MODULE 3
INTERNATIONAL BUSINESS ENVIRONMENTS:
CULTURAL ENVIRONMENT
1. CULTURE AND INTERNATIONAL BUSINESS (GERLIE AND AYI)
Introduction
- Global expansion is demanding. If you are expanding into a market whose
local culture is different from your home market, you may experience
cultural differences that present yet another challenge: a cultural
challenge.
- In recent decades, cultural and international business have been
inextricably linked. Thanks to globalized goods, people, and money flows,
companies growing internationally must deal with cultural differences in
new, local markets.
Ways and reasons - international businesses need to keep culture in mind when
doing business abroad, such as:
- Marketing and promoting products and services whose prices and use
differ from one market to another.
- Relocating senior managers who would need to perform several business
activities abroad.
- Engaging local customers in one market to expand into a neighboring
market whose access is hard to achieve directly.
- Establishing solid business partnerships with local suppliers, vendors,
collaborations, etc.
- Outperforming the competition by creating a more insightful, favorable,
and enduring presence in a market instead of a distant approach where
you’re less involved with local customers or businesses.
The importance and role of culture in international business
The importance and role of culture in international business is a
long-established area of interest in business and academic research.
- In a broad study on the role of culture in international business, cultural
context is shown to substantially influence how global companies perform
everyday duties in diverse cultural contexts. Specifically, going abroad
makes companies adapt business procedures to local customs.
- This finding has broad implications for developing business strategies that
are culturally competent on a wide scale. Notably, while each company
may have a clear and actionable business strategy at home, applying this
method without adopting it to local customs may fail and result in
scandalous or undesirable outcomes.
- Moreover, the complexities involved in doing business abroad are informed
by what makes a culture, such as local languages, business practices, local
dress codes, food habits, and much more. In short, doing business abroad
is, in many ways, more about understanding who your customers are - and,
by extension, your business partners, suppliers, vendors, etc. - are in your
chosen international markets of operation.
International business and cross-cultural challenges
Where business barriers can be overcome using business learning methods
and models, cultural barriers need to be addressed using more innovative
techniques. Such approaches can be informed by how your staff interacts with
local customers, suppliers, and partners.
Common Cross-Cultural Barriers
● Cultural conflicts
- Arising from cultural differences among your international staff
members.
● Parochialism
- Staff might believe at-home rules and ways of doing business apply
equally abroad.
● Individualism
- Staff members who are used to working independently might find
working in teams hard to do in your foreign markets.
● Cultural distance
- Staff whose culture is vastly different from your foreign market’s -
might be unable to adapt to new ways of doing business according to
local cultural customs.
● Culture shock
- An extreme case of culture difference where your staff assigned
abroad cannot adapt to local culture and habits so much that your
final output as a business declines instead of grows.
Example:
1. Wing Zone Franchise - overcame local barriers to certain tastes of chicken
offered as standard in home markets. Tweaking Wing Zone’s flavors to
adapt to local preferences - by adding tandoor in Saudi Arabia, for instance
- has made Wing Zone an instant success.
2. Wing Superior Sandwiches - has worked on supply chain management to
streamline operations outside the US home market. In doing so, this
company has not only cut supply chain costs but has also managed to
localize supply chain practices to adapt to local ways of managing supplies
and vendors in different markets.
To conclude, it shows how creative companies can or can not overcome
cross-cultural barriers. It is not a fixed recipe everyone can cook and enjoy
everywhere. Instead, a wide range of factors, defined by culture as an
overarching factor, are at play in determining whether a product or a service
could succeed at a given time and in a given market. Understanding who your
local customers and partners are defines your cultural competency abroad as an
employer and brand.
Addressing the cultural barriers in international business
- For international projects, carefully select employees.
- Assign employees compatible assignments.
- Provide pre-departure training.
- Provide after-arrival orientation.
- Provide financial and non-financial incentives.
