Professional Documents
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Social and Cultural Environment
Social and Cultural Environment
al euslness Environment ..
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• • f
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1oternatton • . . .
• unt• . where cost of labour. 1s low . 29
nes ·. f •. In several developing countri'es th. .. "
COf()(lucts is re s~ ct~ due to, 1ack .. . . . . ,.. . ·d. •d 1or
, O adequate, •rfrastruc~ral..fac_ilitie many
~egree of electnfi~tt0n ~d po w~ ,sup s, ;Fof CXaitip,e, "iimited
pJy -~~tric~ demand for e~ectrical llpp\iances. Th
d for. colour .telev~sio~ sets., e
dentan . . h' h. .1n l~dia beg.an onl y in the. early 1980s h ••
as started. Coi;npan•es in ig t~con,e coun~ . ,. . .. • t
o_1~r e ecast 1
w ete products and technologies.: .. , es yiew 1,o'Y i~come countries. ~-c
Obso1 ' . •. ,.,. : _.. ,.. . . • • .\ • • •• • a .market for their
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,,, Social.· environment consists of,~
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anding
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eloping countries..
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t~ 'i~#.~J,~i-~~!
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As literacy levels rising, demand ' • • • . •
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. International B~si, I
t . s like the USA, the number of ntJg?a 1•
•· . : 2•. Migration and Ethnicity: In dev~l~ped coudn npeidly There is heavy concentrationIlla!
• . . - • • n has increase ra • . •• or •
. from Asia and oth~r. reg10 _s A So~thali is the city of Indians,. 0 etroi~ ts caUed the 1 I
• . s im- migrants in many areas m_DS •. . dJamilican and Silicon Valley 1s the hub fi i
Arab capital, Miami is becomi~g ~~•~tan ant and buying habits. Scar ~oebuck, Colga~ f
• hn. • p has its own wans · • ·
Asians. Each .et 1c grou . h e modified their marketing strategies to su·~.l
Palmolive and seve~l other comp~n1es av. ., . . . :- . •, , . ; . . . . , . n!
. the references of different ethnic grou~s ••, : • . _ :· . . • j
• • h n impact on 1nternat1onal business. Wo1n ..
ii S tem. The family system • as a . . . • . . ••l\,Q :
3. Fam Y ys. • .. : .1,, • E~rop·e and North Amenca. -But their role is:
la a dominant role in the iam1 J in
P Y. · . th : •
• •· d Asian
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·countries.
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With the
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ec ine o Joint fami"•.
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insignificant mmost-of- e s ~1c . . • . . .. . •1
. • . d - bles arid other products and services 1s increasing.
system demand for-consumer ura .. _ . _. • -: . . •.
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3.~ Cultuf31 EiavirGllmerit . . . . . . ._ ·· I-
Cttl~-~~-th~ ~~;at~ of :~~~s.;b;,;;r~.- ;alue~,-habi~s ,ailitudes. that ·b~_d,~kr -~d
together as. a. social en~ty. I ..
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•. ·- •According to Mitchell,· "culture·: is •a· set··of learned, core· values;_ beliefs,: standards,
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knowledge, morals, iaws and _behaviours shared by individuals a~d ·societies th~t ~etennines; . .
how. an individual' acts,,feels and views one.self and_.other~,~~-- C.ultui:~..is-. both material and'-
.non-material:·Mateiral culture consists of. man-m:acie things .such: _as telephone, l television-I
automobile, etc. whereas non-material. culture· includes intangible .factors such.: as values) l_
beliefs, ideals, -~an~ge, ~owl~dge, et~.. _;,.- .,,·; :. , .:f,: i~. ,_>J-~ , .. :t·f:: _..•• ·~t :., "'· :; t 1 .; 1
•.
• _- .; :-~·-. •Low~~~te~ a#~ ~gh~~ntex~ ~ultur~si1 l?w-~onte~t culture-is 6ne that emphas~:
I • • ... • ' II • • • .• •..
