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Chapter 5 The Cultural Environment

Introduction to Global Business

Define culture and identify the four characteristics of culture that companies doing business abroad need to recognize.

Name several elements of culture.

Name and distinguish among the cultural dimensions proposed by Hofstede and Trompenaars.

Identify the primary and secondary sources that can be used to learn about foreign countries’ cultures.

After studying this chapter, you should be able to:

Describe the cultural aspects of doing business in various countries, including East Asian countries, Arab countries, and Latin America.

Explain why culture is important in global management and marketing.

After studying this chapter, you should be able to:

Defining Culture and Its Characteristics

Culture is learned behavior; a way of life for one group of people living in a single, related, and independent community

Characteristics of culture

Culture is not inherited.

It is nearly impossible to change an entire country’s culture.

A global firm must ascertain the level of importance of various aspects of culture in the foreign markets it serves and recognize these aspects when doing business overseas.

Companies’ operations need to recognize and adjust to the cultural environment in the countries the global company serves.

Elements of Culture: Language

Verbal communication

A message’s actual contents intended to be conveyed to the receiver (i.e., what the message says)

Nonverbal communication

Tone of voice, gestures, eye contact, body positions, facial grimaces, and other body language that accompanies verbal communication

Backward translation

Translating a message from English into a foreign language, then translating it back into English to check for accuracy

EXHIBIT 5.1 THE IMPORTANCE OF LANGUAGE IN FOREIGN COUNTRIES’ CULTURES

“Chuck” had been sent by the president of Parker Pen Company to visit the firm’s trading company in Buenos Aires, Argentina. This was the first time he had been outside the United States, and he did not know how to speak Spanish. Upon arriving after a 14-hour flight from Chicago, Chuck went to a bank of telephones to call the trading company and arrange for transportation. Because he could not read the instructions for use, he prevailed upon a good-natured passerby for help. Then, he had to figure out the Argentinean money system to decide which coins to insert. While talking with the trading company, he was asked to take a taxi to the office as they were tied up with important customers. Upon finding the taxi pickup area, Chuck was dismayed to find that all of the licensed taxi drivers were on strike; he was hoping that the “regular” drivers would know enough English to compensate for his lack of Spanish skills. After an extended length of time, he was able to convey to the driver where he needed to go. After an hour of working with the people at the trading company, he was invited to accompany them to lunch. Because the menu was in Spanish, he was in a quandary about what to order. He thought that the word “bistec” might mean beef steak, so he ordered it. He was right. The waiter proudly presented Chuck with a two-pound steak. Chuck found out later that Argentina is justifiably proud of its world famous, Pampas beef cattle. Chuck and his colleagues worked another four hours at the headquarters of the trading company. About six o’clock, he was invited to accompany a group of customers to dinner. Although it was a different restaurant, it was the same problem: The entire menu was in Spanish. Fortunately, or unfortunately, there was one item that Chuck could read: “bistec.” Chuck ate his second 32 ounces of prized Argentinean steak. Around eleven o’clock, Chuck had returned to his hotel where he was greeted in the lobby by Parker Pen’s president who said: “Chuck, I just arrived. The food on the flight was terrible. Let’s go get something to eat.” Chuck ate his third two-pound steak with his boss.

Religion’s effects

Business operations

Manufacturing and marketing of products

Observance of holidays

Working days and working hours

Values

Basic beliefs or philosophies that are pervasive in a society

Attitudes

Feelings or opinions

Elements of Culture: Religion, Values, and Attitudes

Elements of Culture: Manners and Customs, Material Elements, and Aesthetics

Manners and customs

The usual way a society does things

Material culture

A direct result of technology; best demonstrated by economic, social, financial, and marketing infrastructures of a society

Aesthetics

Color, form, and music are the major components of aesthetics─what is perceived as taste and beauty by a society.

Elements of Culture: Education

The level of education of people in foreign countries is a major factor in explaining economic growth.

Level of education must be such that host-country personnel can work or be trained for a variety of jobs.

Some countries emphasize different educational specialties:

South Korea and Japan stress education in sciences and engineering.

Russia is strong in mathematics and computer programming.

India emphasizes engineering and software development.

Some countries have tiered system of higher education with prestigious colleges and universities.

