CULTURAL

DIFFERENCES
 Objectives
1 Understand How Culture, Language, And Religion
Influence International Investment And Trade.

2 Recognize How Corporate, National And Local Culture

Interacts.

Cases Examples, McDonalds selling Halal menu in Arab countries,

Vegetarian menu in India.
 THE CULTURAL ENVIRONMENT OF
INTERNATIONAL BUSINESS
Understand That Corporate Culture Probably Is Not Homogenous throughout A
Multinational Enterprise.

Eg: 1. Bata’s Multi-domestic strategy (Poly centrism = Business Units have

autonomy from home office and act like local companies) with Video on Bata in
Asia.

2. McDonald`s multi-domestic strategy

 Culture: What
is it?
• Culture is the art and other manifestations of human
intellectual achievement regarded collectively; it is the
customs, civilization, and achievement of a particular time
or people; the way of life of a particular society or group.

• Culture is the knowledge, beliefs, art, law, morals,

customs, and other capabilities of one group,
distinguishing it from other groups.
 CULTURE AND INTERNATIONAL
BUSINESS
• Culture is very important to the practice of international business.
Culture impacts the way strategic moves are presented.

• Culture influences decisions. Management, decision making, and

negotiations are all influenced through culture.

• Culture influences nearly all business functions from accounting to

finance to production to service.
 CULTURE DOES NOT
EXPLAIN EVERYTHING
• While culture is very important to our understanding of
international business, it does not explain everything that is
different from one place to another.

• While culture explains some, other things like corporate

strategy, structure, rivalry, governmental policy, and economics
also help to explain success or failure in international business.
 CORRELATES OF CULTURE:
OVERVIEW
• Culture is correlated with other variables that vary cross-
nationally, like language and religion.

• “Colgate introduced a toothpaste in France called Cue, the

name of a notorious porno magazine.”
 CORRELATES OF CULTURE:
OVERVIEW
• “An American T-shirt maker in Miami printed shirts for the Spanish market
which promoted Pope’s visit.

• Instead of the desired “I saw the Pope” in Spanish, the shirts proclaimed “I saw
the Potato.” (turned out)“An East Asian came to the US for business and
reported back to his HO in China that there is “throat cutting competition in US.
What he really meant was “cut throat competition.”
 Correlates of Culture: Language

• Language is the means by which we communicate verbally.

• We use it for socialization and for communicating how values and norms are
expressed and understood.
• There are approximately 20 different language families that cut across
national borders.
Language Good Morning Thank You
Arabic saBAH al-khyar ShookRAAN
French Bonjour Merci (beaucoup)
German Guten morgen Danke
Japanese Ohayoo Arigato
Correlates of Culture: Verbal and
Nonverbal Language
Linguists study language. They also study the artifacts surrounding
language.
These are called:
• Linguistics – or the meanings of words
• Proxemics – or the distance that speakers stand from one another
• Pragmatics – the cultural interpretations of words, gestures, and nonverbals
• Nonverbals – The gestures and body language that accompanies spoken
words
 Video Cases from
facebook.com/ibusinesand
Facebook.com/drjustinpaul

1. All about China

2.Domino’s adaptation based on cultural
differences
 Correlates of Culture:
Verbal and Nonverbal
Language

It is important to remember, that for language to be truly

useful to business people, they must understand the uses,
distances, gestures and interpretations that accompany verbal
communication.
 Cultural Diversity in Business
related activities
• Different types of Handshake (People in most countries repeat handshake on
arrival and departure –)
• Greetings, Gesture – Hug, Kiss on both cheeks … in some countries
• Japanese- Bow
• Arab – Some Men Greet with Nose when they meet close friends and relatives
(One Arab to another Arab) in some countries
Cultural Diversity in Business related
activities contd.
• Smile – Muscles get relaxed. Business based on relationships, business based
on written agreements.
• First Name ok in US, in Japan Mr (San)+Last name)
• Cultural preferences (based on majority of research studies) – US (Freedom,
Equality (Informal), Individualism, Self-Reliance), Japan (Belonging, Group
Harmony, Collectiveness, Age/Seniority) and Arab countries (family security,
family harmony, parental guidance and age)
Language: English has become a
“Lingua-Franca”
• English is generally considered the world’s lingua franca. This
does not, however, imply that it is not necessary to learn other
languages.
 Correlates of Culture: Religion
• Religion contains key values and norms that are reflected in a
way of life.
• Largest religions:
• Christianity, Islam, Hinduism, Buddhism, Confucianism (China
& Korea) & Shinto (Japan)Sikhism, Judaism
 National Culture Classifications
Individualism – U.S, Great Britain, The Netherlands, Australia etc.
Collectivism (Loyalty to the company etc.) – Japan, Indonesia,
Thailand etc.
Ethno centrism: Belief that one’s own culture is superior to others.
Polycentrism: Companies act like local companies. Geo-centrism:
Hybrid of two.
 National Culture: Hofstede

Geert Hofstede’s cultural typology is the most often used. It is

based upon a study of 100,000 IBM employees who work in IBM
divisions throughout the world.

Hofstede’s survey revealed four underlying dimensions of culture,

i. Individualism/Collectivism, ii. Masculinity/Femininity, iii. Power
distance iv. Uncertainty Avoidance “Differences in culture affect
values and practices in the work place.”
 Hofstede: Masculinity/Femininity
M-
Artifacts- Fem
refers to the extent
More Women In Jobs
to which traditional
Interpersonal Skills
masculine values, like Rewarded Intuitive Skills
aggressiveness and Rewarded
assertiveness, are Social Rewards Valued
valued. (Japan on the (Sweden etc.)
top)
Layers of Corporate Culture: Key
Cultural Issues
• Cultural Etiquette
• Cultural Stereotyping
• Cultural Distance
• Cultural Convergence and Divergence
 Test your business
knowledge:
1. “Those who know, do not speak, those who speak do not know” this
proverb is from: a. East Asia b. America c. India d. None of these

2. Your business partner will not like you to touch anyone’s head (even
children) in -------, as the head is considered sacred. a. Europe b. America c.
Thailand d. None of these
 Test your business
knowledge:
5. Tenth May, 2005 is often specified as 10/05/05 in ----------- a. India & UK
b. USA c. None of these
6. Japanese nationals have a formal custom to introduce themselves by
exchanging Business Cards with Two hands. True / False (Role Play)