Cultural Factors in Global Business
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Differences in culture, International Management Strategies, Hofstede Dimensions
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Cultural Factors in Global Business
- 1. Go Global ! Global Economic Environment : Differences in Culture By Stephen Ong Edinburgh Napier University Business School chong@mail.tarc.edu.my Visiting Professor, College of Management, Shenzhen University 25 August 2012
- 2. Agenda 1. Culture 2. Hofstede’s Dimensions 3. Managing diversity
- 3. Learning Objectives To analyse the factors which contribute to the culture of a nation or region. To assess research findings on culture and their relevance to international business management. To discuss appropriate methods of preparing international managers to handle the cultural differences that they may encounter in the course of their work.
- 4. Society, Culture and Global Consumer Culture • Culture–ways of living, built up by a group of human beings, that are transmitted from one generation to another • Culture has both conscious and unconscious values, ideas, attitudes, and symbols • Culture is acted out in social institutions • Culture is both physical (clothing and tools) and nonphysical (religion, attitudes, beliefs, and values)
- 5. Social Institutions • Family • Education • Religion • Government • Business These institutions function to reinforce cultural norms
- 6. Material and Nonmaterial Culture Physical Culture Abstract Culture – Clothing – Religion – Tools – Perceptio – Decorative ns art – Attitudes – Body adornment – Beliefs – Homes – Values
- 7. Society, Culture, and Global Consumer Culture “Culture is the collective programming of the mind that distinguishes the members of one category of people from those of another.” Geert Hofstede A nation, an ethic group, a gender group, an organization, or a family may be considered as a category.
- 8. Society, Culture, and Global Consumer Culture • Global consumer cultures are emerging – Persons who share meaningful sets of consumption-related symbols – Pub culture, coffee culture, fast-food culture, credit card culture • Primarily the product of a technologically interconnected world – Internet – Satellite TV – Cell phones
- 9. Attitudes, Beliefs, and Values • Attitude–learned tendency to respond in a consistent way to a given object or entity • Belief–an organized pattern of knowledge that an individual holds to be true about the world • Value–enduring belief or feeling that a specific mode of conduct is personally or socially preferable to another mode of conduct
- 10. Religion • The world’s major religions include Buddhism, Christianity, Hinduism, Islam, and Judaism and are an important source of beliefs, attitudes, and values. • Religious tenets, practices, holidays, and history impact global marketing activities.
- 11. Aesthetics • Visual–embodied in the • The sense of what is color or shape of a beautiful and what is not product, label, or beautiful package • What represents good • Styles–various degrees taste as opposed to of complexity, for tastelessness or even example, are perceived obscenity differently around the world
- 12. Aesthetics and Color • Red–associated with blood, wine-making, activity, heat, and vibrancy in many countries but is poorly received in some African countries. • White–identified with purity and cleanliness in the West, with death in parts of Asia. • Gray–means inexpensive in Japan and China, but high quality and expensive in the U.S.
- 13. The Meaning of Colour Yellow indicates a merchant in India In England and the U.S., “Something Red signifies Blue” on a good luck and bride’s garter celebration in symbolizes China fidelity
- 14. Dietary Preferences Domino’s Pizza Subway had to educate pulled out of Italy Indians about the because its products benefits of sandwiches were seen as“too because they do not American” with bold normally eat bread. tomato sauce and heavy toppings.
- 15. Language and Communication Linguistic Category Language Example Syntax-rules of sentence English has relatively fixed word order; Russian has relatively free word order. formation Semantics-system of Japanese words convey nuances of feeling for which other languages lack meaning exact correlations; ‘yes’ and ‘no’ can be interpreted differently than in other languages. Phonology-system of Japanese does not distinguish between the sounds ‘l’ and ‘r’; English and sound patterns Russian both have ‘l’ and ‘r’ sounds. Morphology-word Russian is a highly inflected language, with six different case endings for nouns formation and adjectives; English has fewer inflections.
- 16. Language and Communication Pronounced “shu” Sounds like Sounds like Sounds like “I hope “break into “death” or you have bad luck”. pieces or fall “the end”. apart”. In China, it is bad luck to give these three items.
- 17. Introduction Culture refers to the learned norms based on values, attitudes, and beliefs of a group of people Culture is an integral part of a nation’s operating environment every business function is subject to potential cultural differences
- 18. Introduction Cultural Factors Affecting International Business Operations
- 19. Introduction Companies need to decide when to make cultural adjustments Fostering cultural diversity can allow a company to gain a global competitive advantage by bringing together people of diverse backgrounds and experience
- 20. Introduction But, 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
- 21. Cultural Awareness Problem areas that can hinder managers’ cultural awareness… Subconscious reactions to circumstances The assumption that all societal subgroups are similar Managers that educate themselves about other cultures have a greater chance of succeeding abroad
- 22. Culture and the Nation-State The nation is a useful definition of society because similarity among people is a cause and an effect of national boundaries laws apply primarily along national lines language and values are shared within borders rites and symbols are shared along national lines
- 23. Culture and the Nation-State Country-by-country analysis can be difficult because subcultures exist within nations similarities link groups from different countries Need to focus on relevant groups
- 25. Primary Characteristics Learned Interrelated Adaptive Shared
- 26. 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
- 28. Social Structure The Roles of Social Individuals Stratification in Society and Mobility
- 29. Behavioural Practices Affecting Business : Social Stratification Social ranking is determined by an individual’s achievements and qualifications an individual’s affiliation with, or membership in, certain groups
- 30. Individuals, Families, and Groups Family Structure Individualism Group Service
- 32. Social Stratification 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 Two other factors that are important education and social connections
- 33. Language: Cultural Diffuser and Stabilizer 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
- 34. Language: Cultural Diffuser and Stabilizer Distribution Of The World’s Major Languages
- 35. Language: Cultural Diffuser and Stabilizer Major Language Groups: Population and Output
- 36. Functions of Language Delineates Cultural Groups Thought Patterns Acculturation Cultural Values Diversity
- 37. Cultural Aspects of Language Competitive Lingua Franca Advantage Saying “Yes” Translation or “No”
- 38. Effects of Religion and Values on International Businesses
- 39. Religion
- 40. Impact of Religion on International Business Legal System Homogeneity Tolerance
- 41. Values and Attitudes Time Age Education Status 41 Chapter 4 - Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
- 42. Religion: Cultural Stabilizer Religion impacts almost every business function Centuries of profound religious influence continue to play a major role in shaping cultural values and behaviour many strong values are the result of a dominant religion
