1. Global Business Management (MGT380) Lecture #3: International Business Environment-Culture

2. Learning Objectives
To understand the effect of culture on international business
To get familiar with the importance of values & attitudes for global business
To know the sources of knowledge
To analyse the culture
To understand the training challenges

3. Quick Recap of Last lecture
4 types Business Orientation
Globalization stages(Purely domestic firm, small foreign activity, International company, Multinational, transnational)
Drivers: Liberalization, Technology (Death of distance, no boundaries), MNCs, WWW, Product development costs, Competition, Regional integration, Leverage-advantages by experience(experience transfer, economy of scale, resource utilization, global strategy)

4. Restraining forces: External and Internal
International business decision making: 1. need to see objectives, resources, market potential, environmental factors 2. market selection 3. entry mode 4.Int structure decision
Business Environment (domestic, international, global), self-reliance criterion
Culture: Integrated system of learned behaviour patterns that characteristics of the members of any given society

5. High-context Vs Low-context culture Elements of culture
Language
Religion
Manners and customs

6. Mini-cast study of Lecture-2: Nestle
Nestle, the largest food company has headquarter in Switzerland, but its products can be found all over the world. Unlike the common way to make different websites for different markets by simply having an extension of Swiss site, Nestle developed difference websites for each country, like US, UK, Japan, Philippine.

7. Questions to think are:
By not having the extension websites they are rejecting the basic assumption ‘Internet culture overcome any differences of national culture’. Can you think of any reason? (This a traditional approach- as oppose to cookie-cutter approach- to market itself even in an unconventional business format)
Despite having similar products, why Nestle have different websites for each market, why? (give importance to cultural differences)
Visit these websites and identity how Nestle responds to the cultural differences

8. Culture: Values and attitude
Values are shared beliefs or group norms within the society and attitudes are evaluations of alternatives based on values.
Effect on Planning, decision making, strategy implementation, evolution
Japanese and Chinese values are different

9. Reference: Book- Czenkota et al. Page 43

10. Culture: Material element
It refers to the impact of technology, and as a result how a society organizes its activities.
Economic infrastructure
Social infrastructure
Financial infrastructure
IT has been the major cause of change.
Cultural convergence

11. Culture: Aesthetics & Education
Each culture has clear statement for what is acceptable and what is not.
For example: Nudity, color
Formal or informal education plays an important role in passing on and sharing of culture.
Education level also affect the international business, e.g. human capital, marketing (visual aid)

12. Culture: Social institutions
Social institutions affect the way people relate to each other.
Family unit
Organizational culture and national culture should be aligned, e.g. class system

13. Sources of cultural knowledge
Two types of knowledge
Objective/factual: communication, education, R&D
Experimental: by involving oneself in new culture

14. Good companies provide their managers opportunity to learn the culture, i.e., Nestle
Reference: Book- Czenkota et al. Page 49

15. Cultural Analysis
Culture life styles can be classified into four dimension:
Individualism
Power distance
Uncertainty avoidance
Masculinity

16. Figure 2.3 Culture Dimension Scores for Twelve Countries (0 = low; 100 = high)

17. Reference: Book- Czenkota et al. Page 53

18. Training challenges
Objective of formal training programs is to foster four critical characteristics:
Preparedness
Sensitivity
Patience
Flexibility
It helps managers in negotiations, formalizing contracts, and management.

19. Cross – Cultural Training Methods (Page 56 of Czinkota et al.)

20. Critical Thinking question
Choose two countries where religion has strong influence. Compare the cultures of those countries and indicate how cultural differences influence (a) business practices (b) costs of doing business in each country.

21. Summary of today’s lecture
Values are shared beliefs or group norms within the society and attitudes are evaluations of alternatives based on values.
Material element: It refers to the impact of technology, and as a result how a society organizes its activities (Economic infrastructure, social infrastructure, financial infrastructure). Cultural convergence
Each culture has clear statement for what is acceptable and what is not

22. Education plays an important role in passing on and sharing of culture
Two types of knowledge (i) Objective/factual: communication, education, R&D (ii) Experimental: by involving oneself in new culture
Culture life styles can be classified into four dimension: Individualism, Power distance, Uncertainty avoidance, Masculinity