKEA web site. and IKEA Distribution. and locations in Novgorod. At present. home products and furniture retailer IKEA has a strong global presence and considered a household brand within the United States. Omsk. Samara. The Russian organization includes IKEA Retail. 2 in St Petersburg.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 12 The stern expectations of the Chinese Bosses deviate from the relaxed attitude toward work of Brazilians.” (Jonsson. Russia . “IKEA’s view is that it is important to learn about the market in an active manner that enables the company to perceive it through the eyes of the local consumers. realize nobody is going to arrive at a meeting on time and understand that informality doesn´t necessary equate with a lack of professionalism”. IKEA Russia is organized differently from its counterparts in other countries. IKEA opened its first store in Moscow in March of 2000. IKEA Property. .IKEA While a Swedish company. 2005). said that “he soon learned the Brazilian way – essentially to relax. and seem to contradict the importance Brazilians have towards building personal relationships.

The opening in Novosibirsk was postponed over demands to rebuild a road (Kramer. and disruptive “surprise inspections” from fire and health authorities (Kramer. In 2004. In the 2011 survey. The World Bank ranks economies based on their ease of doing business. IKEA resorted to renting generators and has since made a practice of having them on hand. 2007). 2007). Petersburg. legal concerns in St. Petersburg regarding energy supply from Russian utilities at a cost of 1 billion euros. The outlet in Nizhny Novgorod was closed for its opening holiday season in 2006 on the grounds of fire-code violations. During the first opening of their store location on the outskirts of Moscow. Russian officials halted an opening ceremony at another Moscow store minutes before it was to begin stating that the parking lot was too close to a natural gas pipeline. 183 of 183 while ranking 178 of 183 when dealing with construction permits (World Bank. According to IKEA founder Ingvar Kamprad. Russian authorities declined to connect the electricity. says . it’s apparent that this was the issue even dismissing two senior managers for allowing a supplier to pay bribes in order to secure power for one of the shopping centers in St. 2012) with side effects including several costly delays of shopping centers. "Investors need dozens and dozens of approvals from an incredible number of agencies”.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 13 IKEA is considered one of Russia's largest foreign investors having invested some $4 billion into the country since opening its first store in 2000. The challenges experienced by IKEA are visible in terms of the category “getting electricity” where Russia is placed last. IKEA lost approximately 1 billion Euros (US$1. Though IKEA representatives have not directly accused Russia for corruption and bribery. 2011).3 billion) due to difficulties with corruption in Russia (SvD. Russia ranks 120 out of 183 countries. during their early years entering Russia. requirements on buildings to withstand near-hurricane force winds in areas with no hurricanes.

MNCs do not have an easy way in India (Prasso. 2008).000 employees. products. India .2012 Spring 02 MET AD 655 OL – Assignment #2 Page 14 Evgeny Kovrov. and R&D (ABB Web Site. timing. Their mission is to leverage the Indian operations for projects. ABB started operations in India since 1967 with their first facility and in 2002 developed a global corporate research center to accompany its 14 manufacturing facilities and over 8. firm size. A market with a population of 142 million people proves to be attractive enough to fight for. 2012). or cultural distance (Jonhson & Tellis. we review the company ABB and understand its considerable success entering India. The ABB Group of companies operates in around 100 countries and employs about 130. Due to the Indian people having concepts. 2008). and norms that are generally difficult to understand and assimilate for western MNCs expatriates managers. 2012). country risk. engineering. “That provides for unlimited corruption opportunities. and more than 500 channel partners. Customers are served through more than 23 marketing offices. services. values.ABB In further analysis of market entry to India. 2011) Despite the challenges entering the Russian market. ABB is Swedish-Swiss Multinational Corporation with core competencies in power and automation technologies enabling utility and industry customers’ performance improvements while lowering environmental impact. According to a study conducted by The Boston Consulting Group (2003) the success of European companies in India can be attributed to three pillars: . a researcher at retail consultancy Magazin Magazinov. Challenges posed from entering the Indian market are diverse but include and the entry mode. IKEA is now established in the Russian market with 12 stores and has no intention to leave.000 people (ABB Web Site. economic distance." (Businessweek. 8 service centers.

