Social and cultural Environment - International Business

Social and cultural EnvironmentInternational Business

Prepared By

Manu Melwin Joy

Assistant ProfessorIlahia School of Management Studies

Kerala, India.

Phone – 9744551114Mail – [email protected]

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Social and cultural Environment

• The socio-cultural fabricis an importantenvironmental factor thatshould be analysed whileformulating businessstrategies. The cost ofignoring the customs,traditions, taboos, tastesand preferences, etc., ofpeople could be veryhigh.

Elements of culture

• Culture is the sum total

of the societal behavior.

It is simply the totally

life way of people.

Culture Definition

• Knowledge and beliefs - It refers

to a people’s prevailing notions

of reality.

• Ideals – It refer to the societal

norms which define what is

expected.

• Preferences – It refer to society’s

definitions of those things in life

which are attractive or

unattractive as objects of desire.


• The buying andconsumption habits ofthe people, theirlanguage, beliefs andvalues, customs andtraditions, tastes andpreferences, educationare all factors thataffect business.


In Thailand, Helene Curtisswitched to blackshampoo because Thaiwomen felt that it madetheir hair look glossier.Nestle, a Swissmultinational company,today brews more thanforty varieties of instantcoffee to satisfy differentnational tastes.


Even when people of differentcultures use the same basicproduct, the mode ofconsumption, conditions ofuse, purpose of use or theperceptions of the productattributes may vary so muchso that the product attributesmethod of presentation,positioning, or method ofpromoting the product mayhave to be varied to suit thecharacteristics of differentmarkets.


For example, the two mostimportant foreign markets forIndian shrimp are the U.S andJapan. The product attributes forthe success of the product in thesetwo markets differ. In the U.S.market, correct weight andbacteriological factors are moreimportant rather than eye appeal,colour, uniformity of size andarrangement of the shrimp whichare very important in Japan.Similarly, the mode of consumptionof tuna, another seafood exportfrom India, differs between the U.S.and European countries.


The values and beliefsassociated with colourvary significantly betweendifferent cultures. Blue,considered feminine andwarm in Holland isregarded as masculineand cold in Sweden. Greenis a favourite colour in theMuslim world; but inMalaysia, it is associatedwith illness.


White indicates death andmourning in China andKorea; but in somecountries, it expresseshappiness and is thecolour of the weddingdress of the bride. Red is apopular colour in thecommunist countries; butmany African countrieshave a national distastefor red colour.

Hofstede’s Research on National Culture

• Individualism versuscollectivism

• Power distance

• Uncertainty avoidance

• Masculinity versusfemininity

• long-term versus short-term orientation


Individualism versuscollectivism refers towhether a person functionsprimarily as an individual orwithin a group. Inindividualistic societies, tiesamong people are relativelyloose, and each person tendsto focus on his or her ownself-interest. These societiesprefer individualism overgroup conformity.


Power distance describeshow a society deals withthe inequalities in powerthat exist among people.Societies characterized byhigh power distance arerelatively indifferent toinequalities and allowthem to grow over time.There are substantial gapsbetween the powerful andthe weak.


Uncertainty avoidancerefers to the extent towhich people cantolerate risk anduncertainty in their lives.People in societies withhigh uncertaintyavoidance createinstitutions thatminimize risk and ensurefinancial security.


Masculinity versusfemininity refers to asociety’s orientation, basedon traditional male andfemale values. Masculinecultures tend to valuecompetitiveness,assertiveness, ambition, andthe accumulation of wealth.They are characterized bymen and women who areassertive, focused on careerand earning money, and maycare little for others.


long-term versus short-term orientation . Thisdimension denotes thedegree to which peopleand organizations defergratification to achievelong-term success. That is,firms and people incultures with a long-termorientation tend to takethe long view to planningand living. They focus onyears and decades.

High-Context Cultures• Infer information from

message context, rather than from content.

• Prefer indirectness, politeness & ambiguity.

• Convey little information explicitly.

• Rely heavily on nonverbal signs.

• Asian

• Latin American

• Middle Eastern

Low-Context Cultures• Rely more on content

rather than on context.

• Explicitly spell out information.

• Value directness.

• See indirectness as manipulative.

• Value written word more than oral statements.

• European

• Scandinavian

• North American

Some Cultural Scenarios

Japan China

India Mexico

JAPANTo help her American Company establish a presence in Japan, Mrs. Torres wants to hire a local interpreter who can advise her on business customs. Ms. Tomari has superb qualifications on paper, but when Mrs. Torres tries to probe about her experience, Ms. Tomari just says, “I will do my best. I will try very hard.” She never gives details about any of the previous positions she has held. Mrs. Torres begins to wonder if Ms. Tamari's résumé is inflated.

