Business and Economics

INTERNATIONAL BUSINESS MGF2351

Objectives

Tutorial Program Week 3

Group allocations: Finalised yay!!

Essay Tips

Key Terms Cross-cultural literacy- Awareness of cultural differences across and

within countries and their impact on business.

Examples: Weekend in Middle-east is Friday, Role of Women, Time, Visiting cards ( power, status).

Culture has an IMPACT on COST OF CONDUCTING business.

Class Consciousness (Upper class and labor class) leading to industrial disputes.

Religion, Ethics and Business Practice (Entrepreneurship, capitalism, wealth creation, interest)

Education and National Competitive Advantage

Q1. Discuss how a nation’s culture is shaped by the dominant religion, language, social structure and education. How would you describe the national culture of Australia based on these factors?

The costs of doing business rise as people grapple with unfamiliar ways of doing business.

In Australia people get down to business first, and then get to know each other socially later, in many Middle-Eastern countries it is important develop a good social relationship before trying to discuss business issues.

Different class structures and social mobility also raise the costs of doing business, for if there are inhibitions against working with people from different classes, then the efficiency with which information can flow may be limited and the cost of running a business increased.

A country's religion can also affect the costs of business, as religious values can affect attitudes towards work, entrepreneurship, honesty, fairness, and social responsibility. In Hindu societies where the pursuit of material well-being can be viewed as making spiritual well-being less likely, worker productivity may be lower than in nations with other religious beliefs.

A country's education system can have important implications for the costs of business. In countries where workers receive excellent training and are highly literate, the need for specific worker training programs are decreased and the hiring of additional employees is facilitated.

http://www.youtube.com/watch?v=gWmv5RzJiuE

http://www.youtube.com/watch?v=FQHyv6C_JrU

Q2. Do you think that business practices in Indonesia are likely to differ from business practices in Australia? If so how?

The cultural differences between a Muslim majority country like Indonesia and Christian majority country such as Australia will cause business practices to differ dramatically.

The public role women can take, appropriate etiquette (including simple things like not passing objects with the left hand), holidays, and wining and dining all differ from patterns in Australia.

The underlying ideal and understanding of the role of business also differs. Since Muslims are stewards of property for God, rather than owners, they are more likely to use their resources carefully and may be less likely to give up or sell something to a person who may not practice the same stewardship.

The importance of fairness to all parties in all relations means that over-aggressiveness and self-interest may not be well received, and breaking an agreement, even if technically/legally permissible, may be viewed as inappropriate and the sign of a huge character flaw.

Finally, the prohibitions on interest payments in some Muslim countries means that the wording of the terms of an agreement must be careful so that "fair profits" are not construed as being "interest payments."

Q3. What are the implications for international business of differences in the dominant religion or ethical system of a country? • Differences in the dominant religion of a country affect relationships, attitudes toward business, and overall economic development.

• First, differences in religion require inter-cultural sensitivity. This sensitivity requires things like simply knowing the religious holidays, accepting that some unexpected things may happen "because of god's will," or understanding how interpersonal relationships may be different between "believers" and "non-believers." (Hence non-believers may be treated differently.)

• Second, religious beliefs can significantly affect a country’s attitude toward business, work, and entrepreneurship. In one country successfully beating a competitor may be considered a great achievement while in another it may be thought of as showing a lack of compassion, or disruptive to the society and persons involved, both attitudes that may be derived from underlying religious beliefs. Likewise, hard work may be either rewarded positively or viewed as something of secondary importance to spiritual peace and harmony.

• Thirdly, different dominant religions may affect the overall competitiveness and potential for economic growth of a nation, and hence attractiveness of a country for international business.

Case Study: Matsushita(Panasonic) and Japan’s

Changing Culture

Strong Japanese values especially Confucian values within the organisation.

In terms of Hofstede’s cultural dimensions (high uncertainty avoidance)

Change in Culture

Eco stagnation

Change in Leadership, Influenced by the American Culture

Q1. What were the triggers of cultural change in Japan during the 1990s? How is cultural change starting to affect traditional values in Japan?

• A shift in traditional values began to emerge in Japan as the generation born after 1964 started to come of age.

