Chapter-5

Culture, Management Style, and

Business Systems
Today’s Agenda

 Require adaptation
 The impact of culture on management style
 Management style around the world
 Gender bias in international business
 Business ethics
Required Adaptation
 Adaptation is a key concept in IM, and is
required on small or large matters for success
 For adaptation it required:
 more than tolerance of an alien culture
 an affirmative acceptance or open tolerance of the
concept ‘different but equal’ (business practices
followed by mncs)
 Cultural empathy helps in adaptation because it
minimizes cultural differences
 Required Adaptation
 As a guide to adaptation marketers must be
able to meet 10 basic criteria for adaptation:
1. Open tolerance
2. Flexibility
3. Humbleness
4. Justice/fairness (compensation/social investment)
5. Ability to adjust to varying tempos
6. Curiosity/interest
7. Knowledge of the country/market
8. Liking for others (Community relation development)
9. Ability to command respect
10.Ability to integrate oneself into the environment
Degree of Adaptation
 Adaptation does not require business
executives to a) forsake their ways and b)
change to local customs (swimming costume)
 Essential to effective adaptation is V important:
 Awareness of one’s own culture, and
 The recognition that differences in others can
cause, anxiety, frustration, misunderstandings
of the host’s intentions, and
 The willingness to accommodate those
differences
Degree of Adaptation

 Since SRC is operative in business customs, a

marketer lacking knowledge of his foreign
counterpart’s customs is likely to evaluate his
behavior in terms of what is acceptable to him
 For adaptation, a marketer must remain as
Bangladeshi, but he must develop an
understanding of and willingness to
accommodate the differences that exist
Degree of Adaptation
 A successful marketer must know that:
 In China it is important to make points, without
winning arguments; criticism, even if asked for,
can cause a host to lose face
 In Germany, it is discourteous to use the first
names unless specifically invited to do so
 In Brazil do not be angry by being touched by
someone while conversing
A Chinese, German, or Brazilian does not expect you to
act like one of them. Conversely, it would be equally
foolish for you to give up your own ways
Business Customs (Never discuss about religion, ethnic
background, political beliefs)
Business Customs: Cultural Imperatives

 Informal discussions, entertaining, mutual

friends, and just spending time with other
are ways to establish these trusting relation
 In some cultures, friendship can not be over
emphasized if family relationships are close
 In China the outsider comes after family,
extended family, neighbors, former classmates
in order of importance
 Bangladesh VS UK
Business Customs: Cultural Imperatives

 A complicating factor is what may be an

imperative to avoid in one culture is an
imperative to do in another
 In Japan prolonged eye contact is considered
offensive and thus, it is imperative to avoid
 But in Arab and Latin America it is important to
make strong eye contact or you run the risk of
being seen as evasive or untrustworthy
Business Customs: Cultural Electives
 “Business customs or cultural practices
which are permissible to partake in”
 They are helpful, but not essential and
majority of customs fit into this category
 A cultural elective in one culture may be an
imperative in another
 In some cultures, one can accept or tactfully
and politely reject the offer of a beverage,
whereas in other cases refusing is an insult
Business Customs: Cultural Electives

 A cultural elective in one culture may be an

imperative in another
 In some cultures, one can accept or tactfully
and politely reject the offer of a beverage,
whereas in other cases refusing is an insult
Business Customs: Cultural Exclusives

 “The customs that are reserved exclusively for

the locals and from which foreigner is barred”
 A Christian attempting to act like a Muslim would be
serious repugnant to a follower of Mohammed
 Many of these exclusives are related to religion
 You should avoid political/religion
based discussion in conversation
 When western people discuss about
weather then u r gone mate…
Business Customs: Conclusions

 Foreign managers need to be perceptive

enough to know when they are dealing with
an imperative, an elective, or an exclusive
and have the adaptability to respond to each
Views on Which American Culture
is Based
 ‘Master of destiny’ viewpoint
 Independent enterprise as the instrument of
social action
 Personnel selection & reward based on merit
 Decisions based on objective analysis
 Wide sharing in decision making
 Never-ending quest/search for improvement
 Competition producing efficiency
Management Styles Around the World
 There is considerable variation in ways
business is conducted due to the diverse
structures, management values, and
behaviors
 Cultural shock occurs in foreign markets due
to the differences in:
 The contact level, communications emphasis,
tempo and formality
 Ethical standards and rituals
 Government involvement
 Hofsted’s scores on IDV and PDI
Management Styles Around the World