- 43. Religion: Cultural Stabilizer Distribution Of The World’s Major Religions
- 44. Work Motivation The motivation to work differs across cultures Studies show the desire for material wealth is a prime motivation to work promotes economic development people are more eager to work when the rewards for success are high masculinity-femininity index high masculinity score prefers “to live to work” than “to work to live”
- 45. Work Motivation Hierarchy of needs theory fill lower-level needs before moving to higher level needs The ranking of needs differs among cultures
- 46. Work Motivation The Hierarchy of Needs and Need-Hierarchy Comparisons
- 47. Relationship Preferences Relationship preferences differ by culture Power distance high power distance implies little superior- subordinate interaction autocratic or paternalistic management style low power distance implies consultative style Individualism versus collectivism high individualism – welcome challenges high collectivism – prefer safe work environment
- 48. Risk Taking Behaviour Risk taking behavior differs across cultures Uncertainty avoidance handling uncertainty Trust degree of trust among people Future orientation delaying gratification Fatalism attitudes of self-determination
- 49. Information and Task Processing Cultures handle information in different ways Perception of cues Obtaining information low context versus high context cultures Information processing Monochronic versus polychronic cultures Idealism versus pragmatism
- 50. Communication
- 51. Nonverbal Forms Expressions Gestures Intonation Eye Contact Body Language
- 52. Gifts and Hospitality Etiquette Customs
- 53. Communications Cross border communications do not always translate as intended Spoken and written language Silent language Colour Distance Time and punctuality Body language Prestige
- 54. Communications Body Language Is Not A Universal Language
- 55. Cultural Clusters and International Management
- 56. Marketing’s Impact on Culture • Universal aspects of the cultural environment represent opportunities to standardize elements of a marketing program • Increasing travel and improved communications have contributed to a convergence of tastes and preferences in a number of product categories
- 57. Hall’s Cultural Context Approach High Low Context Context
- 58. High- and Low-Context Cultures • Low Context • High Context – Messages are explicit – Information resides in and specific context – Words carry all – Emphasis on information background, basic – Reliance on legal values, societal status paperwork – Less emphasis on legal – Focus on non-personal paperwork documentation of – Focus on personal credibility reputation Saudi Arabia, Japan Switzerland, U.S., Germany
- 60. Cultural Clusters Similarities and Business Practices Internationalization Strategies Foreign Market Entry Methods
- 61. Hofstede’s Findings on Differences in Cultural Values
- 62. Hofstede’s Cultural Typology • Power Distance • Individualism/Collectivism • Masculinity • Uncertainty Avoidance • Long-term Orientation
- 63. Self-Reference Criterion and Perception • Unconscious reference to one’s own cultural values; creates cultural myopia • How to Reduce Cultural Myopia: – Define the problem or goal in terms of home country cultural traits – Define the problem in terms of host-country cultural traits; make no value judgments – Isolate the SRC influence and examine it – Redefine the problem without the SRC influence and solve for the host country situation
- 64. The Five Dimensions Individual Social Orientation Collective Respect Power Orientation Tolerance Accepting Uncertainty Orientation Avoiding Aggressive Goal Orientation Passive Short- Long-Term Time Orientation Term
- 67. Uncertainty Orientation •Acceptance •Avoidance
- 69. Time Orientation Short Long Term Term
- 71. International Management and Cultural Differences
- 73. Diffusion Theory: The Adoption Process The mental stages through which an individual passes from the time of his or her first knowledge of an innovation to the time of product adoption or purchase • Awareness • Interest • Evaluation • Trial • Adoption
- 74. Diffusion Theory: Characteristics of Innovations • Innovation is something new; five factors that affect the rate at which innovations are adopted include: – Relative advantage – Compatibility – Complexity – Divisibility – Communicability
- 76. Marketing Implications • Cultural factors must be considered when marketing consumer and industrial products • Environmental sensitivity reflects the extent to which products must be adapted to the culture-specific needs of different national markets
- 78. Environmental Sensitivity • Independent of social class and income, culture is a significant influence on consumption and purchasing • Food is the most culturally-sensitive category of consumer goods – Dehydrated Knorr Soups did not gain popularity in the U.S. market that preferred canned soups – Starbucks overcame cultural barriers in Great Britain and had 466 outlets by 2005
- 79. Dealing with Cultural Differences Do managers have to alter their customary practices to succeed in countries with different cultures? Must consider Host society acceptance Degree of cultural differences cultural distance Ability to adjust culture shock and reverse culture shock Company and management orientation
- 80. Dealing with Cultural Differences Three company and management orientations Polycentrism business units abroad should act like local companies Ethnocentism home culture is superior to local culture overlook national differences Geocentrism integrate home and host practices
- 81. Strategies for Instituting Change Value Systems Cost-Benefit Analysis of change Resistance to too much change Participation Reward Sharing Opinion Leadership Timing Learning Abroad
- 82. The Future of National Cultures Scenario 1: New hybrid cultures will develop and personal horizons will broaden Scenario 2: Outward expressions of national culture will continue to become homogeneous while distinct values will remain stable Scenario 3: Nationalism will continue to reinforce cultural identity Scenario 4: Existing national borders will shift to accommodate ethnic differences
- 83. Conclusion “To eat with feeling in France is to eat with your head, your spirit, your nose, your eyes, and your ears…” Jacqueline Friedrich
- 84. Casestudy : Changan-FORD 1. Read and prepare the Casestudy on Changan- FORD (Johnson, Whittington & Scholes (2011)) for discussion and presentation next week. 2. Identify and evaluate the challenges facing the Changan-FORD joint venture by conducting External Environment, Industry, Competitor analysis, SWOT and Hofstede’s Dimensions.
- 85. Core Reading Juleff, L, Chalmers, A.. and Harte, P. (2008) Business Economics in a Global Environment, Napier University Edinburgh Daniels, J.D., Radebaugh, L.H. and Sullivan, D.P. (2012) International Business: Environments and Operations. 14th edition, Pearson Griffin, R.W. and Pustay, M.W. (2013) International Business, 7th edition, Pearson Keegan, W.J. and Green, M.C. (2013) Global Marketing, 7th edition, Pearson
Hinweis der Redaktion
- The Learning Objectives for this chapter are – Having an understanding of the culture can actually become a firm ’ s competitive advantage. To do this we must overcome our prejudices that are a natural result of the human tendency toward ethnocentricity. Cultural factors challenge global marketers because many are hidden from view. In order to do this the chapter will look at culture from several different conceptual frameworks that include Edward T. Hall ’ s notion of high- and low-context cultures, Hofstede ’ s cultural typology, the self-reference criterion, Maslow ’ s hierarchy and diffusion theory.
- This slide is an introduction of the different aspects of culture. The goal of this slide is to help the student see that culture has a number of factors affecting it. Culture is acted out in social institutions and in society.
