Chapter 04 – Differences in Culture
4-1
Differences in Culture
Learning objectives
• Explain what is meant by the culture of
a society.
• Recognize how differences in social
culture influence values in the
workplace.
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
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
4
Chapter 04 – Differences in Culture
4-2
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
Language
Spoken Language
Unspoken Language
Education
Culture and Business
Cultural Change
Focus on Managerial Implications
Cross-Cultural Literacy
Culture and Competitive Advantage
Chapter 04 – Differences in Culture
4-3
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.
OPENING CASE: Best Buy and eBay in China
Summary
The opening case explores the many missteps by Best Buy and eBay when they decided to do
business in China. In the case of Best Buy, the company failed to recognize differences in price
sensitivity between Chinese and American consumers. Also, higher rates of piracy in China
meant that demand for Best Buy’s products was lower than in the United States, where piracy is
QUESTION 1: Reflect on the cultural traditions in China and how they shape the country’s retail
experience expectations. What should Best Buy and eBay executives have done differently when
it came to acknowledging (and embracing) the Chinese shopping culture?
ANSWER 1: Chinese consumers expect a more modest, patient, and personalized approach to
retail sales. Best Buy’s cavernous, gadget-filled stores proved off-putting to Chinese shoppers.
QUESTION 2: In response to Chinese consumers’ distaste for Best Buy’s prices and large store
size, Best Buy elected to close all of its stores and focus on its chain of local Jiangsu Five Star
stores. Does this strategy make sense given the expected growth in China’s middle class
purchasing power by 2020?
Chapter 04 – Differences in Culture
4-4
ANSWER 2: Student responses will vary. The decision to focus on the more modest Five Star
retail chain appears to have been a wise decision in the short term. However, as larger numbers
QUESTION 3: If eBay could go back in time with the knowledge it now has about the Chinese
e-commerce market, what strategies might it use to ensure a more positive reception? Do you
think it would be able to attract a large share of TaoBao users?
ANSWER 3: Following in TaoBao’s footsteps, eBay might seek to encourage better
communication between buyers and sellers by offering a similar messaging function or by
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 4-4 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.
Chapter 04 – Differences in Culture
4-5
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.
Chapter 04 – Differences in Culture
4-6
Slides 4-7 and 4-8 The Determinants of Culture
Culture is an evolutionary product of a number of factors.
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.
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.
Chapter 04 – Differences in Culture
4-7
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.
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.
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.
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.
Slide 4-21 Hinduism
Hinduism, practiced primarily on the Indian subcontinent, focuses on the importance of
Chapter 04 – Differences in Culture
4-8
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
Slide 4-23 Confucianism
Confucianism, practiced mainly in China, teaches the importance of attaining personal salvation
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.
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.
Chapter 04 – Differences in Culture
4-9
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.
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
Slides 4-34 and 4-35 Implications for Managers
Managers need to be aware that societies differ because their cultures vary, and cultures vary
Managers need to be aware of ethnocentric behavior, or a belief in the superiority of their own
culture.
Chapter 04 – Differences in Culture
CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: Outline why the culture of a country might influence the costs of doing business
in that country. Illustrate your answer with examples.
ANSWER 1: This question has be explored throughout the chapter, and since there can be
numerous reasons and examples of how culture influences the costs of doing business, there is no
single acceptable response to the question. Several are highlighted below, but there could be
QUESTION 2: Do you think that business practices in an Islamic country are likely to differ
from business practices in a Christian country? If so how?
ANSWER 2: The cultural differences between a Muslim country and the United States will
cause business practices to differ dramatically. The public role women can take, appropriate
Chapter 04 – Differences in Culture
4-11
QUESTION 3: What are the implications for international business of differences in the
dominant or ethical system of a country?
ANSWER 3: Differences in the dominant religion of a country affect relationships, attitudes
toward business, and overall economic development. First, differences in religion require inter-
cultural sensitivity. This sensitivity requires things like simply knowing the religious holidays,
QUESTION 4: Choose two countries that appear to be culturally diverse. Compare the culture
of those countries and then indicate how cultural differences influence (a) the costs of doing
business in each country, (b) the likely future economic development of that country, and (c)
business practices.
