978-1259578113 Chapter 4 Lecture Notes

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Chapter 04 – Differences in Culture

Differences in Culture

Learning objectives

Explain what is meant by the culture of a society.

Identify the forces that lead to differences in social culture.

Identify the business and economic implications of differences in culture.

Understand how differences in social culture influence values in the workplace.

Demonstrate an appreciation for the economic and business implications of cultural

change.

This chapter explores the role of culture in international business: how differences in culture

across and within countries can affect the practice of business.

The discussion then addresses the major questions of the chapter: What is culture? How does it

play itself out in social structures, religious and ethical systems, language, and education? The

need for cross-cultural literacy and an appreciation of the impact of culture on competitive

advantage are all addressed.

The opening case focuses on the failures of both Best Buy and eBay in China. In both instances,

the companies failed to account for cultural differences between Chinese and American

consumers. The closing case explores the cultural implications of the upcoming World Expo

2020 in Dubai, UAE. Dubai is shown to be an ideal host for the world expo because of its

eclectic mix of cultures and its unique position as a business gateway for the Middle East.

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Chapter 04 – Differences in Culture

OUTLINE OF CHAPTER 4: DIFFERENCES IN CULTURE

Opening Case: Best Buy and eBay in China

Introduction

What Is Culture?

Values and Norms

Culture, Society, and the Nation-State

The Determinants of Culture

Social Structure

Individuals and Groups

Social Stratification

Country Focus: Using IT to Break India’s Caste System

Religious and Ethical Systems

Christianity

Islam

Country Focus: Islamic Capitalism in Turkey

Hinduism

Buddhism

Confucianism

Management Focus: DMG-Shanghai

Language

Spoken Language

Unspoken Language

Education

Culture and Business

Cultural Change

Focus on Managerial Implications

Cross-Cultural Literacy

Culture and Competitive Advantage

Chapter Summary

Critical Thinking and Discussion Questions

Closing Case: World Expo 2020 in Dubai, UAE

CLASSROOM DISCUSSION POINT

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Ask students about what they might expect in the way of cultural differences if they were to go

to Germany. What might they expect if they were to go to Saudi Arabia, Brazil, or South

Korea?

Next, ask students what they think students from Germany, Saudi Arabia, South Korea, or

Brazil might expect from American culture. As students respond, jot their ideas on the board

and try to develop categories similar to the elements of culture discussed in the text.

Then, discuss why these elements of culture exist, and why they differ between countries.

Finally, ask students to consider what they mean for international companies.

If there are foreign students in the class, draw on their special expertise by asking what

differences they experienced when they first came to the United States.

LECTURE OUTLINE

This lecture outline follows the Power Point Presentation (PPT) provided along with this

instructor’s manual. The PPT slides include additional notes that can be viewed by clicking on

“view,” then on “notes.” The following provides a brief overview of each Power Point slide

along with teaching tips, and additional perspectives.

Slide 4-3 Cultural Differences and International Business

Business success requires cross-cultural literacy. Managers need an understanding of the

culture, or cultures, that prevail in the countries where they do business.

Slide 4-4 What Is Culture?

Culture is a system of values and norms that are shared among a group of people and that

when taken together constitute a design for living.

Values are abstract ideas about what a society believes to be good, right, and desirable. Norms

are social rules and guidelines that prescribe the appropriate behavior in particular situations.

Society is a group of people who share a common set of values and norms.

The cost of doing business in a country is influenced by culture – different cultures are more or

less supportive of the capitalist approach to production. Culture is dynamic.

Slide 4-5 Values and Norms

Values and norms are the basic components of culture. Norms can be further divided into

folkways and mores.

Values include attitudes towards concepts like freedom, honesty, loyalty, justice, responsibility,

and personal relations including marriage. Norms shape the actions of people towards one

another. Norms can be divided into folkways and mores.

Slide 4-6 Culture, Society and the Nation-State

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While it is possible for a nation-state to have a uniform culture, this is not always the case.

