You are on page 1of 23

Chapter 3



Operating a successful international business requires cross-cultural literacy (an understanding of how cultural differences across and within nations can affect the way in which business is practiced). A relationship may exist between culture and the costs of doing business in a country or region.


” Hofstede.WHAT IS CULTURE? • “A system of values and norms that are shared among a group of people and that when taken together constitute a design for living. Namenwirth and Weber 3 .

Folkways & Mores 4 .DIFFERENT COMPONENTS OF CULTURE Values Abstract ideas/ assumptions about what a group believes to be good. right and desirable Invested with emotional significance-reflected in political & economical Norms social rules and guidelines that prescribe appropriate behavior in particular situations Subdivided further into two major categories.

social conventions such as dress codes. social manners. and neighborly behavior MORES • Norms central to the functioning of society and its social life • Greater significance than folkways • Violation can bring serious retribution (alcohol & theft) 5 .FOLKWAYS VS MORES FOLKWAYS • Routine everyday life • Little moral significance • Generally.

DETERMINANTS OF CULTURE Political Philosophy Language Economy Philosophy Culture Education Social Structure Religion 6 .

SOCIAL STRUCTURE individual or the group 3Dimension classes or castes economics or political influences 7 .

S.g. innovation • Good general skills • Team work difficult. companies 8 . Japanese companies • Managerial mobility between companies • Economic dynamism.g. U.INDIVIDUAL VS GROUP INDIVIDUAL GROUP • Loyalty and commitment to company • In-depth knowledge of company • Specialist skills • Easy to build teams... collaboration • Emotional identification with group or company • e. non-collaborative • Exposure to different ways of doing business • e.

RELIGIOUS & ETHICAL SYSTEM Christianity.Global Business Today.1. Mc Graw Hill 9 .New York.1 billion Hinduism-750 million Buddhism -350 million Source: Requejo H.7 billion Islam.H (2012).

RELIGION. Hinduism -Focus on Spiritual Growth-do not encourage the kind of entrepreneurial activity.ECONOMIC IMPLICATION Christianity (Protestant) -Emphasize the importance of the hard work and wealth creation. -Caste system limit individual’s opportunities in business or career. -Support the expansion of capitalist Islam -Receptive to International Business as long as those business behave in a manner consistent with Islam ethics -Unwelcomed business that are perceived as making profit through exploitation of others. 10 .

loyalty.RELIGION.ECONOMIC IMPLICATION Buddha • Not emphasize the wealth creation • Opportunities for entrepreneur activity not being blocked by caste system like Hinduism Confucianism • 3 values. reciprocal obligations and honesty • The loyalty binds employees to organizationreduce conflict 11 .

spoken & unspoken language. • Failure to understand local language can lead to wrong interpretation and decrease the business success. • Learning local language can build rapport. • Countries with more than one spoken language. we tend to find more than one culture. 12 .LANGUANGE • Language is one defining characteristic of culture.

EDUCATION Availability of a pool of skilled and educated workers.major determinants of economic success of country Education can be a source of competitive advantage Example: Japan & India 13 .

H (2012).CULTURE AND THE WORKPLACE Source: Requejo H.Global Business Today. Mc Graw Hill 14 .New York.

tend to be more relationship oriented (Panama. India • Low: Denmark Individualism versus collectivism • Individualistic societies: loose ties. Indonesia) Uncertainty avoidance • This dimension measures the extent to which a culture socializes its members into accepting ambiguous situations and tolerating uncertainty • High: Japan • Low: Denmark Masculinity • This dimension looks at the relationship between gender and work roles • High: Japan • Low: Sweden 15 .WORK RELATED VALUES FOR 20 SELECTED COUNTRIES Power distance • Cultures are ranked high or low on this dimensions based on the particular society’s ability to deal with inequalities • High: Panama & Indonesia. individual achievement and freedom highly valued (Australia) • Collectivist societies-tight ties.

PROBLEMS WITH HOTSFEDE FINDING • Assumes one-to-one relationship between culture and the nation-state • His research may have been culturally bound • Survey respondents were from a single industry (computer) and a single company (IBM) 16 .

• Japan moves toward greater individualism in the workplace • Effects of globalization 17 . it evolves over time • Since 1960s American values toward the role of women are changing.CULTURAL CHANGE • Culture is not a constant.

18 .IMPORTANT IMPLICATION FOR INTERNATIONAL BUSINESS Develop • Employing local citizens Cross Culture • Transferring executive overseas Literacy Culture and Competitive Advantage • The value system and norms of a country can affect the cost of doing business in that country.

DISCUSSION QUESTION 1. 19 . Outline why the culture of a country influences the costs of doing business in that country. Illustrate your answer with examples.

important implications for the costs of business religion also affect the costs of business Different class structures and social mobilitylimit the business growth 20 .DISCUSSION QUESTION costs of doing business normally rise as people grapple with unfamiliar ways of doing business a country's education system .

DISCUSSION QUESTION • 2. Do you think business practices in an Islamic country are likely to differ from business practices in the United States? If so. how? 21 .

DIFFERENCE BUSINESS PRACTICE ISLAM COUNTRIES VS US • Appropriate etiquette • Wining & dining • Use resource carefully • Relationship man.woman • Prohibition on interest • Fairness to all parties 22 .

23 .