Culture is defined as the shared patterns of behaviors and

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1 What Is Culture? Culture is defined as the shared patterns of behaviors and interactions, cognitive constructs and affective understanding that are learned through a process of socialization. These shared patterns identify the members of a culture while also distinguishing those of another group Center for Culture and Language Learning University of Minesota What is Culture? Culture: earned and shared human patterns or models for living; i day-today living patterns. These patterns and models prevade all aspects of human social interaction. Culture is mankind s primary adaptive mechanism Addison-Wesley, Fifth Dimension on the Language Classroom 1

2 What is Culture? Culture is the collective programming of the mind which h distinguishes i the members of one category of people from another Hofstede, G. (1984). National Cultures and Corporate Cultures What is Culture? Culture is a set of beliefs or standards, d shared by a group of people, which help the individual decide what is, what can be, how to feel, what to do and how to go about doing it Goodenough, Ward (1971), Culture, Language and Society 2

3 What is Culture? Culture is the collective fingerprint of our identity... Cultural l differences exist, but no culture is globally superior or inferior to another Jean-Claude Usunier and Julie Anne-Lee (2009), Marketing Across Cultures What is Culture? Heaven is where the cooks are French, the mechanics are German, the policemen are English, the lovers are Italian, and it is all organized by the Italians. Hell is where the policemen are German, the mechanics are French, the cooks are British, the lovers are Swiss and it is all organized by the Italians 3

4 Elements of Culture Language Nationality Education Profession Ethnic group Religion Family Sex Social class Corporate culture Question for Discussion Discuss the case of multi- language/multi-region lti i countries (e.g. India, Canada, Switzerland); how can people in these countries share a common culture? On which segments of culture? 4

5 What is Culture? From a Business Point of View Culture is about different ways of doing business and different client expectations in different business communities Barry Tomalin and Mike Nicks (2007), The World s Business Cultures and How to Unlock Them International Business: Why General Philosophical Reasons Absolute advantage: a condition in which a country can produce a product exclusively, or nonexclusively but more cheaply than others, and therefore possesses an absolute advantage for that product 5

6 International Business: Why General Philosophical Reasons Comparative advantage: the principle i that t asserts that t countries should specialize in producing those products in which they have the greatest advantage or the least disadvantage in relationship to other countries. It is job specialization on the international level Question for Discussion Explain the following statement: Companies exploring comparative advantage should be aware that it rarely lasts for very long 6

7 International Business: Why Specific Reasons Desire to expand markets Search for natural resources Global marketing Proximity to consumer Labor savings International Business: How Exporting: General export license/validated export license Foreign licensing: A company in the parent country (licensor) gives the right to a company in the host country (licensee) to make use of an exclusive patent, trademark, process or technology. The license in granted in exchange for money: a fixed fee or a percentage of profits 7

8 International Business: How Foreign assembly: A company exports parts from the parent country to the host country, where final product assembly takes place. Foreign production subsidiaries: a company actually establishes a factory in the host country.if it is in conjunction with a foreign company it is called a joint venture International Business: Problems Communication (see study cases) Cultural l differences (see study cases) Protectionism and trade barriers Tariff: a tax levied against an import Quota: the government limits the quantity of foreign goods allowed to enter the country Embargo: a government prohibition against the entry of foreign goods 8

9 International Business: Problems Human Resources: Aquisition and training i Expatriate managers Acquiring local human resources Control and accounting standards GAAP (generally accepted accounting principles) International Business: Problems International piracy: generally, trademark and patent t (intellectual t l property)rights guaranteed under local law are described as territorial protection ends at the border. The Pineapple example 9

10 International Business: A Success Story Study Case Makudonarudo and Den Fujita: the success of McDonald s in the Land of the Rising Sun What spoke against McDonald s success in Japan? How did Den Fujita overcome the initial disadvantages? Benefits of Entering Foreign Markets Increased Sales: more opportunities during periods of domestic downturns, excellent outlets for excess inventories, and opportunities to utilize productive capacity fully. Leverage Strengths: larger international markets multiply l the effectiveness of whatever company resources helped the firm succeed in the domestic market place. 10

11 Benefits of Entering Foreign Markets Achieving a Competitive Edge Stay-at-home firms will lose market share to leverage benefits generated by a firm s international marketing activities Stay-at-homes at will lose a future opportunity to enter and grow foreign markets occupied by early-bird competitors Benefits of Entering Foreign Markets Achieve Tax Advantages In the U.S. the Foreign Sales Corporation has been set up to make international marketing activities more profitable by providing firms with certain tax deferrals. For example, if a firm s subsidiary qualifies for FSC, a portion of its income is exempt from U.S. corporate income tax. 11

12 Benefits of Entering Foreign Markets Prolong Product Life Increase Profits Specific Problems to Entering Foreign Markets Economic/Demographic Influences: a lack of people in age, income, or occupational groups likely to buy your products Technology: underdeveloped infrastructures to facilitate transportation and communication can make it very expensive to market products in foreign countries 12

13 Specific Problems to Entering Foreign Markets Control Problems: problems in coordinating marketing activities and monitoring competitors in dispersed markets Universalism vrs. Particularism Fons Trompenaars Models Universalists North America and North West Europe, Analysis Rationality Logic Systems Power based on achievement individualistic Particularists Southern Europe and South America; Asia Personal relations Intuition Emotion Sensitivity Power based on seniority collectivist 13

14 Hofstede s Framework for Assessing Culture Hofstede s studies of the interactions between national cultures and organizational cultures demonstrated that there are national and regional cultural groupings that affect the behaviors of societies and organizations, and that are very persistent across time Hofstede s Framework for Assessing Culture You can use Hofstede s model to assess cultural l impact on managerial structures, hierarchical relationships, management of expatriate personnel and variation and consumption patterns across cultures. 14