Cultural differences in international business
As your business grows internationally, cultural differences across markets
you operate in grow accordingly. Cultural differences can be considered assets to
invest in instead of liabilities.
Getting culture right in international business
Understanding cultural differences in international business is a must for
any global employer. The success or failure to understand who your foreign
customers, suppliers, vendors, and partners are can make-or-break your budding
or established international presence.
2. CORRELATES OF CULTURE (GIA)
Culture emerges through the integration of our values and attitudes; manners and customs;
time and space perceptions; symbolic, material, and creative expressions; education; social
structure; language; and religion. Let’s examine these in more detail.
1. Values and Attitudes
Values represent a person’s judgments about what is good or bad, acceptable or unacceptable,
important or unimportant, and normal or abnormal. Values Are the basis for our motivation and
behavior. Attitudes are similar to opinions but are often unconsciously held and may not be
based on logical facts. Prejudices are rigidly held attitudes, usually unfavorable and usually
aimed at particular groups of people.
2. Manners and Customs
Manners and customs are ways of behaving and conducting oneself in public and business
situations. Some countries are characterized by informal cultures; people treat each other
as equals and work together cooperatively. In Other countries, people tend to be more formal;
status, power, and respect are relatively more important. Customs that vary most worldwide
relate to work hours and holidays, drinking and toasting, appropriate behavior at social
gatherings, gift giving, and women in the workforce.
3. Symbolic Productions
A symbol can be letters, figures, colors, or other characters that communicate meaning. For
example, the cross is the main symbol of Christianity. The redstar was the symbol of the former
Soviet Union. National symbols include flags, anthems, seals, monuments, and historical
myths. Symbols can represent nations, religions, or corporations, and they can help
to unite people. Businesses have many types of symbols, in the form of trademarks, logos, and
brands. Think how easy it is to identify popular company logos such as Nike's Swoosh, Apple’s
apple, and Cadbury’s unique lettering.
4. Material Productions and Creative Expressions
Material productions are artifacts, objects, and technological systems that people construct to
function within their environments. They are integral to human life and provide the means
to accomplish objectives as well as communicate and conduct exchanges within and
between societies. The most important technology-based material productions are the
infrastructures that supply energy, transportation, and communications.
5. Social Structure
Social structure refers to the pattern of social arrangements and organized relationships that
characterize a society. It refers to how a society is organized in terms of individuals,
families, groups, and socioeconomic strata. All Cultures have a social structure that
influences our status or class in society. Understanding the social structure of international
employees, clients, and suppliers is vital for avoiding cultural misunderstandings and
optimizing business transactions.
6. Language
Verbal Language
The world has nearly 7,000 active languages, including more than 2,000 in each of Africa and
Asia. Most of these languages have only a few thousand speakers. National languages,
dialects, and translation tend to complicate verbal communication. It is sometimes
difficult to find words to convey the same meaning in a different language. Advertising
Themes often lose their original meaning in translation or give the wrong
impression. Sometimes business jargon, vocabulary unique to a particular country can
cause communication problems.
Nonverbal Communication
Nonverbal communication is unspoken and includes facial expressions and gestures. In fact,
nonverbal messages accompany most verbal ones. These Include facial expressions,
body movements, eye contact, physical distance,posture, and other nonverbal signals.
Certain facial expressions and hand gestures have different meanings in different cultures,
and a lack of awareness of the meanings of these gestures in the local culture can lead to
negative consequences.
3. NATIONAL CULTURE CLASSIFICATIONS (NELA)
- Hofstede’s Cultural Dimensions Theory is a framework used to understand the
differences in culture across countries and the ways that business is done across
different cultures. In other words, the framework is used to distinguish between
different national cultures, the dimensions of culture, their impact on etiquette
and to facilitate communication in areas ranging from business to diplomacy.
Power Distance Index
- The power distance index considers the extent to which inequality and power are
tolerated.