the company utilized a local team to run the company operating as an Indian company would. The last pillar is considered a key factor for success which includes building a long-term relationship with local managers to define a value-added role for them and establishing credibility amongst the local team (BCG. The phenomenal growth of KFC is attributed to their willingness to understand and adapt their products and services to the culture and tastes of the Chinese. Localized product-market business model.000 stores in 650 cities opening one new restaurant a day (Starvish. 2003). The renowned franchise famous for its fried chicken entered the Chinese market opening its first location in Beijing in 1987 and has since expanded to over 3. 2011). Such an approach fosters a tailored and domestic atmosphere where it is not surprising at how well the ABB Group integrated itself into the local culture upon entering India (BCG. And empowered local management (BCG. China . and culture (FHS. From its first store offering only dark meat (Asians consider the white meat of chicken to be tough and lacking of flavor) to the offering of fried dough sticks. despite being a foreign investor.KFC Another household brand within the United States also experienced a great deal of success within the Chinese market – the famous fast food giant KFC. and soybean milk beverages. 2003). 2011). ABB is recognized as a company that invests in leadership training and development. egg tarts. 2003). workforce.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 15 Commitment at a global level. KFC has conducted . since their establishment the company uses a unique decentralized management structure where each company subsidiary is linked to its local customers and labor force working like a local company to look for the needs of customers.

. It is with this understanding of the culture and atmosphere within China and the willingness to adapt (it would’ve been impossible for their success if they only offered the menu they have from the United States) that they continue to experience explosive growth. and artifacts that characterize populations (Ball et al. How the diversity within the Indian culture poses increased . How corruption is intricately integrated within the business practices of Russia. institutions. but the overall experience reflected in the professional level of customer service. could easily cost that Chinese household close to a week’s worth of wages and yet the Chinese people will continue to frequent such establishments because it is more than the food. Reflected earlier the comment of a typical household consisting of 3 members (the Chinese government implemented the “one child policy” back in 1978 which restricts urban couples from having more than one child) so parents are known to spoil their offspring and this is reflected in the colorful and attractive kid’s meals offered at KFC.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 16 extensive studies to understanding the tastes of the Chinese people and offering products to meet those tastes. 2010). This is demonstrated in the analysis of the WalMart case studies and how cultural influences such as the Brazilian expectation of building relationships. Other cultural considerations adapted by KFC include the understanding that Western fast-food is considered a luxury to most Chinese people. rules. and jogo de cintura. jetinho. Conclusion Culture is defined as the sum total of beliefs. McDonalds. techniques. A typical meal for a family of 3 at a KFC. and décor of the establishment. often licensing with brands like Disney or Sanrio to offer collectable toys appealing to the young ones. or Pizza Hut. the cleanliness.

Collectivistic cultures tend to place focus on relationships and rely on group decision making which is reflected from the case studies of Brazil and particularly with Chinese guanxi (China having the lowest of IDV values).S.) . China and India are the most formidable in terms of attracting FDI and the rate of growth. these two countries have comparatively lower UAI values (even lower than that of the U. Of the BRIC countries. the values of the United States were applied for a basis of comparison: Uncertainty Country Power Distance (PDI) Individualism (IDV) Masculinity (MAS) Avoidance (UAI) United States Brazil Russia India China 40 69 93 77 80 91 38 39 48 20 62 49 36 56 66 46 76 95 40 30 Initial analysis of the values. To further dissect the cultural similarities and differences amongst the BRIC nations.) which translate as their ability to adapt and not be bound by rules being extremely high. it can be concluded that the majority of the BRIC countries are collectivistic cultures having relatively low IDV numbers. Hofstede’s 4 cultural value dimensions were used and as a baseline.S. And how the concept of guanxi influences business operations across the segmented and autonomous provinces within China and resulted in challenges when the Chinese entered the market of another BRIC country – Brazil. Interestingly. there are reported incident still happening in the U.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 17 requirements towards the variety of products to offer. Another interesting hypothesis is that while corruption exists in all of the four BRIC countries (and while not as obvious.

