Unit 2 3 Cultural Demographic

INTERNATIONAL BUSINESS MANAGEMENT
INTERNATIONAL BUSINESS ENVIRONMENT
CULTURAL ENVIRONMENT
1. The habit of drinking horlicks 2. Span of Control in organisation 3. US, Germans feel time as money, whereas in Arab it is Flexible 4. Japanese way of giving business card
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.
Hofstede, Namenwirth and Weber
Values are abstract ideas about what a group believes to be good, right and desirable ( shared assumptions about how things ought to be ). Values provide the context for establishing and justifying a societys norms and attitudes toward: individual freedom, democracy, truth and justice, Honesty, loyalty, social obligations, role of women, love and sex, marriage etc., Norms are social rules and guidelines
a.velsamy, sona school of management
International Business Management
Norms are Social rules that govern peoples actions toward one and another Folkways routine conventions of everyday life actions of little moral significance dress code, eating habits, time orientation, rituals, etc. violating folkways will not be considered evil or bad
Mores norms seen as central to the functioning of a society have much greater significance than folkways violating mores can bring serious retribution theft, adultery, incest, cannibalism
1
a.velsamy, sona school of management International Business Management
Elements of Culture
Knowledge and beliefs:
learning & observation sharing and transferring
Ideals:
Expected, customary, right or proper in a given situatin
Preferences :
societys definitions of those things in life which are attractive or unattractive.
Cultural Diffusion
Cultural Adaptation Culture shock Cultural Transmission Cultural conformity Cultural lag Cultural stereotype
Determinants of Culture
Fig: 3.1
3-7
H. Michael Boyd, Ph.D.
International Business
Fig: 3.1
3-8
Social Structure
A societys basic social organization Two Dimensions Degree to which basic social unit is the individual vs. the group Degree to which society is stratified into classes or castes
3-9 H. Michael Boyd, Ph.D. International Business
Individualism
Often prevalent in Western societies Not only reflected in the political and economic organizations How people perceive themselves and relate to each other in social and business settings Social status of an individual is not a function of where they work but their individual performance Often expressed in a high degree of entrepreneurship and managerial mobility H. Michael Boyd, Ph.D. International Business 3-10 Makes team building more difficult
The Group
Often prevalent outside Western societies Social status of an individual is determined by the standing of the group to which they belong to as much by their individual performance
Often expressed in a high degree of group affiliation and the lack of managerial mobility
Social Stratification
All societies are stratified on a hierarchical basis into social categories (social strata) Typically defined on the basis of:
family background occupation Income
Culture differ from each other with regard to the:

3-12
degree of social mobility between social strata H. Michael Boyd, Ph.D. International Business significance attached to social strata in business
Social Mobility
The extent to which individuals can move out of the social strata into which they are born Two Major Types
Caste System Class System
3-13
Caste System
Most rigid form of stratification Closed system in which social position is determined by the persons family Change is usually not possible for entire life Caste position carries with is a specific H. Michael Boyd, Ph.D. International Business 3-14occupation
Class System
Less rigid form of social stratification Open system where social mobility is possible
both upward or downward
Persons social position by birth can be changed through their achievements or luck Degree of social mobility varies by society
Class Consciousness
When people tend to perceive themselves in terms of their class background which shapes their relationships with members of other classes Where class consciousness is high, the way individuals from different classes work together may be very prescribed and strained
Fig: 3.1
3-17
Religion
System of shared beliefs and rituals concerned with the realm of the sacred Shapes attitudes toward work and entrepreneurship Relationship between religion, ethics and society is subtle and complex
3-18
Hazardous to make sweeping generalizations!
Ethical Systems
Set of moral principles or values used to guide and shape behavior
Can affect the cost of doing business in a country
3-19
World Religions
Map 3.1
3-20
Religion and Economic Christianity Implications

Protestant Work Ethic & the Spirit of Capitalism
Islam
favors legitimate profit and market-based systems important to keep ones word or contractual obligations no payment or receipt of interest (mudarabah, murabaha)
Hinduism
ascetic, non-material principles inhibit entrepreneurship caste system plays a role
3-21
Buddhism
Fig: 3.1
3-22
Education
Can be a source of national competitive advantage
provides a pool of skilled and educated workers
Key determinant for location of FDI

Impacts the kind of products/services that are consumed and the related promotional programs
3-23 H. Michael Boyd, Ph.D. International Business Education can be a source of social classes
Adult Literacy Rates

Map 3.3
3-24
Fig: 3.1
3-25
Language
Enables people to communicate with each other and structures the way we perceive the world Spoken
verbal cues language structures our perception of world
Unspoken
body language personal space
3-26
Spoken Mother Language
3-27
Non-Spoken Language
70% of all communication Nonverbal cues:
eyebrows fingers/thumbs hand gestures feet personal space body gestures
Culture and the Workplace

Study on the relationship between culture and the workplace by Geert Hofstede 196773
40 countries 100,000 individuals
3-29
Hofstedes Cultural Dimensions

