1. UNIT 3 CULTURE MATTERS Cultural Differences National Geographic - YouTube

2. Chapter Objectives Describe culture and explain the significance of national culture and subcultures Identify the components of culture and describe their impact on international business Describe cultural change and explain how companies and culture affect each other Explain how the physical environment and technology influence culture Describe two frameworks used to classify cultures and explain their practical use 2 - 2 When dining in the Middle East, North Africa or other Muslim lands, always use the right hand, because the left "is deemed unclean and disrespectful."

3. HOLLYWOOD ABROAD Firms that rely on their familiar home culture to compete in a new market can jeopardize their international success. Movies tend to reflect the cultures in which their stories are set. (Blood Diamonds, SlumDog Millionaire) All facets of an international firm’s business (contract negotiations, production operations, marketing decisions, human resource management policies) can be affected by cultural variations. Kimberley Process Certification Scheme (KPCS) is the process designed to certify the origin of rough diamonds from sources which are free of conflict funded by diamond production Video - Breaking News Videos from CNN.com An American official handed out bright green baseball caps at every stop without noticing that none of the men would put them on or that all the women were giggling. Finally, a Chinese- American in the delegation took the man aside and informed him that "to wear a green hat" is the Chinese symbol of a cuckold (a man whose wife is unfaithful).

4. What is Culture? What is Culture? Set of values, beliefs, rules, and institutions held by a specific group of people Cultural literacy Detailed knowledge of a culture that enables a person to function effectively within it √ Ethnocentricity Belief that one’s own ethnic group or culture is superior to that of others X Why should we try to avoid ethnocentricity? 1.It can cause us to view other cultures in terms of our own and cause us to overlook important human and environmental differences among cultures. 2.It can undermine our business projects if we are insensitive to cultural nuances (differences) EuroDisney—a multibillion dollar blunder Why develop cultural literacy? 1)Cultural literacy improves the ability of managers to manage employees, develop and market products, and conduct negotiations in local markets. 2)It can help bring us and our companies closer to customers’ needs and can increase business competitiveness. Globalization of McDonalds?? When you buy a Coke on the street in Romania, you are only buying the liquid; you actually have to stand there while drinking and then promptly return the bottle!

5. Culture Matters: Creating a Global Mindset CulturalAdaptabilityBridging the Gap Flexibility Is Key Building Global Mentality 2 - 5 Cultural Adaptability – a manager MUST be knowledgeable of an unfamiliar culture, then alter his/her behavior accordingly to lead multicultural teams. Bridging the Gap – Employing creativity when Western management ideas are applied in Eastern cultures, and vice versa. (Ex: Western managers may implement “collective leadership” practices in Asia to better suit Asian values of group consensus.) Building global mentality – developing an open and flexible mentality toward all things unfamiliar, understanding global business principles, and improving our abilities to implement strategies. Flexibility is key— cannot be underestimated because the more behavioral the issue, the greater is local culture’s influence on that issue. If you finish a drink in Indonesia, it implies you'd like another.

6. Subculture People who share a unique way of life within a larger culture (language, race, lifestyle, attitudes, etc.) EXAMPLES Greasers, Hippies, Goth, Punk, Emo, Bikers, Skaters, China’s Dialects Japanese Lolita’s Argentinean Floggers 2 - 6

7. Components of Culture Physical environments Education Personal communication Religion Social structure Manners & customs Values & attitudes Aesthetics Culture 2 - 7 India: In a monetary transaction, your change is simply placed in your hand, without explanation of the amount. If you remain standing with your hand outstretched, you may receive more money.

8. Aesthetics Music Painting Dance Drama Architecture 2 - 8 All that a culture considers to be in “good taste” and beauty as expressed in arts, imagery (mental images) evoked by certain expressions, and symbolism (symbolic meaning) by of colors. In Arab culture, the shoe is considered dirty because it is on the ground and associated with the foot, the lowest part of the body. Hitting someone with a shoe shows that the victim is regarded as even lower

9. Values and Attitudes ValuesValuesAttitudesAttitudes Positive or negative evaluations, feelings, and tendencies people hold toward objects or concepts Ideas, beliefs, and customs to which people are emotionally attached: accept certain things and reject others Freedom Freedom Responsibility Responsibility Honesty Honesty Time Time Work Work Cultural change Cultural change 2 - 9 In U.S. we believe time is money so don’t waste it. In Arab cultures, meetings may not only start later than stated time but may be interrupted by family and friends who wander in to exchange pleasantries. We consider this rude and undermines our dignity but to Arabs, it is considered to reflect an open-door policy that reflect the hospitality of the host and respect the host offers to all guests—just the kind of person with whom the Arab presumes the Western wants to do business with. In Japan and Saudi Arabia, the initial business meeting often focuses on determining whether the parties can trust each other and work together comfortably, rather than on the details of the meeting. This time is not being wasted. Because these cultures value personal relationships so highly, time is being utilized for an important purpose— assessing the qualities of potential business partners. True or False: It is acceptable to discuss prostitution, soft drugs, and euthanasia with your open-minded Dutch coworkers.

