section three international environmental forces international business by ball, mcculloch, frantz,...
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Section ThreeInternational Environmental Forces
International Businessby Ball, McCulloch, Frantz,
Geringer, and Minor
6
Sociocultural ForcesSociocultural Forces
International Businessby Ball, McCulloch, Frantz,
Geringer, and Minor McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
This chapter covers:
•The significance of culture for business
•The sociocultural components
•The significance of religion
•Cultural aspects of technology
•Trends of formal education
•The importance of language
•Classes of society and cultural dimensions
Chapter ObjectivesChapter Objectives
Understand the significance of culture for international business
Understand the sociocultural components of culture Appreciate the significance of religion to businesspeople Comprehend the cultural aspects of technology Grasp the pervasiveness of the Information Technology Era Understand why businesspeople must follow the trends of
formal education Appreciate the importance of the ability to speak the local
language Recognize the importance of unspoken language in
international business Discuss the two classes of relationships within a society Discuss Hofstede’s four cultural value dimensions6-2
Rules of Thumb for Cross Culture Rules of Thumb for Cross Culture BusinessBusiness
Be prepared Slow down Establish trust Understand the
importance of language
Respect the culture Understand the
components of culture
6-3
What is Culture?What is Culture?
Culture The sum total of beliefs, rules, techniques,
institutions, and artifacts that characterize human populations.
Consists of learned patterns of behavior common to the members of a given society.
The unique lifestyle of a particular group of people.
Ethnocentricity Considering your culture superior to all
others6-4
Living with Other CulturesLiving with Other Cultures First, realize that there
are many different cultures.
Then, learn the characteristics of those cultures. Spend a lifetime in a
country. Undergo an extensive,
highly sophisticated training program that covers the main characteristics of a culture.
6-5
Culture Affects All Business FunctionsCulture Affects All Business Functions
Marketing Variation in
attitudes and values requires firms to use different marketing mixes P&G Japanese
Camay commercials
Disneyland Paris
6-6
Human Resource Management Evaluation of
managers Production and
Finance Attitudes toward
authority Attitudes toward
change
Sociocultural ComponentsSociocultural Components
Components of Culture Aesthetics Attitudes and beliefs Religion Material Culture Education Language Societal
organization Legal characteristics Political structures6-7
AestheticsAesthetics
Art Colors, symbols, numbers
convey meaning Nike air symbol
Architectural styles different Feng shui
Music and Folklore Musical tastes vary Folklore discloses way of
life Cowboys in Chile or
Argentina Mexican singing cricket
6-8
Attitudes and BeliefsAttitudes and Beliefs
Attitude Toward Time Problem for
Americans Americans always
prompt Mañana attitude Siestas
Directness and drive Perceived to be
rudeness Deadlines
Liability in Asian cultures
6-9
Attitudes toward Achievement and Work “American live to
work, Germans and Mexicans work to live.”
Demonstration effect Result of having
seen others with desirable goods.
Job prestige Disdain for physical
labor
Attitudes and BeliefsAttitudes and Beliefs
Attitude Toward Change
The American firm is accustomed to the rapid acceptance by Americans of something new.
Europeans are fond of reminding Americans that they are a young nation lacking traditions.
The more consistent a new idea is with a society’s attitudes and experiences, the more quickly it will be adopted.
6-10
ReligionReligion
Responsible for many of the attitudes and beliefs affecting human behavior.Work Ethic
Protestant work ethicEuropeans and Americans generally
view work as a moral virtue and look unfavorably on the idle.
Confucian work ethicIn Asian countries, this is the same
as Protestant ethic.6-11
Asian ReligionsAsian Religions
Hinduism Caste system is
basis of the social division of labor.
Buddhism Jainism Sikhism (Indian) Confucianism
Inseparable from Chinese culture
Taoism Shintoism (Japan)
6-12
IslamIslam
About 1.3 billion followers This youngest faith is the
second largest after Christianity (2 billion adherents).
Founder of Islam is Muhammad Muhammad was not only
the prophet of God but also the head of state.
In Muslim nations, there is no separation of church and state.
Holy Book Koran
6-13
Five Pillars of Faith Confession of faith Five daily prayers Giving charity Ramadan fast Pilgrimage to Mecca
Jihad – holy war Two divisions
Sunni and Shiites Conflict gives rise to
violent clashes
Material CultureMaterial Culture
Refers to all human-made objects Concerned with how
people make things and who makes what and why.
Technology Mix of usable
knowledge that society applies and directs toward attainment of cultural and economic objectives
6-15
Material Culture - TechnologyMaterial Culture - Technology
Importance to International Companies Enables a firm to be
competitive in world markets.
Can be sold, or be embodied in the company’s products.
Can give a firm confidence to enter a foreign market.
6-16
Enables the firm to obtain better than usual conditions for a foreign market investment.
Enables a company with only a minority equity position to control a joint venture.
Can change the international division of labor.
Is causing major firms to form competitive alliances.
Material Culture - TechnologyMaterial Culture - Technology
Cultural Aspects of Technology Includes skills in
marketing, finance, and management
People not always ready to adapt to changes technology brings
Technological Dualism The side-by-side
presence of technologically advanced and technologically primitive production systems.