• r su~h tan~ble ~pee~ ~fa n~goti~~i~n ~r d.~~l as _f~cts: flguies ~and perfonnance.j
.. In sue~ cul~es, b1:1smess c~ be con~u~t~~ wi~po~t ~a~~-t?-face me~tings. On the oth~, •.
h~d, ~- a h!gh-co1:1text.cu~~e pe~~~~l. r~l~ttonsh1ps, respect,· religion and trust are1 •.
.gi~~n more ~po~nce _1n business dealings. : • •, •• •• . •·_•••' • .•
2
• Masc~e 3Dd ~e~inme C~ltuf~~: Ainili;chiine cultllr~ aPP~ciat~s aggreSSiveness
ass~~•veness ~htle Ill a feminine culture quality ofHfi. d. .
• portant tha.·nmatena
• . acqu· . . •A. . .•• , e an 1nter~personal relat1on
: . ·t· . . sbi'1'.
, f •
'·are more un
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from enumne• • cu1tures- • mor ts.t 101:1· ccordmg to Mitchell ,"Business peoP1,.:•
• are·•often
d •· . , · '. , -1
masculine cultures ~here ach · • • rese~e and ~~ss time-driven than those fro01 ·
~elationship,"2 . , .. • . . ~eyemen~s ~o~e imp_o~~t t~an. bui1d~ng a long-terd-
• 4 • • • l : ' i. • ,; • •• ' • •
... , J. Mo~ochronic and Polychronic ., ~. '. ·, •,"; ~•{ '· .• ~- •·: • . • . . _..Jj
•- • ~recious lUld tasks are done in order of'::e~ a ~ ?9chromc culture; time is cons1deltj
0
~- on• re1ationsh1ps
• • and there i·s- close • ndher un1versar . ism iocus is more • oti • the rules
. • • and trusts ~·e·mo . •a erence
reIation-sh1ps . than to bus1ness • • contracts On the conu-oan ....:.t"I.!
'", re important . • . ... . . . '
·• • peopl~ bec?me m~re known to e h th onnal rules under particularism. M
• · · ·• •· • • a~ -0 er, legal ·contra t • ·
1. Charles Mitchell Jn-D-ationalB. . • • - • •. ·. c ~re ~odified. .
2 . ' '"'"' us,ness c l • • - • .,, •
• • Charles Mttchell, op.cit, p.18...... · '.'. .,,· t~re, ~orl~ Press~ California, 20~0,' p.2_ • •
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~,.,,.., -- n~I Business Environment 3j
•• ._band, people from communita:rianism who deal with those f~om individualism should
• . ·;{ be prepared to make quick decisions t••.'. J .:-. .• . ·, : • ~- : • 1 1 •• : , , _ , •• , , . • d.
II .: .: • • r ; •• • " r • • •
;: .. , 6~ Neutral v~. Emo~~;'lal: _tn a neutr~! ~ultui-e ~motions are held in-check whiie emotions
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~:. are openly expressed 'in. an emotional- culture. People from emotion~l culture doing
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·,-~·;,,():business 'j'~-~~utral c~I~r~_sho\i!~. p~t e~erythi~g "(ri writi~g. Thei should not.consider
•• ._.!:· ,r :, -' •lack 9f eiµoti~n as l~ck ~f interest. S1milarly, people from neu'tral' cultti~e·doi~g busine~s
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in e~otional c'ulture s~ou,ld r_~sp'~n~ wa~ly to,th~ emotions ~f,th~ other party;'.,·~· - .
