Culture New_Chapter 06

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Section Three

International Environmental Forces

International Business

by Ball, McCulloch, Frantz,

Geringer, and Minor


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6

Sociocultural ForcesSociocultural Forces

International Business

by Ball, McCulloch, Frantz,

Geringer, and Minor

McGraw-Hill/Irwin Copyright 2006 The McGraw-Hill Companies, Inc. All rights reserved.

This chapter covers:

The significance ofculture for business

The socioculturalcomponents

The significance ofreligion

Cultural aspects oftechnology

Trends of formaleducation

The importance oflanguage

Classes of society

and culturaldimensions


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Chapter ObjectivesChapter Objectives

Understand the significance of culture for international business

Understand the sociocultural components of culture

Appreciate the significance of religion to businesspeople

Comprehend the cultural aspects of technology

Grasp the pervasiveness of the Information Technology Era

Understand why businesspeople must follow the trends of formaleducation

Appreciate the importance of the ability to speak the local language

Recognize the importance of unspoken language in internationalbusiness

Discuss the two classes of relationships within a society

Discuss Hofstedes four cultural value dimensions

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Rules of Thumb for Cross CultureRules of Thumb for Cross Culture

BusinessBusiness Be prepared

Slow down

Establish trust Understand the

importance of language

Respect the culture

Understand thecomponents of culture

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What is Culture?What is Culture?

Culture

The sum total of beliefs, rules, techniques,institutions, and artifacts that characterize humanpopulations.

Consists of learned patterns of behavior commonto the members of a given society.

The unique lifestyle of a particular group ofpeople.

Ethnocentricity

Considering your culture superior to all others

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Living with Other CulturesLiving with Other Cultures

First, realize that there aremany different cultures.

Then, learn thecharacteristics of those

cultures. Spend a lifetime in a

country. Undergo an extensive,

highly sophisticatedtraining program that

covers the maincharacteristics of aculture.

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Culture Affects All Business FunctionsCulture Affects All Business Functions

Marketing

Variation in attitudesand values requires

firms to use differentmarketing mixes

P&G JapaneseCamay

commercials Disneyland Paris

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Human ResourceManagement

Evaluation of

managers Production and Finance

Attitudes towardauthority

Attitudes towardchange


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Sociocultural ComponentsSociocultural Components

Components of CultureAesthetics

Attitudes and beliefs

ReligionMaterial Culture

Education

Language

Societal organization Legal characteristics

Political structures

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AestheticsAesthetics

Art

Colors, symbols, numbersconvey meaning

Nike air symbol

Architectural styles different

Feng shui

Music and Folklore

Musical tastes vary

Folklore discloses way oflife

Cowboys in Chile orArgentina

Mexican singing cricket

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Attitudes and BeliefsAttitudes and Beliefs

Attitude Toward Time

Problem for Americans

Americans always

prompt Maana attitude

Siestas

Directness and drive

Perceived to be rudeness

Deadlines Liability in Asian

cultures

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Attitudes towardAchievement and Work

American live to work,Germans andMexicanswork to live.

Demonstration effect

Result of having seenothers with desirablegoods.

Job prestige

Disdain for physicallabor


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Attitudes and BeliefsAttitudes and Beliefs

Attitude Toward Change

The American firm is accustomed to the rapid

acceptance by Americans of something new. Europeans are fond of reminding Americans that

they are a young nation lacking traditions.

The more consistent a new idea is with asocietys attitudes and experiences, the morequickly it will be adopted.

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ReligionReligion

Responsible for many of the attitudes and beliefsaffecting human behavior.

Work Ethic

Protestant work ethicEuropeans and Americans generally view

work as a moral virtue and look unfavorablyon the idle.

Confucian work ethicIn Asian countries, this is the same as

Protestant ethic.6-11


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Asian ReligionsAsian Religions

Hinduism

Caste system is basis ofthe social division of

labor. Buddhism

Jainism

Sikhism (Indian)

Confucianism

Inseparable from Chineseculture

Taoism

Shintoism (Japan)

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IslamIslam

About 1.3 billion followers

This youngest faith is thesecond largest after Christianity(2 billion adherents).

Founder of Islam is Muhammad

Muhammad was not onlythe prophet of God but alsothe head of state.

InMuslim nations, there is

no separation of church andstate.

Holy Book Koran

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Five Pillars of Faith

Confession of faith

Five daily prayers

Giving charity Ramadan fast

Pilgrimage toMecca

Jihad holy war

Two divisions

Sunni and Shiites Conflict gives rise to violent

clashes


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Religious Population of the WorldReligious Population of the World

Insert Figure 6.1


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Material CultureMaterial Culture

Refers to all human-madeobjects

Concerned with howpeople make things and

who makes what andwhy.

Technology

Mix of usable knowledgethat society applies and

directs toward attainmentof cultural and economicobjectives

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Material CultureMaterial Culture -- TechnologyTechnology

Importance to InternationalCompanies

Enables a firm to becompetitive in world

markets.Can be sold, or be

embodied in thecompanys products.

Can give a firm

confidence to enter aforeign market.

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Enables the firm to obtainbetter than usual conditionsfor a foreign marketinvestment.

Enables a company withonly a minority equityposition to control a jointventure.

Can change the international

division of labor. Is causing major firms to

form competitive alliances.


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Cultural Aspects ofTechnology

Includes skills in marketing,finance, and management

People not always ready toadapt to changes technologybrings

Technological Dualism

The side-by-side presence oftechnologically advancedand technologicallyprimitive productionsystems.

