The Cultural

Environments
Facing Business

2-1

Introduction
Firms operating internationally operate in
diverse cultural environment
These differences may cause
misjudgements and wrong decisions
It is needed to appreciate these cultural
difference and integrate them in their
business practices
Cultural understanding and sensitivity need
to be developed and integrated with
business strategy

2-2

Introduction

- When colouring in 800,000 pixels on a map

of India, Microsoft coloured eight of them a
different shade of green to represent the
disputed Kashmiri territory. The difference in
greens meant Kashmir was shown as nonIndian, and the product was promptly banned
in India. Microsoft was left to recall all
200,000 copies of the offending Windows 95
operating system software to try and heal the
diplomatic wounds. It cost them millions.
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Introduction

Pepsodent tried to sell its toothpaste in South East

Asia by emphasizing that it "whitens your teeth."
They found out that the local natives chew betel nuts
to blacken their teeth which they find attractive.
- The concept of Big Brother was somehow taken to
the Middle East. The show was pulled of the air after
its first few episodes due to public protests and
pressure from religious bodies stating the show's
mixed sex format was against Islamic principles.

2-4

Introduction

The film "Hollywood Buddha" showed the lead

actor sitting on the Buddha's head causing
outrage and protest on the streets of Sri Lanka,
Malaysia and Burma as its an act of clear
degradation against something holy.
McDonalds faced its stores vandalized after
people came to know the usage of beef extract
for cooking fries. Indian Hindus considers cow as
sacred animal

2-5

Culture as Obstacle

Self Reference Criterion (SRC):

unconscious reference to self culture, beliefs,

values, experiences in taking business decisions
Not knowing and understanding the interpretation
and reaction of different cultural perspectives

Ethnocentrism:

A belief that ones culture is superior to others

Making strategies that worked in home countries
hoping that they will work in foreign countries too
Consumer Ethnocentrism

Consumers belief that buying foreign goods is un-patriotic,

or un-healthy

Introduction
Culture refers to the learned norms based
on values, attitudes, and beliefs of a group
of people
It is the way of life and thinking of a group
of people that binds them together as one
identifiable entity
Culture is an integral part of a nations
operating environment

every business function is subject to potential

cultural differences
2-7

Culture

Characteristics

Learned
Shared
Trans-Generational
Symbolic
Patterned
Adaptive

Constituents

Value System
Norms
Beliefs
Traditions and
Customs
Language
Religion

2-8

Language:
Cultural Diffuser and Stabilizer
A common language within a country is a
unifying force
A shared language between nations
facilitates international business

Native English speaking countries account for a

third of the worlds production
English is the international language of
business

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publishing as Prentice Hall

2-9

Religion: Cultural Stabilizer

Religion impacts almost every business
function
Centuries of profound religious influence
continue to play a major role in shaping
cultural values and behavior

many strong values are the result of a

dominant religion

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publishing as Prentice Hall

2-10

Culture and the Nation-State

The nation is a useful definition of society

because similarity among people is a
cause and an effect of national boundaries

laws apply primarily along national lines

language and values are shared within borders
rites and symbols are shared along national
lines

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publishing as Prentice Hall

2-11

Culture and the Nation-State

Country-by-country analysis can be

difficult because

subcultures exist within nations

similarities link groups from different countries

Need to focus on relevant groups

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publishing as Prentice Hall

2-12

Introduction
Cultural Factors Affecting International Business Operations

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publishing as Prentice Hall

2-13

Introduction
Companies need to decide when to make
cultural adjustments
Fostering cultural diversity can allow a
company to gain a global competitive
advantage by bringing together people of
diverse backgrounds and experience

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publishing as Prentice Hall

2-14

Introduction

But, cultural collision can occur when a

company implements practices that are
less effective or when employees
encounter distress because of difficulty in
accepting or adjusting to foreign behaviors

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publishing as Prentice Hall

2-15

How Cultures Form and Change

Cultural value systems are established early in life

from parent to child, teacher to student, peer to
peer, and so on
but may change through

Choice or imposition (cultural imperialism)

Change can be by choice or it can be imposed early in life this
type of change is called cultural imperialism

contact with other cultures

cultural diffusion
change as a result of contact with other cultures
Creolization:resultant mixed cultural elements

Cross-Cultural Behavior

Power distance

high power distance implies little superior-subordinate

interaction
autocratic or paternalistic management style
Hierarchical organization structures with no or less
challenge to authority
Malaysia, India, France on higher side
low power distance implies consultative style
UK, Dutch, Austria have less power distance
Flat organization structure and more comfortable in
subordinates challenging the authority of superior
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Cross-Cultural Behavior

Individualism versus collectivism

Indivisualism
People look after themselves and their immediate family
Independent behavior and strong involvement of
employees for individuals growth
high individualism welcome challenges
US, UK, France are high on individualism and Pakistan,
Singapore and Malaysia are low

Collectivism
Tendency of people to work in groups and to look after
each other in exchange of loyalty
Group interest precedes individual interest
high collectivism prefer safe work environment
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Cross-Cultural Behavior

Risk taking behavior

Uncertainty avoidance
Low on handling uncertainty
Greece, Portugal, Japan are most Uncertainty
avoiding countries
Trust
degree of trust among people
Future orientation
delaying gratification
Fatalism
Believing that every event in life is inevitable
less likely to accept the basic cause-and-effect
relationship between work and reward