 Management styles vary cross-culturally due

to the differences in the following factors:
 Authority and Decision Making
 Management Objectives and Aspirations
 Communication Styles
 Formality and Tempo
 P-Time Versus M-Time
 Negotiation Emphasis

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Authority and Decision Making
 Business size, ownership, public accountability,
and cultural values (that determine the status
and position or PDI) combine to influence the
authority structure of business
 In high PDI countries such as Mexico, Malaysia,
understanding the rank and status of clients, and
business partners is much more important than in
more egalitarian (low PDI) societies such as
Denmark and Israel
 Three authority patterns determining who
makes the decision are prevalent worldwide
Centralized management decisions
 Generally found in those situations where
family gives absolute control to owners
businesses are small enough to make centralized
decision
 In many European businesses, such as those in
France, decision is made by a few at the top
 In other countries, such as Mexico and Venezuela,
where semi-feudal, land-equals-power heritage exists,
management styles are autocratic and paternalistic
 In middle Eastern countries, the top man makes all
decisions
Decentralized management decisions

 As businesses grow and professional management

develops, there is a shift toward this approach
 Here, executives at different levels exercise
authority over their own functions
 In USA, decision making authority is lying with the
middle or lower level management!!!!!!
 Your cleaner may have higher salary range than u!!!
Salary and designation scale…
Committee decision making

 Here, decision is made by group or consensus

 Committee may operate on a centralized or
decentralized basis, different from individualized
functioning of the top management and
decentralized decision-making arrangements
 Every member should be convinced of the
merits of the proposition
 Since Asian cultures and religions emphasize
harmony and collectivism, group decision making
predominates here
Management Objectives and Aspirations

 The training and cultural background of

managers influence their personal and business
outlooks
 Society as a whole establishes the social rank or
status of management
 Cultural background dictates the patters of
aspirations, and objectives
 These cultural influences affect the attitudes of
managers toward innovation, new products and
doing business with foreigners
Management Objectives and Aspirations
 To understand one’s management styles,
marketer must appreciate one’s individual values,
values
which are reflected in business goals and
business practices
 In dealing with foreign business, a marketer
must be aware of varying objectives and
aspirations of management
 Security and Mobility (government job)
 Personal Life (Private sector)
 Affiliation and Social Acceptance (Early office leavers in Japan)
 Power and Achievement
Security and mobility
 Personal security and job mobility directly
relate to basic human motivation and
therefore, have widespread social and
economic implications
 The word security is somewhat ambiguous
and this ambiguity provides some clue to
managerial variation
 To some, it means a big paycheck, training and
ability to move from company to company
 For others, it means the security of lifetime
position with their companies
 To still others, it means adequate retired plans
and other welfare benefits
Security and mobility

 Companies in countries with higher PDI have a

strong paternalistic orientation, and it is assumed
that individuals will work for one company for the
majority of the lives.
 (In Japan owner sit with weekly lunch)
 French managers have much less mobility than
British
Personal life

 For some individuals, a good personal or

family life takes priority over profit, security
or any other goal (Traffic and personal life). Even
people consider their buying decision based on location
 McClelland discovered that “the cultures stressed
the virtue of a good personal life as being far
more important than profit or achievement”
 Greek outlook regarded “work as an undesirable
factor that got in the way of the search for
pleasure or personal life”
Personal life

 To the Japanese, personal life is company life

 Many Japanese workers regard their work as the
most important part of their overall lives
 Japanese work ethic is company loyalty
and Japanese employees maintain identity
with the corporation
 The worst work-personal life trade-off
seems to be among junior doctors
 In the USA, they work 80 hours per week and
because of associated fatigue make many mistakes
Affiliation and social acceptance

 In some countries, acceptance by neighbors

and fellow workers is a predominant goal
within business
 The Asian outlook is reflected in the group
decision making so important in Japan, and
they place high importance on fitting in with
their group, and group identity
 In response to a question: What someone does for
living, he responds ‘I work for Sumitomo or
Mitsubishi’, instead of saying I am an engineer
Power and achievement