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. ;,. -. ?:, ,~~- Diff~~~: -~ speci~c cultyre, P,~()ple_ ..oj,e~ e~!fovert~. !hey keep
wQrk-.l~f~ an~,p_nya~e J1f~ ~epar~ie._._9n_t4e_p~~e~ h~~d~.P~~p,~ i~_a <!i~~e cultur~,are
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.•• • indirect and intr~yert~4: They mi?C,.work-~ife_ anq p~vate lifei-Therefore, peop~e,_Jr~m
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_.· .~ • ., specific culture doing busin~s~ in diffuse culture_ should ~how patience and should
t:'! .t'-· • •
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l )11~ ' ' i "· ,J.,,,' ... ,.;, t) ! ...... ( : • .
.' . respect the t1~le, age and·backgroun~ ofthe_pther person..OQ the-cont1;ary, people fr~m
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. .. . , , : . " ., .. • • •• • .. ... r. ,
,. • ,. , . ...
, •• : • • , ·- • •• • ,, ·- , . •L , . • , , ~· . . ,. ,, J .' . ,,
' j·• ... • · a diffuse culture doing bu~~~ss in speci~c cultµr~s t ,·
sho~Id g~t ~.o the point, be .efficient
.4 _, ·:... - . ' • ' •• # '1 • 'I• •• ,. t -.. • -~· ....... _, : ; ; -, • • •
,·_;\ ;, ._ and should not _µse their titles or copnec~ic;>A~ ,ill: .~~stn~s_s..~ec;i~Y.:,n:·~ :: ·..i, :: . :.•·~ . •- . ;.·
- • 8. Achieveinent vs. Ascription: In achievement cultures; statils of aperson depends on
• :r: r~:- ::his performance-while in .ascription culturesiit dependsJ.on~who..or. what.a_person is.
• :~1i ••...:~ Therefore, people from achievement cultures doing.business in ascriptio~.c~ltur~s should
• - · ensure that the negc;>tiating tea~ is headed l,y a-senior ,aad fortl)al position ·holder .who
can impress the o~e~ party..TJiey. shoulq alsq -r:_esp~ft. th~ ,~taqi~ -~4 ,iIJflq~nc·e ofthe other
sid~: ~n ~e. contrary!~peopl~_ .~,?#P.~i?~ .:.~}1;~tur~~- P,?~.~. -~ achievement
• • ,·{ .• _cultures sho~l~ ~ake use pf
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,.F~~l~_dge.
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~~~!1nic~~~·t:~~.e~i~~
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!o ~mi;,ress the
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: • other party..
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. . 'f:~ ·,..11:·ru.:,fiJ' ~:;~r.:••. r•.r:<..::J •
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Thll$,
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it,, ·is•• es·sential,
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(hat ev~ry
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finµ .eng~ge~.jn.jnt~~a!i~R~l
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:h.¥,.s~n~s~
-.} .. • J ,'•,.• l .... 1-:l!D.der~tands
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the - ,11 .• , ,>.; .. \ • .. , , J1,1 • .,,1 'Jt
' cultures of host ·countries. Cross-ciiiture literacy is essen~~a~.. f...,,Qn~ W~Y -~c;> mitig~_te the dangers .. , • i ' •1 J J • -...; , • ... , • .,_; l • ( t_ . ; .. , • i
of imensitivity to the host country's culture is to employ host c~untry n~~on~ls~ who can help
. . . .
mconducting business to suit the particular·culf1:Ire:·~·---.--~~~:~:~,!~ :·:~;~,;:-~::~.-:~-.,~:~;~- --~_:;-:··. ~--·-:-~~-
. ~·· ..
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• • David Ricks, Bi~~ in 1~,nat,~;4 /~'us/n;~~l~~clU)~i~~ i999, p.//' : :,; :
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·, International Bu fl
~s
32.. . . . . .' •·. •
' _Religion: Multinationals _mUst be sensitive•to the rehg1ous b~hefs,. cus~oms, ritua~j
festivals of every country in which they operate. For ~xample, '? India Hindus re&ard
cow as sacred and there have been demonstrations against a foreign fa~t .food chain .
