● APPLY YOUR UNDERSTANDING
3-18. Suppose you get a job at Kismet Indemnity, a life insurance company. In its 45-year
history, Kismet has never done any international business. Now its president, Randall
Fraser, wants to expand abroad. You have noted in meetings that he seems to lack much
awareness of the role of culture. Write a memo to him in which you explain why culture
matters in international business. Be sure to speculate on the effects of various
dimensions of culture on sales of life insurance.
TO: Mr. Randall Fraser, President Kismet
FROM: Annabel Coulter
DATE: 07/07/15
RE: International Expansion and Cultural Implications for Kismet
In an effort to facilitate our globalization, please allow me to summarize what I have read
concerning international business and cultural implications:
■ Culture is the collective mental programming of people. It influences consumer behavior,
■ Culture matters in international business in areas such as developing products and services;
■ Be mindful– Cross-cultural differences complicate workplace issues such as teamwork,
■ Service industries and cultural differences– In contact-based services such as life
■ Driver of cultural change– Technological advances are a key determinant of culture and
■ We may want to employ a cross-cultural framework such as Hofstede’s in order to better
BLUNDERS IN INTERNATIONAL ADVERTISING
Company and Location
Intended Ad Slogan
Literal Translation
Parker Pen Company in
Latin America
“Use Parker Pen, avoid
embarrassment”
“Use Parker Pen, avoid
pregnancy!”
■ Perspectives– Ethnocentric orientation refers to using our own culture as the standard for
■ Strategy– Once cultural differences have been assessed we should determine what our
■ In sum, developing an appreciation of and sensitivity for cultural differences is an imperative. I
3-19. People tend to see other cultures from their own point of view. They accept their
own culture and its ways as the norm — everything else seems foreign, or even
mysterious. This chapter described a technique called critical incident analysis (CIA) that
encourages an objective reaction to cultural differences by helping managers develop
empathy for other points of view. Using the CIA approach, define a situation that you or
someone else has experienced that led to a cross-cultural misunderstanding- perhaps
an interaction with a fellow student, a visit to a store in your town, or an experience you
had while traveling abroad. Explain what actually happened, and how a more
culturally-sensitive response might have been possible if you or your fellow student had
used CIA.
(LO 3.5; LO 3.6; AACSB: Reflective thinking)
■ Critical incident analysis involves being culturally aware, not making value judgments, and
■ The first time that I flew on Air France, as I was pulling my carry-on toward the airplane
■ This was disconcerting as I had used the same carry-on hundreds of times previously with no
■ The funny thing was that it did fit so easily that I was bewildered why they had made such a
■ Had I thought to employ the Critical incident analysis, and had been more culturally-aware, I
3-20. Ethical Dilemma:
Suppose you work for a multinational firm and are posted to Bogota, Colombia. After
renting a house in a posh neighborhood, you hire a full-time maid to perform household
chores, a common practice among wealthy Colombians. A colleague at work tells you
local maids are typically poor women who live in Bogota’s slums and earn about $200 a
month. As an executive, you feel guilty about paying such a cheap wage when you can
afford much more. But for cultural and socioeconomic reasons, your colleague insists
you cannot pay more than the going rate. Doing so might embarrass your maid and risk
upsetting the economic balance in her community. Analyze this dilemma. Do you pay
your maid the customary local rate or a higher wage? Justify your decision. Can you
think of any creative solutions to this dilemma?
(LO 3.4; LO 3.6; AACSB: Analytical Thinking)
■ Ethical Relativism argues that ethical truths are not absolute but differ from group to group.
■ Ethical Normativism holds that ethical standards are universal, and firms and individuals
should seek to consistently uphold them anywhere in the world.
■ According to the Ethical Relativism theory, your colleague is right. The wage that you should
■ Geocentric orientation refers to a global mindset where the manager is able to understand a
■ An Ethnocentric orientation would dictate that you pay the maid whatever you would pay in
■ Perhaps this is exactly what is needed here. A creative solution would respect the cultural and
socioeconomic parameters in Bogota, while at the same time embracing an innovative solution
■ Students may also wish to employ the five standards that managers can use to examine
ethical dilemmas (Chapter 5):
● Utilitarian approach, the best ethical action is the one that provides the most
MAID: Paid $200 per month, which provides the maid with a salary yet does not upset the
economic/sociocultural balance of the community
● Rights approach, the decision maker chooses the action that best protects
MAID: Paid the amount the Executive determines is right for the work
● Fairness approach suggests that everyone should be treated equally and
MAID: Paid the amount the Executive determines is fair for the work and provides a
decent standard of living in Bogota.
