International Business: Cultural Issues - Term Paper Example

INTERNATIONAL BUSINESS CULTURAL ISSUES (Degree for which this dissertation is being submitted) Submitted in part fulfillment of the Date of Submission International Business- Cultural Issues 1. Introduction Managing people in international setting s requires human resource to address a broader range of functional areas. If requires more involvement in the employee's personal life. The firm should establish different human resource management systems for different geographic locations. It must closely watch the moves made by external constituencies including foreign governments, political and religious groups. A host of other issues relating to employee compensation, health safety, welfare etc, need to be monitored carefully. Employees on international assignments represent valuable assets and hence need to the managed systematically and strategically so that they can easily adapt survive and flourish in diverse culture and environments. 2. Culture Culture is the mix of behaviors, thoughts, beliefs, symbols, and artifacts that are conveyed to people throughout an organization over time. Culture may include a belief about desired employee conduct. Keep communication channels open. Because an organization requires the cooperation of its members for survival, managers should encourage employee communication of its members for survival, managers should encourage employee communication. Committees, conferences and networks can all lay an important role in effective communication in organizations (Yvonne, 2000, p- 119). The study of organizational culture is thus defined as: "A socially inherited body of sanctions and directives which define (he 'proper' and 'improper' ways of behavior" could help to highlight on one hand the complex environment to which one has to adjust; on the other, being assimilated by the individual, it functions part of the super-ego and conditions his tendency to autonomy." (Yvonne, 2000, p- 87) 3. Cultural differences and HRM The important global pressures impacting International business practices in MNCs have grown in number, variety and complexity in recent times- thanks to the changes in information technology, dismantling of tariffs, differentiated labor laws, cultural and language barriers, bargaining practices etc. getting the right people with requisite skills, motivating them to accept the challenges in a foreign locale and extending family support through cultural orientation, language training and education assistance have become truly demanding. Any systematic study of a new geographic market requires a combination of tough mindedness and generosity. The appreciation of another way of life cannot develop when one is defensive about one's own way of life; it is necessary to be secure in one's own convictions and traditions. In additions, generosity is required to appreciate the integrity and value of other ways of life and points of view-to overcome the prejudices that are natural result of the human tendency toward ethnocentricity. When people from other countries like Chinese are haughty, patronizing, or arrogant, home-country ethnocentricity is probably contributing to the problem. Global marketers need to develop an objective standpoint that recognizes diversity and seeks to understand its origins. There are many paths to the same end in life. The successful global marketer knows this and rejoices in life's rich diversity. 4. High and low context cultures In a low-context culture, messages are explicit; word carries most of the information. In a high context culture, less information is contained in the verbal part of the message. Much more information resides in the context of communication, including the background, associations, and basic values of the communicators. In general, high context cultures function with much less legal paperwork than is deemed essential in low context cultures. Japan, Saudi Arabia, and other high context cultures place a great deal of emphasis on a person's value and position or place in the society. In such cultures, a business loan is more likely to be based on who you are than on formal analysis of pro forma financial documents. In China, guanxi or kuan-xie is extremely important. Guanxi is roughly translated as "relationships," which take years to develop. In business and society, guanxi is even more important than laws. Chin-ning Chu quotes, "In china, it does not matter how many laws and how much righteousness are on your side, without Kuan-Xie, you have nothing. Even if you are outside the law and there is no righteous to your position, if you have the right Kuan -Xie and Ho-Tai (backstage), you can do no wrong." (Chin-ning, Chu, 1991. p199) In a low context culture such as the United States, Switzerland or Germany, deals are made much less information about the character, background, and values of the participant. Much more reliance is placed on the words and numbers in the loan application. In a high context culture, a person's word is his or her bond. There is less need to anticipate contingencies and provide for external legal sanctions because the culture emphasizes obligations and trust as important values. In these cultures, shared feelings of obligations and honor take the place of impersonal legal sanctions. This helps explain the importance of long and protracted negotiations that never seems to " get to the point" . Part of the purpose of negotiating for a person from a high context culture is to get to know the potential partner. 