Cross-cultural management

Justin Paul Ref: Chap 9, International Business, 6th ed, Justin Paul)

Ref INTERNATIONAL BUSINESS by JUSTIN PAUL

Objectives 1. 

Understand How Culture, Language, And Religion Influence International Investment And Trade. 2.  Recognize How Corporate, National And Local Culture Interacts. Cases: 1) Cultural Factors in an MNC, Page 413, International Business, Justin Paul by Prentice Hall (PHI) Examples, McDonalds selling Halal menu in Arab countries, Vegetarian menu in India 4. Islamic Banking drjustinpaul.com

The Cultural Environment of International Business Understand That Corporate Culture Probably Is Not Homogenous throughout A Multinational Enterprise. Eg: i.  Bata’s Multi-domestic strategy (Poly centrism =Business Units have autonomy from home office and act like local companies) ii.  McDonald`s multi-domestic strategy

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Culture: What is it? Culture is the art and other manifestations of human intellectual achievement regarded collectively; it is the customs, civilization, and achievement of a particular time or people; the way of life of a particular society or group. Culture is the knowledge, beliefs, art, law, morals, customs, and other capabilities of one group, distinguishing it from other groups.

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Culture and International Business Culture is very important to the practice of international business. Culture impacts the way strategic moves are presented. Culture influences decisions. Management, decision making, and negotiations are all influenced through culture. Culture influences nearly all business functions from accounting to finance to production to service.

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Culture does not explain everything While culture is very important to our understanding of international business, it does not explain everything that is different from one place to another. While culture explains some, other things like corporate strategy, structure, rivalry, governmental policy, and economics also help to explain success or failure in international business.

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Correlates of Culture: Overview Culture is correlated with other variables that vary cross-nationally, like language and religion. “Colgate introduced a toothpaste in France called Cue, the name of a notorious porno magazine.”

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Correlates of Culture: Overview “An American T-shirt maker in Miami printed shirts for the Spanish market which promoted Pope’s visit. Instead of the desired “I saw the Pope” in Spanish, the shirts proclaimed “I saw the Potato.” (turned out) “An East Asian came to the US for business and reported back to his HO in China that there is “throat cutting competition in US. What he really meant was “cut throat competition.”

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Correlates of Culture: Language Language is the means by which we communicate verbally. We use it for socialization and for communicating how values and norms are expressed and understood. There are approximately 20 different language families that cut across national borders. Language Arabic French German Japanese

Good Morning saBAH al-khyar Bonjour Guten morgen Ohayoo

Thank You shookRAAN Merci (beaucoup) Danke Arigato

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Correlates of Culture: Verbal and Nonverbal Language Linguists study language. They also study the artifacts surrounding language. These are called: •  Linguistics – or the meanings of words •  Proxemics – or the distance that speakers stand from one another •  Pragmatics – the cultural interpretations of words, gestures, and nonverbals •  Nonverbals – The gestures and body language that accompanies spoken words drjustinpaul.com

Video Cases from facebook.com/ibusines and Facebook.com/drjustinpaul 1.  10 surprising ways to offend people. 2.  All about China 3.  Why China Rises and the US falls?

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Correlates of Culture: Verbal and Nonverbal Language It is important to remember, that for language to be truly useful to business people, they must understand the uses, distances, gestures and interpretations that accompany verbal communication.

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Cultural Diversity in Business related activities • Different types of Handshake (People in most countries repeat handshake on arrival and departure –) •Greetings, Gesture – Hug, Kiss on both cheeks … in some countries Japanese- Bow Arab – Some Men Greet with Nose when they meet close friends and relatives (One Arab to another Arab) in some countries

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Cultural Diversity in Business related activities contd. • Smile – Muscles get relaxed. Business based on relationships, business based on written agreements. • First Name ok in US, in Japan Mr (San)+Last name) • Cultural preferences (based on majority of research studies) – US (Freedom, Equality (Informal), Individualism, Self-Reliance), Japan (Belonging, Group Harmony, Collectiveness, Age/Seniority) and Arab countries (family security, family harmony, parental guidance and age) drjustinpaul.com

Language: English has become a “Lingua-Franca” English is generally considered the world’s lingua franca. This does not, however, imply that it is not necessary to learn other languages. Test your understanding: Surname is often written first in a) Pakistan b) Australia c) China & Japan d) UAE e) None of these

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Correlates of Culture: Religion

Religion contains key values and norms that are reflected in a way of life.

Largest religions: Christianity Islam Hinduism Buddhism, Confucianism (China & Korea) & Shinto (Japan) Sikhism Judaism

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National Culture Classifications Individualism – U.S, Great Britain, The Netherlands, Australia etc. Collectivism (Loyalty to the company etc.) – Japan, Indonesia, Thailand etc. Ethno centrism: Belief that one’s own culture is superior to others. Polycentrism: Companies act like local companies. Geo-centrism: Hybrid of two. drjustinpaul.com

National Culture: Hofstede

Geert Hofstede’s cultural typology is the most often used. It is based upon a study of 100,000 IBM employees who work in IBM divisions throughout the world. Hofstede’s survey revealed four underlying dimensions of culture, i.  Individualism/Collectivism, ii. Masculinity/Femininity, iii. Power distance iv. Uncertainty Avoidance “Differences in culture affect values and practices in the work place.” drjustinpaul.com

Hofstede: Masculinity/ Femininity M - refers to the extent to which traditional masculine values, like aggressiveness and assertiveness, are valued. (Japan on the top)

Artifacts- Fem More Women In Jobs Interpersonal Skills Rewarded Intuitive Skills Rewarded Social Rewards Valued (Sweden etc.)

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Layers of Corporate Culture: Key Cultural Issues Cultural Etiquette Cultural Stereotyping Cultural Distance Cultural Convergence and Divergence

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Test your business knowledge:

1.

“Those who know do not speak, those who speak do not know” this proverb is from: a. Japanese b. America c. India d. None of these

2.

Your business partner will not like you to touch anyone’s head (even children) in -------, as the head is considered sacred. a. Europe b. America c. Thailand d. None of these drjustinpaul.com

5. Tenth May, 2005 is often specified as 10/05/05 in ----------a India & UK b. USA c. None of these 6. Japanese nationals have a formal custom to introduce themselves by exchanging Business Cards with Two hands. True / False

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Lecture by Justin Paul

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