International Finance Cooperation. High PDI cultures accept an unequal distribution of power and while understanding that something is wrong (corruption). it’s noted that the values of these categories are similar with India and China.doingbusiness.org/rankings Citing the reports towards "dealing with construction permits" and "getting electricity" in Russia. . that some of the practices of guanxi are interpreted as a form of corruption. not being in a position of power. http://www. Russia. A supporting statistic to this theory is the “Ease of doing business Index” produced by the International Finance Corporation. As these functions are government-based. they people tend to be more tolerant of it. having the worst case of corruption amongst the BRIC countries has an extremely high PDI value of 93. June 2011. The World bank. the countries also share high PDI values which may explain the willingness within these countries to accept and tolerate the existence of bribery and existence of corruption as part of daily life. then Brazil with the lowest PDI value of the BRIC nations having comparatively lower values in the areas of construction permits or obtaining electricity and as cited earlier with a significant middle-class and decreasing percentage of the poor. The World Bank (2011): Economy United States China Russian Federation Brazil India Dealing with Ease of Doing Starting a Construction Business Rank Business Permits 4 91 120 126 132 13 151 111 120 166 17 179 178 127 181 Getting Registering Getting Protecting Paying Electricity Property Credit Investors Taxes 17 115 183 51 98 16 40 45 114 97 4 67 98 98 40 5 97 111 79 46 72 122 105 150 147 Trading Across Borders 20 60 160 121 109 Resolving Enforcing Insolvenc Contracts y 7 16 13 118 182 15 75 60 136 128 Source.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 18 but there appears to be a correlative relationship of how prevalent the level of corruption is with the country’s PDI value. India has notably less mention of corruption despite having the lowest ranking in Ease of Doing Business. China is second with a PDI of 80 and as noted during the case study analysis.

The differences in India and China towards industry and the even wider culture gap between the neighbors are significant. concern for others. and legal culture that its autocratic neighbor is unlikely ever to grasp (F. The Chinese phenomenon “guanxi” in business relations based on trust and relations requires substantial adaptation from any MNC that would like to enter the market. Russia in commodities and natural resources like natural gas. The assessment of the BRIC nations indicated more commonality in their size and economic potential but the structures of the four economies are quite different with Brazil primarily specialized in agriculture. they should be able to maintain their growth and meet the expectation of surpassing the G7 nations. China has a single-minded focus on productivity and economic growth that India may never match. if they can work towards lowering the PDI value within their culture. the strength of the BRIC countries appear to be an interesting balance between being a collectivistic culture (low IDV). having a notably high MAS value paired with a high UAI. In conclusion. For China and India already experiencing considerable success. or overall quality of life. while India has a democratic. Cameron). India in services. and moderate PDI.2012 Spring 02 MET AD 655 OL – Assignment #2 Page 19 Another notable observation is that China’s MAS value even surpasses that of the US. civil. And China focused on manufacturing. These differences give implications entering the economies with FDI like in the cases examined. and requires detailed strategies to . This holds true noting that was the cause of some of the challenges experienced by Lenovo in Brazil or ongoing political debate over China’s focus on growth at the expense of the environment or lack of attention towards human rights. Having a high MAS value translates that the Chinese culture emphasizes assertiveness and the acquisition of money and status over that of relationships.

India which presents a highly diverse market in terms of languages and religious beliefs demands extraordinary detailed market/target group analysis before entering. As Russia struggles with severe corruption challenges any MNC considering entering the market will need a well-defined strategy to handle this challenge. For Russia. Of the BRIC nations. Brazil is notably well-rounded but could still benefit from a reduction of their UAI and perhaps increase their MAS value citing the general perception that their work attitude seemed lax. the country needs to reduce their PDI while and UAI to become more adaptable or otherwise risk loss of their growth potential despite its abundance of natural resources. .2012 Spring 02 MET AD 655 OL – Assignment #2 Page 20 meet Chinese expectations. Local workforce regulations might put a FDI to challenge in terms of management style adjustments.

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