 Although there is some power seeking by

business managers worldwide, power seems
to be a more important motivating force in
South American countries
 Many business leaders are not only profit
oriented but also use their business positions
to become social and political leaders
 One way to measure achievement is by the amount
of money in the bank and another is high rank; both
aspirations are relevant to the USA
Communication Styles
 Prof. T. Hall tells that “communication involves
much more than just words”
 He also describes “symbolic meanings of time,
space, friendships, and agreements, and how
they vary across cultures.”
 Hall’s ideas about cross cultural communication is
universally applicable to all media
 Face-to-face
communication and Internet
communication will be covered here only
Face-to-face Communication

 No language readily translates into another

due to differences in meanings among
languages
 The word “marriage” means love in one language,
while it may mean restrictions in another
 Although it is the basic tool of communication
in foreign lands, managers fail to develop even
a basic understanding of one other language
Face-to-face Communication

 Much communication depends on implicit

messages that are not verbalized
 Verbal communication is at least explicit, but
business communication is more implicit

 It is difficult to understand linguistic nuances

which reveal unspoken attitudes & information
Face-to-face Communication

 Prof. Hall places 11 cultures along a high-

context/low-context continuum
 Communication in a high context culture depends
heavily on the contextual (who says it, when it is
said, how it is said) or nonverbal aspects of
communication
 Communication in a low context culture depends
more on explicit, verbally expressed
communications
 Face-to-face Communication

HIGH CONTEXT Japanese

(Implicit) Arabian
Latin American
Spanish
Italian
British
French
U.S.A.
Scandinavian
German LOW CONTEX
Swiss (Explicit)

Contextual background of various countries

Internet Communication

 The message on a B-to-B Web site is an

extension of the company and company needs
to be sensitive to Web message
 There is huge opportunity to convey message
 Once a message posted on it can be read anywhere
anytime
 Although Web can be designed using English
language, using country-specific language is
more effective
 In France the official use of English is banned
Internet Communication

 Examples of using English in Web

 Estimates are that ‘78% of today’s website context is
written in English, but an English e-mail message can
not be understood 35% of all Internet users’
 Another study on European continent highlights the
need for companies to respond to e-mail in the
languages of their websites
 Estimates show that ‘1/3 of European senior managers
said they would not tolerate English online. They do
not believe that middle managers can use English well
enough to transact business on the Internet
Internet Communication
 In designing Web, marketers must examine
the meaning of any symbol, icon, color etc
used which could convey an unwanted
message
 Examples of symbol related problems
 An icon such as a hand making a high-five sign will
be offensive in Greece
 An image of a thumb-to-index finger the A-OK
gesture, will infuriate visitors in Brazil
 A two-fingered peace sign when turned around has
a very crude meaning to the British
Formality and Tempo
 The degree of formality and haste varies
across cultures
 A German executive was taken aback when
employees of his Indiana client called him by his
first name. He noted, “In Germany you don’t do
that until you know someone for 10 years- and
never if you are at a lower rank.”
 Americans are more informal but prompt and
dutiful as reflected in the comment of a
British
Formality and Tempo
 France is higher on Hofested’s PDI than the
USA and such differences can lead to
cultural misunderstandings
 The French are dubbed snobbish by Americans,
while the French consider Americans crude and
unsophisticated
 Haste and impatience are the common
mistakes of North Americans who do
business in the Middle East
 Most Arabs do not start serious discussions until
2/3 opportunities to meet the individual
Formality and Tempo

 Marketers expecting maximum success have

to deal with foreign executives in ways that
are acceptable to foreigners
 Latin Americans depend greatly on friendships but
establish these friendships only in South American
ways: slowly over a considerable period of time
P-Time versus M-Time

 North Americans are a more time-bound

culture than Middle Eastern and Latin
American cultures
 “Middle Eastern and Latin Americans are always
late and Americans are always prompt.”
Neither statement is completely true. What is true is
Americans are a very time-oriented society- time is
money to them.
P-Time versus M-Time
P-Time versus M-Time

Most cultures offer a mix of M-time and P-time behavior

Negotiations Emphasis

 Business negotiations are perhaps the most

fundamental business rituals
 All the differences in business customs and
culture come into play frequently and
obviously in the negotiation process
 Basic elements of negotiations are the same
 They relate to product, price, associated services,
terms, and friendship between vendor and
customer
Negotiations Emphasis

