Module 2: Culture and Business/World Economies PDF

National University- Baliwag School of Business and Accountancy MODULE 2: CULTURE AND BUSINESS/ WORLD ECONOMIES BAINBUSX: INTERNATIONAL BUSINESS AND TRADE  LEARNING OUTCOMES At the end of this lesson, the students are expected to: 1. Understand methods for...

National University- Baliwag School of Business and Accountancy MODULE 2: CULTURE AND BUSINESS/ WORLD ECONOMIES BAINBUSX: INTERNATIONAL BUSINESS AND TRADE  LEARNING OUTCOMES At the end of this lesson, the students are expected to: 1. Understand methods for learning about cultural environments; 2. Grasp the major causes of cultural difference and change; 3. Discuss behavioral factors influencing countries’ business practices; 4. Recognize the complexities of cross-cultural information differences, especially communications; 5. Analyze guidelines for cultural adjustment; 6. Grasp the diverse ways that national cultures may evolve. REVIEW THE ROLE OF CULTURE IN INTERNATIONAL BUSINESS CULTURE  CULTURE Culture is sometimes an elusive topic to study. Why?  CULTURE —Refers to learned norms based on the values, attitudes, and beliefs of a group of people. —is an integral part of a nation’s operating environment. CULTURE  CULTURE International business deals not only cross borders, they also cross cultures. Culture profoundly influences how people think, communicate, and behave. It also affects the kinds of transactions they make and the way they negotiate them.  The People Factor Business involves people. International business involves people from different national cultures, which affects every business function—managing a workforce, marketing and transporting output, purchasing supplies, dealing with regulators, and securing funds.  CULTURAL COLLISION When divergent cultures come in contact, cultural collision occurs. In international business, the major problems of cultural collision arise under two conditions: When a company implements practices that are less effective than intended; When a company’s employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors.  Sensitivity and Adjustment A firm doing business in another country must determine which of that nation’s business practices differ from its own and then decide what adjustments, if any, are needed to operate efficiently.  Cultural Awareness Most cultural variables—daily routines and rules, codes of social relations, language, emotive expression, and concepts of luck—are universal. The forms of these variables, however, differ among cultures, and not everyone responds to them in the same way. Every national culture, for instance, features dancing, but types of and participation in dancing vary among and even within cultures. Some cultural differences, such as acceptable attire, are fair obvious; others aren’t. And people in every culture often react to given situations by expecting the same responses they would likely get in their own.  How Cultures Form and Change? Culture is transmitted in various ways—from parent to child, teacher to pupil, social leader to follower, peer to peer.  Sources of Change Both individual and collective values and customs may evolve, however. Examining this evolution explains how a culture comes to accept (or reject) certain business practices—knowledge that is useful to companies attempting to introduce changes there. The important thing here is change, which may result from either choice or imposition.  Sources of Change Change by Choice. - may occur as a reaction to social and economic situations that present people with new alternatives. Change by Imposition. —involves imposing certain elements from an alien culture, such as forced change in laws by an occupying country that, over time, becomes part of the subject culture.  Sources of Change As a rule, contact among countries brings change; this is known as cultural diffusion. When the change results in mixing cultural elements, we have creolization.  LANGUAGE Like national boundaries and geographic obstacles, language limits people’s contact with other cultures. Not surprisingly, when people from different areas speak the same language, culture spreads more easily.  LANGUAGE Commerce is easier among nations that share the same language because there is no need to translate everything. Thus, when people study second languages, they usually choose those most useful in interacting with other countries, especially in the realm of commerce. RELIGION AS A CULTURAL STABILIZER Many strong values are the result of a dominant religion. At the same time, religion has been a cultural stabilizer because centuries of religious influence continue to shape cultural values even in these societies. RELIGION AS A CULTURAL STABILIZER Many of these religions—Buddhism, Christianity, Hinduism, Islam, and Judaism—influence specific beliefs that may affect business, such as inhibiting the sale of certain products or the performance of work at certain times. In fact, religion has an impact on almost every business function. To be viewed legitimately, companies must take religious beliefs into account.  