A high-power distance index indicates that a culture accepts inequity and power
differences, encourages bureaucracy, and shows high respect for rank and authority.
A low power distance index indicates that a culture encourages flat organizational
structures that feature decentralized decision-making responsibility, a participative
management style, and emphasis on power distribution.
Individualism vs. Collectivism
- The individualism vs. collectivism dimension considers the degree to which
societies are integrated into groups and their perceived obligations and
dependence on groups.
In individualistic societies, the emphasis lies on personal achievement and
rights, prioritizing the needs of oneself and one’s immediate family.
Collectivism indicates that there is a greater importance placed on the goals and
well-being of the group. A person’s self-image in this category is defined as “We”
and individuals from collectivist backgrounds often prioritize relationships and
loyalty more prominently than those in individualistic cultures.
Uncertainty Avoidance Index
- This dimension considers how unknown situations, uncertainty, and unexpected
events are dealt with.
A high uncertainty avoidance index indicates a low tolerance for uncertainty, ambiguity,
and risk-taking. The unknown is minimized through strict rules, regulations, etc. Both the
institutions and the individuals in these societies strive to reduce uncertainty by
employing vigorous rules, regulations, and similar measures.
A low uncertainty avoidance index indicates a high tolerance for uncertainty and
ambiguity. The unknown is more openly accepted, and there are lax rules, regulations,
etc. Individuals and cultures with low uncertainty avoidance embrace and feel at ease in
situations lacking structure or in fluctuating environments.
Masculinity vs. Femininity
- The masculinity vs. femininity dimension is often referred to as gender role
differentiation and examines the extent to which a society values traditional masculine
and feminine roles.
Masculinity includes the following characteristics: distinct gender roles, an appreciation
of assertiveness, courage, strength, and competition.
Femininity includes characteristics such as fluid gender roles, modest, nurturing, and
concerned with the quality of life.
Long-Term Orientation vs. Short-Term Orientation
- The long-term orientation vs. short-term orientation dimension considers the extent
to which society views its time horizon.
Societies that emphasize long-term orientation prioritize future outcomes, postponing
immediate success for achievements over the long term. In these cultures, values like
persistence, endurance, frugality, savings, sustained growth and adaptability take centre
stage.
Short-term orientation shows focus on the near future, involve delivering short-term
success or gratification, and place a stronger emphasis on the present than the future.
Short-term orientation emphasizes quick results and respect for tradition.
Indulgence vs. Restraint
- The indulgence vs. restraint dimension considers the extent and tendency for a
society to fulfill its desires. In other words, this dimension revolves around how societies
can control their impulses and desires.
Indulgence indicates that society allows relatively free gratification related to enjoying
life and having fun.
Restraint indicates that society suppresses gratification of needs and regulates it
through social norms.
4. CORPORATE CULTURE (MAX)
WHAT IS CORPORATE?
The term "corporate" typically refers to anything related to corporations or large
businesses. A corporation is a legal entity that is separate and distinct from its owners
(shareholders) and is recognized as such under the law. Corporations have certain rights,
responsibilities, and obligations, including the ability to enter into contracts, own assets, incur
liabilities, and sue or be sued.
In the context of business, "corporate" often implies activities, structures, or
characteristics associated with large organizations or companies. It may refer to corporate
culture (the shared values, beliefs, and norms within an organization),
WHAT IS CORPORATE CULTURE?
Corporate culture refers to the shared values, beliefs, norms, attitudes, and behaviors
that characterize an organization and guide the interactions and decisions of its employees. It
encompasses the collective mindset of the organization and influences how individuals within
the company perceive themselves, their colleagues, and their work.
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Key aspects of corporate culture include: (1-5 lahat ilalagay sa ppt with meaning) elaborate ko
na lang sa actual
1. Values - The fundamental principles or beliefs that guide the organization's
actions and decisions. These values often reflect what the organization stands for
and what it considers important.
