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Chapter 05 - Managing Across Cultures
Chapter 5: Managing Across Cultures
Learning Objectives and Chapter Summary
1. EXAMINE the strategic dispositions that characterize responses to different
cultures.
One major problem facing MNCs is that they sometimes attempt to manage across
cultures in ways similar to those of their home country. MNC dispositions toward
2. DISCUSS cross-cultural differences and similarities.
One major challenge when dealing with cross-cultural problems is that of
overcoming parochialism and simplification. Parochialism is the tendency to view
the world through one’s own eyes and perspectives. Simplification is the process of
exhibiting the same orientation toward different cultural groups. Another problem
is that of doing things the same way in foreign markets as they are done in domestic
3. REVIEW cultural differences in select countries and regions, and note some of the
important strategic guidelines for doing business in each.
Doing business in various parts of the world requires the recognition and
understanding of cultural differences. Some of these differences revolve around the
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Chapter 05 - Managing Across Cultures
The World of International Management: Apple vs. Samsung:
Comparing Corporate Culture
1. Summary: This vignette discusses two smartphone companies with a combined 50
percent share of the market. The two companies have very different cultures and
differ greatly in approach to innovation, supply chain, product lines, and ideas
about intellectual property rights.
2. Suggested Class Discussion:
1. Discuss similarities and differences across cultures regarding the individual
versus the collective for Apple and Samsung.
2. Discuss the differences in the approach to the supply chain and manufacturing
processes at Samsung and Apple.
3. Discuss the product focus at Apple and how it differs from that at Samsung.
4. Discuss the results of cultural differences between Apple and Samsung in
regarding intellectual property and the resulting legal conflicts for each.
5. Analyze which strategy is working and why.
3. Related Internet Sites:
Apple: {http://www.apple.com/}.
Samsung: {http://www.samsung.com/}
Chapter Outline with Lecture Notes and Teaching Tips
The Strategy for Managing Across Cultures
1) As MNCs become more transnational, their strategies must address the cultural
similarities and differences in their varied markets.
a) Renault’s strategic decisions include buying controlling stakes in Nissan (Japan,
Samsung (South Korea), and Dacia (Romania) and building factories in Brazil and
Russia.
b) Renault’s quest for greater global market share continues to progress. The company’s
recent experiences underscore the need to carefully consider different national cultures
and practices when developing international strategies.
Strategic Predispositions
1) There are four distinct strategic predispositions.
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Chapter 05 - Managing Across Cultures
b) Polycentric predisposition―a philosophy of management whereby strategic decisions
are tailored to suit the cultures of the countries where the MNC operates.
d) Geocentric predisposition―a philosophy of management whereby the company tries
to integrate a global systems approach to decision making.
Teaching Tip: There are a number of consulting firms that help firms “go global.” Your
students might be interested in knowing a little bit about these companies.
Teaching Tip: There are many resources available on the Internet to help businesses
become acquainted with foreign cultures, tastes, and customs. An example is the
"Travlang Site," which contains a wide variety of information on cultural and language
issues. Some features of interest: international calendars of holidays, online translating
dictionaries, common phrases for business travelers, currency exchange rates, and hotel
directories. The site is available at {http://www.travlang.com/}.
Meeting the Challenge
1) Despite the need for and tendency of MNCs to address regional differentiation issues,
many MNCs are committed to a globalization imperative, which is a belief that one
worldwide approach to doing business is the key to both efficiency and effectiveness.
a) Factors facilitating the need to develop unique strategies for different cultures:
i) The diversity of worldwide industry standards such as those in broadcasting,
where television sets must be manufactured on a country-by-country basis.
ii) A continued demand by local customers for differentiated products, as in the case
v) The need to allow subsidiaries to use their own abilities and talents and not be
restrained by headquarters, as in the case of local units that know how to
customize products for their market and generate high returns on investment with
limited production output.
2) Responding to the cultural needs of local operations and customers, MNCs find that
regional strategies can be used effectively in capturing and maintaining worldwide market
niches.
3) Globalization versus national responsiveness varies greatly from culture to culture. The
need to adjust global strategies for regional markets presents three major challenges for
most MNCs.
a) Stay abreast of local market conditions and sidestep the temptation to assume that all
markets are basically the same
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Chapter 05 - Managing Across Cultures
b) Know the strengths and weaknesses of its subsidiaries so that it can provide these units
with the assistance needed in addressing local demands
c) Give the subsidiary more autonomy so that it can respond to changes in local demands
Cross-Cultural Differences and Similarities
1) As shown in Chapter 4, culture can be similar or quite different across countries. The
challenge for MNCs is to recognize and effectively manage these similarities and
differences.
Parochialism and Simplification
1) Parochialism and Simplification
a) Parochialism―the tendency to view the world through one's own eyes and
perspectives. This can be a strong temptation for many international managers, who
often come from advanced economies and believe that their start-of-the-art knowledge
is more than adequate to handle the challenges of doing business in less developed
countries. In addition, many of these managers have a parochial point of view
fostered by their background. The implications of the different perspectives on
technology, labor, and production need to be fully grasped by all parties.
b) Simplification―the process of exhibiting the same orientation toward different
cultural groups. For example, the way in which a U.S. manager interacts with a
British manager is the same way in which he or she behaves when doing business with
an Asian executive.
c) Understanding the culture in which they do business can make international managers
more effective. Most international managers are not culturally knowledgeable, so they
often misinterpret what is happening.
d) Malaysia, for example, has a high-context culture:
Relatively long-lasting relationships, deep personal involvement
Implicit communication
Those in authority feel personally responsible for actions of subordinates
Written agreements preferred
Difficult to distinguish insiders and outsiders; encouragement to join inner circle
f) Not everything is totally different. Some approaches that work at home also work well
in other cultural settings.
