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This chapter covers:

The significance of culture for business The sociocultural components The significance of religion

Sociocultural Forces

Cultural aspects of technology Trends of formal education

The importance of language

Classes of society and cultural dimensions

Copyright 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Rules of Thumb for Cross Culture Business

Be prepared Slow down Establish trust Understand the importance of language Respect the culture Understand the components of culture

What is Culture?

To cultivate

What is Culture?
Culture The sum total of beliefs (values), rules (norms),
techniques, institutions, and artifacts that characterize human populations. Consists of learned patterns of behavior common to the members of a given society. The unique lifestyle of a particular group of people. Ethnocentricity Considering your culture superior to all others

Living with Other Cultures

First, realize that there are many different cultures. Then, learn the characteristics of those cultures. Spend a lifetime in a country. Undergo an extensive, highly sophisticated training program that covers the main characteristics of a culture.

Culture Affects All Business Functions

Marketing Variation in attitudes and values requires firms to use different marketing mixes P&G Japanese Camay commercials Disneyland Paris

Human Resource Management Evaluation of managers Production and Finance Attitudes toward authority Attitudes toward change

Sociocultural Components

Components of Culture
Aesthetics Attitudes and beliefs Religion Material Culture Education

Language Societal organization Legal characteristics Political structures



Colors, symbols, numbers convey meaning Nike air symbol Architectural styles different Feng shui Musical tastes vary Folklore discloses way of life Cowboys in Chile or Argentina

Music and Folklore

Attitudes and Beliefs

Attitude Toward Time Problem for Americans

Attitudes toward Achievement and Work

Americans always prompt Siestas Perceived to be rudeness Liability in Asian cultures

Directness and drive


American live to work, Germans and Mexicans work to live. Demonstration effect Result of having seen others with desirable goods. Job prestige Disdain for physical labor

Attitudes and Beliefs

Attitude Toward Change

The American firm is accustomed to the rapid acceptance by Americans of something new. Europeans are fond of reminding Americans that they are a young nation lacking traditions.

The more consistent a new idea is with a societys attitudes and experiences, the more quickly it will be adopted.

Responsible for many of the attitudes and beliefs
affecting human behavior. Work Ethic Protestant work ethic Europeans and Americans generally view work as a moral virtue and look unfavorably on the idle. Confucian work ethic In Asian countries, this is the same as Protestant ethic.

Asian Religions

Hinduism Caste system is basis of the social division of labor. Buddhism Jainism Sikhism (Indian) Confucianism

Inseparable from Chinese culture

Taoism Shintoism (Japan)

About 1.3 billion followers This youngest faith is the

second largest after Christianity (2 billion adherents). Founder of Islam is Muhammad Muhammad was not only the prophet of God but also the head of state. In Muslim nations, there is no separation of church and state. Holy Book Koran

Five Pillars of Faith Confession of faith Five daily prayers Giving charity Ramadan fast Pilgrimage to Mecca Jihad holy war Two divisions Sunni and Shiites Conflict gives rise to violent clashes

Religious Population of the World

Insert Figure 6.1

Material Culture
Refers to all human-made
objects Concerned with how people make things and who makes what and why. Technology Mix of usable knowledge that society applies and directs toward attainment of cultural and economic objectives

Material Culture - Technology

Importance to International Enables the firm to obtain
Companies Enables a firm to be competitive in world markets. Can be sold, or be embodied in the companys products. Can give a firm confidence to enter a foreign market.

better than usual conditions for a foreign market investment. Enables a company with only a minority equity position to control a joint venture. Can change the international division of labor. Is causing major firms to form competitive alliances.

Material Culture - Technology

Cultural Aspects of Technology

Appropriate Technology

Includes skills in marketing, finance, and management People not always ready to adapt to changes technology brings

Choose the technology that most closely fits the society using it Can be labor-intensive, intermediate or capitalintensive

Technological Dualism

The side-by-side presence of technologically advanced and technologically primitive production systems.

Bommerang Effect

Technology sold to copanies in another nation used to produce competing goods

Material Culture - Technology

Information Technology Era

By the year 2000 the Internet economy

Already reached $850 billion. Exceeded the size of the automobile and truck and life insurance industries.