Within a nation-state multiple cultures can exist, and cultures can also cut across national

borders.

Slides 4-7 and 4-8 The Determinants of Culture

Culture is an evolutionary product of a number of factors.

Political philosophy, economic philosophy, education, dominant language, social structure, and

dominant religion are all determinants of culture.

Slide 4-9 Social Structure

The social structure of a country can be described along two major dimensions: individualism

vs. group, and degree of stratification into classes or castes.

Slides 4-10 through 4-12 Individuals and Groups

A focus on the individual and individual achievement is common in many Western societies.

An emphasis on individual achievement has positive and negative implications.

On the positive side, the dynamism of the United States’ economy owes much to people like

Sam Walton, Steve Jobs, and Bill Gates – people who took chances, tried new things,

succeeded, and encouraged others to do likewise. On the other hand, individualism can lead to

a lack of company loyalty and failure to gain company-specific knowledge, competition

between individuals in a company rather than team building, and a limitation of people’s ability

to develop a strong network of contacts within a firm.

In sharp contrast to the Western emphasis on the individual, in many Asian societies the group

is the primary unit of social organization.

While this emphasis on the group may discourage job switching between firms, encourage

lifetime employment systems, and lead to cooperation in solving business problems, it tends to

suppress individual creativity and initiative.

Slides 4-13 through 4-15 Social Stratification

All societies have some sort of stratification, where individuals in higher strata or castes are

likely to have a better education, standard of living, and work opportunities.

Social structure is linked to the ease with which an individual can move between strata.

Additionally, the social structure created by the strata levels and the social significances of

each strata level can have implications for the way business is conducted.

The significance of the social strata can have important implications for the management and

organization of businesses.

In cultures where there is a great deal of consciousness over the class of others, the way

individuals from different classes work together (i.e., management and labor) may be very

prescribed and strained in some cultures, or have almost no significance in others.

Slides 4-16 through 4-18 Religious and Ethical Systems

Religion can be defined as a system of shared beliefs and rituals that are concerned with the

realm of the sacred.

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Ethical systems refer to a set of moral principles, or values, that are used to guide and shape

behavior. The ethical practices of individuals within a culture are often closely intertwined

with their religion.

Another Perspective: The International Business Ethics Institute

{http://www.business-ethics.org} promotes ethical business practices around the world. The

site contains a number of articles that can be used to expand a discussion of business ethics in

foreign markets, and a “top ten mistakes” list for companies doing business in other countries.

Slide 4-19 Christianity

Christianity, the largest religion, is common throughout Europe, the Americas, and other

countries settled by Europeans and has three major branches: Protestant, Roman Catholic, and

Eastern Orthodox.

The “Protestant work ethic” – a focus on hard work, wealth creation, and frugality – is

considered the driving force of capitalism. In the workplace this work ethic translates into a

significant emphasis on quality and productivity.

Slide 4-20 Islam

The world’s second largest religion, Islam has the same underlying roots of Christianity (Christ

is viewed as a prophet), and suggests many of the same underlying societal mores. Islam,

however, extends this to more of an all-embracing way of life that governs one’s being. Islam

also prescribes many more rules by which people should act and live.

In Islam people do not own property, but only act as stewards for God and thus must take care

of that with which they have been entrusted. They must use property in a righteous, socially

beneficial, and prudent manner; not exploit others for their own benefit; and they have

obligations to help the disadvantaged. Thus, while Islam is supportive of business, the way

business is practiced is strictly prescribed. For instance, no interest may be paid on business

loans.

Slide 4-21 Hinduism

Hinduism, practiced primarily on the Indian subcontinent, focuses on the importance of

achieving spiritual growth and development, which may require material and physical

self-denial. Since Hindus are valued by their spiritual rather than material achievements, there

is not the same work ethic or focus on entrepreneurship found in some other religions.