Similarities across Cultures
1) When internationalization began to take off in the 1970s, many companies quickly
admitted that it would not be possible to do business in the same way in every corner of
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the globe. There was a secret hope, however, that many of the procedures and strategies
that worked so well at home could be adopted overseas without modification. This has
proved to be a false hope. At the same time, some similarities across cultures have been
uncovered by researchers.
a) Luthans and associates found that Russian managers carried out traditional
management, communication, human resources, and networking activities and that
behaviors.
c) A study in Korea found other similarities with U.S. firms: included (1) as
organizational size increased, commitment declined; (2) as structure became more
employee-focused, commitment increased; and (3) the more positive the perceptions
of organizational climate, the greater the employee commitment.
Many Differences across Cultures
1) Despite similarities between cultures in some studies, far more differences than
similarities have been found.
Teaching Tip: For information about foreign governments and their approaches to
international trade, visit the Electronic Embassy at {http://www.embassy.org}. This site
provides links to all of the foreign embassies located in Washington D.C.
2) Human resource management (HRM) utilized in the selection of employees can further
form the culture that international managers will oversee. Understanding the HRM
strategies before becoming a manager in the industry can aid in effective performance.
3) Evaluations can be quite different from country to country because what iss regarded as
the most important criterion in one subsidiary might be ranked much lower on the
evaluation list of another subsidiary. Other HRM differences can be found in areas such as
wages, compensation, pay equity, and maternity leave.
4) It is possible to link cultural clusters and compensation strategies (see Table 5–3). Figure
5–2 shows how specific HRM areas can be analyzed contingently on a country-by-country
basis.
5) Managing across cultures requires careful understanding of the local environment.
Cultural differences must be addressed.
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Chapter 05 - Managing Across Cultures
Cultural Differences in Selected Countries and Regions
1) Certain regions of the world have similar cultures. Since there is an increasing frequency
of managers and executives from one part of the world assuming leadership roles in
another, it is important for managers today to learn about their business and the emerging
markets environment through formal classes, mentoring, and experience.
Doing Business in China
1) The People’s Republic of China (PRC or China) is rapidly trying to close the gap between
itself and economically advanced nations and to establish itself as a power in the world
economy. It is a member of the WTO, and is a major trading partner of the United States.
2) Despite its global presence and economic potential, many U.S. and European
multinationals have found that doing business in the PRC can be a long, grueling process.
Very few outside firms have yet to make a profit in China. One primary reason is that
Western-based MNCs do not appreciate the important role and impact of Chinese culture.
c) It is important to be a good listener.
3) The Chinese take pride in being members of a group: avoid using self-centered
conversation. They avoid open displays of affection and do not appreciate loud, boisterous
behavior.
4) Guidelines:
a) Values and principles above money and expediency
b) Business meetings typically start with pleasantries.
c) Chinese host will indicate when a meeting is ready to begin and end.
h) Negotiations involve investing in a long-term relationship.
Doing Business in Russia
1) The Russian economy has experienced severe problems, and the risks of doing business
there cannot be overstated. At the same time, however, by following certain guidelines,
MNCs can begin to tap the potential opportunities.
2) Guidelines:
a) Build personal relationships with partners.
b) Use local consultants.
c) Consider business ethics.
d) Be patient.
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Chapter 05 - Managing Across Cultures
e) Stress exclusivity.
f) Personal relations are important.
g) Research the company.
h) Stress mutual gain.
i) Clarify terminology.
j) Be careful about compromising or settling things too quickly.
k) Written contracts are not as binding as to Westerners.
Doing Business in India
1) In recent years, India has begun to attract the attention of large MNCs. Unsaturated
consumer markets, coupled with cheap labor and production locations, have helped make
India a desirable market for global firms.
2) Be aware of food customs, proper attire. Other guidelines:
a) Be on time for meetings.
b) Do not ask personal questions.
c) Use titles.
d) Avoid public displays of affection.
e) Beckon with palm down.
f) Use right hand to eat and accept things; left is considered unclean.
g) Greet with Namaste gesture.
h) Bargaining is common.
Doing Business in France
1) Many in the United States believe that it is more difficult to get along with the French than
with other Europeans. This feeling probably reflects the French culture, which is
markedly different from that in the United States.
2) The French are status-conscious, friendly, humorous, and sardonic (sarcastic). They
determine trustworthiness based on firsthand evaluation; they are not motivated by
competition or the desire to emulate fellow workers. Organizations are highly centralized
and have rigid structures.
3) Guidelines
a) Quick, light handshake
b) Be on time.
c) Avoid personal questions during meals.
d) Important to be neat and cultured.
e) Avoid early friendliness, casualness.
f) French wait to reveal their hand.
g) They don’t like to be rushed into decisions.
h) They are precise and logical.
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