Cross-Cultural Behavior

Masculinity Vs Femininity

Masculinity
Dominant values emphasizes on work goals like
earnings, advancements & material belongings
People live to work
Less gender equality
Japan, US, Italy
Femininity
Emphasizes on personal goals like quality of life,
caring for others, friendly atmosphere
People work to live
More gender equality
Netherlands, Norway, Sweden

Cross-Cultural Behavior

Universalism Vs Particularism

Universalism
Belief that ideas and practices can be defined and
applied everywhere without modification
Focus is more on formal rules
US, Austria, Germany etc
Particularism
Believes that circumstances and relationships decide
how ideas and practices should be applied
Focus is on relationships
Venezuela, China, Honk Kong, Indonesia

Cross-Cultural Behavior

Neutral Vs Affective : The way emotions are

expressed

Neutral
People tend to hold their emotions and not explicitly
exhibit their emotions/feelings
Consider showing emotions as unprofessional
Japan, UK, Singapore, Australia
Affective
Emotions are expressed openly and are more
natural
Holding back emotions is considered as
emotionally-dead or mask of deceit
Mexico, China, Brazil, Netherlands

Cross-Cultural Behavior

Specific Vs Diffuse: Relative size of private

and public spaces

Specific
Large public space and smaller private space
Work and personal life are kept separate and private
space is closely guarded and shared only with close
friends and associates
Australia, UK, US
Diffuse
Public and private space are more or less similar
Work and personal lives are not completely separate
Venezuela, China, Spain

Cross-Cultural Behavior

High Context Vs Low Context

In high context cultures, implicit communication such

as non-verbal and situational cues are extremely imp
In lo-context cultures, the explicit communication is imp
and relies heavily on words to convey meaning
In High context cultures organizations need to focus on
subtle and non-verbal expression of people
China, Korea, Japan are high context cultures while
German, Swiss, British are low context

Cross-Cultural Behavior

Homophilous Vs Heterophilus

Cultures where people share same beliefs, speak same

languages and practice the same religion are
homophilous cultures
In heterophilous cultures there is fair amount of
differentiation in language, beliefs, religion
In homophilous cultures, diffusion of new products and
services takes much less time and uniform product mix
can be adopted
Japan, Korea and Scandinavian countries have
homophilous cultures whereas countries like India and
China have Heterophilous cultures

Cross-Cultural Behavior

Polychronic (Fluid-Time) Vs Monochronic

(Rigid-time) Cultures

In polychronic cultures people generally have relaxed

attitudes towards time schedules, punctuality and
meeting deadlines.
Here people and relationships are more important than
time schedules and deadlines which are flexible
India, Bangladesh, Malaysia, UAE, Brazil, Russia etc
have polychronic cultures whereas Japan, China, US,
Britain, Canada, Australia, Germany etc have
monochronic cultures.

Cross-Cultural Behavior

Expressive Vs Reserved Cultures

Expressive cultures excessively use all form of

communication. They generally
speak louder, interrupt frequently and are
uncomfortable with silence
Interpersonal space is less and there is considerable
physical contact
There are direct eye contact and lively facial
expressions and gesturing
India, UAE, Brazil, Egypt, Greece, Mexico, France,
Belgium, Italy, Spain are expressive cultures whereas
Japan, China, US, Russia, Britain, Germany etc may be
said to be reserved

Communications
Cross border communications do not
always translate as intended
Spoken and written language
Silent language

Color
Distance
Time and punctuality
Body language
Prestige
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2-28

Communications
Body Language Is Not A Universal Language

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publishing as Prentice Hall

2-29

Dealing with
Cultural Differences
Do managers have to alter their customary
practices to succeed in countries with
different cultures?
Must consider

Host society acceptance

Degree of cultural differences
cultural distance
Ability to adjust
culture shock and reverse culture shock
Company and management orientation
2-30

Dealing with
Cultural Differences

Company and management orientations

(EPRG)

Ethnocentrism
home culture is superior to local culture
overlook national differences
Sarees, Idli/Vada/Sambhar Mix, Ethnic
Indian Food

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Dealing with
Cultural Differences

Polycentrism

business units abroad should act like local

companies
They appreciate the substantial cultural difference
existing in different countries and so single
business strategy across countries wont work

2-32

Dealing with
Cultural Differences

Regiocentrism
Business Units adopts a region specific
strategy within a region but not across all
region
Mc Donald not selling pork and selling all
meat preparations made out of halal
process in Middle East and other Islamic
countries

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Dealing with
Cultural Differences

Geocentrism
Considers the whole world as a single market
and attempts to device uniform global
business strategies
Try to identify the cultural similarities and
device integrated home and host practices
Excessive Ethnocentrism and Polycentrism
can be dangerous. Geocentrism is often the
safest and fastest strategy.
J K Rowlings Harry Potter Series was read
and liked across the globe with same passion
2-34

Strategies for Instituting

Change
Value Systems
Cost-Benefit Analysis of change
Resistance to too much change
Participation
Reward Sharing
Opinion Leadership
Timing
Learning Abroad

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2-35

The Future of National Cultures

Scenario 1:

Scenario 2:

Outward expressions of national culture will continue to

become homogeneous while distinct values will remain
stable

Scenario 3:

New hybrid cultures will develop and personal horizons

will broaden

Nationalism will continue to reinforce cultural identity

Scenario 4:

Existing national borders will shift to accommodate

ethnic differences
2-36