Consumption Japanese wide use of automation


Equips a person to take his or her place in adult society Yardsticks Literacy rate Must verify definition used Kinds, quality and enrollment of schools Amount per capita spent on education Vocationally trained groups Study trends

Educational Mix

European business schools patterned on American model because of

Increased competition in the EU Return to Europe of American business school graduates Establishment of American-type schools with American faculties

Trend in less developed countries to emphasize humanities, law and medicine


Brain Drain The emigration of highly educated professionals to industrialized nations Reverse Brain Drain The return of highly educated professionals to their home countries. Korea and Taiwan are luring home engineers and scientists

Womens Education Fall in illiteracy rate Most governments now provide education for both genders Educated women have fewer, healthier, and better educated children Educated women achieve higher labor force participation and wages

Spoken Language
Language is the key to culture, and without it, people find themselves locked out of all but a cultures perimeter Spoken languages demarcate cultures

Switzerland four separate cultures

Many languages can exist in a single country, but one usually serves as communication vehicle
Lingua franca or link language English primary language of business


Must speak the local language Still need translators Use back translations to avoid errors Technical words do not exist in all languages

Usually resort to English

Many cultures avoid saying anything disagreeable

Unspoken Language

Nonverbal communication, such as gestures and body language. Gestures vary tremendously from one region to another Closed doors convey different meanings Office size different in various cultures Conversational distance small in East Gift giving has specific etiquette in each culture

Gift or bribe?

Questionable Payments
Necessary in some countries to obtain action from the government Foreign Corrupt Practices Act prohibits American firms from making questionable payments

Societal Organization
Kinship Extended family Includes blood relatives Associations Social units based on
age, gender, or common interest, not on kinship. Age Manufacturers of consumer goods are well aware of the importance of segmenting a market by age groups. This segmentation often cuts across cultures.

and relatives by marriage. This is a source of employees and business connections. Members responsibility Although the extended family is large, each members feeling of responsibility to it is strong.

Societal Organization
Associations Gender As nations

industrialize, more women enter the job market and assume greater importance in the economy Free association people joined together by a common bond: political, occupational, religious or recreational

Understanding National Culture

Hofstedes Dimensions of Culture Individualism versus Collectivism Large versus Small Power Distance Strong versus Weak Uncertainty Avoidance Masculinity versus Femininity

World Bank Anti-Corruption Program

We believe that an effective anticorruption strategy builds on five key elements: 1. Increasing Political Accountability 2. Strengthening Civil Society Participation 3. Creating a Competitive Private Sector 4. Institutional Restraints on Power 5. Improving Public Sector Management

Source: www.worldbank.org

Business Culture in Brazil

Brazilians conduct business only through personal connections. There must also be an implicit understanding that the business relationship will be long-term. In Brazil, people quickly move to a first-name basis. Do not, however, use first names until you are invited to do so. Maintain steady eye contact at all times; it is considered impolite to break eye contact.

Do not give anything that is obviously expensive. Your generosity will only cause embarrassment or be misinterpreted as a bribe. Avoid giving items in black or purple, since these are the colors of mourning. Moreover, handkerchiefs are also associated with funerals. Brazilians also consider themselves Americans. Consequently, don't use the phrase 'in America' when referring to the United States.

Source: www.executiveplanet.com


The ability to read and write or literacy is a basic skill for people to live and work in todays world. Yet more than 900 million adults are not literate, primarily in developing countries. More than 125 million children who should be in school are not. For this reason, USAID emphasizes programs of support for basic education and places a special emphasis on improving opportunities for girls, women and other underserved and disadvantaged populations.

Source: www.usaid.gov


The FCPA covers all entities and individuals engaging in acts within the territory of the United States in furtherance of the prohibited conduct, and it covers U. S. citizens, resident aliens, entities established under U. S. law, and publicly held corporations, including their officers, directors, employees, shareholders and agents, whether foreign or domestic, that are registered with the SEC as an issuer that participates in corrupt practices in any fashion outside the United States.

Source: www.abanet.org


As of June 2001, Buddhists in Taiwan had registered 4,037 temples, 39 seminaries, five universities, three colleges, four high schools, 45 kindergartens, 30 nurseries, five orphanages, five retirement homes, one center for the mentally retarded, 64 institutions for proselytizing, three hospitals, four clinics, 118 libraries, and 28 publishing houses with 26 publications. There were also around 9,866 Buddhist clergy serving the 5.48 million Buddhists of Taiwan. Source: www.gio.gov.tw

World Illiteracy Rates

Source: www.uis.unesco.org