ANSWER 4: Responses to this question will obviously vary based on the countries chosen by
students, and their knowledge of the countries. Hopefully, students can present some
information on the dimensions of culture including values, norms, social structure, religion,
Chapter 04 – Differences in Culture
4-12
QUESTION 5: Reread the Country Focus on Islamic Capitalism in Turkey. Then answer the
following questions:
a. Can you see anything in the values and norms of Islam that is hostile to business?
b. What does the experience of the region around Kayseri teach about the relationship between
Islam and business?
c. What are the implications of Islamic values towards business for the participation of a country
like Turkey in the global economy or becoming a member of the European Union?
ANSWER 5:
a. Many students will probably focus on the comment by the sugar factory manager that “if you
are not a good Muslim, don’t pray five times a day and don’t have a wife who wears a headscarf,
QUESTION 6: Reread the Management Focus on DMG-Shanghai. Then, answer the following
questions
a. Why do you that it is so important to cultivate guanxi and guanxiwang in China?
b. What does the experience of DMG tell us about the way things work in China? What would
likely happen to a business that obeyed all of the rules and regulations rather than trying to find a
way around them as Dan Mintz apparently does?
c. What are the ethical issues that might arise when drawing upon guanxiwang to get things done
in China? What does this suggest about the limits of using guanxiwang for a Western business
committed to high ethical standards?
Chapter 04 – Differences in Culture
4-13
ANSWER 6:
a. Guanxi literally means relationships, although in business settings in can better be understood
as “connections.” The concept of guanxi is deeply rooted in Chinese culture and Confucianism.
CLOSING CASE: World Expo 2020 in Dubai, UAE
The closing case explores the culture of the United Arab Emirates and its impact on the
upcoming World Expo 2020. The Expo’s theme, “connecting minds, creating the future,” is
shown to be an apt reflection of Dubai’s multicultural atmosphere and status as an international
gateway to doing business in the Middle East. In particular, the theme of connecting minds
relates to the notion that businesses competing in the global marketplace must connect with
foreign consumers by underscoring cultural similarities while downplaying cultural differences.
Discussion of the case can revolve around the following questions:
QUESTION 1: What forces shaped the culture in the country of UAE and Dubai in Particular?
How similar or different are these forces from those that shaped the culture of Western nations.
ANSWER 1: Historically, the UAE is a conservative country where a large segment of the
population desires to preserve the religious values and ancient traditions of the region. However,
QUESTION 2: What kinds of misunderstanding, if any, are likely to arise between Western-
based visitors and people from the UAE during World Expo 2020?
Chapter 04 – Differences in Culture
4-14
ANSWER 2: Reflecting their Bedouin traditions, Emiratis will often conduct business only after
QUESTION 3: If you were in a position to advise a Western company that was considering
doing business in UAE for the first time, what would your advice be?
ANSWER 3: Student answers will vary on this question. Several important strategies could be
implemented: (1) Researching the religious and cultural customs of UAE and understanding
QUESTION 4: Using Dubai as an example, do you believe that cultural similarities among
people can outweigh cultural differences that exist in terms of doing business together in the
future?
ANSWER 4: As shown by Dubai Expo 2020’s stated aims (to explore creative solutions relating
to sustainability, mobility, and opportunity), there are many concerns in the global business
MHE INTERNATIONAL BUSINESS VIDEO LIBRARY
Please click here to visit our International Business Video Library on Pinterest, which is updated
on a monthly basis. While there be sure to “like” the clips that work well for you, and add notes
that might be helpful to your colleagues.
Chapter 04 – Differences in Culture
4-15
INCORPORATING globalEDGE™ EXERCISES
Exercise 1
You are preparing for a business trip to Chile where you will need to interact extensively with
local professionals. Therefore, you should consider collecting information regarding local culture
Exercise 2
Typically, cultural factors drive the differences in business etiquette encountered during
international business travel. In fact, Middle Eastern cultures exhibit significant differences in
Chapter 04 – Differences in Culture
Answers to Exercise Questions
Exercise 1
This resource is found under the globalEDGE category “Reference: Culture”. Be sure to click on
the Resource Desk link to search this area of the globalEDGE website.
Search Phrase: “Centre for Intercultural Learning”
Resource Name: Centre for Intercultural Learning (Foreign Affairs and International Trade
Canada)
Exercise 2
Middle East from the map located at the top of the website. This resource is found under the
globalEDGE category “Reference: Culture”. Be sure to click on the Resource Desk link to search
this area of the globalEDGE website.
Search Phrase: “Business Etiquette Around the World”
Resource Name: Business Etiquette Around the World