- Material and nonmaterial elements of culture are interrelated. Cultural universals include athletic sports, body adornment, cooking, courtship, dancing, decorative art, education, ethics, etiquette, family feasting, food taboos, language, marriage, mealtime, medicine, mourning, music, property rights, religious rituals, residents rules, status differentiation, and trade.
- Because of technologies such as satellite TV, Internet, cell phones, and other communication channels marketers have begun to see the emergence of the global consumer. The hallmark of this culture is consumption. As the world becomes more interconnected and as cultural imagery continues to freely flow across national borders it can be expected that this culture will grow. It can be exploited by global consumer culture positioning (GCCP) discussed in Chapter 7.
- By accepting Hofstede ’ s definition of culture (the collective programming of the mind) it would make sense to learn about culture by studying the attitudes, beliefs, and values shared by a specific group of people. Values represent the deepest level of a culture and are shared by the majority of members. Within any culture, there are likely to be subcultures , that is, smaller groups of people with their own shared subset of attitudes, beliefs, and values. Subcultures may represent attractive niche marketing opportunities, i.e., vegetarians. Japanese values include striving for cooperation, consensus, self-denial, and harmony. A Japanese belief is that they are unique in the world. Japanese youth believe that the West is an important source of fashion trends. Therefore, many Japanese share a favorable attitude towards American brands.
- McDonald ’ s does not serve beef hamburgers in India because Hindus do not eat beef. There were objections raised in the merger of Daimler-Benz and Chrysler relating to Jewish history and the Holocaust. Some Muslims have tapped into anti-American sentiment by urging a boycott of American brands due to U.S. military action in the Mideast following 9/11. Europeans are divided on the issue of referring to God and Christianity in a new European constitution. Strong Catholic countries like Ireland, Spain, Italy, and Poland are for inclusion. France and Belgium are strong advocates of separation of church and state. Europe ’ s politically active Muslim minority are resisting inclusion of Christianity in the EU Constitution.
- Aesthetic elements that are seen as attractive in one country may be viewed differently in another.
- Some colors may be used in all countries, i.e., Caterpillar yellow, Marlboro ’ s red chevron, Bluetooth, and JetBlue. Colors may need to be adapted according to local cultural preferences. Soft drink labels and color associated with good taste: Chinese associate brown. South Koreans and Japanese associate yellow. Americans associate red.
- Despite local preferences, there is evidence that global dietary preferences are converging. When time pressed families do not have time to prepare meals, fast food becomes more popular. Young people experiment with different foods. Global tourism has exposed people to pizza, pasta, and other ethic foods. Shorter work hours and tighter budgets are forcing workers to find a place to grab a quick, cheap bite before returning to work. Due to the backlash to fast food in France, especially le Big Mac , the French National Council of Culinary Arts designed a course on French cuisine and “ good taste ” for elementary students. The director of the council, Alexandre Lazareff, warns that France ’ s haute cuisine is under attack by globalization of taste. The French have a new buzzword, le fooding, to express the notion that the nation ’ s passion for food goes beyond mere gastronomy: “ To eat with feeling in France is to eat with your head and your spirit, with your nose, your eyes, and your ears, not simply your palate. Le fooding seeks to give witness to the modernity and new reality of drinking and eating in the 21 st century. Everything is fooding so long as audacity, sense, and the senses mix.”
- American and British English have different meanings. British firm BAA McArthurGlen set up a factory outlet-style store in Austria only to have local officials ask, “ Where ’ s the factory? ” The firm had to rename it a “ designer outlet center. ” “ Light beer ” failed for both Miller and Anheuser-Busch in the U.K. because it was perceived as light in alcohol. In the European market, Miller Lite is now Miller Pilsner. Good Housekeeping magazine had to adapt for the Japanese market. “ Housekeeping ” is most closely translated as “ domestic duties, ” which may be tasks performed by servants. The magazine retained the name but the word “ Good ” is much larger than “ Housekeeping ” on the cover. The famous Good Housekeeping Seal was eliminated as it caused confusion among readers. In China, Dell had to find another way to express “ direct sales ” since the literal translation meant an illegal pyramid marketing scheme. Sales reps now use a phrase that translates as “ direct orders. ” Phonology: In Spanish, Colgate means “ go hang yourself; ” Whirlpool advertised extensively in Europe only to find that Italians, French, and Germans had trouble pronouncing the brand ’ s name. “ Diesel ” was chosen for the jeans brand because it is pronounced the same in every language. Technology is providing opportunities to exploit linguistics. Cell phone text messaging of certain number combinations takes on special meaning. In Korea, 8282 means “ hurry up ” , 7170 sounds like “ close friend ” and 4 5683 968 may be interpreted as “ I love you. ” After eBay acquired EachNet auction site in China, it used rebates and other promotions to attract visitors. It offered credits of 68 yuan on purchases of 168 or more. In Chinese, the word “ six ” is pronounced the same as “ safe ” and “ eight ” is pronounced the same as “ prosperity. ”
- Westerners must pay close attention not only to what they hear but also what they see when conducting business in other countries.
- What is culture? Culture refers to the learned norms based on values, attitudes, and beliefs of a group of people. Culture can be based on nationality, ethnicity, gender, religion, work organization, profession, age, political party membership, income level, and so on. International business activities incorporate people from all different groups and backgrounds, thus, every business function is subject to cultural differences.
- This Figure shows the cultural factors affecting international business operations.
- Most people recognize that cross-country differences exist, but they don’t always agree on exactly what they are. It can be beneficial to foster cultural diversity in some cases. B ringing together people of diverse backgrounds and experience can give companies a deeper knowledge about products and services and ways in which to produce and deliver them.
- But keep in mind that cultural collision can create problems. Companies doing business in another country must determine which of that nation’s business practices differ from their own and then decide what adjustments, if any, are necessary in order to operate efficiently.
- In order to increase their chance for success, managers need to develop their awareness of and sensitivity to other cultures. They can do this by educating themselves. Gathering some basic research on another culture can be instructive. In addition, managers should consider the information they gather to determine if it perpetuates unwarranted stereotypes, covers only limited facets of a country and its culture, or relies on outdated data. Managers should also observe the behavior of those people who have garnered the kind of respect and confidence they themselves will need.
- We often use the idea of a nation when we talk about culture. In general, within national borders, people largely share such essential attributes as values, language, and race. There is a feeling of “we” that casts foreigners as “they.” Rites and symbols—flags, parades, rallies—and the preservation of national sites, documents, monuments, and museums promote a common perception of history and perpetuates national identity.
- Note though that subcultures do exist within nations and groups from different nations can actually be quite similar. International managers need to focus on relevant groups —differentiating, for example, between the typical attitudes of rural dwellers and those of urban dwellers, or those of young people versus old people.
- Culture is the collection of values, beliefs, behaviors, customs, and attitudes that distinguish one society from another. A society’s culture determines the rules that govern how firms operate within the society.