●Common good approach suggests that actions should be based on the
MAID: Paid $200 per month, as this action contributes most to the quality of life of all
affected people.
● Virtue approach argues that ethical actions should be consistent with certain
MAID: Paid $200 per month; alternative forms of compensation may also be explored,
e.g. childcare, education, cultural passport to local events, etc.
● GlobalEDGE™ INTERNET EXERCISES http://globaledge.msu.edu
3.21. Ethnologue (www.ethnologue.com/web.asp) is a site that lists the world’s known
languages. It is an excellent resource for scholars and others with language interests
and contains statistical summaries of the number of language speakers by language
size, family, and country. Using Ethnologue, try the following:
a. Visit the China page. What is the population of China? Of the country’s nearly
300 languages, which has the largest number of speakers? Which has the
second-most speakers? How do these figures compare to the total number of
English speakers in the English-speaking countries of Australia, Britain,
Canada, New Zealand, and the United States?
b. Visit the Spain page. How many people live in Spain? How many native
Spanish speakers are in Spain? How many languages altogether are spoken in
Spain?
c. Switzerland is one of the smallest European countries. What are the major
languages of Switzerland, and how many speakers does each have?
d. Ethnologue’s Statistics section shows the distribution of living languages as a
percent of world population. Which world region has the most languages?
Which region has the fewest? Why do you suppose those regions evolved in
such a way?
a. Cultural characteristics of China. (See table below)
CHINA CHARACTERISTIC TOTAL
Population Country: China 1,357,380,000
(2013 World Bank)
second-most speakers
Sources: www.ethnologue.com; http://wikitravel.org/en/China
How do these figures compare to the total number of English speakers in the
English-speaking countries of Australia, Britain, Canada, New Zealand, and the United
States?
(See table below)
COUNTRY
AUSTRALIA U.K. CANADA
NEW
ZEALAND U.S.
ATTRIBUTE
POPULATION
23,131,000
(2013 World
Bank)
63,182,000
(2012
census)
34,490,000
(2011
census)
4,471,000
(2013
World
Bank)
313,914,000
(2013
UNDESA)
FIRST
English:
English:
English:
English:
English:
census)
census)
Sources: www.ethnologue.com; http://wikitravel.org/en/
b. How many people live in Spain? How many native Spanish speakers are in Spain?
How many languages altogether are spoken? (See table below)
SPAIN CHARACTERISTIC TOTAL
POPULATION 46,647,000 (2013 World Bank)
Sources: www.ethnologue.com; http://wikitravel.org/en/
c. What are the major languages of Switzerland, and how many speakers does each
have? (See table below)
CHARACTERISTIC TOTAL
666,000 in Switzerland (2012 census)
German Swiss:
4,490,000 in Switzerland (2012 census)
Source: http://en.wikipedia.org/siki/Demographics_of_Switzerland; www.ethnologue.com
d. Ethnologue’s Statistics section shows the distribution of living languages as a percent
of world population. What world region has the most languages? What region has the
fewest? Why do you suppose those regions evolved in such a way? (See table below)
AREA LIVING
LANGUAGES
PERCENT NUMBER OF
SPEAKERS
AFRICA 2,138 30.1 815,252,580
■ Fewest languages: Europe
Most of the most linguistically diverse countries are emerging market countries (e.g., Asia) and
developing countries (e.g., Africa). Conversely, some of the least linguistically diverse countries
are European and Northeast Asian countries.
3-22. Cultural intelligence is a person’s ability to function effectively in situations
characterized by cultural diversity. GlobalEDGE™ and other online resources feature
cultural intelligence scales. What are the components of cultural intelligence? Answer
the questions on this scale and calculate your score on cultural intelligence. Compare
your score to those of your classmates.
(LO 3.2; LO 3.6; AACSB: Application of knowledge)
a. What are the components of cultural intelligence? (See table below)
Four Components of
Cultural Intelligence (CQ)
Description
CQ-Strategy (CQS) Entails how a person makes sense of inter-cultural experiences.
