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Chapter 04 – Differences in Culture
4-1
Differences in Culture
Learning objectives
differences in social culture.
• Identify the business and economic
culture influence values in business.
• Demonstrate an appreciation for the
This chapter explores the role of culture in
international business: how differences in
culture across and within countries can affect
the practice of business.
How does it play itself out in social
structures, religious and ethical systems,
language, and education? The need for cross-
The opening case explores Swiss watch
maker Swatch. The company celebrates
cultural differences and diversity in
cultural diversity of the workforce at The
Emirates Group and the challenges and
opportunities it creates for the organization.
The Emirates Group is headquartered in
Dubai, UAE—a city with an eclectic mix of
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Chapter 04 – Differences in Culture
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OUTLINE OF CHAPTER 4: DIFFERENCES IN CULTURE
Opening Case: The Swatch Group and Cultural Uniqueness
Social Structure
Individuals and Groups
Social Stratification
Country Focus: India and Its Caste System
Religious and Ethical Systems
Confucianism
Management Focus: China and Its Guanxi
Language
Spoken Language
Unspoken Language
Culture and Competitive Advantage
Chapter Summary
Critical Thinking and Discussion Questions
Closing Case: The Emirates Group and Employee Diversity
Chapter 04 – Differences in Culture
CLASSROOM DISCUSSION POINT
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.
OPENING CASE: The Swatch Group and Cultural Uniqueness
Summary
The opening case explores Swiss watchmaker Swatch. Since its founding in 1983, Swatch has
been a cultural icon, transforming the traditional watch industry with its playful plastic
watches with traditional Swiss quality at affordable prices. Swatch watches are appealing to
people of all ages and types. The company prides itself on the appeal of the Swatch to people
from different cultures and claims that for wearers, Swatch watches are an attitude, approach
to life, and way of seeing. Discussion of the case can begin with the following questions:
QUESTION 1: How does the geographic location of Swatch’s headquarters impact the
company and its product line?
ANSWER 1: The Swatch Group is located in Biel, Switzerland. Biel is on the language border
QUESTION 2: How has Swatch capitalized on cultural diversity in its product line?
ANSWER 2: While many companies respond to differences in cultures, it is not as common
to find companies that celebrate those differences in everything they do. Swatch is one of
Chapter 04 – Differences in Culture
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QUESTION 3: Do you own a Swatch? What attracted you to the watch you chose? Discuss
the appeal of Swatch. How has the company managed to bridge age, gender, national, and
other differences?
ANSWER 3: Responses to this question will vary based on student ownership of a Swatch
Another Perspective: To learn more about Swatch, go to:
{http://www.bbc.com/news/technology-31857418} and {https://shop.swatch.com/en_us}.
LECTURE OUTLINE
This lecture outline follows the Power Point Presentation (PPT) provided along with this
“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
prevailing culture or cultures in the countries where they do business.
Slide 4-4 – 4-9 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.
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.
Chapter 04 – Differences in Culture
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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.
Slides 4-10 – 4-14 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.
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’s 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.
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,
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 class consciousness, 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.
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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
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
In recent decades there has been a rise in Islamic fundamentalism. Fundamentalists, who
demand a commitment to traditional religious beliefs and rituals, are often anti-Western.
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 are obliged
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.
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,
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Confucianism, practiced mainly in China, teaches the importance of attaining personal
salvation through right action. Unlike religions, Confucianism is not concerned with the
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
Slide 4-24 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
collectivism, uncertainty avoidance, and masculinity versus 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
