Topic in IB: Understanding the role of culture in International Business

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1 Topic in IB: Understanding the role of culture in International Business GriffithBusiness Year 12 Workshop July 2017 Dr. Bernard Gan Department of International Business and Asian Studies Griffith Business School

2 Today s Agenda Lecture: 1.5 hours (relates to MCQs in the assessment) Lunch Break: 1 hour Tutorial Activity: 1 hour Exams: 30 mins Griffith Business School

3 Q: How much can you sell a box of Australian made Weetbix in China?

4 In this lecture, we seek answers to the fundamental question: How does culture affects and impacts international business (doing business overseas)? Griffith Business School

5 What is International Business (IB)? (Wild et al. 2007, p. 5) From another perspective, IB is an integral part of globalisation and the rise of MNCs (Efficiency seekers) Department of International Business and Asian Studies

6 28/07/2017 Question for YOU:

7 Culture. 28/07/2017

8 Definitions and origins of culture Culture is the sum of: Values, rituals, symbols, beliefs and thought processes that are learned, shared by a group of people and transmitted from generation to generation. Culture has been conceptualised as: Software of the mind culture is a guide for humans on how to think and behave; it is a problem-solving tool (Hofstede) An invisible barrier complete different way of organising life, of thinking and of conceiving the underlying assumptions about the family and the state, the economic system and even Man himself ( Stuart Hall) 28/07/2017

9 My experience in China (in 1999) Griffith Business School

10 Consider the context: China has 1.4B people. Singapore has B people. Griffith Business School

11 Question: Can you think of ways to use your tissue pack other than blowing your nose or wiping your mouth? Griffith Business School

12 Discussion Activity 5 mins Turn to the person beside you to discuss the following question. Why is understanding culture important to success in doing business globally? 28/07/2017

13 Famous Researches in Culture Griffith Business School

14 Hofstede s Cultural Dimensions Griffith Business School

15 Australia vs China Cultural Dimensions Griffith Business School

16 Q: Are the cultural dimensions similar in various Asian countries? Griffith Business School

17 Applying Individualism vs Collectivism (implications to managing employees) Griffith Business School

18 Hall s High Context vs Low Context In high context cultures, the context of a communication is at least as important as what is actually said. In low-context cultures, however most of the information is contained explicitly in the words.

19 Symbols The languages of High Context Cultures. verbal Q: How do you say No verbally without saying the word No? non-verbal (read in between the lines ask me out) colour (Q: what colour do you wear to which occasion?) symbols (of social status) my uncle s visit metaphor 28/07/2017

20 Do we and our businesses need to acculturate? Acculturation The process of adjusting and adapting to a specific culture other than one s own This process can be difficult as the transmission of culture is often unconscious The challenge is how can anyone become cultural effective 28/07/2017

21 MNCs are successful in IB because they are cultural-effective To be cultural effective, one needs to understand various elements of culture and apply them in the right context. Elements of culture include: Languages (verbal and non-verbal) Education Social interactions Religions (and beliefs) Value systems

22 Elements of culture Language Cultural meanings are captured by language culturally-appropriate words (& myths). Understanding the world we live in (some ideas only exist because of a particular phrase). Q: How does Chinese differ in greetings from the Australians? In a business context, the English language dominates, but Mandarin, Bahasa Indonesian, Spanish, Arabic, French, German, Japanese, and Russian are also important Distinct roles in international business Aids information gathering and evaluation Provides access to local society Reduces the risk of errors Extends beyond the mechanics of communication Read the Australia in the Asian Century white paper 2012

23 Elements of culture Non-verbal language Time Space Body language Friendship patterns (holding hands in some cultures) Monochronic The perception of time that emphasises and values promptness and punctuality Polychronic The perception of time that does not emphasise promptness and punctually but focuses more on flexibility (Jam karet) 28/07/2017

24 Elements of culture Elements of culture Education Literacy rates implication for packaging and print advertising in countries with low literacy Increasing use of English Vietnam has a relatively English-literate workforce relative to its developing nature Shapes New product introductions Product adaptations Recruitment

25 Elements of culture Social interactions Role of nuclear versus extended family Extended family households in rapid decline in parts of Asia Marriage the role of husband and wife changing roles within and between countries Reference groups Collective identities in Asia (group conformity based on concepts of face)

26 Elements of culture Religion and beliefs McDonald s in India selling non-beef products tofu and lamb burgers The depiction of women in certain cultures what do brands do to accommodate this?

27 Elements of culture Religion and beliefs Q: What are the main religions in Asia? McDonald s in India selling non-beef products tofu and lamb burgers The depiction of women in certain cultures what do brands do to accommodate this?

28 Q: What does this advertisement communicate? Targeting which country s consumers? Griffith Business School

29 This ad for a Dubai tourist spot is an excellent example of the tightrope that advertisers walk in Islamic countries. If this was a Western resort, she'd be in a bikini. Client: Maydan Beach. Advertising Agency: Gyro, Dubai, UAE. Griffith Business School

30 Elements of culture Manners and customs Provide clues to culture Influenced by religion, values and attitudes Aesthetics Market acceptability may vary, even in similar markets Challenges could be encountered with brand translations Colour, symbols Feng Shui 28/07/2017

31 Elements of culture Value systems Guiding principles in life, which are intrinsic to a person s identity and inner-self issue of face in many Asian cultures capacity for change stronger in some countries and cultures than others Obviously, a central consideration for marketers gift giving (example: Mooncakes) Value systems merging as the world becomes a global place

32 Culture in actions: Factors influencing ethical thinking Manager as a person Family influences Religious values Personal standards and needs Employing organisation Policies, codes of conduct Behaviour of supervisors, peers Organisational culture External environment Laws and regulations Norms and values of society Ethical climate of industry Ethical managerial behaviour

33 The Celebration of Moon-Cake Festival in China Griffith Business School

34 Cross-cultural management success Q. Managers play an important role in the success of international business. What can managers do to achieve cross-cultural success?

35 Guidelines to achieve crosscultural success: 1) Managers should acquire factual and interpretive knowledge about the other culture and try to speak the language. Successful managers acquire a base of knowledge about the values, attitudes, and lifestyle of the cultures with which they interact. Managers study the political and economic background of target countries, their history, their current national affairs, and their perceptions about other cultures. 2) Managers should avoid cultural bias. Ethnocentric assumptions lead to poor business strategies in both planning and execution. For example, it is easy to be offended when our foreign counterpart does not appreciate our food, history, sports, or entertainment or is otherwise inconsiderate. 3) Managers should develop cross-cultural skills. Each culture has its own ways of carrying out business transactions, negotiations, and dispute resolution. Successful managers exhibit traits of perceptiveness, flexibility, and adaptability, and they make an effort to develop personal relationships.

36 Take home Reflective Questions: Are you cultural competent (CQ)? How do you develop your cultural intelligence (CQ)? Griffith Business School

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