- Several characteristics of culture are worth noting for their relevance to international business: Culture reflects learned behavior that is transmitted from one member of a society to another, and the elements of culture are interrelated . Furthermore, because culture is learned, it is adaptive ; that is, the culture changes in response to external forces that affect the society. Finally, culture is shared . Individuals who share a culture are members of a society; those who do not are outsiders.
- Culture is learned – from parent to child, teacher to student, peer to peer, and so on. So, while cultural value systems tend to be established early in life, they can change. Change can be by choice or it can be imposed – this type of change is called cultural imperialism. Cultural value systems can also change as a result of contact with other cultures. This is kn own as cultural diffusion. When this change results in mixing cultural elements, the process is known as creolization.
- A society’s culture determines how its members communicate and interact with each other. The basic elements of culture are social structure, language, communication, religion, and values and attitudes. The interaction of these elements affects the local environment in which international businesses operate. They also affect the ability of countries to respond to changing circumstances.
- Basic to every society is its social structure —the overall framework that determines the roles of individuals within the society, the stratification of the society, and individuals’ mobility within the society.
- Social stratification determines an individual’s class, status, and financial rewards within a culture. It’s determined by individual achievements and qualifications, and by affiliation and membership in groups.
- All human societies involve individuals living in family units and working with each other in groups. However, societies differ in the way they define the family and the relative importance they place on the individual’s role within groups. The view of family ties and responsibility in the United States focuses on the nuclear family. In other cultures, the extended family is more important—including uncles, brothers, cousins, and in-laws as family members who are owed obligations of support and assistance. Other societies define family even more broadly; for example, focusing on clans, each one comprised of individuals of the same tribe who share a common ancestor. Cultures also differ in the importance of the individual relative to the group. Culture in the United States, for example, promotes individualism. Conversely, in group-focused societies such as Japan, children are taught that their role is to serve the group.
- Societies differ in their degree of social stratification ; that is, how people are classified on the basis of birth, occupation, educational achievements, or other attributes. In addition, the importance of these categories varies by society. Multinational corporations (MNCs) operating in highly stratified societies often must adjust their hiring and promotion procedures to take into account class or clan differences among supervisors and workers. Hiring members of one group to do jobs traditionally performed by members of another group may lower productivity and morale on the job. In less stratified societies , firms are freer to seek out the most qualified employees, regardless of whether they went to the right school or belong to all the best clubs. Social mobility allows individuals to move from one stratum of society to another. Such mobility tends to be higher in less stratified societies. Social mobility (or the lack of it) often affects individuals’ attitudes about such factors as labor relations, human capital formation, risk taking, entrepreneurship, and education.
- An individual may belong to a group because of age, gender, family, racial, or ethnic variables. This is known as ascribed group membership. When membership is based on religion, political affiliation, or professional association it’s an acquired group membership. In general, equalitarian societies tend to put more emphasis on acquired group membership. Keep in mind that education and social connections also impact an individual’s rank in a society.
- Language acts both as a diffuser of culture and as a stabilizer. On one hand, a common language unifies a culture. However, w hen people from different areas speak the same language, culture spreads more easily. So, there’s greater cultural homogeneity among all English-speaking countries and among all Spanish-speaking countries than there is between English-speaking countries and Spanish-speaking countries. When nations share a language, business is easier because there’s no need for time consuming and expensive translations. Often, people studying languages choose the ones that are most useful in interacting with other countries.
- This Map shows the distribution of the world’s major languages. Notice the large number of English speaking, French speaking, and Spanish speaking countries.
- This Figure shows the relationship between major language groups and world output. Notice the importance of English as a language of international business.
- Language is a primary delineator of cultural groups because it is an important means by which a society’s members communicate with each other. Language organizes the way members of a society think about the world. In addition, language provides important clues about a society’s cultural values and aids in the acculturation of that society. The presence of more than one language group is an important signal about the diversity of a country’s population. It also signals differences in income, cultural values, and educational achievement. Generally, countries dominated by one language group tend to have a homogeneous society. Countries with multiple language groups tend to be heterogeneous, with language providing an important means of identifying cultural differences within the country.
- Linguistic ties often create important competitive advantages because the ability to communicate is so important in conducting business transactions. English has emerged as the predominant common language, or lingua franca of international business. However, failure by native English speakers to learn a second language puts them and their firms at a decided disadvantage when negotiating or operating on foreign turf. Of course, some linguistic differences may be overcome through translation. The process, however, requires more than merely substituting words of one language for those of another. Translators must be sensitive to subtleties in the connotations of words and focus on translating ideas, not just the words themselves. Even the use of yes and no differs across cultures. In contract negotiations, Japanese businesspeople often use yes to mean, “Yes, I understand what is being said” rather than, “Yes, I agree with you.” Misunderstandings can be compounded because directly uttering no in some cultures is considered impolite or inhospitable. In such cultures, negotiators who find a proposal unacceptable will suggest that it “presents many difficulties” or requires “further study.”
- Religion is an important aspect of most societies. It affects the ways in which members of a society relate to each other and to outsiders.
- Religion shapes the attitudes its adherents have toward work, consumption, individual responsibility, and planning for the future. The Protestant ethic stresses hard work, frugality, and achievement as ways of glorifying God. Hinduism emphasizes spiritual accomplishment, rather than economic success. Islam is supportiv e of capitalism, but it places more emphasis on the individual’s obligation to society. Religion affects the business environment in other important ways. Often religions impose constraints on the roles of individuals in society. For example, the caste system of Hinduism restricts the jobs that individuals may perform, thereby affecting the labor market and business opportunities. Religion may also affect the way products are advertised and sold. The precept that “sex sells” may hold true in Western society, but it would not be accepted in societies that are predominately Muslim. Religion also affects the types of products consumers may purchase, as well as seasonal patterns of consumption. In Christian countries, the Christmas season represents an important time for gift-giving. While consumption booms during this season, production falls as employees take time off to visit friends and family.
- The impact of religion on international businesses varies from country to country, depending on the country’s legal system, its homogeneity of religious beliefs, and its toleration of other religious viewpoints. In some countries, strong political pressure exists to preserve religious traditions. In such situations, it would be impossible to overstate the importance of understanding how politics and religion affect exporting, producing, marketing, or financing goods. In many other countries, religion is important, yet it does not permeate every facet of life. Ironically, countries characterized by religious diversity may offer even greater challenges. Firms that operate in the cosmopolitan cities of London and New York must accommodate the diverse religious needs of their employees and customers by taking into account differences in religious holidays, dietary restrictions, and Sabbath days. Firms that fail to adjust to these needs may suffer from absenteeism, low morale, and lost sales.
