5- 0 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 5 Business Customs in Global Marketing

5- 1 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Cultural Adaptation Cultural Imperatives Cultural Adiaphora Cultural Exclusives

5- 2 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Contextual Background of Various Countries High Context Implicit Japanese Arabian Latin American Spanish Italian English (UK) French North American (US) Scandinavian German Swiss Low Context Explicit

5- 3 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Hall’s Silent Languages Language of Time Language of Space Language of Things Language of Friendship Language of Agreements

5- 4 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Cultural Differences between Japanese and American Business Game concept: Business is a game in pursuit of profits under the rules of laws and contracts Efficiency-oriented and approximate accuracy simplicity, clarity, and quickness Quantity-oriented Short-term performance evaluation Easy layoffs, dismissals of employees, and selling of businesses Japanese BusinessAmerican Business Mutual trust-oriented business: business is based on trusting relationship among people rather than the rules of game Highly precision-oriented and perfectionism-high dependency on human awareness Quality-oriented Mid-to-long term evaluations Job security SOURCE: Norihiko Shimizu, “Today’s Taboos may be gone tomorrow,” Tokyo Business, February 1995, p.51.

5- 5 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Cultural Differences between Japanese and American Business Top down management Low mutual dependence between employers and employees Control of business by stockholders and the management Management by "force" Heavy dependence on machinery and technology, vs. Light dependence on human resources Limited loyalty and incentive-oriented work ethics Excellent software-based technology development Heavy dependence on human resources bottom-up management and teamwork High mutual dependence between employers and employees Joint management of business by Employees and Employees Management by "motivation" Heavy dependence on human resources Strong loyalty and fewer incentives Inadequate software development ability Japanese BusinessAmerican Business SOURCE: Norihiko Shimizu, “Today’s Taboos may be gone tomorrow,” Tokyo Business, February 1995, p.51

5- 6 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Corruption Perception Index* (Selected Countries 1997 & 1996) * The ranking is based on the 52 countries studied. ** ( ) number is rank in 1997 Study. ^ The maximum is A perfect score of would be a totally corrupt free country. Source: “Transparency International Publishes 1997 Corruption Perception Index, “ TI Press Release, July 31, Available at (select Press Releases).

5- 7 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Bribery? Variations on a Theme Bribery Extortion Subornation Lubrication

5- 8 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Three Ethical Principles Utilitarian EthicsDoes the action optimize the "common good" or benefits of all constituencies? Rights of the Parties Does the action respect the rights of the individuals involved? Justice or Fairness Does the action respect the canons of justice or fairness to all parties involved? PrincipleQuestion

5- 9 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill A Decision Tree for Incorporating Ethical and Social Responsibility Issues into Multinational Business Decisions Does the decision efficiently optimize the common good or benefits of: Society Culture Order Justice “The good life” Other The Individual? Freedom Health and welfare Self-realization Human dignity Opportunity Other The Business firm? Stockholders Management Profits Growth Other The Economy? Economic growth Allocation of resources Production and distribution of goods and services Other Are there critical factors that justify suboptimizing these goals and satisfactions? Does the decision respect the rights of individuals involved. Reject decision Are there critical factors that justify the abrogation of a right. Does the corporate decision respect the canons of justice or fairness to all parties involved? Reject decision Are there critical factors that justify the violation of a canon of justice? Reject decision Accept decision YES NO YES NO YES NO YES NO

5- 10 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Caux Round Table Principles The responsibilities of businesses : Beyond shareholders toward shareholders. The economic and social impact of business: Beyond shareholders toward justice and world community. Business behavior: Beyond the letter of law toward a spirit of trust. Respect for rules. Support for multilateral trade. Respect for the environment. Avoidance of illicit operations. General Principles SOURCE: Joel Makower and business for social responsibility, Beyond The Bottom Line: Putting Social Responsibility to Work for your Business and the World (New York: Simon and Schuster, 1994)

5- 11 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Caux Round Table Principles The mobility of employment, capital, products, and technology is making business increasingly global in its transactions and its effects. Laws and market forces are necessary but insufficient guides for conduct. Responsibility for a business's policies and actions and respect for the dignity and interests of its shareholders are fundamental. Shared values, including a commitment to shared prosperity, are as important for a global community as for communities of smaller scale. For these reasons, and because business can be a powerful agent of positive social change, we offer the following principles as a foundation for dialogue and action by business leaders in search of business responsibility. In so doing, we affirm the necessity for moral values in business decision making. Without them, stable business relationships and a sustainable world community are impossible. SOURCE: Joel Makower and business for Social Responsibility, Beyond the Bottom Line : Putting Social Responsibility to Work for your Business and the World (New York: Simon and Schuster, 1994) Preamble