5. China China with a population surpassing 1.27 billion is the largest populated country in the world with approximately 15 percent of the World population. This fact alone attracts many marketers," imagine if we just sold one package of X to every individual" is the motivating factor for multinational companies to enter this market. (Warren, 2002 p-150) Traditional western life and Chinese cultural and marketing values Cultural values Classical western Traditional Chinese Nuclear family, self or immediate family Beliefs in competition, challenge, self expression Personnel responsibility, independence Doing one's own thing Resentment of authority Primacy given more to youth and change Control by guilt and conscience Extended family, blood/kinship work group Beliefs in harmony, cooperation, avoiding confrontation Shared responsibility, interdependence Public self and face Respect for authority Age and seniority important, value tradition Control by "shame" and "loss of face" Marketing values Brand segmentation; personal choice and self expression through brand Presenters/ testimonials important but more to draw attention to brands Seeding and diffusion from leading edge Belief in understatement of wealth Environmentalism Popular famous brands; confidence in brand and corporate names Imitations, emulation, use of presenters as role models in ads Rapid adoption of successful brands Display of wealth and status Confidence in technology Source: George fields, Hitaka Katahira, and Jerry Wind, Marketing to the New Asia, New York: Jossey-Bass, 2000 6. Need for cultural training One of the important challenges for mangers is preparing people to be expatriate employees working in China other than their home country. Without this preparation, such employees may not be able to take on and successfully complete an overseas assignment. To survive, cope and succeed, managers generally require training in three areas: the culture, the language and practical day to day matters. The cultural differences could be examined (areas where training is to be offered to expatriate managers) along the following dimensions: 1. Sense of self and space: people in number of cultures prefer to stand close when conversing. Chinese emphasis group cooperation. Bosses often sit together with their employees in the same large room. The heads of some of the biggest Chinese firms ride the public subways to work in the morning so that they can be with their workers. 2. Language: Foreign language skills are the gateway to the cross cultural understanding. Words and gestures mean different things to different people. Although English continues to grow in importance as the language of international travel and business, understanding and speaking the language of China is a valuable asset in understanding China's culture. There is an often repeated maxim: you can buy in your home country language, but you need to learn your customer's language to sell. 3. Dress and appearance: Garments and body decorations vary by culture. Formal dress for business meetings may be essential in some culture but not in others. 4. Food eating habits and perceptual problems: Different cultures may have different ways of preparing and eating foods. Chinese feel it is polite to take a portion of every food served and consider it evidence of satisfaction to belch. 5. Time and time consciousness: The sense of time varies across cultures. Chinese are punctual and expect others to arrive promptly for each meeting. 6. Relationships: Cultures specify human and organizational relationship, as well as by wealth, power and wisdom 7. Values and norms: Material wealth might be the dominant value in some cultures. People are ready to do anything in order to acquire wealth. In other cultures, people may value means as important as ends. Sharing wealth with others may be a way of life in some cultures. Customs regarding gift giving, birth death, marriage, treating elders with respect, showing exemplary manners also differ from culture to culture. 8. Beliefs and attitudes: Religious beliefs and attitudes vary among cultures. Chinese, generally do not liked to be touched, even to shake hands, Westerners should know that Chinese do not like loud, boisterous, or aggressive behavior 9. Mental Processes and Learning: Across cultures, one can always find profound differences in the way people think and learn. Some people emphasize logical thinking and proceed cautiously, weighing pros and cons from various angles. The Chinese languages emphasize learning through word pictures whereas the English prefer to do the same through words. 10. Work habits and practices: the attitude towards work may vary greatly across various cultures. Chinese prefer to meet other in groups. They are more retiring, reticent and shy. They prefer to conclude deals through a third party. Appointments with Chinese take a lot of time. They do not like to conclude anything in a hurry. Patience and persistence are required to strike deals with the Chinese Cultural differences such are these make executive life in China, much more difficult. Sometimes, a small mistake may cost a huge fortune. In their own self interest, organizations must take every precaution to offer requisite training and consultancy assistance to executives to be sent abroad. 7. HOFSTEDE'S CULTURAL TYPOLOGY Organizational anthropologist Geert Hofstede has argued that the cultures of different nations can be compared in terms of four dimensions (Hofstede, p.5) The first, power distance, is the extent to which the les powerful members of a society accept-even expect- that power is to be distributed unequally. The second dimension is a reflection of the degree to which individuals in a society are integrated into groups. In individual cultures, each member of society is primarily concerned with his or her own interest and those of the immediate family. In collectivist cultures, all of society's members are integrated into cohesive in groups. Masculinity, the third dimension, describes a society in which men are expected to be assertive, competitive, and concerned with material success, while women fulfill the role of nurturer and are concerned with issues such as the welfare of children. Femininity, on the other hand, describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behavior. Hofstede notes that the first three dimension, refer to expected social behavior; the fourth dimension is concerned with, "man's search for truth," Uncertainty avoidance is the extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations. Some cultures express strong uncertainty avoidance with aggressive, emotional intolerant behavior; they are characterized by a belief in absolute truth. The manifestation of low uncertainty avoidance is behavior that is more contemplative, relativistic, and tolerant (Warren, 2002 p-79) Hofstede's research convinced him that, although the four dimensions yielded interesting and useful interpretations, they did not provide any insight into possible cultural bases for economic growth. Hofstede was also disturbed by the fact that surveys used in the research had been developed by Western social scientists. Because many economists failed to predict the explosive economic development of Japan and South Korea, Taiwan, Hong Kong and Singapore, Hofstede surmised that some cultural dimension in Asia are