International Business Management

MGT 521

Dr. Jacob Cherian

M.Com., M.S.W., M.B.A., M.Phil., Ph.D
 Topic 2
(Chapter 2)

The Cultural Environments Facing Business

 Culture

Culture refers to the learned norms

based on values, attitudes, and
beliefs of a group of people

It is the collection of values, beliefs,

behaviors, customs, and attitudes
that distinguish one society from
another.

It reflects learned behavior that is

transmitted from one member to
another in society.
 Acculturation

Acculturation is the
process of adjusting and
adapting to a specific
culture other than one’s
own. It is one of the keys
to success in international
operations.
 Cultural Collision

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
 Cultural Awareness

• The most important, but sometimes the most commonly

overlooked factor for international business success is
cultural awareness. When we are dealing with people
from a different culture we need to be aware of their
beliefs and customs, and respect them.

• Problem areas that can hinder managers ’ cultural

awareness…
• Managers that educate themselves about other cultures
have a greater chance of succeeding abroad
Behavioral Practices Affecting Business

Attitudes and values affect all

dimensions of business activities,
from what products to sell, to how to
organize, finance, manage and
control operations.

The result is that there are

thousands of ways to relate culture
to business.
 Strategies for Dealing with Cultural Differences
Managers must consider
• Host society acceptance
• Degree of cultural differences - cultural distance
• Ability to adjust -culture shock and reverse culture shock
• Company and management orientation

Three management orientations

– Ethnocentrism
• home culture is superior to local culture

– Polycentrism
• business units abroad should act like local companies

– Geocentrism
• integrate home and host practices
How Cultures Form and Change

• Cultural value systems are established

early in life but may change through

– choice or imposition
• cultural imperialism

– contact with other cultures

• cultural diffusion
• creolization
Elements of Culture
 Social Stratification
• It is the relationships between different entities or groups in a society.
Society is divided according to social class.

• Social classes are economic or cultural arrangements of groups in

society.

• Social ranking is determined by

– an individual’s achievements and qualifications
– an individual’s affiliation with, or membership in, certain groups
• Group affiliations can be
– Ascribed group memberships
• based on gender, family, age, caste, and ethnic, racial, or national
origin
– Acquired group memberships
• based on religion, political affiliation, professional association
 Language

• 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 world’s production
– English is the international language of
business
 Language

Distribution Of The World’s Major Languages

 Communications

• Cross border communications do not

always translate as intended
• Spoken and written language
• Silent language
– Color
– Distance
– Time and punctuality
– Body language
– Prestige
 Communications
Body Language Is Not A Universal Language
 Religion

• Religion impacts almost every business

function

• Centuries of deep religious influence

continue to play a major role in shaping
cultural values and behavior

– many strong values are the result of a

dominant religion
Religion
 Values and Attitudes

• Time
• Age
• Education
• Status
 Work Motivation
The Hierarchy of Needs and Need-Hierarchy Comparisons

Hierarchy of needs theory

Individuals will fill lower-level needs before moving to higher level
needs. The ranking of needs differs among cultures
 Theories of Culture

• Hall’s Low-Context, High-Context Approach

• Cultural Cluster Approach

• Hofstede’s Five Dimensions

4-20
Hall’s Low-Context, High-Context Approach

• Low-Context Cultures - What Is Said Is More

Important Than How or Where It Is Said
– U.S.
– Germany
• High-Context cultures - What Is Said and
How or Where It is Said Are Significant
– Asia
– Latin America
– Middle East
Hall’s High- versus Low-Context Cultures

High-context culture Low-context culture

• context is at least as • most of the information is
important as what is contained clarity in words
actually said
• what is not being said can • what is said is more
carry more meaning than important than what is not
what is said said
• focuses on group • focuses on individual
development development
• Japan and Saudi Arabia • The U.S. is an example
are examples
 Low-context in business

• Business before friendship

• Credibility through expertise & performance

• Agreements by legal contract

• Negotiations efficient
High-context in business
• No business without friendship

• Credibility through relationships

• Agreements founded on trust

• Negotiations slow
Hall’s High-Context and Low-Context Cultural Framework

High-Context Low-Context
China Austria
Egypt Canada
France Denmark
Italy England
Japan Finland
Lebanon Germany
Saudi Arabia Norway
Spain Switzerland
Syria United States
The Cultural Cluster Approach

An approach to understanding
communication based on meaningful
clusters of countries that share
similar cultural values
The Cultural Cluster Approach

• Internationalization strategies

• Foreign Market Entry Methods

Geert Hofstede’s Dimensions of Culture
According to cultures of different nations can be
compared in terms of five dimensions.

• Individualism versus Collectivism

• Large versus Small Power Distance

• Strong versus Weak Uncertainty Avoidance

• Masculinity versus Femininity

• Long term versus Short term orientation