- Culture also affects and reflects the secular values and attitudes of the members of a society. Cultural values often stem from deep-seated beliefs about the individual’s position in relation to his or her deity, the family, and the social hierarchy. Cultural attitudes toward such factors as time, age, education, and status reflect these values in a given culture. Attitudes about time differ dramatically across cultures. In Anglo-Saxon cultures, “time is money,” so it is not to be wasted. In Latin American cultures, few participants would think it was unusual if a meeting began 45 minutes after the appointed time. Important cultural differences exist in attitudes toward age . Many U.S. firms devote much time and energy to identifying young “fast-trackers” and providing them with important assignments. In Asian and Arab cultures, however, age is respected and a manager’s stature is correlated with age. A country’s formal system of public and private education is an important transmitter and reflection of the cultural values of its society. The United States prides itself on providing widespread access to higher education. In contrast, the United Kingdom, has historically provided an elite education to a relatively small number of students. The means by which status is achieved also vary across cultures. In some societies, status is inherited as a result of the wealth or rank of one’s ancestors, or conferred by the status of the group to which a person belongs. In others, status is earned through personal accomplishments or professional achievements.
- Religion also acts as a cultural stabilizer. Dominant religions can have a profound influence in shaping cultural values and behavior. Many religions even impact specific beliefs that may affect business, such as inhibiting the sale of certain products or the performance of work at certain times. McDonald’s, for example, recognizes the Hindu and Muslim influences in India and chooses not to sell beef or pork in the country. Similarly, El Al, the Israeli national airline, does not fly on Saturday, the Jewish Sabbath. When rival religions or factions fight for political control in a country, business is often negatively affected. You might think of property damage, broken supply chains, or breaches in connections with customers as examples.
- This Map shows the distribution of major religions around the world.
- The desire to work differs across cultures. In countries where material wealth is valued, there is generally a greater motivation to work. This of course, also helps to promote economic development. In fact, the higher level of development that exists in some countries can be explained by the work of Max Weber who suggested that self-discipline, hard work, honesty, and a belief in a just world foster work motivation and, thus, economic growth. Typically, people are also more eager to work when the potential rewards are high. We can also measure attitudes toward work and achievement using the masculinity-femininity index. The degree to which individuals are assertive, confrontational, and aggressive in their relationships with others varies across borders. These attitudinal differences help explain why an international company may encounter managers abroad who behave differently from what it expects or prefers.
- The hierarchy-of-needs theory suggests that people fill lower-level needs before filling higher level needs. An understanding of this theory is helpful to managers as they make decisions regarding reward preferences of employees in different countries. In very poor countries, for example, workers might be motivated with enough compensation to simply satisfy their needs for food and shelter. Workers in other countries may be motivated by other needs.
- This Figure shows the hierarchy of needs and need-hierarchy combinations. Note that n eeds are broken down into physiological needs, security needs, affiliation needs, esteem needs, and self-actualization needs. The way in which these needs are ranked differs among countries.
- Relationships preferences – and more specifically the interactions between bosses, subordinates, and peers – also differ from country to country. Power distance refers to the general relationship between superiors and subordinates. Where it is high, people prefer little consultation between superiors and subordinates. Employees usually prefer one of two management styles: autocratic - ruling with unlimited authority - or paternalistic - regulating conduct by supplying needs. Where power distance is low, they prefer “consultative” styles. Individualism is characterized by a preference for fulfilling leisure time and improving skills outside the organization. It also implies a low preference for receiving compensation in the form of benefits and a high preference for personal decision making and on-the-job challenges. In contrast, collectivism encourages dependence on the organization and a preference for thorough training, satisfactory workplace conditions, and good benefits.
- How people approach risk also varies from country to country. Four types of risks are important: uncertainty avoidance, trust, future orientation, and fatalism. In cultures where there is high uncertainty avoidance employees prefer following set rules even if breaking them may be in the company’s best interest. Similarly, many consumers are not prepared to risk being early adopters of products. In cultures where trust is high, the cost of doing business tends to be lower because managers don’t spend much time fussing over every possible contingency and monitoring every action for compliance with certain business principles. Business decisions can also be influenced by a culture’s attitude toward the future and whether it’s worthwhile to delay gratification in order to invest for the future. Finally, if people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if they’re fatalistic and believe every event in life is inevitable, they’re less likely to accept the basic cause-and-effect relationship between work and reward.
- How information is perceived, obtained, and processed differs from country to country. In low context cultures people generally regard only firsthand information that bears directly on the subject at hand as being relevant. Managers typically spend little time on small talk and tend to get to the point. In contrast, in high-context cultures people see seemingly peripheral information as pertinent and infer meanings from things said either indirectly or casually. In monochronic cultures p eople prefer to work sequentially. So, for example, a transaction with one customer is completed before dealing with another. But in a polychronic culture, people often feel more comfortable working simultaneously on a variety of tasks, such as dealing immediately with multiple customers who need service. Cultures that prefer to establish overall principles before tackling smaller details take an approach called idealism, while those that focus more on details than on abstract principles take a pragmatic approach. Keep in mind that an individual’s approach to information processing can affect business in a number of ways. In a culture of pragmatists like the United States, for example, labor negotiations tend to focus on well-defined issues—say, hourly pay increases for a specific bargaining unit. However, in an idealist culture like that of Argentina, labor disputes tend to blur the focus on specific demands as workers tend to rely first on mass action—such as general strikes or political activities—to publicize basic principles.
- Communicating across cultural boundaries is an important skill for international managers. Although communication can often go awry between people who share a culture, the chances of miscommunication increase substantially when the people are from different cultures. In such cases, the senders encode messages using their cultural filters, and the receivers decode the same messages using their filters. The result of using different cultural filters can be a misunderstanding that is expensive to resolve.
- Members of a society communicate with each other using more than words. In fact, some researchers believe that 80 to 90 percent of all information is transmitted among members of a culture by means other than language. This nonverbal communication includes facial expressions, hand gestures, intonation, eye contact, and body language. Although most members of a society share an understanding of common nonverbal forms of communication, outsiders may find that society’s nonverbal communication difficult to comprehend. Because of cultural differences, nonverbal forms of communication often can lead to misunderstandings. For instance, the meanings of certain hand gestures can differ dramatically from culture to culture. Needless to say, international businesspeople should avoid gesturing in a foreign culture, unless they are sure of how those gestures will be interpreted in that culture.