eluding the researchers. This methodological problem was remedied by Chinese value survey (CVS) developed by Chinese social scientists. The CVS data supported the first three "social behavior" dimensions of culture identified earlier (i.e., power distance, individualism/collectivism, and masculinity/femininity). Uncertainty avoidance however did not show up in the CVS. Instead the CVS revealed a dimension that has eluded western researchers. Moreover this dimension -which Hofstede calls "Confusion Dynamism"-concerns several aspects of culture that appear to be strongly linked to economic growth. Hofstede explains that these dimensions concern "a society's search for virtue" rather than a search for truth. Persistence (perseverance) is a general tenacity in the pursuit of goal. Ordering relationships by status reflects the presence of societal hierarchies, and observing this order indicates the acceptance of complementary relations. Thrift manifests itself in high saving rates. Finally a sense of shame leads to sensitivity in social contacts. Hofstede notes that these values are widely held within the high performing countries but that the presence of these values by themselves is not sufficient to lead the economic growth. Two other conditions are necessary: the existence of a market and a supportive political context (Warren, 2002 p-80) 8. Cross Cultural Management: First, no organization can be isolated from cultural environment, that is, organization as a social unit must operate within the framework of the larger cultural system prevailing in China. As such, a congruency has to be maintained with the values of total culture. Second, organization may be considered as a subculture within the framework of total broader culture of China. No doubt, every organization develops its own norms and cultural pattern of behavior; these elements are developed within the context of the larger cultural pattern. No part of the system should go against it if both have to succeed. (Buchanan, 1974,p.534) 9. Skills require for the manager Global marketing has played an important - even leading role in influencing the rate of cultural change around the world. This is particularly true of food, but it includes virtually every industry, particularly in communication and consumer products. The internet and global television have changed how and what people learn about products. Although Chinese culture can also affect characteristics of industrial products, it is more important as an influence on the marketing process, particularly in the way business is conducted. Global marketers have learned to rely on people, who know and understand local customs and attitudes for marketing expertise. Even so, many persons doing business in new culture avail themselves of training opportunities to help Avoid potential cross-cultural complications. Global strategic skills: When the managers try to shift their work in China, they will need working knowledge such as: International relationships. Foreign affairs. Global financial market International law Exchange rate movement And they must understand: Chinese economies of scale Work ethics of employees China's government policies (Yvonne, 2000, p- 125) Team Building Skills: The need of work teams increased as a result of the complexity of global operations. These teams work include culturally diverse groups. These kinds of teams have many advantages; one of these advantages is to avoid cultural dominance. (Buchanan, 1974,p.538) Communication Skills: Cross-cultural communication often results in misunderstanding caused by misperception, misinterpretation, and misevaluation. This misunderstanding can be avoided if managers possessed multilingual skills and high levels of cross cultural awareness and sensitivity 10. Conclusion Culture, a society's programming of the mind." has both a pervasive on each national market environment. Global marketers must recognize the influence of culture in all aspects of Chinese life including work habits and consumption of products, before planning their business ventures. Human behavior is a function both of a person's own unique personality and that person's interaction with the collective forces of the particular society or culture in which he or she has lived. A number of concepts can help guide anyone seeking insight into cultural issues. Nations can be classified as high and low context cultures; communication and negotiations styles can differ from country to country. Hofstede's typology and the self reference criterion can provide clues about certain cultural differences and similarities. 11. Recommendations for expatriate mangers Cross culture training techniques 1. Documentary programs: Trainees read about a foreign country's history, culture institutions, geography, and economics. Videotaped presentations are often used. 2. Culture assimilation: Cultural familiarity is achieved through exposure to a series of simulated intercultural incidents, or typical problem situations. This technique has been used to quickly train those who are given short notice of a foreign assignment. 3. Language instruction: Conversational language skills are taught through variety of methods. In most multinational companies, executives learn various languages in a routine way, so they can be useful to the company in case of short term foreign assignments 4. Sensitivity training: Experimental exercises teach awareness of the impact of one's actions on others. 5. Field experience: Firsthand exposure to ethnic subcultures in one's own country or foreign cultures heightens awareness 6. Business basics: This covers negotiating cross culturally working with various types of clients, making presentations etc.( Wald 1993, p-93) References Buchanan, B. (1974). Building organizational commitment: The socialization of managers in work organization. Administrative Science Quarterly, 19, pp.533-46 Chin-ning, Chu, The Asian Mind game, New York: Rawson associates, 1991. p199 George fields, Hitaka Katahira, and Jerry Wind, Marketing to the New Asia, New York: Jossey-Bass, 2000 Hofstede and Bond, The Confucius connection, pp.5-21 Wald S Oden, (1993), A Guide for Global Training, Training and Development, p-93 Warren J Keegan, (2002) Global Marketing Management, patience hall, New Delhi, p67- 150 Yvonne Mc Laughhlin, (2000) Business Management: A Practical guide for Managers, Supervisors and Administrators. Business Information Books. Pp 85-125 Read More