10. Manners and Customs Free Business Reports on Successsful Negotiation Skills Free Business Reports on Successsful Negotiation Skills Free Business Reports on Successsful Negotiation Skills Manners Appropriate behavior, speech, and dressing in general Customs Traditional ways or behavior in specific circumstances 2 - 10 Manners are acceptable ways of behaving, speaking, and dressing. For example, conducting business before, during, and after meals is commonly practiced in the U.S. but may be unacceptable in another culture which prefers to wait until afterwards. CUSTOMS Habits and behaviors in specific circumstances and situations such as the specific rules governing eating habits during the holy month of Ramadan. Indonesia–An American oil rig supervisor, shouting at an employee to take a boat to the shore. What will that employee do? Here comes a mob of outraged workers with axes in their hand chasing the supervisor. They are very angry with him. Why they are angry? They are angry because nobody scolds an Indonesian in public. He (American supervisor) was unaware of this thing and hence he is in trouble. Taiwan--PepsiCo Promoted their soft drink product Pepsi with ad 'Come Alive With Pepsi'. But they didn't know its translation in Chinese: 'Pepsi Brings Your Ancestors Back From the Dead'. Michelle Pres. ObamaFeel Truly Sorry For Obama's Faux Pas as He Toasts Queen of England - YouTube

11. Customs Brass Shackles – YouTube Brass Shackles – YouTube Brass Shackles – YouTube Gift Giving – Giving token gifts to Business & government Associates, yet the proper Type of gift can differ Across cultures Folk – Passing down of elements of a culture from generation to generation Popular – Practiced by heterogeneous group or by several groups 2 - 11 U.S. FOREIGN CORRUPT PRACTICES ACT Prohibits companies from giving large gifts to win business favors and it applies to U.S. firms at home AND abroad. 1978. FCPA about bribery, overcharges, accounting cover-ups in foreign business transactions

12. Social Structure Social Group Two or more people who identify and interact with each other Defining characteristic: social interaction Social Stratification Process of ranking people into social layers according to family heritage, income, and occupation Social Mobility Ease of moving up or down a culture's "social ladder" 2 - 12 Social structure emphasizes the idea that society is grouped into structurally related groups or sets of roles, with different functions, meanings or purposes (examples: family, religion) Social structure influences important social systems such as: economic system, legal system, political system, cultural system, etc. Social groups contribute to an individual’s identity and self-image: Nuclear family common in Australia, Europe, U.S. includes only immediate relatives--parents, brothers, sisters. Extended family common in Asia, Middle East, North Africa, Latin America includes grandparents, aunts, uncles, cousins, relatives through marriage. Gender—socially learned traits associated with men or women. Cultures differ in their views of gender equality at work. The mirage of equality. The Situation of Women in the World of Work in Mexico – YouTubeThe mirage of equality. The Situation of Women in the World of Work in Mexico – YouTube (8 min) The Hunger Project: Women's Journey to Self-reliance – YouTubeThe Hunger Project: Women's Journey to Self-reliance – YouTube (8 min) ISLAM IN BANGLADESH: 30% of girls married by 13yrs – YouTubeISLAM IN BANGLADESH: 30% of girls married by 13yrs – YouTube (24 min) Social stratification is based on four basic principles: (1)It is a trait of society, not simply a reflection of individual differences; (2) It carries over from generation to generation; (3) It is universal; (4) It involves not just inequality but also beliefs (2)In Western societies, stratification is divided into three layers: upper class, middle class, lower class. Each of these classes can be further subdivided into smaller classes (e.g. occupational). Ability and hard work affect social mobility, but so do race, gender, luck, and parents' wealth. A caste system restricts people to the social ranking into which they are born. People are rigidly expected to marry and interact with people of the same social class. India has a well known example of a caste system. A class system lets personal ability and actions decide social status and mobility. If a person starts at a low level, they may improve their status by (for example) working hard, getting a better job. Stratification 1 of 2 – YouTube (2 min) Stratification 1 of 2 – YouTube