2. Norms - The unwritten rules and expectations that govern behavior within the
organization. Norms dictate acceptable and unacceptable behavior,
communication styles, dress codes, and other cultural practices.
3. Behaviors - The actions and attitudes demonstrated by employees at all levels
of the organization. These behaviors are influenced by the organization's values,
norms, and leadership.
4. Symbols - The tangible representations of the organization's culture, such as its
mission statement, logo, office layout, dress code, and rituals. These symbols
help reinforce the organization's identity and values.
5. Communication styles - The manner in which information is shared, feedback is
given, and decisions are made within the organization. Communication styles can
vary significantly across different corporate cultures.
5. KEY CULTURAL ISSUES (KATH)
The world of business has transcended geographical boundaries, creating a
vibrant and dynamic international landscape. While this opens doors to exciting
opportunities, it also presents intricate challenges, with cultural differences
standing as a major issue. Understanding and navigating these complexities is
crucial for any business hoping to thrive in the global setting.
So my report basically delves into the key cultural issues that can impact
international business success. We'll explore how diverse cultures, values, and
social norms influence various aspects of business operations, from
communication and etiquette to decision making styles and more. Through
specific examples and insightful analysis, we'll shed light on potential barriers
that can arise due to cultural misunderstandings.
1. Communication Style and Language Barriers- Effective communication is
at the heart of any successful business venture. However, cultural
differences can significantly impact communication styles and create
language barriers. In some cultures, communication may be more indirect,
relying on non-verbal cues and context, while in others, it may be more
direct and explicit. For instance, in high-context cultures like Japan, a lot
can be conveyed through silence and subtleties, whereas in low-context
cultures like the United States, direct verbal communication is valued.
2. Cultural Norms and Etiquette- Cultural norms and etiquette play a
significant role in international business interactions. What may be
considered polite and respectful behavior in one culture could be
perceived as rude or offensive in another. For example, the way individuals
greet each other, exchange business cards, negotiate, or even dress can
vary greatly from one culture to another. In some Middle Eastern cultures,
physical contact between genders is not common, and greetings might
involve specific handshakes or gestures. Failing to understand these norms
can lead to offense. In some Latin American countries, greetings can be
more physical, with hugs and kisses. This can be misinterpreted as overly
familiar by individuals from cultures with more reserved greetings.
3. Workplace Etiquette- Differences in workplace etiquette are a vital
consideration when discussing culture’s impact on international business.
When you engage with multinational teams, you will encounter stark
differences in workplace etiquette, reflecting cultural diversity. Let’s
consider punctuality. You must reach in time when dealing with American,
Japanese, Russian, or South Korean clients and colleagues. On the other
hand, arriving early for an appointment is standard in Germany. But when
in Malaysia, China, Mexico, Ghana, or Nigeria, arriving late for meetings is
acceptable.
4. Business Norms- Business norms refer to the accepted practices and
behaviors within a specific business culture. These norms can vary widely
between cultures and can impact how business is conducted. For example,
in some cultures, it is common to negotiate business deals over a formal
meal, while in others, negotiations are strictly business-focused and meals
are not part of the negotiation [Link] some Latin American countries,
meetings can be more flexible and informal compared to the structured,
time-bound approach common in Western cultures. This can lead to missed
deadlines and misaligned expectations. On the other hand, French
business communication can be more formal and hierarchical than in some
cultures, with emphasis on titles and formalities. Individuals accustomed
to a more casual approach might misinterpret this as coldness or
arrogance.
5. Religion- Religion can be a barrier or issue in the international business
environment due to its potential to create misunderstandings, conflicts, or
ethical dilemmas. Differences in religious beliefs and practices can lead to
misunderstandings in communication and business interactions.
Additionally, religious differences can lead to conflicts in business
relationships, especially when there are opposing views on ethical issues
or business practices. Moreover, religious beliefs can impact business
negotiations, as values and priorities may differ based on religious
teachings.
