International Business
by Charles W.L. Hill
CULTURE AND ITS
ELEMENTS
Introduction
Cross-cultural literacy –
An understanding of how cultural
differences across and within nations
can affect the way in which business is
practiced.
important to success in international
business
Culture is not static.
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What is Culture?
Question: What is culture?
Answer:
Culture is a system of values (abstract ideas about
what a group believes to be good, right, and
desirable) and norms (the social rules and
guidelines that prescribe appropriate behavior in
particular situations) that are shared among a group
of people and that when taken together constitute a
design for living
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Values and Norms
Values – Basic beliefs that people have regarding
what is right and wrong, important and
unimportant.
Norms - the social rules that govern the actions of
people toward one another and can be further
subdivided into
folkways - the routine conventions of everyday life
mores - norms that are seen as central to the
functioning of a society and to its social life.
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The Determinants of Culture
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The Determinants of Culture
Customs- Common or established practices.
Manners- Behaviors regarded at appropriate in a
particular society.
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Culture, Society, and the Nation-State
Society - a group of people who share a common
set of values and norms.
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Social Structure
A society's social structure is its basic social
organization
Two dimensions to consider:
the degree to which the basic unit of social
organization is the individual, as opposed to the
group
the degree to which a society is stratified into
classes or castes
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Individuals and Groups
Group - an association of two or more individuals
who have a shared sense of identity and who
interact with each other in structured ways on the
basis of a common set of expectations about each
other’s behavior.
groups are common in many Asian societies.
many Western countries emphasize the individual.
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Individuals and Groups
In societies where the individual is emphasized
individual achievement and entrepreneurship are
promoted.
but, this can encourage job switching, competition
between individuals in a company rather than team
building, and a lack of loyalty to the firm.
In societies where the group is emphasized
cooperation and team work are encouraged and life
time employment is common
but, individual initiative and creativity may be
suppressed.
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Social Stratification
All societies are stratified on a hierarchical basis
into social categories, or social strata
usually defined by characteristics such as family
background, occupation, and income
Societies differ in terms of
the degree of mobility between social strata
the significance attached to social strata in a business
context
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Social Stratification
Social mobility- the extent to which individuals can
move out of the strata into which they are born
The most rigid system is the caste system - a closed
system of stratification in which social position is
determined by the family into which a person is
born, and change in that position are unlikely
A less rigid system is the class system - a form of
open social stratification in which the position a
person has by birth can be changed through
achievement or luck
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Religious and Ethical Systems
Religion - a system of shared beliefs and rituals
that are concerned with the realm of the sacred
Religions with the greatest following are
Christianity (2.2 billion adherents)
Islam (1.6 billion adherents)
Hinduism (1 billion adherents)
Buddhism (350 million adherents)
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Language
Countries differ in terms of language or means of
communication
There are two forms language
spoken
unspoken
Language is one of the defining characteristics of
culture
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Spoken Language
Countries with more than one spoken language
often have more than one culture
Chinese is the mother tongue of the largest number of
people in the world
English is the most widely spoken language in the
world, and is becoming the language of international
business
However, knowledge of the local language is
beneficial, and in some cases, critical for business
success
https://www.youtube.com/watch?v=foHRQkjJLZc&feature=
youtu.be
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Unspoken Language
Unspoken language - nonverbal cues
examples include facial expressions and hand gestures
can be important for communication
Many nonverbal cues are culturally bound and
because they may be interpreted differently, can
result in misunderstandings
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Education
Formal education is the medium through which
individuals learn many of the language, conceptual,
and mathematical skills that are indispensable in a
modern society.
The knowledge base, training, and educational
opportunities available to a country's citizens can
also give it a competitive advantage in the market
and make it a more or less attractive place for
expanding business
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Education
The general education level of a country
is a good indicator of the types of
products that might sell in that location or
the type of promotional materials that
might be successful
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Cultural Change
Culture evolves over time, although changes in
value systems can be slow and painful for a society
social chaos is an unavoidable outcome of cultural
change.
cultural change is particularly common as countries
become economically stronger
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Implications for Managers
Differences in culture imply that
1. there is a need for managers to develop cross-
cultural literacy
2. there is a connection between culture and national
competitive advantage
3. there is a connection between culture and ethics in
decision making
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Cross-Cultural Literacy
Individuals and firms must develop cross-cultural
literacy
firms that are ill informed about the practices of
another culture are unlikely to succeed in that culture
Individuals must also beware of ethnocentric
behavior (a belief in the superiority of one's own
culture)
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Culture and Competitive Advantage
The connection between culture and competitive
advantage is important because
the connection suggests which countries are likely to
produce the most viable competitors
the connection has implications for the choice of
countries in which to locate production facilities and
do business
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Culture
Attitude
Aesthetics
Material Goods
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Importance Question
Cultural diversity has a major impact on the way
companies do business internationally, discuss the
role that culture plays in the strategic management
process of multinational enterprises. Give examples
of support your answer.
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