SOCIAL STRATIFICATION Social stratification dictates a person’s class, status, and financial rewards within a culture. In business, this practice may entail ranking members of managerial groups more highly than production group members.  SOCIAL STRATIFICATION Social stratification is determined by: (1) individuals’ achievements and qualifications (2) their affiliation with or membership in certain groups.  MEMBERSHIPS 1. ASCRIBED GROUP MEMBERSHIPS - Determined by birth including sex, family, age, caste, and ethnic, racial, or national origin. 2. ACQUIRED GROUP MEMBERSHIPS - Based on religion, political affiliation, educational status and achievement, and profession. IMPACT OF CULTURE ON NEGOTIATION 1. NEGOTIATING GOAL: Contract or relationship? For deal makers from some cultures, the goal of a business negotiation, first and foremost, is a signed contract between the parties. Other cultures tend to consider that the goal of a negotiation is not a signed contract but rather the creation of a relationship between the two sides. IMPACT OF CULTURE ON NEGOTIATION 2. Negotiating attitude: Win-Lose or Win-Win? Because of differences in culture, personality, or both, business persons appear to approach deal making with one of two basic attitudes: that a negotiation is either a process in which both can gain (win-win) or a struggle in which, of necessity, one side wins and the other side loses (win-lose). IMPACT OF CULTURE ON NEGOTIATION 3. Personal style: Informal or formal? Personal style concerns the way a negotiator talks to others, uses titles, dresses, speaks, and interacts with other persons. Culture strongly influences the personal style of negotiators. IMPACT OF CULTURE ON NEGOTIATION 4. Communication: Direct or indirect? Methods of communication vary among cultures. Some emphasize direct and simple methods of communication; others rely heavily on indirect and complex methods. The latter may use circumlocutions, figurative forms of speech, facial expressions, gestures and other kinds of body language. IMPACT OF CULTURE ON NEGOTIATION 5. Sensitivity to time: High or low? Discussions of national negotiating styles invariably treat a particular culture’s attitudes toward time. It is said that Germans are always punctual, Latins are habitually late, Japanese negotiate slowly, and Americans are quick to make a deal. IMPACT OF CULTURE ON NEGOTIATION 6. Emotionalism: High or low? According to the stereotype, Latin Americans show their emotions at the negotiating table, while the Japanese and many other Asians hide their feelings. Obviously, individual personality plays a role here. There are passive Latins and hot-headed Japanese. Nonetheless, various cultures have different rules as to the appropriateness and form of displaying emotions, and these rules are brought to the negotiating table as well. IMPACT OF CULTURE ON NEGOTIATION 7. Form of agreement: General or specific? Whether a negotiator’s goal is a contract or a relationship, the negotiated transaction in almost all cases will be encapsulated in some sort of written agreement. Cultural factors influence the form of the written agreement that the parties make. IMPACT OF CULTURE ON NEGOTIATION 8. Building an agreement: Bottom up or top down? Related to the form of the agreement is the question of whether negotiating a business deal is an inductive or a deductive process. Does it start from an agreement on general principles and proceed to specific items, or does it begin with an agreement on specifics, such as price, delivery date, and product quality, the sum total of which becomes the contract? IMPACT OF CULTURE ON NEGOTIATION 9. Team organization: One leader or group consensus? In any negotiation, it is important to know how the other side is organized, who has the authority to make commitments, and how decisions are made. Culture is one important factor that affects how executives organize themselves to negotiate a deal. Some cultures emphasize the individual while others stress the group. IMPACT OF CULTURE ON NEGOTIATION 10. Risk taking: High or low? Research supports the conclusion that certain cultures are more risk-averse than others. In deal-making, the negotiators’ cultures can affect the willingness of one side to take risks—to divulge information, try new approaches, and tolerate uncertainties in a proposed course of action. SIX RULES FOR FINDING OUT WHAT’S REALLY GOING ON IN A CULTURE DON’T BE QUIET LOOK ASSUME ASK LISTEN FEEL QUESTION