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MGT 3660: International Business
Session 5: Differences in Culture
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Announcement
No classes on January 23 and 25
Use these times to prepare international business presentation I
International business presentation I on January 28 and 30
Team presentation
Team adjustment
A solid class list will come out in a week
Please, submit a hard copy of closing case on time
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Warm-up Quiz
Distribution of warm-up quiz
Average: 7.41
Standard deviation: 1.58
Distribution
Congrats: Matthew, Dylan (Kase), Abjijan, Samuel (Morgan), Arjun, Nishitkumar,
Yuhyeu, Ann, Kasmi
0
2
4
6
8
10
12
14
16
18
5 6 7 8 9 10
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Warm-up Quiz
True or false questions
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Learning Objectives
After this session, we can do followings:
Explain what is meant by the culture of a society
Identify the forces that lead to differences in social culture
Identify the business and economic implications of differences in culture
Recognize how differences in social culture influence values in the workplace
Demonstrate an appreciation for the economic and business implications of cultural
change
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Where We Are
Concepts of globalization
Chapter 1
Country differences
Chapter 2-5
The global trade and investment environment
Chapter 6-9
The strategy and structure of international business Chapter 13-15
Business operation
Chapter 16-20
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Class Activities
Discuss with your team
Choose two countries that appear to be culturally diverse. Compare the cultures ofthose countries and then indicate how cultural differences influence
(a) the costs of doing business in each country
(b) the likely future economic development of that country
(c) business practices.
2-7
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Local Culture and International Business
Understanding and adapting to the local culture is important to international
companies cross-cultural literacy - an understanding of how cultural differences across and within
nations can affect the way in which business is practiced
cross-cultural literacy is important for business success
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Culture
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 where
values are abstract ideas about what a group believes to be good, right, and desirable
Values provide the context within which a societys norms are established and
justified and form the bedrock of a culture
norms are the social rules and guidelines that prescribe appropriate behavior in particular
situations
folkways - the routine conventions of everyday life
mores - norms that are seen as central to the functioning of a society and to its social
life
Society - a group of people who share a common set of values and norms
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Determinants of Culture
The values and norms of a culture evolve over time
Determinants include
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Social Structure
Social structure - a societys basic social organization
Consider the degree to which the basic unit of social organization is the individual, as opposed to
the group
the degree to which a society is stratified into classes or castes
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Individuals and Groups
In Western societies, there is a focus on the individual
individual achievement is common
dynamism of the U.S. economy
high level of entrepreneurship
But, creates a lack of company loyalty and failure to gain company specific
knowledge
competition between individuals in a company instead of than team building less ability to develop a strong network of contacts within a firm
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Individuals and Groups
In many Asian societies, the group is the primary unit of social organization
discourages job switching between firms
encourages lifetime employment systems
leads to cooperation in solving business problems
But, might also suppress individual creativity and initiative
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Social Stratification
All societies are stratified on a hierarchical basis into social categories, or social
strata individuals are born into a particular stratum
Must consider
mobility between strata
caste system - closed system of stratification in which social position is determined
by the family into which a person is born
change is usually not possible during an individual's lifetime
class system - form of open social stratification
position a person has by birth can be changed through achievement or luck
the significance placed on social strata in business contexts
class consciousness - a condition where people tend to perceive themselves in terms
of their class background, and this shapes their relationships with others an antagonistic relationship between management and labor raises the cost of
production in countries with significant class differences
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Religious and Ethical Systems
Religion - a system of shared beliefs and rituals that are concerned with the realm
of the sacred Four religions dominate society
Christianity
Islam
Hinduism
Buddhism
Confucianism is also important in influencing behavior and culture in many parts of Asia
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Religious and Ethical Systems
Ethical systems - a set of moral principles, or values, that are used to guide and
shape behavior Religion and ethics are often closely intertwined
ex. Christian or Islamic ethics
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Christianity
Christianity
the worlds largest religion found throughout Europe, the Americas, and other countries settled by Europeans
the Protestant work ethic (Max Weber, 1804)
hard work, wealth creation, and frugality is the driving force of capitalism
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Islam
Islam
