International Business in English

BUS 460

CHAPTER 4THE ROLE OF CULTURE IN

INTERNATIONAL BUSINESS

Introduction:The need to avoid cultural misunderstanding is vital to

successful international business expansion,But it must be recognized that culture can affect many

aspects of corporate activity.Comparative management – which looks specifically at

how management styles vary across national cultures.The overall impact of culture on international

business, however goes right through an international companies because,

It affects the core functions of HRM, marketing and finance (also corporate strategies and organization culture)

What is Culture?Culture: the essential core of culture consists of

traditional ideas and specially their attached values.

Culture affects beliefs, values and behavior and the culture is shared and passes through the generations.

Beliefs: Most obviously expressed in religion, but vary across cultures: EXAMPLES

Middle East: Islam is a very important influence within society, Western societies which are predominantly Christian, the influence of religion is declining rapidly.

What is Culture?Values: the relative value attached to the individual

versus the group varies from across national cultures,

And affects the process of social interaction. EXAMPLE:

Middle Eastern and Japanese societies place a strong emphasis on the collective view.

By contrast, in the US and UK, individual prospective takes precedence over the collective view.

Behavior: beliefs and values influence behavior, even in small ways such as daily habits.

Comparing CulturesIn comparing cultures, care must be taken on

a number of accounts, including:1- Cultures are not monolithic; but there are

numerous subcultures. 2- The separation of cultural issues from

economic and political is complex, as all three factors interact to influence views and beliefs.

3- Defining the degree of difference between cultures is not straightforward because recognition of difference is a subjective issue.

Comparing Cultures 4- As the level of international trade and

travel increases, cultures become increasingly intermingled and this cultural diffusion may dilute the significance of national cultures.

Alternative Classifications of National Cultural CharacteristicsHofstede: developed four dimensions which can

be used as a basis for comparison of national cultures:

1- Individualism versus Collectivism.2- Power distance. ( السلطة (نطاق3- Uncertainty avoidance. ( غير االشياء تجنب(المؤكدة

4- Masculinity versus femininity.

EXPLAINED IN DETAIL ON THE NEXT SLIDES

Classifications of National Cultural Characteristics - Hofstede1- Individualism versus Collectivism:Members of an individualist society enjoy the

challenge of hard work but demand alongside this the right to a private life. (North America & Western Europe)

The collective societies emphasize the right of everybody to share access to good training and remuneration. (Latin America & Africa)

Classifications of National Cultural Characteristics - Hofstede2- Power distance:Measures the degree of tolerance for differences in

power in given national cultures.In the cultures which score highly on power

distance , managers tend to have greater power over their subordinates,

And exercise of this power is accepted.Examples:Poorer nations are characterized by high power

distance combined with collectivism. While richer Western countries which are

individualist and low on power distance.

Classifications of National Cultural Characteristics - Hofstede3- Uncertainty avoidance:Measures the extent to which people are

nervous of the future and what may / may not happen.

Cultures which score highly on uncertainty avoidance have a preference for trying to predict the future, and

A general dislike of uncertainty and ambiguity in managerial and social situations.

Classifications of National Cultural Characteristics - Hofstede4- Masculinity versus femininity:Here there is a stereotype.Masculine being used to describe a society

which promotes a ‘macho’ norms and values of ability and earning power.

Feminine cultures place a high value on interpersonal relationship, caring and the overall of quality of life.

Japan was found to be the most masculine and Sweden the most feminine.

Classifications of National Cultural CharacteristicsThe works of the following:Hall and Hall.Trompenaars.Lewis.

Will not be discussed

Implications For ManagementIf one accepts the view that national cultural

characteristics influence people’s behavior and beliefs, then

It is reasonable to expect that this will also mean that management styles are not common throughout the world.

The differences of cultures can be narrowed down by the creation of clusters of countries which demonstrate similar characteristics.

Se Figure 4.1 (Page 80) Displayed on next slide

Implications For ManagementFigure 4.1 demonstrates that there is a level

of cultural affinity between groups of nations, and

So a general understanding of management practices is made easier if one realizes that it is only necessary to grasp the key characteristics of the seven groups.

This is not, of course, to say that the Russians are exactly like the Latvians.

The Impact of Culture on International MarketingOne of the major issues for international

marketing managers is the extent to which it is possible for an international company to

Sell identical products / services across the world.

Maintaining a standard product design helps to keep costs down,

But it also fails to recognize that customer tastes /needs may vary from one country to another.

The Impact of Culture on International MarketingIn practice, culture might affect all of the

following aspects of marketing:1- Product.2- Price.3- Promotion.4- Place

The Impact of Culture on International Marketing:1- Product:It is very important if you are a company such as

Uniliver, marketing washing powder across the world.

If you try and sell a powder that is ineffective at the normal local temperature,

You will not find many customers. Consequently,The way in which products are linked into culture

may actually be quite subtle and require extensive local research in order to ensure marketing success.

The Impact of Culture on International Marketing:2- Price:Price is a cultural issue because it needs to be

matched to the level of economic development in a country.

3- Promotion:In practice, the most effective form of promotion will

be culturally influenced. In the less developed world, billboard and radio

advertising are likely to be more effective media.In contrast, in rich countries such as the USA, the use

of the internet as a prime choice for advertisements is now commonplace.

The Impact of Culture on International Marketing:4- Place:As the internationalization of business

increases, place may become less important.Nonetheless, sometimes, especially food

products, tend to be purchased in different places according to national culture.

Human Resource Management In a company that operates across

international boundaries, it is likely that the staff will be of mixed nationalities and so

This creates the possibility for cultural misunderstandings.

In recruitment, some cultures will operate a very formalized recruitment process,

Based on the specification of particular qualifications for each job and interviews and tests to assess the relative ability of applicants.

Human Resource Management In other cultures, the method of recruitment

may be more informal,Based on employee network, educational

background or personal recommendation.Familial societies such as those of Africa, Asia

and Arabia view it as a personal duty to use one’s position to help other family members obtain work.

Although such an approach would be deemed wholly inappropriate and unfair in the west.

Operations Management The richer and more developed societies are

likely to have access to more sophisticated production technologies than

Those which are poorer and with a population that is less well educated.

In addition to the technology of production itself, there is also the question of how sophisticated is the information system that supports it.

Finance The sources that may be used by companies to

expand their business tend to vary from country to country,

As they reflect the political economy of the nation as well as its state of economic development.

In some countries, the usual form of business finance is bank borrowing, with the loans often underwritten by the state – Japan and Germany.

In contrast, businesses in the USA and UK are much more reliant of raising money via the sale equity shares in the stock market.

الله بحمد تم

THE END