Elements of Culture: Social Institutions

Social institutions

The way people in a society relate to one another within group settings

Reference groups

Groups that are important to individuals

Social stratification

The extent to which groups at the top of the social pyramid exert control over others at lower levels of the pyramid

Clustering Countries and Regions by Culture

uncertainty avoidance

power distance

individualism vs. collectivism

masculine vs. feminine

time orientation

Hofstede

achievement vs. ascription

neutral vs. emotional

universalism vs. particularism

specific vs. diffuse

Trompenaars

EXHIBIT 5.2 GLOBE CONSTRUCTS AND CORRESPONDING QUESTIONNAIRE ITEMS

EXHIBIT 5.3 GLOBE RESULTS ON NINE CONSTRUCTS FOR SIX REGIONAL GROUPINGS

Gannon’s Cultural Metaphors

Gauge a specific culture by using an image (“metaphor”) that depicts how people in a specific culture think and behave:

French wine—Purity; classification; composition; compatibility; maturation

German symphony—Orchestra; conductors; performance; society; education and politics

British house—Laying the foundation; building the brick house; living in the brick house

Sources of Cultural Information

The U.S. Department of Commerce Country Commercial Guide provides cultural information for 133 countries.

The Economist’s Intelligence Unit contains the same type of information on 180 countries in its Country Reports.

Culture Grams, from Brigham Young University’s Center for International and Area Studies, describes customs existing in 174 countries.

Craigshead’s International Business, Travel, and Relocation Guide to 84 Countries gives cultural information for these nations.

Price Waterhouse Coopers Doing Business in 118 Countries contains information about 118 countries.

Cultural Dimensions of Doing Business in Japan

Upon meeting a Japanese executive, a slight bow and handshake are appropriate.

Business card etiquette is important.

Information should be in English on one side of the card.

The other side should have the same information in Japanese.

It is not appropriate to look directly into the eyes of your Japanese hosts.

It is important for your Japanese hosts to know your title and rank.

Cultural Dimensions of Doing Business in Japan (continued)

Japanese business has a group orientation, rather than an individualistic one.

Japanese executives expect foreign business representatives to arrive prepared and to have decision-making authority.

New potential business partners must have been referred to Japanese business representatives through a third party.

Cultural Dimensions of Doing Business in Korea

Elders are respected for their knowledge and wisdom.

“Yangban” refers to the noble class’s culture of honor, reputation, and dignity (similar to the concept of gravitas in Western cultures).

“Inwa” involves harmony among unequals: loyalty is owed to parents and authority figures, yet superiors are responsible for the well-being of their subordinates.

A personal relationship needs to occur before business matters can be discussed with foreigners.

Cultural Dimensions of Doing Business in China

Guanxi

A philosophy denoting friendships among unequals (as between subordinates and superiors) and the unlimited exchanges of favors; it is utilitarian and not based on sentiment, emotions, or a group orientation

Exchanges are often uneven, an advantage for weaker member in the guanxi relationship.

Persons of low rank may be powerful and influential due to guanxi relationships with superiors.

Foreigners who want to conduct business in China may need to seek out lower-level persons and obtain their favor in order to gain access to more powerful superiors who are decision makers.

Cultural Dimensions of Doing Business in Arab Countries

Avoid sitting so that the sole of one’s shoe is shown.

The left hand is viewed as “unclean.”

Good posture is imperative.

Foreign business representatives should not inquire about the wives of Arab business representatives.

Do not overly praise the possessions of Arab hosts, as this could create a perception that you expect your hosts to give them to you.

Cultural Dimensions of Doing Business in Arab Countries (continued)

Arab business representatives will probably be reluctant to do business with women.

If a woman is accepted, modest dress is appropriate.

Arab business representatives may frequently divert from the topic initially discussed, then return to it.

Cultural Dimensions of Doing Business in Latin America

Potential customers will want to develop a personal relationship before doing business with foreign executives.

Latin Americans are more flexible about time than are North Americans.

Latin Americans are not as immersed in their work as the business people in the United States.

The Importance of Culture for Managing and Marketing in Overseas Markets

A country’s culture affects its attitudes toward work.

Management styles can give rise to challenges or lead to success.

When developing new products, management styles must be considered along with many other aspects of marketing.

Advertising campaigns must be carefully tailored to local cultures.

Culture has an impact on communication styles.

EXHIBIT 5.4 U.S.-BASED BUSINESS JARGON THAT WOULD NOT BE UNDERSTOOD BY FOREIGN BUSINESS REPRESENTATIVES

“Flying by the seat of my pants.”

“On the same wave length.”

“Shotgun approach.”

“Run it up the flag pole.”

“100 k.”

“Belly up.”

“Overview.”

“If it ain’t broke, don’t fix it.”

“Let’s throw it on the wall and see if it sticks.”

“Let’s see how it plays out.”

“It ain’t over until the fat lady sings.”

“Reinvent the wheel.”

culture

acculturation

verbal communication

nonverbal communication

backward translation

values

attitudes

manners and customs

material culture

aesthetics

social institutions

reference groups

social stratification