FAKULTI EKONOMI DAN PENGURUSAN

EPPM2033 PERNIAGAAN ANTARABANGSA

TASK 1: CULTURAL ENVIRONMENT OF INTERNATIONAL BUSINESS

LECTURER : ASSOCIATE PROF DR. ZIZAH CHE SENIK

GROUP MEMBER AND MATRIKS NO.:

BUVANA A/P SUBRAMANIAM GA02195

KASTHURI A/P SOTHI GA02207

NOR AZUWA BINTI ABDUL SHUKOR GA02228

SHARIFAH ZURAINI BINTI SYED A. GHANI GA02245

ZALIZAH BINTI JAMARI GA02265

a. Brief information about the selected countries, such as:

i. Location and geography

ii. Population, Ethnicity, Religion

iii. Country main resources

iv. Ethical behavior

v. Business Practices

SAUDI ARABIA GERMANY

i. LOCATION AND GEOGRAPHY

Saudi Arabia in in Asia and 6 times Germany is the second most populous

bigger than Germany. Saudi Arabia is a nation in Europe. Germany is located in

part of the Middle East located between Central Europe, bordering the Baltic Sea

the Red Sea and the Persian Gulf. The and the North Sea, between the

total area of the country is 2,149,690 Netherlands and Poland, to the south of

km2. The country experiences mostly Denmark. Germany covers a total area of

extreme dry desert climate. 357,022 km2 and has temperate and

marine climates.

ii. POPULATION, ETHNICITY, RELIGION

31.5M people living in Saudi Arabia. 81.4M people living in Germany. 16th

41st most populous country in the most populous country in the world.

world. German 91.5%, Turkish 2.4%, Italian

Arab 90%, Afro-Asian 10% 0.7%, Greek 0.4%, Polish 0.4%, other

Islam 100% 4.6%.

Protestant 34%, Roman Catholic

34%, Islam 4%, Unaffiliated or other

28%

iii. COUNTRY MAIN RESOURCES

Saudi Arabia has 20% of the world's oil The key natural resources of Germany

reserves, the fifth-largest natural gas include timber, natural gas, coal, lignite,

reserves and large amounts of timber. uranium, iron ore, arable land,

Overall, the country has about $34.4 construction materials, potash, nickel,

trillion worth of natural resources. salt and copper.

iv. ETHICAL BEHAVIOR

Saudi Arabian society can be described Germany society that all citizens are

as a strongly hierarchical and dependent equal and have the chances to rise in

orientated. This becomes obvious society. These attitudes are depicted by

regarding Saudi Arabian people who the allocation of power within the social

tend to be very deferential towards classes. Germany has a strong middle-

others with a higher age, more power or class which questions unequal power

a higher position. This comes along with distribution. Furthermore the gap

a very indirect style of communication between wealthy and poor in general is

preserving the dignity of the rather small.

communication partner

v. BUSINESS PRACTICES

Knowledge of Saudi etiquette and the It is extremely important to be punctual

personal manner in which they conduct for your meetings! Arriving 15 minutes

their business is imperative for starting early is even well thought of. Do not

any commercial venture in the country. underestimate the time for a car journey

Patterns of rank and status, which can be and if you really have a problem of

based on age and gender for example, timing, tell your contacts in advance.

are strictly observed in all social and Plan meetings from 10 am to 4 pm, and

business situations. Though Saudis tend avoid lunch time (1 pm-3 pm) and Friday

to be comparatively relaxed about afternoons. Avoid giving compliments, it

punctuality they never allow meetings to can often cause embarassment.

encroach on their time of prayer. As In general you will be welcomed and

business in Saudi Arabia is still based on after a few questions about your journey,

personal reference, establishing trust can your contact will get down to business

be the starting point. quite quickly. He will expect informative,

During a business meeting, people use well documented answers to his

body language and eye-contact rather questions. Therefore, it is imperative that

than direct words. During the you prepare your meetings well so that

conversation people make assumptions you have solid arguments. Do not

about what is not said. Particular interrupt. The influence of the hierarchy

emphasis is placed on tone of voice, the is not so strong and the opinion of

use of silence, and facial cues. It is vital specialists invited to attend the meeting

to be aware of these non-verbal aspects will be the determining factor. Avoid all

of communication in any business setting forms of irony. If you are planning to give

in order to avoid misunderstandings. For a presentation which requires the use of

instance, silence is often used for an overhead projector, make sure it is

contemplation and one should not feel available a week before the meeting.