 The negotiating process is complicated when

negotiating with someone from another
culture
 Attitudes brought to the negotiating table by
each individual are affected by many cultural
factors and customs often unknown to the
other participants
 Misunderstanding can be created if SRC is
used as the basis for assessing a situation
Negotiations Emphasis

 SRC of both parties can come into play, if

care is not taken
 One standard rule in negotiating is “know
thyself” first, and second, “know your
counterpart”
Gender Bias in International Business
 The gender bias against women managers exists
both at home and abroad, but some mythical
bias is harbored by some male managers
 As a result, MNCs are hesitant to offer women
international assignment
 Although 50% are women in USA, only 18% are
chosen for international assignment
 In Asia, Latin America, Middle East, women are not
found in upper levels of management, they are not
treated equally. Bangladesh is exception…
Gender Bias in International Business
 Despite the substantial prejudices toward
women in foreign countries, evidence suggests
that:
 Prejudice toward foreign women is exaggerated
 Women executives are not equally treated in
home and host countries
 However, it does not mean that women are
not much successful in foreign postings
Gender Bias in International Business

 A key to success for both managers hinges

on the strength of a firm’s backing like,
training, and its strong support
 There is no correct way of dealing with
gender bias
 The worst thing to do is go into a culture and try
to change its view
 The best thing to do is understand why the bias
exists and try to work around it
Business Ethics
 The moral question of what is right poses many
dilemmas for domestic marketers as ethical
standards are not clear
 In foreign marketplace it is infinitely complex
because value judgments differ widely among
culturally diverse groups
 What is acceptable in one culture may be
completely unacceptable in another
 Giving gifts of high value is condemned in USA but
in many countries it is not only accepted but also
expected
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Corruption Defined
 Meaning of the word corruption varies around
the world as reflected in the following:
 Profits (Marxism)
 Individualism (Japan)
 Rampant/uncontrolled Consumerism (India)
 Missionaries (China)
 Currency speculation (Southeast Asia)
 R-rated American movies with their sex & violence
 Intellectual property laws (Sub-Sahara Africa)
The Western Focus on Bribery

 Before the Enron and WorldCom crises, to

most American the word corruption meant
bribery
 Now, fraud or non-disclosure of any item is
considered a great corruption
 The decision to pay bribe creates a major
conflict between what is ethical and proper and
what is profitable and necessary for business
Bribery: Variations on a Theme

 Although bribery is a legal issue, it is

important to see bribery in a cultural context
to understand different attitudes toward it
 Some cultures are more open about taking
bribes, whereas others, like the USA, are publicly
contemptuous of such practices
Bribery: Variations on a Theme

 Bribery- voluntarily offered payment by

someone seeking unlawful advantage
 Extortion- payments are extracted under
duress by someone in authority from a
person seeking only what he or she is
lawfully entitled to
 Finance minister is demanding heavy payments
under the treat that a million dollar contract would
be voided. It is known a speed money
Bribery-Variations on a Theme
 Subornation- involves giving large sums of
money designed to entice an official to
commit an illegal act on behalf of the one
offering bribe
 Lubrication- involves a relatively small sum
of cash, a gift, or a service given to a low-
ranking official in a country where such
offerings are not prohibited by law
 Its purpose is to expedite the normal, lawful
performance of a duty by that official
Bribery-Variations on a Theme

 Agent’s Fees- When a company is

uncertain about of a country’s rules and
regulations, an agent may be hired to
represent the company in that country
 If a part of that agent’s fee is used to pay bribes,
the intermediary’s fees are being used unlawfully
 Ethical and Socially Responsible Decisions
 Marketer faces the dilemma of responding to
situations where the local law does not exist, or
local practices appear to ignore a certain behavior
 In normal business operations, difficulties arise in
making decisions, establishing policies, and
engaging in business operations in five areas:
 Employment practices & policies
 Consumer protection
 Environmental protection
 Political payments
 Basic human rights & fundamental freedoms
Ethical and Socially Responsible Decisions

 Three ethical principles to help the marketer

distinguish between right and wrong:
 Utilitarian ethics: Does the action optimize the
“common good” or benefits of all constituencies?
And who are the relevant community?
 Rights of the parties: Does the action respect
the rights of the individuals involved?
 Justice or fairness: Does the action respect the
canons of justice or fairness to all parties
involved?
Where do we stand??