6. Building Trust and Relationships (Social Customs)- Trust is a
fundamental component of successful business relationships, and it often
takes time to develop. In some cultures, trust is built through personal
relationships and social gatherings, which can be challenging in
international settings where business is often conducted remotely while in
others, it is primarily based on contractual agreements and legal
frameworks. For instance, in Japan, building trust often takes longer and
involves extensive relationship-building through socializing and shared
experiences. An American company focused on quick deals and contracts
might find this pace frustrating and lose confidence.
7. Ethical Behavior- cultural differences can lead to varying perspectives on
what is considered ethical behavior in business. For example, gift-giving is
a common practice in many cultures as a way to build relationships and
show respect. However, in some cultures, lavish gifts may be seen as
bribery, while in others, it is a customary and acceptable practice.
Example, In China, gift-giving is a complex practice with specific etiquette
and expectations. Giving the wrong gift or violating protocol can be seen
as offensive.
8. Decision Making Styles- Cultural differences also extend to
decision-making styles within business environments. In some cultures,
decisions are made hierarchically, with senior leaders having the final say
which include the cultures of the United States, Canada, and Australia. In
contrast, other cultures value consensus and group input in
decision-making processes. Examples include Japan, China, and many
Latin American countries. These differences can lead to challenges in
negotiation and collaboration, as individuals may have different
expectations and approaches.
In conclusion, the diverse differences in culture accross the globe presents both
challenges and opportunities for international business. While cultural
differences can indeed act as barriers, leading to misunderstandings, delays, and
frustration, they also hold immense potential for innovation, deeper customer
connections, and a more inclusive and adaptable business environment.
The key lies in recognizing these complexities and approaching them with
sensitivity and awareness. By actively researching specific cultural norms,
employing cultural experts, and embracing flexibility in communication,
negotiation, and business practices, you can transform potential barriers into
bridges of understanding and collaboration.
Question
Identification
1. It has a worked on supply chain management to streamline operations outside
the US home market
Ans: Wing Superior Sandwiches
2. It refers to the shared values, beliefs, norms, attitudes, and behaviors that
characterize an organization and guide the interactions and decisions of its
employees.
Ans: Corporate Culture
3. The manner in which information is shared, feedback is given, and decisions
are made within the organization.
Ans: Communication Style
4. It represents a person’s judgments about what is good or bad, acceptable or
unacceptable, important or unimportant, and normal or abnormal.
Ans: Values
5. It is a rigidly held attitude, usually unfavorable and usually aimed at
particular groups of people.
Ans: Prejudices
6. It can be letters, figures, colors, or other characters that communicate meaning.
Ans: Symbol
Multiple Choice
[Link] might be unable to adapt to new ways of doing business according to local
cultural customs.
a. Cultural conflicts
b. Symbolic Productions
c. Cultural distance
d. Social Structure
Ans: C
2. Staff members who are used to working independently.
a. Individualism
b. Values
c. Ethical Behavior
d. Parochialism
Ans: A
3. The actions and attitudes demonstrated by employees at all levels of the
organization.
A. Norms
B. Behavior
C. Values
D. All of the above
Ans: B
4. This refers to the pattern of social arrangements and organized relationships
that characterize a society.
A. Social Structure
B. Society
C. Social Arrangements
D. Society Organization
Ans: A
5. What are the most important technology-based material productions
A. Communication
B. Energy
C. Transportation
D. Infrastructures
Ans: D
6. These are the ways of behaving and conducting oneself in public and business
situations.
A. Manners
B. Customs
C. Manner and Customs
D. Culture
Ans: C
7. Give at least three (3) key cultural issues
Ans: 1. Communication Style and Language Barriers
2. Cultural Norms and Etiquette
3. Workplace Etiquette
4. Business Norms
5. Religion
6. Building Trust and Relationships
7. Ethical Behavior
8. Decision Making Styles