obliged to speak during these periods. First meetings are not very long, 1 hour

maximum. When you get back, do not

forget to thank your contact for his

availability and take advantage to recall

the main points you talked about.

b. Cultural Environment. Based on Geert Hofstedes Intercultural dimensions,

compare and contrast the findings (index) of the cultural differences of your

selected countries.

i. Power Distance

ii. Uncertainty Avoidance

iii. Individualistic vs. Collectivism

iv. Masculinity vs. Feminity

v. Short-term vs. long-term orientation

vi. Indulgence vs. Restraint

SAUDI ARABIA GERMANY

POWER DISTANCE

Saudi Arabia scores high on this Though German society is hierarchically

dimension (score of 95) which means structured, it is a low-power-distance

that people accept a hierarchical order in culture. Germans respect power that is

which everybody has a place and which earned rather than positional power, and

needs no further justification. Hierarchy emphasize hard work and effort

in an organization is seen as reflecting especially in business situations. In

inherent inequalities, centralization is Germany, subordinates are expected to

popular, subordinates expect to be told be consulted. The ideal boss is a

what to do and the ideal boss is a resourceful democrat, privileges and

benevolent autocrat status symbols are frowned upon, and

inequalities should be minimized.

Salaries ranging from the top to the

bottom of the organization are only

narrowly different.

UNCERTAINTY AVOIDANCE
Saudi Arabia scores 80 on this Germany lies between the medium and

dimension and thus has a preference for high levels on the uncertainty avoidance

avoiding uncertainty. Countries exhibiting scale. German society favors stability

high Uncertainty Avoidance maintain and avoids risks, but sometimes value is

rigid codes of belief and behaviour and ambiguous. For example, people cannot

are intolerant of unorthodox behaviour clarify their position if aggression and

and ideas. In these cultures there is an emotions may be ventilated at proper

emotional need for rules (even if the times and places, or they should be

rules never seem to work) time is money, shown all of the time

people have an inner urge to be busy

and work hard, precision and punctuality

are the norm, innovation may be

resisted, security is an important element

in individual motivation.

INDIVIDUALISTIC VS. COLLECTIVISM

Saudi Arabia, with a score of 25 is The German society is a truly

considered a collectivistic society. This is Individualist one (67). Small families with

manifest in a close long-term a focus on the parent-children

commitment to the member 'group', be relationship rather than aunts and uncles

that a family, extended family, or are most common. There is a strong

extended relationships. Loyalty in a belief in the ideal of self-actualization.

collectivist culture is paramount, and Loyalty is based on personal preferences

over-rides most other societal rules and for people as well as a sense of duty and

regulations. The society fosters strong responsibility. This is defined by the

relationships where everyone takes contract between the employer and the

responsibility for fellow members of their employee. Communication is among the

group. In collectivist societies offence most direct in the world following the
leads to shame and loss of face, ideal to be honest, even if it hurts and

employer/employee relationships are by this giving the counterpart a fair

perceived in moral terms (like a family chance to learn from mistakes.

link), hiring and promotion decisions take

account of the employees in-group,

management is the management of

groups.

MASCULINITY VS. FEMINITY

Saudi Arabia scores 60 on this Germany is a masculine society with

dimension and is thus a Masculine assertive and materialistic tendencies.

society. In Masculine countries people Men are supposed to be assertive,

live in order to work, managers are ambitious, and tough. Women are

expected to be decisive and assertive, supposed to be tender and are expected

the emphasis is on equity, competition to take care of relationships. They

and performance and conflicts are attempt to resolve conflicts by fighting

resolved by fighting them out. them out.

SHORT-TERM VS. LONG-TERM ORIENTATION

The normative nature of Saudi Arabian Germany's high score of 83 indicates

society can be seen in its low score of 36 that it is a pragmatic country. In societies

on this dimension. People in such with a pragmatic orientation, people

societies have a strong concern with believe that truth depends very much on

establishing the absolute Truth; they are situation, context and time. They show

normative in their thinking. They exhibit an ability to adapt traditions easily to

great respect for traditions, a relatively changed conditions, a strong propensity

small propensity to save for the future, to save and invest, thriftiness, and

and a focus on achieving quick results. perseverance in achieving results.