• This generation resisted many of the values shared by their parents and instead embraced many Western traditions.

• Many watched as troubled companies reneged (went back) on lifetime employment commitments made during the post-ward period and decided that instead of being tied to a single company they wanted the freedom to move around in the same way that their Western counterparts could.

•In this new cultural era, values characteristic of employees in the Western world such as individual effort will become more important in Japanese business, and that these new values will eventually make their way into other parts of Japanese life as well.

Q2. How might Japan’s changing culture influence the way Japanese businesses operate in the future? What are the potential implications of such changes for the Japanese economy?

• The new generation, which resisted the lifetime employment concept of their parents, has pushed for more freedom to move from company to company.

• This generation will make individual effort and initiative more important for success in Japan. These values may promote more risk taking by Japanese companies and in doing so influence the highs and lows of Japan’s economy in a more direct way.

3) How did traditional Japanese culture benefit Matsushita during the 1950s-1980s? Did traditional values become more of a liability during the 1990s and early 2000s? How so?

• Japan’s traditional culture helped Matsushita become a major economic power during the post-war years and through the 1980s.

• Matsushita agreed to take care of its employees for life providing benefits such as subsidized housing and retirement bonuses in exchange for loyalty and hard work.

• However, the prolonged economic slump that began in the 1990s made these commitments difficult to keep. Matsushita was saddled with high expenses and no real way to cut them. It is similar to the more recent challenges of GM to maintain the commitments it had made to its older workers.

Q4. What is Matsushita trying to achieve with the human resource changes it has announced? What are the impediments to successfully implementing these changes? What are the implications for Matsushita if (a) the changes are made quickly or (b) it takes years or even decades to fully implement the changes?

• In 2000, Matsushita began to make changes to its employment policies offering workers choices between traditional lifetime employment options with lower salaries to higher salaries with no long-term commitments. These changes should give the company more flexibility to reduce its staff as needed as well as cut costs during leaner times.

• Matsushita is implementing the changes in a gradual manner recognizing that especially among older workers the new alternatives as not popular.

• The faster Matsushita moves towards a more Western approach to staffing the more flexibility it will have, but should also recognize that it is important to maintain the values and traditions that are important to Matsushita’s corporate culture.

Q5) What does the Matsushita case teach you about the relationship between societal culture and business success?

• Societal culture and business culture are strongly intertwined. A society’s culture has a direct impact in a company’s culture. The values and traditions that are important in societal culture will typically be important in corporate culture as well. • As societal culture changes over time, so should company culture. However, changes in the business environment can also prompt changes in corporate culture which can then begin to influence societal culture as well.

Internet use explodes in China

http://www.youtube.com/watch?v=IWsXhNJFj78 Get into 4 groups

Group 1- How has internet changed Culture in China? Are Chinese internet users different from their Australian counterparts?

Group 2- What is an open democratic society. Does it exist in China?

Group 3-What is the Great Firewall? What is Google’s role? Is it right? Why?

Group 4- How does China’s culture influence the way information is disseminated within the country? What does this mean for people living in China?

Essay: 2500 words, 25% "Following Ford and Holden, Toyota Australia recently announced they will cease manufacturing of motor vehicles in Australia by 2017, meaning that from 2017, Australia will not have a local car manufacturing industry.” Was the demise of the Australian automotive industry a natural progression of a rapidly expanding global economy or one that could have been avoided through government intervention? Discuss through the use of at least one international trade theory. Essay Structure: Introduction, Body and Conclusion (Don’t use too many headings, it is an essay not a report).

Introduction: Clearly state the Aims, purpose, and the scope of the essay & Outline the structure of analysis.

Body: Case details, Theoretical framework and analysis.Conclusion: Summary and key implications for IB managers/ learning.

References: Minimum 10 peer reviewed academic articles.Some resources: http://www.pc.gov.au/__data/assets/pdf_file/0006/132981/automotive-position.pdfhttp://www.toyota.com.au/news/toyota-australia-announces-future-plan-for-local-manufacturing

Thank You!

Next week :I am away at a Conference in Cambridge!!Kendall will take the tute.Submit reference list and peer evaluation forms.Group for week 4, ALL THE BEST