DIFFERENCES IN CULTURE Personal Communication:

international business  DIFFERENCES IN CULTURE Personal Communication:

Every culture has a communication system to convey thoughts, feelings, knowledge, and information through speech, actions, and writing. Understanding a culture’s spoken language provides insight into why people think and behave in a certain way. Understanding a culture’s body language avoids unintended or embarrassing messages. Spoken Language:

  1. Spoken Language is the part of a culture’s communication system embodied in its spoken and written vocabulary.
  2. Linguistically different segments of a population are often culturally, socially, and politically distinct (e.g., Malaysia’s population is comprised of Malay [60 percent], Chinese [30 percent], and Indian [10 percent]).
  3. Software providers assist companies from English-speaking countries in adapting their Web sites for global e-business. The company that provides customers in Mexico City, Paris, or Tokyo with a quality buying experience in his or her native language will have a competitive edge.
  4. Companies have made language blunders in their international business dealings (e.g., When Chevrolet launched its Chevrolet Nova in Spanish-speaking markets, it did not realize that “No va” means “No go” in Spanish).
  5. The use of machine translation—software that translates languages—is booming along with the explosion in nonnative English speakers using the Internet (e.g., the French version of “I don’t care” (“Je m’en fou”) into “I myself in crazy”).
  6. A lingua franca is a third or “link” language that is understood by two parties who speak different languages (e.g., Sony and Matsushita use English in official company communications—even in non-English-speaking countries).

Body Language:

  1. Body Language is that which is communicated through unspoken cues, including hand gestures, facial expressions, physical greetings, eye contact, and the manipulation of personal space.
  2. Body language communicates information and feelings and differs among cultures (e.g., Italians, French, Arabs, and Venezuelans animate conversations with hand gestures). Most body language is subtle and takes time to interpret.
  3. Proximity is an element of body language; standing too close may invade personal space and appear aggressive (e.g., Middle Eastern cultures stand about 8 to 12 inches apart).

Education:

Education is crucial for passing on traditions, customs, and values. Cultures educate young people through schooling, parenting, religious teachings, and group memberships. Families and other groups provide informal instruction about customs and how to socialize with others.

1. Education Level:
a. Nations with excellent basic education attract high-wage industries that invest in training and
increases productivity. Nations with skilled, well-educated workforces attract high-paying jobs
whereas those with poorly educated populations attract low-paying manufacturing jobs.
b. Newly industrialized economies in Asia owe much of their economic development to solid
education systems (e.g., Hong Kong, South Korea, Singapore, and Taiwan focus on mathematical
training).
2. The “Brain Drain” Phenomenon:
a. Brain drain is the departure of highly educated people from one profession, geographic region, or
nation to another.
b. The brain drain in Indonesia is among those that are Western-educated professionals in finance and
technology). Eastern Europe experienced high levels of brain drain during the transition to a
market economy.
c. Some countries lure professionals back to their homelands—a process known as reverse brain
drain.

Hofstede Framework:

The Hofstede Framework grew from a study of more than 110,000 people working in IBM subsidiaries by Dutch psychologist Geert Hofstede. He developed four dimensions for examining cultures.

1. Individualism versus Collectivism:

This dimension identifies the extent to which a culture emphasizes the individual versus the group.

a.Individualist cultures value hard work, entrepreneurial risk-taking, and freedom to focus on personal goals.

b.Collectivist cultures feel a strong association to groups, including family and work units. The goal is to maintain group harmony and work toward collective rather than personal goals.

2. Power Distance:

This dimension identifies the degree to which a culture accepts social inequality among its people.

a.A culture with large power distance is characterized by inequality between superiors and subordinates. Organizations are hierarchical, with power derived from prestige, force, and inheritance.

b.Cultures with small power distance display equality, with prestige and rewards equally shared between superiors and subordinates. Power in these cultures derives from hard work and is considered more legitimate.

c.Refer to Figure 2.4. There is a tight grouping of nations within the five clusters (plus Costa Rica): African, Asian, Central and South American, and Middle Eastern nations in Quadrant 1 (cultures with large power distance and lower individualism). Quadrants 2 and 3 include Australia and the nations of North America and Western Europe (cultures high in individualism and smaller power distance scores).

3. Uncertainty Avoidance:

This dimension identifies the extent to which a culture avoids uncertainty and ambiguity.

a.Cultures with large uncertainty avoidance value security and place faith in strong systems of rules and procedures in society. They tend to have lower employee turnover, formal rules for employee behavior, and more difficulty implementing change.

b.Cultures, low on uncertainty avoidance, are more open to change and new ideas.

c.Refer to Figure 2.5. Quadrant 4 contains nations characterized by small uncertainty avoidance and small power distance, including Australia, Canada, Jamaica, the United States, and many Western European nations. Quadrant 2 contains many Asian, Central American, South American, and Middle Eastern nations—nations having large power distance and large uncertainty avoidance indexes.