Four Dimensions of Culture
Power Distance Individualism versus Collectivism Uncertainty Avoidance Masculinity versus Femininity
3-30
Power Distance
Dimension focused on how a society dealt with the fact that people are unequal in physical and intellectual capabilities
High Power Cultures
societies that let inequalities (power and wealth) grow over time
Low Power Cultures

societies that tried to play down such inequalities
Individualism versus Collectivism

Dimension focused on the relationship between the individual and his/her fellows within a culture
Individualistic Societies
loose ties between individuals individual achievement & freedom highly valued
Collectivist Societies
tight ties between individuals tend to be more relationship oriented
Uncertainty Avoidance
Dimension measured the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty
High Uncertainty Cultures
job security, career patterns, retirement benefits are very important need for rules and regulations and clear instructions and tight control from superior are important
3-33
Low Uncertainty Cultures
Masculinity versus Femininity

Dimension focused on the relationship between gender and work roles
Masculine Cultures
sex roles were sharply differentiated and traditional masculine values were cultural ideals
Feminine Cultures
sex roles were less sharply distinguished and little differentiation was made between gender in the same job
Work-Related Values for 20 Countries
3-35
Problems with Hofstedes Findings

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) Findings are becoming dated (1967-1973)
3-36
Revised his initial research and included a fifth H. Michael Boyd, Ph.D. International Business
Cultural Change
Culture is not a constant; it evolves over time
American values toward the role of women American college students values about work and careers Japan moves toward greater individualism in the workplace and is impacted by aging society
Effects of economic advancement and globalization

Economic progress is accompanied by a shift in values away from:
3-37
collectivism towards individualism
Changing Values
3-38
Managerial Implications
Culture and competitive advantage
Which nations might be competitors Which nations might be a resource (HR, R &D) Which nations might be a market (early adopters) Which nation might be a production site
Culture and business ethics

Many ethical principles are universal, others are culturally bound
Cross cultural literacy

Observe and study foreign cultures
40
a.velsamy, sona school of management
4/1/2013
International Business Environment (Jokes)
Cow story
TRADITIONAL CAPITALISM
You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.
ENRON VENTURE CAPITALISM

You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. Sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with there lease. The public buys your bull.
AN AMERICAN CORPORATION
You have two cows. You sell one, and force the other to produce the milk off our cows. You are surprised when the cow drops dead.
A FRENCH CORPORATION
You have two cows. You go on strike because you want three cows.
A JAPANESE CORPORATION
You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create clever cow cartoon images called Cowkimon and market them World-Wide.
A GERMAN CORPORATION
You have two cows. You reengineer them so they live for 100 years, eat once a month, and milk themselves.
A BRITISH CORPORATION
You have two cows. Both are mad.
AN ITALIAN CORPORATION
You have two cows, but you don't know where they are. You break for lunch.
A RUSSIAN CORPORATION
You have two cows. You count them and learn you have five cows. You count them again and learn you have 42 cows. You count them again and learn you have 12 cows. You stop counting cows and open another bottle of vodka.
A SWISS CORPORATION
You have 5000 cows, none of which belong to you. You charge others for storing them.
A CHINESE CORPORATION
You have two cows. You have 300 people milking them. You claim full employment, high bovine productivity, and arrest the newsman who reported the numbers.
AN ISRAELI CORPORATION
So, there are these two Jewish cows, right? They open a milk factory, an ice cream store, and then sell the movie rights. They send their calves to Harvard to become doctors. So, who needs people?
A HINDU CORPORATION
You have two cows. You worship them.
DOES STEREOTYPE MATTERS ?
GOOD BYE

Unit 2 3 Cultural Demographic

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Unit 2 3 Cultural Demographic

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INTERNATIONAL BUSINESS MANAGEMENT

INTERNATIONAL BUSINESS ENVIRONMENT

a.velsamy, sona school of management

International Business Management

H. Michael Boyd, Ph.D.

H. Michael Boyd, Ph.D.

Culture differ from each other with regard to the:

H. Michael Boyd, Ph.D.

H. Michael Boyd, Ph.D.

Hazardous to make sweeping generalizations!

H. Michael Boyd, Ph.D.

Can affect the cost of doing business in a country

H. Michael Boyd, Ph.D.

H. Michael Boyd, Ph.D.

Religion and Economic Christianity Implications

H. Michael Boyd, Ph.D.

H. Michael Boyd, Ph.D.

Key determinant for location of FDI

Adult Literacy Rates

H. Michael Boyd, Ph.D.

H. Michael Boyd, Ph.D.

Spoken Mother Language

H. Michael Boyd, Ph.D.

Culture and the Workplace

Hofstedes Cultural Dimensions

H. Michael Boyd, Ph.D.

Low Power Cultures

Individualism versus Collectivism

Low Uncertainty Cultures

H. Michael Boyd, Ph.D.

Masculinity versus Femininity

Work-Related Values for 20 Countries

H. Michael Boyd, Ph.D.

Problems with Hofstedes Findings

Effects of economic advancement and globalization

collectivism towards individualism

H. Michael Boyd, Ph.D.

Culture and business ethics

Cross cultural literacy

a.velsamy, sona school of management

International Business Environment (Jokes)

ENRON VENTURE CAPITALISM

You have two cows. You worship them.

DOES STEREOTYPE MATTERS ?

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