the worlds second largest religion dating to AD 610 there is only one true omnipotent God
an all-embracing way of life that governs one's being
associated in the Western media with militants, terrorists, and violent upheavals
but, in fact teaches peace, justice, and tolerance
fundamentalists have gained political power and blame the West for many social
problems
people do not own property, but only act as stewards for God
supportive of business, but the way business is practiced is prescribed
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Hinduism
Hinduism
practiced primarily on the Indian sub-continent focuses on the importance of achieving spiritual growth and development, which may
require material and physical self-denial
Hindus are valued by their spiritual rather than material achievements
promotion and adding new responsibilities may not be important, or may be infeasible
due to the employee's caste
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Buddhism
Buddhism
has about 350 millions followers stresses spiritual growth and the afterlife, rather than achievement while in this world
does not emphasize wealth creation
entrepreneurial behavior is not stressed
does not support the caste system, individuals do have some mobility and can work with
individuals from different classes
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Confucianism
Confucianism
ideology practiced mainly in China teaches the importance of attaining personal salvation through right action
high morals, ethical conduct, and loyalty to others are stressed
three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may
all lead to a lowering of the cost of doing business in Confucian societies
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Role of Language in Culture
Language - the spoken and unspoken (nonverbal communication such as facial
expressions, personal space, and hand gestures ) means of communication countries with more than one language often have more than one culture
Canada, Belgium, Spain
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Role of Language in Culture
Language is one of the defining characteristics of culture
Chinese is the mother tongue of the largest number of people English is the most widely spoken language in the world
English is also becoming the language of international business
but, knowledge of the local language is still beneficial, and in some cases, critical for
business success
failing to understand the nonverbal cues of another culture can lead to communication
failure
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Role of Education in Culture
Formal education is the medium through which individuals learn many of the
language, conceptual, and mathematical skills that are indispensable in a modernsociety
important in determining a nations competitive advantage
Japans postwar success can be linked to its excellent education system
general education levels can be a good index for the kinds of products that might sell in a
country
ex. impact of literacy rates
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Culture and Workplace
Management processes and practices must be adapted to culturally-determined
work-related values Geert Hofstede studied culture using data collected from 1967 to 1973 for 100,000
employees of IBM
Hofstede identified four dimensions that summarized different cultures
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Culture and Workplace
Hofstedes dimensions of culture:
Power distance - how a society deals with the fact that people are unequal in physicaland intellectual capabilities
Uncertainty avoidance - the relationship between the individual and his fellows
Individualism versus collectivism - the extent to which different cultures socialize their
members into accepting ambiguous situations and tolerating ambiguity
Masculinity versus femininity -the relationship between gender and work roles
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Culture and Workplace
Work-Related Values for 20 Countries
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Culture and Workplace
Hofstede later expanded added a fifth dimension called Confucian dynamism or
long-term orientation captures attitudes toward time, persistence, ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and favors
Japan, Hong Kong, and Thailand scored high on this dimension
the U.S. and Canada scored low
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Was Hofstede Right?
Hofstedes work has been criticized for several reasons
made the assumption there is a one-to-one relationship between culture and the nation-state
study may have been culturally bound
used IBM as sole source of information
culture is not staticit evolves
But, it is a starting point for understanding how cultures differ, and the implications
of those differences for managers
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Dynamics of Culture
Culture evolves over time
changes in value systems can be slow and painful for a society
Social turmoil - an inevitable outcome of cultural change
as countries become economically stronger, cultural change is particularly common
economic progress encourages a shift from collectivism to individualism
globalization also brings cultural change
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What Do Cultural Differences Mean For Managers?
It is important to develop cross-cultural literacy
companies that are ill informed about the practices of another culture are unlikely tosucceed in that culture
To avoid being ill-informed
consider hiring local citizens
transfer executives to foreign locations on a regular basis
Managers must also guard against ethnocentrism
a belief in the superiority of one's own culture
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What Do Cultural Differences Mean For Managers?
There is a connection between culture and national competitive advantage
suggests which countries are likely to produce the most viable competitors
has implications for the choice of countries in which to locate production facilities and
do business
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Next Time
Ethics in International Business