 INDULGENCE VS. RESTRAINT

Saudi Arabia's intermediate score of 52 The low score of 40 on this dimension

does not point to a clear preference on indicates that the Germany culture is

this dimension Restrained in nature. Societies with a low

score in this dimension have a tendency

to cynicism and pessimism. Also, in

contrast to Indulgent societies,

Restrained societies do not put much

emphasis on leisure time and control the

gratification of their desires. People with

this orientation have the perception that

their actions are Restrained by social

norms and feel that indulging themselves

is somewhat wrong.

We have discussed eight cultural values (Figure 6.1: A model of culture, Browaeys &

Price, 2011, p. 115) that could affect five management skill areas. Using the

Framework in Figure 1 to guide your completing the assignment:

 SAUDI ARABIA GERMANY

1. Time Focus

slow working process in Saudi Arabia, Germans typified the monochronic

which is taking time for enjoying life. group. people who did one thing at a time,

This is a characteristic of polychronic usually well, and in a planned order

culture. verbal agreement is very

important in Saudi Arabia. This issue

corresponds to high context culture and

from ABC model point of view, this

behaviour is at B-level.

In monochronic cultures time is

perceived as a resource (Time is

money).

2. Time orientation

Cavusgil, et al. (2008) had expressed Germany is a future oriented culture.

their opinions on how Saudi Arabians There is a high emphasis on the future,

perceive their value on time. From that it will be better than the present.

the Saudi Arabians perspective, time is Germans would never consider making or

viewed as elastic, thus people are building something without considering

capable to attend multiple tasks the impact it might have on the future and

simultaneously. They do not mind to the consequences that may occur. These

wait for a long time before take the beliefs allow Germany to have an

action. Managers in Saudi Arabia optimistic culture. To Germans, time is

organizations are flexible in time money, which explains why they place

commitment and take punctuality such importance on punctuality and

as unimportant. However, they rank thinking before one acts.

relationships higher than time

commitment. The managers and

employees prefer to form lifelong

relationships and therefore do not stress

and strictly adhere to clock sand

schedules. The polychronic attributes

shown by the Arabians are highly

contrast with the monochronic attributes

of Americans such as time valued as

resources, time viewed as linear,

managers and employees are stressed

and strictly adhered to schedules and

deadlines, performance measured on

quarterly basis as well as short-term

perspective in business (Cavusgil, et al.,

2008).

3. Power

People in Saudi Arabia accept a Germany using Democratic ideal or

hierarchical culture order in which Equality culture. large middle class, long

everybody has a place and which needs tradition of Mitbestimmung (employee

no further justification. Hierarchy in an co-determination), but respect for

organization is seen as reflecting organizational hierarchy

inherent inequalities, centralization is

popular, subordinates expect to be told

what to do and the ideal boss is a

benevolent autocrat

4. Competition

Competitiveness
Towards a Saudi Arabian The competition culture reflects the way in

Competitiveness. Continue efforts on which firms, consumers and the public

educational reform, including a stronger sector act in given market situations and

push on workforce development. Make are affected by several factors, including

efficient capital provision to the private the legislation and its enforcement,

sector the central goal of financial market conditions and norms and values.

market development of financial market The competition culture is a major

development. Modernize corporate determinant of the actual intensity of

governance and reporting practices, competition in the economy. Firms in

especially in GLCs. Shift the focus of Denmark, Germany and the UK all rank

business regulatory reform from discrete the importance of the six competition

process improvements to improving the strategies in a very similar order

overall regulatory experience. Use FDI

attraction and the promotion of new

business formation to challenge legacy

market structures with little competitive

pressure. Create a comprehensive

cluster development program to drive

deeper competitiveness improvement

and create the structure for economic

diversification. Unleash

entrepreneurship and SME

development. Move from 10 by 10 to a

broader competitiveness strategy

Co-operative / Negotiate

Though the countrys culture is quite Cooperation can be a natural way for

homogeneous, Saudi businesspeople, firms to carry out common tasks and meet
especially those among younger common challenges. For example,

generations, are usually experienced in cooperation can be necessary for small

interacting and doing business with firms who each find it difficult to procure

visitors from other cultures. Until the the necessary resources in order to

discovery of oil, the Kingdom of Saudi implement key strategic activities such as