13. World Religions Christianity Islam Hinduism Buddhism Confucianism Judaism Shinto Origin of Human Values Origin of Human Values 2 - 13 Why are religious beliefs important? 1)They help shape people’s values. 2)Religious views of work, savings, and material goods influence competitiveness, economic development, and business strategies. Christianity World’s largest religion with over 300 denominations, 2B members. Roman Catholics expected to refrain from placing materialism above God and people. Protestants believe salvation comes from faith in God and hard work gives glory to God. ISLAM World’s second largest religion with 20.28% of world’s population. Islam means “submission to Allah” and Muslim means “one who submits to Allah.” Devout Muslims let their religion determine what is acceptable. (ex: strict Muslims do not drink alcohol, eat pork, or charge interest on money lent.) Hinduism World’s third largest religion with 15% of world’s population. Caste system influences people’s way of like and occupational options. Strict Hindus do not eat or harm living creatures because of the belief in reincarnation - rebirth of the human soul at the time of death. BUDDHISM Life centered on spiritual rather than worldly matters. Seeks nirvana (escape from reincarnation) through charity, modesty, compassion for others, restraint from violence, and general self-control. CONFUCIANISM Earning money violates strict beliefs. Merchants in China distrusted and why many moved their businesses elsewhere. Business in South Korea reflects Confucian thought in its rigid organizational structure and reverence for authority. JUDAISM Key holidays: Rosh Hashanah (Jewish New Year); Yon Kippur (Day of Atonement); Passover (Exodus from Egypt) and Hanukkah (ancient victory over Syrians. Work schedules adjusted for these holidays and Sabbath (from sundown Friday to sundown Saturday). Fully observant Jews eat only kosher foods (food that adheres to Jewish law) and do not eat pork or shellfish. SHINTO Native religion of Japan. Teaches sincere and ethical behavior, loyalty and respect toward others and enjoyment of life. Reflects itself in workplace through practice of lifetime employment for workers and high degree of trust between firms and customers, loyal workforces, low employee turnover, and good labor-management cooperation.

14. Language Blunders  Japanese knife manufacturer labeled its exports to the United States with “Caution: Blade extremely sharp! Keep out of children.”  English sign in a Moscow hotel read, “You are welcome to visit the cemetery where famous Russians are buried daily, except Thursday.”  Sign for non-Japanese-speaking guests in a Tokyo hotel read, “You are respectfully requested to take advantage of the chambermaids.”  Sign in English at Copenhagen ticket office read, “We take your bags and send them in all directions.”  Braniff Airlines’ English-language slogan “Fly in Leather” was translated into “Fly Naked” in Spanish.  Multicultural Mistakes: Selling to Hispanic Customers - Michael Soon Lee - YouTube Multicultural Mistakes: Selling to Hispanic Customers - Michael Soon Lee - YouTube 2 - 14

15. Lingua Franca ¿Hola? Guten Tag? Hello?? Ni Hao? Bonjour? Hello!!! 2 - 15

16. Mixed Signals 2 - 16 http://www.youtube.com/watch?v=fRQSRed58XM&feature=related

17. Education Cultures pass on traditions, customs, and values through schooling, parenting, group memberships, etc. Education level Well-educated attract high-paying jobs, while poorly educated attract low-paying manufacturing jobs Brain drain Departure of highly educated people from one profession, geographic region or nation to another 2 - 17

18. Problem of Illiteracy Source: Based on World Development Indicators, World Bank Web site (www.worldbank.org). 2 - 18

19. Physical and Material Culture These influence a culture’s development and pace of change Topography Physical features characterizing the surface of a geographic region Climate Weather conditions of a geographic region Material Culture Technology used to manufacture goods and provide services 2 - 19

20. Hofstede Framework Geert Hofstede Cultural insights for International Business Geert Hofstede Cultural insights for International Business Geert Hofstede Cultural insights for International Business IndividualismIndividualism PowerdistancePowerdistance Achievement vs. nurturing UncertaintyavoidanceUncertaintyavoidance Long-termorientationLong-termorientation 2 - 20

21. Power Distance & Individualism vs. Collectivism Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p. 82. 2 - 21

22. Power Distance & Uncertainty Avoidance Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p. 84. 2 - 22