CHINAStan Williams wants to negotiate a joint venturebetween his American firm and a Beijing-basedcompany. He asks Tung-Sen Lee if the Chinesepeople have enough discretionary income to affordhis product. Mr. Lee is silent for a time, and thensays, “Your product is good. People in the Westmust like it.” Stan smiles, pleased that Mr. Leerecognizes the quality of his product, and he leavesa contract for Mr. Lee to sign. Weeks later, Stan stillhasn’t heard anything. If China is going to be soinefficient, he wonders if his company should try todo business there.

INDIAGloria Johnson is proud of her participatorymanagement style. Assigned in Bombay on behalf ofher U.S.-based company, she is careful not to giveorders but to ask for suggestions. But the employeesrarely suggest anything. Even a formal suggestionsystem she established does not work. Worse still,she doesn’t sense the respect and camaraderie thatshe felt at the plant she managed in Texas. Perhapsthe people in India just are not ready for a womanboss.

MEXICOAlan Caldwell is a U.S. sales representative in MexicoCity. He makes appointments with Senõr Lopez andis careful to be on time, but his host is frequentlylate. To save time, Alan tries to get right to business,his host wants to talk about sightseeing and aboutAlan’s family. Even worse, the meetings areinterrupted constantly with phone calls, longconversations with other people, and evencustomers’ children who come into the office. Alan’sfirst report to his home office is very negative. Hehasn’t yet made a sale. Perhaps Mexico just isn’t theright place to do business.

Religion

• The cost of ignoring certainreligious aspects could bevery high, sometimes fatal,in international business.

• When Mac Donalds wasplanning to enter India, onepolitical party stated that itwould oppose the marketingof beef products in thecountry by MNC.

Language

• Differences in the languageare a very importantproblem area in business.,

• Non verbalcommunications createequally difficult problems.

Etiquette

• The ways of meeting andgreeting people,expression of appreciationor disapproval, methods ofshowing respect etc varyquite widely betweencultures.

• Handshake.

In Japan, bowing is the norm in both business and personal settings. Here, Japanese Foreign Minister Yoriko Kawaguchi and a U.S. Trade representative (left) bow to each other before a 2004 meeting

• There are even differences in

one country and some may

consider certain regions more

hospitable and polite; it is

often just a matter of

understanding their traditions.

For example, friends can give three kisses in

certain countries if they meet each other; others

will give one, two and there are even consider

kissing between friends as insulted. There is no

difference between the hospitality and politeness

between these countries; they have just different

etiquettes.

• Most everyone knows the traditional Thai Greeting (the Wang). Thai people put both hands in a prayer position and bow their head a little bit to their hands. They always smile and only use this “Way greeting” to foreigners or elderly persons. This kind of greeting is also used in some other countries in Asia, for example India, the Philippines, Myanmar, China and many others.

• Kissing and shaking hands are the most common greeting gestures between different countries and cultures. Shaking hands is a traditional way of greeting when American people meet someone for the first time.

• American people are friendly people and say “hi” to everyone

they meet, even if they don’t know them. It is more a form of

politeness and they expect you return the same greeting. No

return of greeting is considered to be a form of rudeness. It is

unusual to kiss foreigners and even friends. Cheek kissing is

acceptable but unusual in Northern America.

Cheek kissing is more common in Europe and Latin America.

There are either differences between the countries in these

continents.

• For example in France, Spain, Portugal, Switzerland, Belgium they usually

give one on each cheek

• there are either parts of Belgium, France and Switzerland where they gave

three or even four kisses.

• Cheek kissing is uncommon in Asia, they greet mostly with a bow or they

shake hands. Shaking hands is also the most common form of greeting in

Africa.

• People in Turkey are talkative and welcome almost all visitors

of their country. They invite you at home for a drink or to

spend some time with the family. People of this country are

proud of their country and want to show all the beauties to

every tourist.

• Life in Asia is not easy and they treat every tourist with

respect. It is a part of their culture. You may find some

countries impolite at first sight because you don’t know the

meaning of their traditions.

• For example; Chinese people are noisy when they eat and they

even slurp when they eat noodles.

• People of Europe, America and many other countries of the

world may consider this as impolite but according theChinese

culture, it is a sign they enjoyed the meal. There is no reason to

consider their behavior as less polite than western culture; it is

just different.

• It is more a matter of accepting these differences and you will

find hospitable and polite people in every country and culture

of the world. Discovering the differences in traditions between

countries and cultures is really a wonderful experience and

may help you to see the positive things in every culture.

Education

Social and cultural Environment - International Business