Likewise, promotion and adding new responsibilities may not be the goal of an employee,

Slide 4-22 Buddhism

Buddhists also stress spiritual growth and the afterlife, rather than achievement while in this

world. Buddhism, practiced mainly in Southeast Asia, does not support the caste system,

however, so individuals do have some mobility not found in Hinduism, and can work with

individuals from different classes.

Slide 4-23 Confucianism

Confucianism, practiced mainly in China, teaches the importance of attaining personal salvation

through right action. Unlike religions, Confucianism is not concerned with the supernatural and

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has little to say about the concept of a supreme being or an afterlife. The needs for high moral

and ethical conduct and loyalty to others are central in Confucianism.

Three key teachings of Confucianism – loyalty, reciprocal obligations, and honesty – may all

lead to a lowering of the cost of doing business in Confucian societies.

Slides 4-24 and 4-25 Language

Language refers to the spoken and unspoken means of communication, and is one of the

defining characteristics of culture.

While English is clearly the language of international business, knowing at least some of the

local language can greatly help when working in another country.

In some situations knowing even a bit of the local language can be critical for business success.

Such knowledge may be understood as a sign that the businessperson is willing to learn from

the local firm.

Unspoken language refers to nonverbal communication such as facial expressions, personal

space, and hand gestures. Managers who fail to understand the nonverbal cues of another

culture may experience a breakdown in communication.

Slide 4-26 Education

Formal education is the medium through which individuals learn many of the language,

conceptual, and mathematical skills that are indispensable in a modern society.

Education is part of the social structure of a country and is instrumental in shaping many

cultural values and norms. The knowledge base, training, and educational opportunities

available to a country’s citizens can contribute to a competitive advantage in the marketplace.

Slide 4-27 Think Like a Manager: Analyze Your School Culture

Slides 4-28 through 4-32 Culture in the Workplace

Geert Hofstede conducted what is probably the most famous study about the connection

between culture and values in the workplace. Hofstede made a study of IBM employees

worldwide, and identified four dimensions to describe cultures: power distance, individualism

vs. collectivism, uncertainty avoidance, and masculinity vs. femininity.

Power distance focuses on how a society deals with the fact that people are unequal in

physical and intellectual capabilities. Individualism versus collectivism focuses on the

relationship between the individual and his or her fellows. Uncertainty avoidance measures

the extent to which different cultures socialize their members into accepting ambiguous

situations and tolerating ambiguity. Masculinity versus femininity looks at the relationship

between gender and work roles.

Hofstede later expanded his study to include a fifth dimension called Confucian dynamism

which captures attitudes toward time, persistence, ordering by status, protection of face, respect

for tradition, and reciprocation of gifts and favors.

Slide 4-33 Cultural Change

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Culture is not a constant, but evolves over time. As countries become economically stronger,

cultural change is particularly common.

Slides 4-34 and 4-35 Implications for Managers

Managers need to be aware that societies differ because their cultures vary, and cultures vary

because of profound differences in social structure, religion, language, education, economic

philosophy, and political philosophy.

Individuals and firms must develop cross-cultural literacy. International businesses that are ill

informed about the practices of another culture are unlikely to succeed in that culture. One way

to develop cross-cultural literacy is to regularly rotate and transfer people internationally.

Managers need to be aware of ethnocentric behavior, or a belief in the superiority of their own

culture.

Another Perspective: To give students an opportunity to “experience” cultural differences create

a mock business meeting. Executive Planet maintains a web site,

{http://www.executiveplanet.com/index.php?title=Main_Page}, with guidelines for doing

business in different countries. The site allows visitors to explore relevant issues in a variety of

cultures. A recent article in Entrepreneur magazine provides some strategies on how to avoid

cultural missteps when doing business in other countries

{http://www.entrepreneur.com/article/22686}.

The connection between culture and competitive advantage is important because it suggests

which countries are likely to produce the most viable competitors, and it has implications for

the choice of countries in which to locate production facilities and do business.

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