15 Hofstede s Framework for Assessing Culture Low vs. High Power Distance The extent to which the less powerful members of institutions and organizations expect and accept that power is distributed unequally Low PD (Austria, Israel, Denmark, New Zealand) expect power relations which are more consultative or democratic. A sense of equality as human beings prevades High PD (Malaysia): autocratic and paternalistic structures. Power is centralized. (see More equal than others, p.20) Hofstede s Framework for Assessing Culture Individualism vs. Collectivism / Independence vs. dependence (Anglo cultures /Latin American) Refers to the extent to which people p are expected to stand up for themselves and to chose their own affiliations, or alternatively act predominantly as a member of a life-long group or organization In individual societies people tend to be motivated by personal preferences, needs and rights; personal goals and rational analysis take precedence In collectivist societies people tend to be motivated by norms and duties imposed by the group; ingroup goals and relational analysis takes precedence. (See From Chanel chick to individualist, p.17 15

16 Hofstede s Framework for Assessing Culture Masculinity vs. Femininity Refers to the value placed on traditionally male or female values Masculine cultures: competitiveness, assertiveness, ambition, personal achievement accumulation of wealth (Japan) Feminine cultures: caring for others, nurturing roles, quality of life. (Sweden) Hofstede s Framework for Assessing Culture Uncertainty Avoidance The extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. High UA societies: avoidance of ambiguous situations, preference of known stable situations, uncertainty-reducing rules and procedures (Mediterranean societies, Latin America, Japan) Low UA societies: ambiguity is more accepted. Uncertainty = opportunity. People as individuals are the engine of change 16

17 Hofstede s Framework for Assessing Culture Long vs. Short Term Orientation Describes a society s s time horizon, o or the importance attached to the future versus the past and present LT societies: values include persistence, ordering relationships by status, thrift, having a sense of shame (China, Japan, Asian countries) ST societies: values include personal steadiness and stability, normative statements, t t protecting one s face, respect for traditions, and reciprocation of greetings, favors and gifts (Western nations) (See Communication Styles, p.19) Hofstede s Framework for Assessing Culture Culture is more often a source of conflict than of synergy Cultural differences are a nuissance at best and often a disaster Prof. Geert Hofstede, Emeritus Professor, Maastricht University 17

18 American Culture and the 2008 Financial Crisis -- Hoftstede A study conducted between in 17 countries Compared to their colleagues in 16 other countries US business leaders scored higher on seeking: Growth of business Personal wealth Short-term profits Power American Culture and the 2008 Financial Crisis -- Hoftstede They were seen as pursuing to a lesser extent t than business leaders in other countries the following goals: Profits 10 years from now Responsibility towards employees Creating something new Continuity of business 18

19 American Culture and the 2008 Financial Crisis -- Hoftstede The list reflects two aspects of the US national culture described d in Hofstede s books Masculinity stands for belief in big business and showing off, and a lack of care for others weaker than oneself Short-term orientation a lack of understanding of the long-term consequences of one s own doings Tomalin s and Nicks Personal Cultural Profile Communication Style Direct Gets to the point Criticizes Faces disagreement Addresses issues directly Indirect Encircles the point Saves face Avoids disagreement Addresses issues sideways-on 19

20 Tomalin s and Nicks Personal Cultural Profile Working Style Formal Prefers business dress Uses surnames and titles Closed door Prefers a more formal style of speech Informal Prefers dressdown Uses first names Open plan/open door Prefers a more familiar and intimate type of speech Tomalin s and Nicks Personal Cultural Profile Discussion Style Fast Moving Interrupts more Talks more and quickly Conversation has to keep moving Dislikes silence Slow and Measured Never interrupts Prefers measured tone and pace Pauses are acceptable Is tolerant of silence 20

21 Tomalin s and Nicks Personal Cultural Profile Business Attitude Progessive Embraces change Likes new technology Seeks new organizational methods Wants new people Traditional Needs change to be based in present practice Is cautious in adopting new technology Prefers tried and tested solutions Prefers loyal staff Tomalin s and Nicks Personal Cultural Profile Leadership Style Flat Communicates directly Community decision Two-way feedback Strict line of management reporting Vertical Communicates through hierarchy Leader decision Top-down feedback Dotted line matrix reporting 21

22 Tomalin s and Nicks Personal Cultural Profile Business Relationship Relationship Takes time in building relationships Won t work with you unless he/she likes you Takes interest in understanding people My business colleague is my friend Task Focuses on having job done May begin with small-scale deals and then build up if original deal is successful Focuses on task rather than on people Business and friendships don t mix Tomalin s and Nicks Personal Cultural Profile Decision Making Style Individualistic Risk taking Decides first then persuades others Makes decisions within budget and job descriptions Is accountable for decision and implementation Collective Risk averse Seeks consensus, then decides Decisions and budgets are agreed with higher management Takes decision agreed by the group 22

23 Tomalin s and Nicks Personal Cultural Profile Basis for Decision Making Facts Makes decisions based on data and figures Personal connections are not important Maintains strict criteria i Agreements are independent of hospitality or gifts Instincts Makes decisions based on instinct and intuition Personal connections are important Prefers to work with existing contacts Agreements are accompanied by hospitality and gifts Tomalin s and Nicks Personal Cultural Profile Attitude to Time Scheduled Time conscious Punctual Schedules by the clock Meetings start/end on time Fexible Relaxed about time Late Schedules by activity Completing the business is more important than the schedule/time 23

24 Tomalin s and Nicks Personal Cultural Profile Work/Life Balance Live to Work Overtime expected Taking work home admired Out of hours phone contact tolerated Weekend working normal Work to live Overtime unusual Taking work home criticized Out of hours phone contact unacceptable Weekend working exceptional 24