CQS reflects the processes individuals use to acquire and
CQ-Knowledge (CQK) Represents a person’s understanding of how cultures are similar
CQ-Motivation (CQM) Entails a person’s interest in experiencing other cultures and
interacting with people from different cultures. CQM represents
CQ-Behavior (CQB) Consists of a person’s capability to adapt verbal and nonverbal
Source: Lynn Van Dyne (2005-2007), Cultural Intelligence, Michigan State University,
www.linnvandyne.com/fourfac.html
b. The 20-Item, Four Factor Cultural Intelligence Scale (CQS) (See table below)
Directions
Read each statement and select the response that best describes your capabilities. Select the
answer that BEST describes you as you really are by indicating your degree of agreement or
disagreement to each statement.
(1=strongly disagree; 7=strongly agree)
CQ Component*Questionnaire Item
Strategy CQ
SCQ1
• I am conscious of the cultural knowledge I use when
interacting with people with different cultural backgrounds
Knowledge CQ
KCQ1
• I know the legal and economic systems of other cultures
KCQ3
• I know the cultural values and religious beliefs of other
cultures.
• I know the marriage systems of other cultures.
Motivational CQ
MCQ1
MCQ2
• I enjoy interacting with people from different cultures.
• I am confident that I can socialize with locals in a culture
Behavioral CQ
BCQ1
• I change my verbal behavior (e.g., accent, tone) when a
cross-cultural interaction requires it.
*Notation modified.
Source: Cultural Intelligence Center 2005. (www.lynnvandyne.com)
The instructor can ask students to answer the questions on the scale and calculate their
3-23. Various Web sites list cultural blunders or faux pas (false steps) people make in
their international interactions. Neglecting to develop relationships (as in “Just sign the
contract, I’m in a hurry!”) and making too-casual use of first names (as in “Just call me
Bill!”) are examples of such blunders. Research online sources such as Kwintessential
(http://www.kwintessential.co.uk/) or simply enter “cultural blunders” in an Internet search engine
to identify examples of improper cultural behaviors. How can managers avoid these
errors?
Country-Regions List of Cultural Blunders (Faux pas)
Arab countries; Indian Subcontinent; Japan;
Middle east; East Africa; SE Asia
Displaying the sole of the feet or touching
somebody with shoes
Arab countries; Indian Subcontinent; Japan;
Middle east; East Africa; SE Asia
Offering and accepting things with the left
hand; Passing food at the table with the left
hand
China, Korea
Giving someone a timepiece as a gift;
Eating first before the elders.
Scandinavia; Central and Eastern Europe;
Japan, China, Hawaii, Turkey, India
Entering someone’s household without
removing your shoes
France
Asking an individual’s job or name
Greece Showing the number five by displaying a hand
Japan, Korea When greeting or thanking another person,
Korea Writing someone’s name in red
(considered a symbol of death);
Middle East Addressing an elder or person higher in social
India, Pakistan Calling an elder or stranger of the opposite sex
Bulgaria, Croatia, Czech Republic, Hungary,
Giving someone an even number of flowers
Sources: www.marybosrock.com/fauxpas.htm; http://en.wikipedia.org/wiki/Faux_pas
How can managers avoid such blunders?
Global companies prepare their managers to conduct business internationally by educating
them about foreign customs, manners and culture. For example, managers should always study
a country’s cultures and customs before going there. One way to facilitate the education
process is to offer online courses and other information to managers before they visit countries.
Moreover, with an “etiquette learning curve” for new technologies, the electronic devices (e.g.,
mobile phones, email) that create instant communication can be a quick and easy arena to
offend business people in other countries. According to one research report, business managers
should act as if they are having a face-to-face conversation with international businesspeople
MyManagementLab
Simulation Global Culture and Diversity
Apply what you have learned in this chapter by simulating how a multinational company can
best promote its corporate culture across various national cultural groups in the firm. Go to
MyManagementLab; click your course; click Multimedia Library.
Go to MyManagementLab.com for Auto-graded writing questions as well as the following
Assisted-graded writing questions:
3-24. Explain why culture matters in international business. In what types of contexts
can cross-cultural differences cause concerns for managers?
3-25. Explain the major dimensions of culture.
3-26. MyManagementLab Only– comprehensive writing assignment for this
chapter.
Visit MyManagementLab for suggested answers.