4. Achievement versus Nurturing:

This dimension identifies the extent to which a culture emphasizes personal achievement and materialism versus relationships and quality of life.

a.Cultures scoring high are characterized by assertiveness and the accumulation of wealth, and entrepreneurial drive.

b.Cultures scoring low have relaxed lifestyles, with more of a concern for others than material gain. Culture and the Workplace:

  1. For an international business with operations in different countries, it is important to understand how a society’s culture impacts on the values found in the workplace. The opening and closing cases both provide examples of culture affecting the workplace.
  2. Hofstede made a study of IBM employees worldwide, and identified four dimensions that summarize different cultures: power distance, individualism vs. collectivism, uncertainty avoidance, and masculinity vs. femininity. Table 3.1 shows some of the findings of his study and can be used to discuss sets of countries, outliers, and differences between the primary country of the students and other countries. While critics have concerns about Hofstede’s methodology, and it is important to caution students from taking it all too seriously, the study does suggest what individuals should consider when doing business from individuals from another country.

Cultural Change:

  1. Culture is not a constant, but does evolve over time. What was acceptable behavior in the US in the 1960s is now considered “insensitive” or even harassment. Language and sensuality that was not allowed on American TV in the 1960s is now commonplace. Changes are taking place all the time, as the Management Focus on Matsushita and Japan suggests.
  2. As countries become economically stronger and increase in the globalization of products bought and sold, cultural change is particularly common.

Implications for Business:

  1. Individuals and firms must develop cross-cultural literacy. International businesses that are ill informed about the practices of another culture are unlikely to succeed in that culture. One way to develop cross-cultural literacy is to regularly rotate and transfer people internationally.
  2. One must also beware of ethnocentric behavior, or a belief in the superiority of one’s own culture. Perhaps in our presentation of this material we are guilty of this, and have been unable to find some of the obvious weaknesses in US culture and strengths of other cultures. Some students are unaware of the uniqueness of their American culture and are hard pressed to identify American cultural peculiarities. One good lead-in for a discussion on the uniqueness of American culture is to point out that the second free cup of coffee, so common in American restaurants, is unheard of in many European or Asian countries. Students who have traveled internationally can often identify many other examples.
  3. Cultural values can influence the costs of doing business in different countries, and ultimately the competitive advantage of the country. The text suggests some positive and negative aspects of US and Japanese culture than may have contributed to the economic success of these countries. Understanding what countries may have a competitive advantage has implications both for looking for potential competitors in world markets and deciding where to undertake international expansion.

Unit 5 INTERNATIONAL TRADE THEORY Learning Objectives:

  1. Outline and critically evaluate the major theories that attempt to explain

1) why nations should engage in international trade and

2) the patterns of international trade.

  1. Show, via simple examples, the case for free trade and how all countries can benefit from free trade.
  2. Suggest the conditions under which governments should consider adopting policies that can influence an industry’s competitiveness and/or the flow of trade.
  3. Describe how each of the theories presented certainly has some validity and seems logical, how in many ways the theories build on each other, and how taken together they explain a great deal of the world trade picture. Yet there is still a great deal more to understand.

Lecture Outlines:

THE GAINS FROM TRADE – GHANA AND SOUTH KOREA INTRODUCTION AN OVERVIEW OF TRADE THEORY

Benefits of Trade Country Focus: Crawfish Wars Pattern of International Trade Trade Theory and Government Policy

MERCANTILISM ABSOLUTE ADVANTAGE COMPARATIVE ADVANTAGE

The Gains From Trade Qualifications and Assumptions Simple Extension of the Ricardian Model Management Focus: Free Trade and REI

HECKSCHER-OHLIN THEORY The Leontief Paradox THE PRODUCT LIFE CYCLE THEORY

Evaluating the Product Life Cycle Theory THE NEW TRADE THEORY NATIONAL COMPETITIVE ADVANTAGE: PORTER’S DIAMOND

Factor Endowments Demand Conditions Related and Supporting Industries Firm Strategy, Structure, and Rivalry

Management Focus: The Rise of Finland’s Nokia

Evaluating Porter’s Theory

IMPLICATIONS FOR BUSINESS

CHAPTER SUMMARY

CRITICAL DISCUSSION QUESTIONS

THE RISE OF THE INDIAN SOFTWARE INDUSTRY

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