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CHAPTER -2
THE CULTURAL ENVIRONMENT
FACING BUSINESS
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CULTURE
Culture refers to the learned norms based on values, attitudes, and
beliefs of a group of people.
Culture is sometimes an elusive topic to study. Why? Because people
belong to different groups with different “cultures” –groups based on
nationality, ethnicity, religion, gender, work organization, profession,
age, political party membership, and income level.
(You’ve undoubtedly heard the term youth culture, which refers to a
group designated by age.)
In this chapter, we emphasize the nature of national cultures. At the
same time, however, we also explore the importance of other cultural
memberships, especially as they differ from country to country.
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Culture is an integral part of anation’s operating
environment
Cultural Factors Affecting International Business Operations
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THE PEOPLE FACTOR
Business involves people: Every business employs, sells to,
buys from, and is owned and regulated by people.
International business, of course, involves people from
different cultures.
Every business function, therefore—managing a workforce,
marketing and transporting output, purchasing supplies,
dealing with regulators, securing funds—is subject to
potential cultural differences.
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THE PEOPLE FACTOR
Cultural Diversity
In Chapter 1, we explained that companies become
international to create value for their organizations and
observed that one means to this end is the acquisition of
foreign assets, including knowledge-based resources.
Another means of gaining global competitive advantage is
fostering cultural diversity.By bringing together people of
diverse backgrounds and experience, companies often gain a
deeper knowledge about products and services and ways in
which to produce and deliver them.
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THE PEOPLE FACTOR
Cultural Collision
Cultural collision occurs when divergent cultures come in
contact. In international business, the major problems of
cultural collision arise under two conditions:
▪When a company implements practices that are less
effective than intended
▪When a company’s employees encounter distress
because of difficulty in accepting or adjusting to foreign
behaviors.
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THE PEOPLE FACTOR
Sensitivity and Adjustment
To predict and control its relationships and operations, an
international firm must be sensitive to cultural differences.
Thus, it must realize that doing business as usual is not
always the best way of doing things. When doing business in
another country, a firm must determine which of that nation’s
business practices differ from its own and then decide what,
if any, adjustments are necessary if it is to operate efficiently.
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A LITTLE LEARNING GOES A LONG WAY
Although some people seem to have an innate ability to say
and do the right thing at the right time, others offend
unintentionally or forget they’re no longer on their home turf.
Experts agree, however, that businesspeople can learn to
improve awareness and sensitivity and, by educating
themselves, they enhance the likelihood of succeeding on
foreign soil.
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A LITTLE LEARNING GOES A LONG WAY
Gathering some basic research on another culture can be
instructive, but it’s usually just a start.
For a variety of reasons, managers who plan to work abroad
must assess the information they gather to determine if it
perpetuates unwarranted stereotypes, covers only limited facets
of a country and its culture, or relies on outdated information.
They should also observe the behavior of those people who have
garnered the kind of respect and confidence they themselves will
need.
A LITTLE LEARNING GOES A LONG WAY
Of course, cultural variations are so numerous that no one can
reasonably expect to memorize everything that he or she will
need in every country (or, for that matter, in any country).
Consider, for example, how many different ways there are to
address people. Should you use a given name or a surname? If