6-17
Appropriate Technology Choose the technology
that most closely fits the society using it
Can be labor-intensive, intermediate or capital-intensive
Bommerang Effect Technology sold to
copanies in another nation used to produce competing goods
Material Culture - TechnologyMaterial Culture - Technology
Information Technology Era
By the year 2000 the Internet economy
Already reached $850 billion.
Exceeded the size of the automobile and truck and life insurance industries.
Consumption Japanese wide use of automation
6-18
EducationEducation
Equips a person to take his or her place in adult society
Yardsticks Literacy rate
Must verify definition used
Kinds, quality and enrollment of schools
Amount per capita spent on education
Vocationally trained groups
Study trends6-19
Educational MixEducational Mix
European business schools patterned on American model because of Increased competition in the EU Return to Europe of American business
school graduates Establishment of American-type schools
with American faculties Trend in less developed countries to
emphasize humanities, law and medicine
6-20
EducationEducation Brain Drain
The emigration of highly educated professionals to industrialized nations
Reverse Brain Drain The return of highly
educated professionals to their home countries.
Korea and Taiwan are luring home engineers and scientists
6-21
Women’s Education Fall in illiteracy rate Most governments
now provide education for both genders
Educated women have fewer, healthier, and better educated children
Educated women achieve higher labor force participation and wages
Spoken LanguageSpoken Language
Language is the key to culture, and without it, people find themselves locked out of all but a culture’s perimeter
Spoken languages demarcate cultures Switzerland four separate cultures
Many languages can exist in a single country, but one usually serves as communication vehicle Lingua franca or link language English primary language of business
6-22
LanguageLanguage
Must speak the local language Still need translators Use back translations
to avoid errors Technical words do
not exist in all languages Usually resort to
English Many cultures avoid
saying anything disagreeable
6-23
Unspoken LanguageUnspoken Language
Nonverbal communication, such as gestures and body language. Gestures vary tremendously from one
region to another Closed doors convey different meanings Office size different in various cultures Conversational distance small in East Gift giving has specific etiquette in
each culture Gift or bribe?
6-24
Questionable PaymentsQuestionable Payments
Necessary in some countries to obtain action from the government
Foreign Corrupt Practices Act prohibits American firms from making questionable payments
6-25
Societal OrganizationSocietal Organization
Kinship Extended family
Includes blood relatives and relatives by marriage.
This is a source of employees and business connections.
Member’s responsibility Although the extended
family is large, each member’s feeling of responsibility to it is strong.
6-26
Associations Social units based on
age, gender, or common interest, not on kinship.
Age Manufacturers of
consumer goods are well aware of the importance of segmenting a market by age groups. This segmentation
often cuts across cultures.
Societal OrganizationSocietal Organization
Associations Gender
As nations industrialize, more women enter the job market and assume greater importance in the economy
Free association people joined
together by a common bond: political, occupational, religious or recreational
6-27
Understanding National CultureUnderstanding National Culture
Hofstede’s Dimensions of Culture
Individualism versus Collectivism Large versus Small Power Distance Strong versus Weak Uncertainty
Avoidance Masculinity versus Femininity
6-28
World Bank Anti-Corruption ProgramWorld Bank Anti-Corruption Program
We believe that an effective anticorruption strategy builds on five key elements:
1. Increasing Political Accountability2. Strengthening Civil Society Participation 3. Creating a Competitive Private Sector4. Institutional Restraints on Power 5. Improving Public Sector Management
Source: www.worldbank.org
Business Culture in BrazilBusiness Culture in Brazil Brazilians conduct business
only through personal connections. There must also be an implicit understanding that the business relationship will be long-term.
In Brazil, people quickly move to a first-name basis. Do not, however, use first names until you are invited to do so.
Maintain steady eye contact at all times; it is considered impolite to break eye contact.
Source: www.executiveplanet.com
Do not give anything that is obviously expensive. Your generosity will only cause embarrassment or be misinterpreted as a bribe.
Avoid giving items in black or purple, since these are the colors of mourning. Moreover, handkerchiefs are also associated with funerals.
Brazilians also consider themselves Americans. Consequently, don't use the phrase 'in America' when referring to the United States.
USAIDUSAID The ability to read and
write — or literacy — is a basic skill for people to live and work in today’s world. Yet more than 900 million adults are not literate, primarily in developing countries. More than 125 million children who should be in school are not. For this reason, USAID emphasizes programs of support for basic education and places a special emphasis on improving opportunities for girls, women and other underserved and disadvantaged populations.
Source: www.usaid.gov
FCPAFCPA
The FCPA covers all entities and individuals engaging in acts
within the territory of the United States in furtherance of the prohibited conduct, and it covers
U. S. citizens, resident aliens, entities established under U. S. law, and
publicly held corporations, including their officers, directors, employees, shareholders and agents, whether foreign or domestic, that are registered with the SEC as an issuer that participates in corrupt practices in any fashion outside the United States.
Source: www.abanet.org
BuddhismBuddhism As of June 2001, Buddhists in
Taiwan had registered 4,037 temples, 39 seminaries, five universities, three colleges, four high schools, 45 kindergartens, 30 nurseries, five orphanages, five retirement homes, one center for the mentally retarded, 64 institutions for proselytizing, three hospitals, four clinics, 118 libraries, and 28 publishing houses with 26 publications. There were also around 9,866 Buddhist clergy serving the 5.48 million Buddhists of Taiwan. Source: www.gio.gov.tw