- Gift-giving and hospitality are important means of communication in many business cultures. Japanese business etiquette requires solicitous hospitality, such as elaborate meals and after-hours entertainment to build personal bonds and group harmony among the participants. These personal bonds are strengthened by the exchange of gifts; however, business gifts are opened in private. That way, the giver will not lose face should the gift be too expensive or too cheap relative to the gift offered in return. The business culture of Arab countries also includes gift-giving and elaborate hospitality, as a means of assessing proposed business partners. Unlike in Japan, however, business gifts are opened in public so that all may be aware of the giver’s generosity. Hospitality customs also differ. American executives often seek the most conspicuous table in a fancy restaurant as a means of communicating their status and clout. In China, business banquets are an important mechanism for developing the personal relationships so important in that business culture. However, such events, are normally located in a private dining room at an expensive restaurant.
- Communication across cultures can be problematic when communications are not translated with the same meaning as intended. This problem can occur with not only with spoken and written language and but also with silent language. Even a slight misuse of words or phrases can have a significant impact on the meaning of a message. Moreover, it’s important to recognize that even when two countries share a language problems can exist. For example, some 4,000 words have different meanings in British and American English. Silent language refers to a host of nonverbal cues. How these physical cues or “body language” are perceived and interpreted varies between cultures. Many Western countries, for instance, associate black with death ,while white has the same connotation in some parts of Asia. Similar differences exist with perceptions of time and punctuality. In the United States, people usually arrive early for business appointments, a few minutes late for dinner at someone’s home, and a bit later still for large social gatherings. In other countries though, the concept of punctuality in any or all of these situations may be different. The appropriate distance people maintain during conversations and prestige also differs between countries. For Americans, the customary distance for a business discussion is 5 to 8 feet; for personal business, it’s 18 inches to 3 feet. The much smaller distances common in Latin America can make many Americans quite uncomfortable. Likewise, a U.S. manager who places great faith in objects as cues to prestige may underestimate the status of foreign counterparts who don’t value large, plush offices on high floors. A foreigner may underestimate U.S. counterparts who perform their own services, such as opening their own doors, fetching their own coffee, and answering unscreened phone calls.
- These images show how a simple gesture is interpreted quite differently around the world.
- The various elements of national culture affect the behavior and expectations of managers and employees in the workplace. International businesspeople face the challenge of managing and motivating employees with different cultural backgrounds.
- The astute global marketer often discovers that much of the apparent cultural diversity in the world turns out to be different ways of accomplishing the same thing. Widespread shared preference for convenience foods, disposable products, popular music, and movies in the United States, Europe, and Asia suggests that many consumer products have broad, even universal, appeal. The cultural change and the globalization of culture have been capitalized upon, and even significantly accelerated, by companies that have seized opportunities to find customers around the world.
- One useful way of characterizing differences in cultures is the low-context–high-context approach developed by Edward and Mildred Hall. In a low-context culture , the words used by a speaker convey the message to the listener; hence, the specific terms of a transaction are important. The United States and Germanic countries are good examples of low-context cultures In a high-context culture , the context in which a conversation occurs is just as important as the words that are actually spoken. Furthermore, high-context cultures consider interpersonal relationships when deciding whether to enter into a business arrangement. Japan and Arab countries exemplify high-context cultures.
- Japan, Saudi Arabia, and other high-context cultures place a great deal of emphasis on a person’s values and position or place in society. In such cultures, a business loan is more likely to be based on “ who you are ” than on formal analysis of pro forma financial documents. In a low-context culture such as the United States, Switzerland, or Germany, deals are made with much less information about the character, background, and values of the participants. Much more reliance is placed upon the words and numbers in the loan application. Similarly, Japanese companies such as Sony traditionally paid a great deal of attention to the university background of a new hire; preference would be given to graduates of Tokyo University. Specific elements on a resume were less important. Insisting on competitive bidding can cause complications in low-context cultures. In a high-context culture, the job is given to the person who will do the best work and whom you can trust and control. In a low-context culture, one tries to make the specifications so precise that a builder is forced by the threat of legal sanction to do a good job.
- The cultural cluster approach is another technique for classifying and making sense of national cultures. Researchers have analyzed such factors as job satisfaction, work roles, and interpersonal work relations in an attempt to identify clusters of countries that share similar cultural values that can affect business practices. Their findings suggest that similarities exist among many cultures, thereby reducing some of the need to customize business practices to meet the demands of local cultures. Many international businesses instinctively utilize the cultural cluster approach in formulating their internationalization strategies. Furthermore, closeness of culture may affect the method that a firm uses to enter a foreign market.
- The most influential studies analyzing cultural differences and synthesizing cultural similarities were performed by Geert Hofstede, a Dutch researcher who studied 116,000 people working for IBM in dozens of different countries. Although Hofstede’s work has been criticized for methodological weaknesses and his own cultural biases, it remains the largest, most comprehensive work of its kind.
- Hofstede is well-known for research studies of social values suggesting that the cultures of different nations can be compared in terms of five dimensions. Hofstede notes that three of the dimensions refer to expected social behavior, the fourth dimension is concerned with “ man ’ s search for truth, ” and a fifth reflects the importance of time. The first dimension, power distance , is the extent to which the less powerful members of a society accept—even expect—power to be distributed unequally. The second dimension is a reflection of the degree to which individuals in a society are integrated into groups. In individualist cultures , each member of society is primarily concerned with his or her own interest and those of the immediate family. In collectivist cultures , all of society ’ s members are integrated into cohesive in-groups. Masculinity , the third dimension, describes a society in which men are expected to be assertive, competitive, and concerned with material success, and women fulfill the role of nurturer and are concerned with issues such as the welfare of children. Femininity , by contrast, describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behavior. Uncertainty avoidance is the extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations. Long-term orientation (LTO) versus short-term orientation is interpreted as concerning “ a society ’ s search for virtue, ” rather than a search for truth. It assesses the sense of immediacy within a culture, whether gratification should be immediate or deferred.
- The lesson that the SRC teaches is that a vital, critical skill of the global marketer is unbiased perception, the ability to see what is so in a culture. Although this skill is as valuable at home as it is abroad, it is critical to the global marketer because of the widespread tendency toward ethnocentrism and use of the self-reference criterion. The SRC can be a powerful negative force in global business, and forgetting to check for it can lead to misunderstanding and failure. How might the European Disneyland been different if Disney executives had used the four-step approach? Step 1. Disney executives believe there is virtually unlimited demand for American cultural exports around the world. Evidence includes the success of McDonald’s, Coca-Cola, Hollywood movies, and American rock music. Disney has a stellar track record in exporting its American management system and business style. Tokyo Disneyland, a virtual carbon copy of the park in Anaheim, California, has been a runaway success. Disney policies prohibit sale or consumption of alcohol inside its theme parks. Step 2. Europeans in general and the French in particular are sensitive about American cultural imperialism. Consuming wine with the midday meal is a long-established custom. Europeans have their own real castles, and many popular Disney characters come from European folk tales. Step 3. The significant differences revealed by comparing the findings in steps 1 and 2 suggest strongly that the needs upon which the American and Japanese Disney theme parks were based did not exist in France. A modification of this design was needed for European success. Step 4. This would require the design of a theme park that is more in keeping with French and European cultural norms. Allow the French to put their own identity on the park.