Arabia produced very little, and the research or common purchasing, or for

primary business activity was trading. firms that produce different components

This merchant culture helped them but must work together to manufacture

become shrewd and highly skilled the finished product. Conversely,

bargainers. However, that does not cooperation and relations with

necessarily mean that they are open- competitors, customers and suppliers can

minded. When negotiating business also lead to reduced competition. This is

here, realize that people may expect clearly the case concerning illegal

things to be done their way. Always activities such as price-fixing and market-

keep in mind that this is an Islamic sharing agreements. In addition,

country. Showing any disrespect for the legitimate forms of cooperation,

religion could have disastrous networking and good collegial relations

consequences. can in certain cases contribute to a

weakening of competition. Competition

can be weakened, for example, if firms

refrain from reporting violations of the

competition law due to tradition and

norms, or if good collegial relations with

competitors impede firms from competing

directly against one anothers areas of

strength, including the firms ongoing

efforts to make production more efficient

 and develop new and better products and

services. Germany, it is the reverse; firms

facing significant competition from foreign

firms have the highest extent of

cooperation and highest assessment of

cooperation.

5. Action

Doing culture in Saudi Arabia that Germany is a doing culture. This

Westerners often fail to appreciate is the emphasis on doing gives Germans a

importance of family ties. Nepotism is desire to be work-oriented and focused on

not a sign of corruption but of a healthy the task at hand. It is common to have a

business structure. After all, why business-meeting end with a decision no

wouldnt you give a responsible position matter where they stand at that point.

in your company to someone you can Germans concentrate on just one thing at

trust, and who can you trust if not a a time and make sure they keep their

member of your family? This policy is commitments.

aided by the fact that many businesses

are built around family units, with senior

positions often being held by senior

family members. The importance of

maintaining a wide network of

connections and contacts can therefore

not be stressed enough.

6. Space

Men and women would not greet each In public, space is less of a physical

other in public if not from the same concept. people bump into each other in

family. This does not apply to the street and push others when queuing;
foreigners. Saudis feel comfortable it is more a concept of the mind. People

standing close to one another when tend not to smile in public with people

together. Even within public, i.e. at the they dont know

mosque, in a queue, shopping, etc

people are a lot more comfortable with

being in close quarters. Expatriates are

not required to fast; however, they must

not eat, drink, smoke, or chew gum in

public.

7. Communication

A high context culture in Saudi Arabia is A low context culture in Germany is one

one in which the communicators assume in which things are fully (though

a great deal of commonality of concisely) spelled out. Things are made

knowledge and views, so that less is explicit, and there is considerable

spelled out explicitly and much more is dependence on what is actually said or

implicit or communicated in indirect ways written

8. Structure

Saudi Arabia is a collectivism country, Germany can be considered as

From birth, children in Saudi Arabia are individualistic with a relatively high

instilled lessons of loyalty and obedience score (67) on the scale of Hofstede

. compared to a Saudi Arabia.

They are taught to retrain their individuali In Germany people stress on personal

ty, emphasize sharing and to maintain a achievements and individual rights.

harmonious group atmosphere. In the Germans expect from each other to fulfil

collectivist society, a high quality life is their own needs. Group work is

defined by family and group important, but everybody has the right of

terms(Weebly, n.d.). Thus before his own opinion an is expected to reflect

proceeding with work, they prefer to those. In an individual country like

establish trust and confidence with Germany people tend to have more loose

others first, they strongly fitting in where relationships than countries where there

they belonged into the group, and they is a collectivism where people have large

focus on a we identity. extended families.

Conclution

Culture undeniably influences business The Geert Hofstede analysis for

and legal environments. This paper Germany shows their emphasis on

highlighted cultural differences that may individualism, masculinity, and

manifest while conducting business in uncertainty avoidance. Power distance

Saudi Arabia. Dr. Hofstede has and long-term orientation are both ranked

recognized that the dimensions do not considerably lower than the others. This

directly predict any phenomena or illustrates Germanys belief in equality

dynamics. Applying them to make sense and opportunity for each citizen, as well

of what happens in the world always has as its ability to change and adapt rapidly.

to take into account other factors as well

as culture - notably national wealth,

history, personalities, and coincidences.

There is no quick fix to understand social

life after taking a dose of Hofstede. But

the dimensions, when well understood,

do allow to predict a little better what is

likely to happen. And they become more

useful as you go from the specific case

to the trend, average, or expectation

(Hofstede, n.d.). This research identified

various aspects of the business and legal

environment in Saudi Arabia that are

consistent with Hofstedes rankings. This

suggests that Hofestedes Model

remains a valuable tool to begin to

understand and appreciate a given

culture.