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International Business Environments & Operations 14e Daniels ● Radebaugh ● Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Sullivan 2-1 Chapter 2 The Cultural Environments Facing Business Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-2 Learning Objectives To understand methods for learning about cultural environments To analyze the major causes of cultural difference and change To discuss behavioral factors influencing countries’ business practices To understand guidelines for cultural adjustment Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-3 Introduction Learning Objective 1: To understand methods for learning about cultural environments Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-4 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-5 Introduction Cultural Factors Affecting International Business Operations Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-6 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-7 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-8 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-9 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-10 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-11 How Cultures Form and Change Learning Objective 2: To analyze the major causes of cultural difference and change Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-12 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-13 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-14 Language: Cultural Diffuser and Stabilizer Distribution Of The World’s Major Languages Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-15 Language: Cultural Diffuser and Stabilizer Major Language Groups: Population and Output Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-16 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 behavior many strong values are the result of a dominant religion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-17 Religion: Cultural Stabilizer Distribution Of The World’s Major Religions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-18 Behavioral Practices Affecting Business Learning Objective 3: To discuss behavioral factors influencing countries’ business practices Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-19 Social Stratification Social ranking is determined by an individual’s achievements and qualifications an individual’s affiliation with, or membership in, certain groups Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-20 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-21 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” Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-22 Work Motivation Hierarchy of needs theory fill lower-level needs before moving to higher level needs The ranking of needs differs among cultures Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-23 Work Motivation The Hierarchy of Needs and Need-Hierarchy Comparisons Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-24 Relationship Preferences Relationship preferences differ by culture Power distance high power distance implies little superiorsubordinate 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-25 Risk Taking Behavior 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-26 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-27 Communications Cross border communications do not always translate as intended Spoken and written language Silent language Color Distance Time and punctuality Body language Prestige Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-28 Communications Body Language Is Not A Universal Language Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-29 Dealing with Cultural Differences Learning Objective 4: To understand guidelines for cultural adjustment Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-30 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-31 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-32 Strategies for Instituting Change Value Systems Cost-Benefit Analysis of change Resistance to too much change Participation Reward Sharing Opinion Leadership Timing Learning Abroad Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-33 The Future of National Cultures Scenario 1: Scenario 2: Outward expressions of national culture will continue to become homogeneous while distinct values will remain stable Scenario 3: New hybrid cultures will develop and personal horizons will broaden Nationalism will continue to reinforce cultural identity Scenario 4: Existing national borders will shift to accommodate ethnic differences Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-34 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 2-35