- Hofstede identified five important dimensions along which people seem to differ across cultures: i.e., social, power, uncertainty, goal, and time orientations. These dimensions reflect tendencies within cultures, not absolutes. Within any given culture, there are likely to be people at every point on each dimension.
- Social orientation is a person’s beliefs about the relative importance of the individual and the groups to which that person belongs. The two extremes of social orientation are individualism and collectivism. Individualism is the cultural belief that the person comes first. Key values of individualistic people include a high degree of self-respect and independence. They tend to put their career interests first and weigh decisions from their own point of view. Hofstede asserted that people in the United States, Australia, Canada, New Zealand, and the United Kingdom tend to be relatively individualistic. Collectivism is the belief that the group comes first. Collectivistic societies are usually characterized by well-defined social networks, such as extended families, tribes, or coworkers. People are expected to put the good of the group ahead of their own personal welfare, interests, or success. According to Hofstede, people from Mexico, Greece, Hong Kong, Singapore, Colombia, and Pakistan tend to be relatively collectivistic in their values.
- Power orientation refers to the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies, such as business organizations. Some cultures are characterized by power respect . They tend to accept the authority of a leader or manager based on that person’s position in an organization’s hierarchy. These same people also tend to respect that person’s right to power. In Hofstede’s opinion, people in France, Spain, Mexico, Japan, Brazil, Indonesia, and Singapore tend to be relatively power respecting. In contrast, people in cultures characterized by power tolerance attach much less significance to a person’s formal position in a hierarchy. Such people are willing to follow a leader, if they believe that person is right or if their self-interests will be served by doing so. Hofstede suggested that people in the United States, Israel, Austria, Denmark, Ireland, Norway, Germany, and New Zealand tend to be more power tolerant.
- Uncertainty orientation is the feeling people have regarding uncertain and ambiguous situations. People in cultures characterized by uncertainty avoidance dislike ambiguity and will avoid it whenever possible. These people tend to prefer a structured and routine, even bureaucratic, way of doing things. Hofstede found that many people in Israel, Austria, Japan, Italy, Colombia, France, Peru, and Germany tend to avoid uncertainty whenever possible. People in cultures characterized by uncertainty acceptance are stimulated by change and thrive on new opportunities. Ambiguity is seen as a context within which an individual can grow and develop. Hofstede suggested that people from the United States, Denmark, Sweden, Canada, Singapore, Hong Kong, and Australia are more likely to accept uncertainty.
- Hofstede’s fourth dimension, goal orientation is the manner in which people are motivated to work toward different kinds of goals. One extreme on the goal orientation continuum is aggressive goal behavior . People who exhibit aggressive goal behavior tend to place a high premium on material possessions, money, and assertiveness. According to Hofstede’s research, many people in Japan tend to exhibit relatively aggressive goal behavior, whereas many people in Germany, Mexico, Italy, and the United States exhibit moderately aggressive goal behavior. At the other extreme, people who adopt passive goal behavior place a higher value on social relationships, quality of life, and concern for others. In Hofstede’s opinion, people from the Netherlands, Norway, Sweden, Denmark, and Finland tend to exhibit relatively passive goal behavior.
- Hofstede’s fifth dimension, time orientation is the extent to which members of a culture adopt a long-term versus a short-term outlook on work, life, and other aspects of society. Some cultures, such as those of Japan, Hong Kong, Taiwan, and South Korea, have a long-term, future orientation. Members of those cultures value hard work, dedication, perseverance, and thrift. Other cultures, including those of Pakistan and West Africa, tend to focus on the past and present, emphasizing respect for traditions and fulfillment of social obligations. Hofstede’s work suggests that the people who live in the United States and Germany tend to have an intermediate time orientation.
- Some experts believe the world’s cultures are growing more similar as a result of improvements in communication and transportation. They also assert that multinational corporations facilitate this cultural convergence in two ways: Through advertisements that define appropriate lifestyles, attitudes, and goals. By bringing new management techniques, technologies, and cultural values into the international marketplace. Nevertheless, cultural differences do exist in global markets.
- When dealing with a new culture, many international businesspeople make the mistake of relying on the self-reference criterion , the unconscious use of one’s own culture to help assess new surroundings. I nternational businesspeople traveling abroad must remember that they are the foreigners and behave according to the rules of the culture at hand. There are numerous ways to obtain knowledge about other cultures to achieve cross-cultural literacy . The best and most common way, not surprisingly, is through personal experience that results from conducting business abroad or from non-business travel. Cross-cultural literacy is the first step in acculturation , the process by which people not only understand a foreign culture but also modify and adapt their behavior to fit into that culture. To complicate matters, many countries have more than one culture, although the level of such cultural diversity varies by country. Successful international businesspeople must recognize the attributes of the primary national culture, as well as any important subcultures, in culturally heterogeneous societies.
- In Diffusion of Innovation (1962) Everett Rogers described three concepts that describe the process by which an individual adopts a new idea: the adoption process, characteristics of innovations, and adopter categories. “ New ” means different things. A product already introduced in one market may be an innovation in another one. Products may be innovations in one market yet mature or declining in others. 1. Awareness. In the first stage the customer becomes aware for the first time of the product or innovation. An important early communication objective in global marketing is to create awareness of a new product through general exposure to advertising messages. Impersonal sources of information are most important at this stage. 2. Interest. During this stage, the customer is interested enough to learn more. The customer has focused his or her attention on communications relating to the product and will engage in research activities and seek out additional information. 3. Evaluation. In this stage the individual mentally assesses the product ’ s benefits in relation to present and anticipated future needs and, based on this judgment, decides whether or not to try it. 4. Trial. Most customers will not purchase expensive products without the “ hands-on ” experience marketers call “ trial. ” A good example of a product trial that does not involve purchase is the automobile test drive. For inexpensive consumer packaged goods, trial often involves actual purchase or the distribution of free samples. 5. Adoption. At this point, the individual either makes an initial purchase (in the case of the more expensive product) or continues to purchase—adopts and exhibits brand loyalty to—the less expensive product.