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Appropriate Technology

Choose the technology thatmost closely fits the societyusing it

Can be labor-intensive,intermediate or capital-intensive

Bommerang Effect

Technology sold to copaniesin another nation used toproduce competing goods


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Information Technology Era

By the year 2000 the Internet economy

Already reached $850 billion.

Exceeded the size of the automobile and truckand life insurance industries.

ConsumptionJapanese wide use of automation

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EducationEducation

Equips a person to take his orher place in adult society

Yardsticks

Literacy rate

Must verify definitionused

Kinds, quality andenrollment of schools

Amount per capita spent oneducation

Vocationally trained groups

Study trends

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Educational MixEducational Mix

European business schools patterned on Americanmodel because of

Increased competition in the EU

Return to Europe of American business schoolgraduates

Establishment of American-type schools withAmerican faculties

Trend in less developed countries to emphasizehumanities, law and medicine

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EducationEducation

Brain Drain

The emigration of highlyeducated professionals toindustrialized nations

Reverse Brain Drain The return of highly

educated professionals totheir home countries.

Korea and Taiwan are

luring home engineersand scientists

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Womens Education

Fall in illiteracy rate

Most governments nowprovide education forboth genders

Educated women havefewer, healthier, andbetter educated children

Educated women achieve

higher labor forceparticipation and wages


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Spoken LanguageSpoken Language

Language is the key to culture, and without it,people find themselves locked out of all but acultures perimeter

Spoken languages demarcate cultures Switzerland four separate cultures

Many languages can exist in a single country, butone usually serves as communication vehicle

Lingua franca or link language English primary language of business

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LanguageLanguage

Must speak the locallanguage

Still need translators

Use back translations toavoid errors

Technical words do notexist in all languages Usually resort to English

Many cultures avoidsaying anythingdisagreeable

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Unspoken LanguageUnspoken Language

Nonverbal communication, such as gestures andbody language.

Gestures vary tremendously from one region to

another Closed doors convey different meanings

Office size different in various cultures

Conversational distance small in East

Gift giving has specific etiquette in each culture Gift or bribe?

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Questionable PaymentsQuestionable Payments

Necessary in somecountries to obtainaction from the

government Foreign Corrupt

Practices Act prohibitsAmerican firms from

making questionablepayments

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Societal OrganizationSocietal Organization

Kinship

Extended family

Includes blood relativesand relatives by

marriage. This is a source of

employees and businessconnections.

Members responsibility

Although the extendedfamily is large, eachmembers feeling ofresponsibility to it isstrong.

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Associations

Social units based onage, gender, or commoninterest, not on kinship.

Age Manufacturers of

consumer goods are wellaware of the importanceof segmenting a marketby age groups.

This segmentationoften cuts acrosscultures.


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Societal OrganizationSocietal Organization

AssociationsGenderAs nations

industrialize, more

women enter the jobmarket and assumegreater importance inthe economy

Free association people joined together

by a common bond:political, occupational,religious orrecreational

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Understanding National CultureUnderstanding National Culture

Hofstedes Dimensions of Culture

Individualism versus Collectivism

Large versus Small Power Distance

Strong versus Weak Uncertainty Avoidance

Masculinity versus Femininity

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World Bank AntiWorld Bank Anti--Corruption ProgramCorruption Program

We believe that an effective anticorruption strategybuilds on five key elements:

1. Increasing Political Accountability

2. Strengthening Civil Society Participation3. Creating a Competitive Private Sector4. Institutional Restraints on Power5. Improving Public SectorManagement

Source: www.worldbank.org


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Business Culture in BrazilBusiness Culture in Brazil

Brazilians conduct businessonly through personalconnections. There must also bean implicit understanding thatthe business relationship will

be long-term. In Brazil, people quickly move

to a first-name basis. Do not,however, use first names untilyou are invited to do so.

M

aintain steady eye contact atall times; it is consideredimpolite to break eye contact.

Source: www.executiveplanet.com

Do not give anything that isobviously expensive. Yourgenerosity will only causeembarrassment or bemisinterpreted as a bribe.

Avoid giving items in black orpurple, since these are thecolors of mourning.Moreover,handkerchiefs are alsoassociated with funerals.

Brazilians also considerthemselves Americans.Consequently, don't use thephrase 'in America' whenreferring to the United States.


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USAIDUSAID

The ability to read and write or literacy is a basic skill forpeople to live and work intodays world. Yet more than900 million adults are not

literate, primarily in developingcountries.More than 125million children who should bein school are not. For thisreason, USAID emphasizesprograms of support for basic

education and places a specialemphasis on improvingopportunities for girls, womenand other underserved anddisadvantaged populations.

Source: www.usaid.gov


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FCPAFCPA

The FCPA covers

all entities and individuals engaging in acts within theterritory of the United States in furtherance of theprohibited conduct, and it covers

U. S. citizens, resident aliens, entities established underU. S. law, and

publicly held corporations, including their officers,directors, employees, shareholders and agents, whetherforeign or domestic, that are registered with the SEC as an

issuer that participates in corrupt practices in any fashionoutside the United States.

Source: www.abanet.org


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BuddhismBuddhism

As of June 2001, Buddhists inTaiwan had registered 4,037temples, 39 seminaries, fiveuniversities, three colleges, four

high schools, 45 kindergartens,30 nurseries, five orphanages,five retirement homes, onecenter for the mentally retarded,64 institutions for proselytizing,three hospitals, four clinics, 118

libraries, and 28 publishinghouses with 26 publications.There were also around 9,866Buddhist clergy serving the 5.48millionBuddhists of Taiwan.

Source: www.gio.gov.tw


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World Illiteracy RatesWorld Illiteracy Rates

Source: www.uis.unesco.org

Culture New_Chapter 06

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