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International Business. Chapter Two The Cultural Environments Facing Business. Understanding Culture. What is Culture?: “Sum total” of all learned activities, a way of life that includes values, attitudes, beliefs, lifestyles etc….

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international business

International Business

Chapter Two

The Cultural Environments Facing Business

understanding culture
Understanding Culture
  • What is Culture?: “Sum total” of all learned activities, a way of life that includes values, attitudes, beliefs, lifestyles etc….
  • Cultures consist of societies, i.e., relatively homogeneous groups of people, who share attitudes, values, beliefs, and customs.
  • Why an international business manager should study the culture of a country?
understanding culture3
Understanding Culture
  • National cultures are dynamic, they evolve over time change may occur by choice or by imposition
  • The Nation or Nation-State as point of reference (identity, symbolism, common history)
  • Language as both a diffuser and stabilizer of culture (expression, sharing, bond)
  • Religion as a cultural stabilizer (beliefs, ethics, spiritualism)
behavioral practices affecting business
Behavioral Practices Affecting Business
  • Issues in Social Stratification
  • Work Motivation
  • Relationship Preferences
  • Risk-taking Behavior
  • Information and Task Processing
  • Communications
social stratification systems
Social Stratification Systems
  • Individual’s status in a culture
  • Open vs. closed societies
  • Ascribed and acquired group membership: gender, age, or family-based groups
work motivation
Work Motivation
  • Work vs. leisure-how it affects productivity
  • Role of materialism, how it motivates people
  • Achievement orientation
  • Expectation of success and reward
  • Hierarchy of Needs
relationship preferences
Relationship Preferences
  • Power distance, i.e., the psychological and social distance between superiors and subordinates
  • Individualism vs. collectivism
    • Individualism represents a desire for personal freedom, time, and challenge.
    • Collectivism represents a dependence on the organization as well as a need for a safe environment.
  • Role of extended families/clans
risk taking behavior
Risk-taking Behavior
  • Uncertainty avoidance, i.e., one’s tolerance of risk
  • Trust, i.e., one’s belief in the reliability and honesty of another
  • Future orientation, i.e., the need for immediate vs. delayed gratification
  • Fatalism, i.e., the belief that life is pre-destined, that events are “the will of God”
information and task processing
Information and Task Processing
  • Perception of Cues
  • Obtaining information: Low-Context cultures [explicit, e.g., USA] vs. High-Context cultures [implicit, e.g., Saudi Arabia]
  • Information processing:
    • Monochronic [work sequentially] vs. Polychronic [multi-task]
    • Idealism vs. Pragmatism
communications
Communications
  • Spoken and Written Language
  • Silent Language of time, distance/space, and friendship
  • Verbal vs. Nonverbal Language (kinesics: body language and gestures)
  • We need to be sensitive to linguistic differences
dealing with cultures
Dealing With Cultures
  • Host society acceptance (i.e., accommodation of foreigners in a culture)
  • A few terms: Cultural Distance, Cultural Diffusion, Cultural Imperialism, Culture Shock and Reverse Culture Shock
  • Managerial Orientations: Polycentrism, Ethnocentrism, Geocentrism
strategies for instituting change
Strategies for Instituting Change
  • Value systems
  • Cost-benefit analysis of change
  • Resistance to change
  • Participation in decision-making
  • Reward sharing
  • Role of opinion leaders
  • Timing
  • Opportunities to learn from abroad
hofstede s cultural value
Hofstede’s Cultural Value
  • Individualism/collective index (IDV): Refers to preference of behavior that promotes one’s self interest. Higher score (e.g., USA) means high on individualism.
  • Power distance index (PDI): Measures the tolerance of social inequality, i.e., inequality between superiors and subordinates within a social system. Higher score (e.g., Arab countries) means more hierarchical.
  • Uncertainty avoidance index (UAI): Refers to the intolerance of ambiguity and uncertainty among members of a society. Higher score (e.g., Greece) means less tolerance for uncertainty.
  • Masculinity/feminity (MAS): Refers to one’s desire for achievement and entrepreneurial tendencies. Higher score (e.g., Latin culture) means more assertiveness and masculinity.
  • Future orientation: Refers to the future or long-term orientation of the society
chapter 2 discussion questions
Chapter 2: Discussion Questions
  • Define culture? Why an international business manager should study the culture of a country?
  • Explain how the dynamic interplay of nation, language and religion shapes the culture of a country.
  • Explain the six behavioral practices that affect the business in a country.
  • Explain the three managerial orientations and their implications in international business.
  • What are the five cultural values of Hofstede? Explain.