Cultural Dynamics In Assessing Global Markets 2

CULTURAL DIVERSITY

CULTURAL IMPERATIVES , ELECTIVES AND EXCLUSIVES

•

Business customs can be grouped into 1. IMPERATIVES : Customs that must be recognized and accomodated 2. ELECTIVES /ADIAPHORA: Customs to which adaptation is helpful but not necessary 3. EXCLUSIVES : Customs in which an outsider must not participate

CULTURAL IMPERATIVES • •

1. 2. 3. 4. 5.

Significance of establishing friendship In China for example , the outsider is ,at best ,in 5th place in order of importance when deciding with whom to conduct business The order is Family Extended family Neighbours from one’s hometown Former classmates Strangers

CULTURAL IMPERATIVES (examples) • In Japan prolonged eye contact is considered offensive and it is imperative that it be avoided • With Arab and Latin American executives it is important to make strong eye contact or you are seen as being evasive and untrustworthy.

CULTURAL ELECTIVES • Relate to areas of behaviour which are particularly not important but it is permissible to follow the custom in question. • One need not greet another man with a kiss , eat foods that disagree with the digestive system , or drink alcoholic beverages • A symbolic attempt to participate in such options is not only acceptable but also may help to establish rapport

CULTURAL ELECTIVES (examples) • Chinese business negotiations often include banquets at which large quantities of alcohol are consumed in an endless series of toasts . • It is imperative that you participate in the toasts with a raised glass of the offered beverage , but to drink is optional. • Your Arab business associates will offer coffee as part of the important ritual of establishing a level of friendship and trust ; you should accept even if you take a ceremonial sip.

CULTURAL EXCLUSIVES • These are behaviour patterns reserved exclusively for the locals and from which the foreigner is barred. • A foreigner criticizing or joking about a country’s politics and pecularities is considered offensive , even though locals may among themselves criticize such issues. • There is truth in the old adage “I’ll curse my brother , but if you curse him ,you’ll have a fight”.

THEREFORE • Foreign managers need to be perceptive enough to know when they are dealing with an imperative, an elective or an exclusive • Most sensible businesspeople will make allowances for the occasional misstep. • But the fewer you make the smoother the relationship will be.

Dimensions of Culture Power Distance Individualism/collecti vism

Uncertainty Avoidance

Masculinity / Femininity Long-term/ Shortterm Orientation

CULTURAL VALUES ( by Geert Hofstede) • Individualism/ Collective Index (IDV) focuses on self orientation • Power Distance Index (PDI) focuses on authority orientation • Uncertainty Avoidance Index (UAI) focuses on risk orientation • Masculinity/ Femininity Index (MAS) focuses on assertiveness and achievement

INDIVIDUALISM/COLLECTIVISM INDEX

INDIVIDUALISM /COLLECTIVISM INDEX (IDV)

Preference for behaviour that promotes one’s self interest. • Cultures that score high on IDV reflect an “I” mentality and tend to reward and accept individual initiative • Cultures low in individualism reflect a “we” mentality

INDIVIDUALISM /COLLECTIVISM INDEX (IDV)

• Individualism pertains to societies in which the ties between individuals are loose; everyone is expected to look after himself or herself or his or her family • Collectivism, pertains to societies in which people are integrated into strong cohesive groups .

INDIVIDUALISM - COLLECTIVISM • Collectivistic countries – Peru, Costa Rica, Pakistan,India Indonesia, Colombia, Equador, Guatemala • Individualistic countries – USA, Australia, UK, Canada, Netherlands, Italy, France, Sweden....

POWER DISTANCE INDEX

POWER DISTANCE INDEX • Measures the tolerance of social inequality i.e. power inequality between superiors and subordinates within a social system • Cultures with high PDI scores tend to be hierarchical ,with members citing social role, manipulation and inheritance as source of power and social status

POWER DISTANCE INDEX

• High PDI scores indicate a perception of differences between superior and subordinate -a belief that those who hold power are entitled to privileges • Cultures with low PDI scores value equality and consider knowledge and respect as a source of power.

