Chapter 3

Culture, Management Style, and Business Systems

Presented by: Dr. John V. Padua

International Marketing15th edition

Philip R. Cateora, Mary C. Gilly, and John L. GrahamMcGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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Chapter Objectives

At the end of the session, the students are expected to know and understand the following:

The Required and Degree of AdaptationThe Impact of American Culture on Management

StylesThe Different Management Styles Around the

WorldEthical and Socially Responsible Decisions

5Introduction (1 of 2)

• Culture, including all of its elements, profoundly affects management style and overall business systems

• Culture not only establishes the criteria for day-to-day business behavior but also forms general patterns of values and motivations

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5Introduction (2 of 2) • A lack of empathy for and knowledge of

foreign business practices can create insurmountable barriers to successful business relations

• Knowledge of the management style – the business culture, management values, and business methods and behaviors existing in a country and a willingness to accommodate the differences are important to success in an international market

• Culture has an important influence on strategic thinking

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5Overview• The necessity for adapting to cultural

differences with imperatives, electives, and exclusives

• Different management styles vary around the world

• The extent and implications of gender bias in other countries

• The importance of cultural differences in business ethics

• The differences between relationship-oriented and information-oriented cultures Roy Philip 5-5

5Required Adaptation• Adaptation is a key concept in

international marketing• Ten basic criteria for adaptation

1) Open tolerance2) Flexibility3) Humility4) Justice/fairness5) Ability to adjust to varying tempos6) Curiosity/interest7) Knowledge of the country8) Liking for others9) Ability to command respect10) Ability to integrate oneself into the environment

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5Degree of Adaptation

• Essential to effective adaptation– Awareness of one’s own culture and the – Recognition that differences in others can

cause anxiety, frustration, and misunderstanding of the host’s intentions

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5Imperatives, Electives, and Exclusives

• Cultural imperatives - Business customs and expectations that must be met and conformed to or avoided if relationships are to be successful – In some cultures a person’s demeanor is more

critical than in others– Imperatives vary from culture to culture

• Cultural electives - Relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required– A cultural elective in one county may be an

imperative in another• Cultural exclusives - Customs or behavior

patterns reserved exclusively for the localsRoy Philip 5-8

5The Impact of American

Culture on Management Style

• “Master of destiny” viewpoint• Independent enterprise as the

instrument of social action• Personnel selection and reward

based on merit• Decisions based on objective

analysis• Wide sharing in decision making• Never-ending quest for improvement• Competition producing efficiencyRoy Philip 5-9

5Management Styles around the World

• Authority and decision making• Management objectives and aspirations• Communication styles• Formality and tempo• P-time versus M-time• Negotiation emphasis• Marketing orientation

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5Authority and Decision Making

• Influencers of the authority structure of business:– High PDI Countries

• Mexico, Malaysia– Low PDI Countries

• Denmark, Israel• Three typical authority patterns:

– Top-level management decisions– Decentralized decisions– Committee or group decisions

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5Management Objectives and Aspirations

• Security and mobility– Relate directly to basic human motivation and

therefore have widespread economic and social implications

• Personal life– Worldwide study of individual aspirations,

(David McClelland)• Affiliation and social acceptance

– In some countries, acceptance by neighbors and fellow workers appears to be a predominant goal within business

• Power and achievement - South American countries

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5Communication Styles• Face-to-face communication

– Managers often fail to develop even a basic understanding of just one other language

– Much business communication depends on nonverbal messages

• Internet communications– Nothing about the Web will change the extent to which

people identify with their own language and cultures• 78% of today’s Web site content is written in English• An English e-mail message cannot be understood by

35% of all Internet users– Country-specific Web sites– Web site should be examined for any symbols, icons,

and other nonverbal impressions that could convey and unwanted message

– www.nike.com – a great example of a company with a webpage for many countriesRoy Philip 5-13

5American Slangs – Foreign Interpretations

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• “Let’s do a deal”

• “What’s the bottom line?”

• “Okay” or “That’s okay”

• “That’s a shame”• “I get a kick from that”• “Can we close on this?”

• “That is too good to be true”

• Arab=“Let’s do something unethical”

• Japanese=“What is your starting bid?”

• Chinese “Not really good, could be better”

• Indian=“You have insulted me”

• Japanese= “It hurts”• Chinese= “We should stop,

cancel this”• Malaysian= “You must be

cheating me”

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5Formality and Tempo• Breezy informality and haste characterize

American business relationships• Europeans not necessarily “Americanized”• Higher on Hofstede’s Power Distance

Index (PDI)– May lead to business misunderstandings

• Haste and impatience most common mistakes made by Americans in the Middle East

• For maximum success marketers must deal with foreign executives in acceptable ways Roy Philip 5-15

5P-Time versus M-Time• Monochronic time

– Tend to concentrate on one thing at a time– Divide time into small units and are concerned

with promptness– Most low-context cultures operate on M-Time

• Polychronic time– Dominant in high-context cultures– Characterized by the simultaneous occurrence of

many things– Allows for relationships to build and context to be

absorbed as parts of high-context cultures• Most cultures offer a mix of P-time and M-time

behavior• As global markets expand more businesspeople

from P-time cultures are adapting to M-time.

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5Negotiations Emphasis• Business negotiations are perhaps the

most fundamental business rituals• The basic elements of business

negotiations are the same in any country– They relate to the product, its price and

terms, services associated with the product, and finally, friendship between vendors and customers

• One standard rule in negotiating is “know thyself” first, and second, “know your counterpart”

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5Marketing Orientation• The extent of a company’s market

orientation has been shown to relate positively to profits

• Firms in other countries have not been able to move from the traditional production, product, and sales orientation to the marketing orientation

• Research has shown that sometimes in can be difficult to encourage a marketing orientation across diverse business units in global companies

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5Gender Bias in International Business

• Women represent less than 20% of the employees who are chosen for international assignments

• In many cultures (Asia, Middle East, Latin America) women not typically found in upper levels of management, and are treated very differently from men

• Prejudices toward women in foreign countries• Cross-mentoring system instituted by Lufthansa• Executives who have had international

experience are– more likely to get promoted,– have higher rewards, and have – greater occupational tenure

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5Ethical and Socially Responsible Decisions

• Difficulties arise in making decisions, establishing policies, and engaging in business operations in five broad areas

– Employment practices and policies– Consumer protection– Environmental protection– Political payments and involvement in political affairs of the

country– Basic human rights and fundamental freedoms

• Laws are the markers of past behavior that society has deemed unethical or socially irresponsible

• Ethical principles to help the marketer distinguish between right and wrong, determine what ought to be done, and justify actions

– Utilitarian Ethics (Does it achieve a common good?)– Rights of the Parties (Does the actions involve the rights of

the individual?)– Justice or Fairness (Does the action represent fairness for

all?)

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5A Synthesis – Relationship-

Oriented vs. Information-Oriented Cultures

• Not every culture fits every dimension of culture in a precise way

• Information-oriented culture– United States

• Relationship culture– Japan

• Synthesis of cultural differences allows us to make predictions about unfamiliar cultures

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5Summary (1 of 2)• Some cultures appear to emphasize the

importance of information and competition while others focus more on relationships and transaction cost reductions

• Businesspersons working in another country must be sensitive to the business environment and must be willing to adapt when necessary

• Understanding the culture you are entering is the only sound basis for planning

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5Summary (2 of 2)

• Varying motivational patterns inevitably affect methods of doing business in different countries

• The international trader must be constantly alert and prepared to adapt when necessary

• No matter how long in a country, the outsider is not a local – in many countries that person may always be treated as an outsider

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