. . • . . • •
. beef products. Religi~n affects customs regarding mama~e, ?aming cere_mony . of theSell~ ch·1 '
~estivals, etc. These have ~mportant implications for finns selfing cl~thes, Jewellery, etc. ~
. Language: Another problem which global finns have to face is_ di~erenc~s in Ian
··For.example, the Arabic language is r~ad fron:i right to le1' wh~~eas ~indi, English., etc a ~
~m left to right. Bod}' 18nguage lias diffirent meai:i\ngs in ?ifferent cultures. A &Ym~
111
gesture may denote appreciation in one culture,b~t ~n a~?th~r ~ulture. For ins
a pat on the sho:uld~r ~epres~nts -~~co~ag~m~~t in'_s~veral_ c~~?tries is _offen~ive i_n.Thail~
Pepsi translated the hea~li~~ "Peps~- ~rii:i.gs you ~ack to hfe ~nt~ ~1-ne~e •. ~e transl~tion "as
interpreted as "Pepsi brings your ancestors back from the grave . •
• • Colours: ·The same ·colour ha~ different co~otati'ons'. in different culture_s. For.exarnp
white dress_ is the norm' at wedding 'ii:1 Christi'an countries while it ·is used at triouri11ngst .
in India.: Green is a: favourite cQlour in Muslim· countries but it is a sign ·of illness in Malaysia.
0
• .. ~~<iuetle:_ ~e. ~aY 'pe?ple ~~t. Otiie\ dif;~':s'. ~?~. i:ul~e. ~o cu1~e•.Eiµbracing
hugging ~d kissmg·1s colllll?-on ,in some cultures but 1s ~1ghly obJ~cttonable 1n ·~thers. S~
cultures disapprove ·shaking hands •with people of oppos.i~e ·sex:: In some cultures gifts
expected.while in others' these.are·considered bribes.or insults. Eating habits·, dressing styl
need priority-vary from one c1:1l~e t9 anoth~r._: .· . ·:. •. . .-.. . . . . •.. . , -9~ , : . -~-
Firms engaged in international _business must avoid _the Self Referenee Criterion (SRC) •
decision-making. It means an uncons_cious reference to one's own cultural traits while Dl: . •
decisions. Lee has suggested the following steps .to overcome the -~RC:4 : . -~ • .• • ·, ; . -
. . . ,.
• . ..•
• ·(ii)· Defme the problem or goal in terms ·of the host country's cultural traits. •.
•1 ,., f • •
(iii) Isolate the SRC influence in the problem ·and ·examine it' carefully ·to see how.
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complicates the problem. ·•.
. • • t • • l • : • • ' ... . ., •
•. (iv) •Rede~me the probl~m. without the SRC jnfluence· and ·develop_ the solution for .
. .• • foreign market situation:. ~--- · _ ..• ,1, :::: :,>'_' _.. ,· .:_.__ ,•···· ' I':·_;-• ••• .'
I •
• • , J
. · ••.• :· _Politi~ environment ,e~ercis~s , e~~nn~~s· • influenc~ ,' on.·. intemati'onal : -busines~: =
··international business finn must be. aware of the· political environment of the horn~ coun
• . as well as_ tha~ of ~e host country. The main' components of the political environment ·are
• follows:-. . . . ·· ' - , • • . .· : . · , ..!, • ... • . · • 111
·°.J.. e 1
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, ' .. • - • - ., ' : , •• ." 1 l (. , , ,- • : l t ; • ' 1 •
_. : 1•.• Political The type ofGove~ent in a coun~ is its political syst~~~ Democ
: • _ . and 1?~htarianism are ~o ideologically opposing political ,systems. _Democracy
. a political -system ~herem people elect their repres_eittatives to run the Govenun
' • : Global f ~ need be careful about two aspects of democratic countries. First, n
. democrac~es ~uffer_ from political instability due t~ internal rivalry, corruptio~ ~li
4. Jam~ ·A. Lee, "Cultural Analysis in Oyerseas •Operations," Harvard Busin~ss ·Review, iv-. ...., ....