- 1. Relative advantage : How a new product compares with existing products or methods in the eyes of customers. The perceived relative advantage of a new product versus existing products is a major influence on the rate of adoption. If a product has a substantial relative advantage vis-à-vis the competition, it is likely to gain quick acceptance. Ex: compact discs vs. vinyl records. 2. Compatibility : The extent to which a product is consistent with existing values and past experiences of adopters. The history of innovations in international marketing is replete with failures caused by the lack of compatibility of new products in the target market. Ex.: VCR ’ s—Betamax and VHS. 3. Complexity : The degree to which an innovation or new product is difficult to understand and use. Product complexity is a factor that can slow down the rate of adoption, particularly in developing country markets with low rates of literacy. In the 1990s, dozens of global companies were developing new interactive multimedia consumer electronics products. Complexity is a key design issue; it is a standing joke that in most households, VCR clocks flash 12:00 because users don ’ t know how to set them. To achieve mass success, new products will have to be as simple to use as slipping a prerecorded videocassette into a VCR. 4. Divisibility : The ability of a product to be tried and used on a limited basis without great expense. Wide discrepancies in income levels around the globe result in major differences in preferred purchase quantities, serving sizes, and product portions. U.S.-size jars of Hellman ’ s Mayonnaise did not sell in South America. Less expensive, no refrigeration required, plastic packets were a hit. 5. Communicability . The degree to which benefits of an innovation or the value of a product may be communicated to a potential market. A new digital cassette recorder from Philips was a market failure, in part because advertisements did not clearly communicate the fact that the product could make CD-quality recordings using new cassette technology while still playing older analog tapes.
- The first 2.5 percent of people to purchase a product are defined as innovators. The next 13.5 percent are early adopters, the next 34 percent are the early majority, the next 34 percent are the late majority, and the final 16 percent are laggards. Innovators: These consumers tend to be venturesome, more cosmopolitan in their social relationships, and wealthier than those who adopt later. Early adopters: Early adopters are the most influential people in their communities, even more than the innovators. Thus the early adopters are a critical group in the adoption process, and they have great influence on the early and late majority, who comprise the bulk of the adopters of any product. Several characteristics of early adopters stand out. First, they tend to be younger, with higher social status, and in a more favorable financial position than later adopters. They must be responsive to mass media information sources and must learn about innovations from these sources because they cannot simply copy the behavior of early adopters.
- Environmental sensitivity is a useful approach to view products because it places them on a continuum. At one end of the continuum are environmentally insensitive products that do not require significant adaptation to the environments of various world markets. At the other end of the continuum are products that are highly sensitive to different environmental factors. A company with environmentally insensitive products will spend relatively less time determining the specific and unique conditions of local markets because the product is basically universal. The greater a product ’ s environmental sensitivity, the greater the need for managers to address country-specific economic, regulatory, technological, social, and cultural environmental conditions. The next slide illustrates this concept.
- The horizontal axis shows environmental sensitivity, the vertical axis the degree for product adaptation needed. Any product exhibiting low levels of environmental sensitivity—integrated circuits, for example—belongs in the lower left of the figure. Intel has sold more than 100 million microprocessors because a chip is a chip anywhere around the world. Moving to the right on the horizontal axis, the level of sensitivity increases, as does the amount of adaptation. Computers are characterized by moderate levels of environmental sensitivity; variations in country voltage requirements require some adaptation. In addition, the computer ’ s software documentation should be in the local language. At the upper right of Figure 4-3 are products with high environmental sensitivity. Food sometimes falls into this category because it is sensitive to climate and culture. As we saw in the McDonald ’ s case at the end of Chapter 1, the fast food giant has achieved great success outside the United States by adapting its menu items to local tastes. GE ’ s turbine generating equipment may also appear on the high sensitivity end of the continuum; in many countries, local equipment manufacturers receive preferential treatment when bidding on national projects.
- The U.S. soup market was dominated by Campbell Soup Company; 90 percent of the soup consumed by households was canned. Knorr was a Swiss company acquired by CPC that had a major share of the European prepared food market, where bouillon and dehydrated soups account for 80 percent of consumer soup sales. Despite CPC’s failure to change the soup-eating habits of Americans, the company (now called Bestfoods and a unit of Unilever) is a successful global marketer with operations in more than 60 countries and sales in 110 countries. Coffee is a beverage category that illustrates the point. On the European continent, coffee has been consumed for centuries. By contrast, Britain has historically been a nation of tea drinkers, and the notion of afternoon tea is firmly entrenched in British culture. In the 1970s, tea outsold coffee by a ratio of 4-to-1. Brits who did drink coffee tended to buy it in instant form, because the preparation of instant is similar to that of tea. By the 1990s, however, Britain was experiencing an economic boom and an explosion of new nightclubs and restaurants. Trendy Londoners looking for a non-pub “third place” found it in the form of Seattle Coffee Company cafés. An instant success after the first store was opened by coffee-starved Americans in 1995, by 1998 Seattle Coffee had 55 locations around London. Starbucks bought the business from its founders for $84 million. By 2005, Starbucks had overcome the challenge of high real estate prices and had 466 locations in the United Kingdom.
- So, are managers required to change their customary practices to match those of the host culture? The answer is not always clear. In general, host cultures don’t expect that foreign managers will totally conform with their norms and values, but it is important that they understand and respect the local culture. Managers need to consider how they will be received by the host country, and make adjustments accordingly. In many cases, host countries are willing to view foreigners differently. M anagers should also be aware that closely clustered countries may not be as alike as they seem, and so adjustments may be necessary in some cases. Women’s roles and behavior, for example, differ substantially from one Arab country to another even though Arab countries overall are similar culturally. Sometimes, managers going abroad experience culture shock —the frustration that results from having to absorb a vast array of new cultural cues and expectations, and then reverse culture shock when they return home.
- Companies and managers doing business abroad will typically take one of three basic approaches when dealing with foreigners. Those that take a polycentric approach believe that business units abroad should act like local companies. In contrast, those that take an ethnocentric orientation believe that the home culture is superior to the local culture, and therefore national differences can be overlooked. Finally, those that integrate both home and host practices have a geocentric orientation. Managers should recognize that excessive polycentrism or ethnocentrism can be dangerous. A geocentric approach is often the safest.
- Companies that choose a geocentric approach to their operations will often combine both home and host practices requiring that people in both countries adapt to some degree. Companies may face some resistance to these changes, and so must manage the process carefully. There are various ways to implement changes. Companies may need to promote changes in value systems. A cost-benefit analysis of change can reveal whether a change makes sense. Moving too quickly can create additional resistance to change. Many companies find that encouraging stakeholders to become involved in change and sharing the rewards of making changes can be beneficial. Similarly, using the right channels of influence and the right timing can make a big difference in whether change is accepted. Finally, companies should recognize that they can gain important knowledge from other companies in the market. Emulating their methods can often be successful.
- What will happen to national cultures in the future? Only time will tell. One scenario is that new hybrid cultures will develop and personal horizons will broaden. Another scenario suggests that outward expressions of national culture will continue to become homogeneous while distinct values will remain stable. A third scenario is that nationalism will continue to reinforce cultural identity. Finally, a fourth scenario suggests that existing national borders will shift to accommodate ethnic differences.