INTERNATIONAL BUSINESS
MGMT
Midterm Examination
Answer all of the following questions:
1. What are the differences among an ethnocentric, polycentric, and
geocentric approach to international business?
The ethnocentric approach to international business is based off of values, practices, and
behaviors of the home country being seen as better than other countries overall. In terms
of international business they look past national differences in cultures and markets in
other countries. Home culture is seen as the best compared to other or local culture.
Pitfalls- overwhelmed by national differences could make it difficult to introduce
workable changes.
The polycentric approach is more adaptive to change and differences from one country
to the other. Tend to practice that business abroad should adapt to and act like local
organizations or companies.
Pitfalls- ignores important factors, believes home country is better, thinks acceptance by
other countries is easy.
The geocentric approach doesn’t look so much into the countries when dealing with
international business. They tend to look for the best candidate for the appropriate jobs
within the business organization to maximize results. They also integrate both home and
host practices with company practices. They encourage innovation to improve the
likelihood of success. This approach tends to be the more favored out of all three
approaches.
Pitfalls– often use business practices that are hybrids of home and foreign norms.
2. Explain how culture influences international business, making specific
reference to important cultural dimensions including a detailed explanation
of the Hofstede framework.
Culture influences international business by looking further into and dealing with one’s
values, attitude, and beliefs which all are important when working together in other
countries. Certain dimensions that need to be looked at further are how laws are in
accordance to cultural norms in the home country, looking further into subcultures, and
even different languages of that country can differ or there be more than one.
Communication and cultural understanding will help with this possible barrier to
investors in a different country. Many strong values are a result of religion so being
educated with religions of the country you are doing business in is beneficial as well.
The Hofstede framework is broken down in 6 categories;
Individualistic/Collectivistic – personal needs to needs/goals of groups
Masculine/Feminine – Masculine societies have different rules for men and women,
less so in feminine cultures
Uncertainty Avoidance-how comfortable people are with changing the way they work
or live or prefer the known systems
Power Distance degree people are comfortable with influencing upwards. Accept of
inequality in distribution on power in society
Time Perspective Long-term perspective, planning for future, perseverance values vs.
short time past and present oriented
Indulgent/Restraint-Allowing gratification of basic drives related to enjoying life and
having fun vs. regulating it through strict social norms.
Hofstede’s Dimensions looks even further into cultural barriers. How others do work
individually and as a group will differ, masculine and feminine societies will largely differ
depending on where in the world you are doing business. Changes in the work
environment and how comfortable people are plays a large factor. Facing inequality and
distribution of power in society varies differently with cultures. Long term, past, and
present planning of values will differ. Enjoying life and regulating it with strict norms is
another cultural dimension that differs. Some examples to the 6 factors could be
Americans may be workaholics and prioritize that over everything else but in other
countries family is valued first. In Canada men and women are both treated fairly in
society whereas some middle eastern countries have very strict regulations and modesty
restrictions with women. In America many people may be adaptable to work in different
types of environments where you go to a conservative strict country that has done