Power Distance and Individualism-Collectivism

Individualism Index

0

Small Power Distance Collectivist

Large Power Distance Collectivist

1

1. Costa Rica

2

2. Korea and Mexico

3

4

Example Countries:

3. Brazil & India 4. Israel and Ireland

6

5. Australia and U.S.A.

Small Power Distance 112 Individualist 10

5

Large Power Distance Individualist 110

Power Distance Index

6. France and Italy

UNCERTAINTY AVOIDANCE INDEX

UNCERTAINTY AVOIDANCE INDEX • Measures the tolerence of uncertainty and ambiguity among members of a society • Cultures with high UAI scores are highly intolerant of ambiguity and tend to be distrustful of new ideas or behaviour • They have a high level of anxiety and stress • They dogmatically stick to historically tested patterns of behaviour

UNCERTAINTY AVOIDANCE INDEX • Those with very high UAI scores accord a high level of authority to rules as a means of avoiding risk. • Cultures scoring low in UAI have a low level of anxiety and stress • They have a willingness to take risk. • They take a more empirical approach to understanding and knowledge whereas those high in UAI seek absolute truth.

MASCULINITY /FEMININITY INDEX

MASCULINITY/FEMININITY INDEX (MAS) • Some cultures allow men and women to take on many different roles , while others make sharp divisions between what men should do and what women should do. • In societies that make a sharp division , men are supposed to have dominant, assertive roles and women more service oriented ,caring roles .

MASCULINITY/FEMININITY INDEX (MAS) • It refers to one’s desire for achievement and entrepreneurial tendencies and the extent to which the dominant values in the society are “masculine” • Assertiveness, the acquisition of money and not caring for others are cultural traits in countries with high MAS scores • Low scoring cultures are associated with equality between the sexes and an emphasis on service, interdependence and people

TIME ORIENTATION P-Time versus M-Time • M-Time or monochronic time , typifies most North Americans , Swiss ,Germans and Scandinavians • These western cultures tend to concentrate on one thing at a time. • They divide time into small units and are concerned with promptness • M – time is used in a linear way and it is experienced as being as almost tangible , in that one saves time ,wastes time, bides time, spends time and loses time. • Most low –context cultures operate on M-time

P-Time versus M-Time • P- Time or Polychronic time , is more dominant in high –context cultures, where the completion of human transaction is emphasised more than holding to schedules. • P-time allows for relationships to build and context to be absorbed as parts of high context cultures.

P-Time versus M-Time • The Americans desire to get straight to the point and get down to business . This is a manifestation of an M-time culture. • The P-time system gives rise to looser time schedules , deeper involvement with individuals and a wait-and-see-whatdevelops attitude.

P-Time versus M-Time

• When business people from M-time and P-time meet , adjustments need to be made for a harmonious relationship. • As global markets expand , however, most business people from P-time cultures are adapting to M-time

CULTURAL SENSITIVITY AND TOLERANCE

• Successful foreign marketing begins with cultural sensitivity- getting attuned to nuances of culture so that a new culture can be viewed objectively , evaluated and appretiated. • Most important step is the recognition that cultures are not right or wrong , better or worse, they are simply different.

Recommended International Business Conduct 1. 2. 3. 4. 5. 6.

Always show respect and listen, don’t be in a hurry Do not feel your way is the best way. Emphasize points of agreement. Don’t embarrass anyone in front of others Know or take someone who knows the culture. Understand that leadership may mean different things to different countries. 7. Don’t lose your temper. 8. Always show respect 9. Eliminate stereotypes. 10.Be sensitive to the difference between low context culture and high context cultures 11.Learn to tolerate a high degree of unpredictability.

EUROPEAN CULTURE

ASIAN CULTURE

INDIAN CULTURE

INDIAN CULTURE

YOUTH CULTURE

Topics covered • High context vs. low context cultures • Elements of culture • Cultural Imperatives, electives and exclusives • Cultural values by Geert Hofstede • Time orientation