Culture, Management Style

and Business Systems.

Course: Global Marketing (MKT 526)

Date of Submission: 22nd November, 2009.

Submitted To:
Abu Sayeed Talukder
Professor, Department of Marketing
University of Dhaka.

Accomplished By:
Md. Ehsanul Haque
ID No.: 40713052
EMBA, 13th Batch
Department of Marketing

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University of Dhaka

Preamble

This essay is prepared as the “Term Paper” for the course “Global Marketing (MKT 526)”.It is
based on the “Chapter-5” of the Book “International Marketing” by “Philip R. Cateora and
John L. Graham”. The topic of the paper “Culture, Management Style and Business Systems”
is the heading of the chapter and the objective was to depict the contents of the chapter briefly
and according to my understanding. There was no lack of effort from my part to make the
study an impeccable and significant one.

I would like to pay gratitude to our honorable course teacher Mr. Abu Sayed Talukder,
Professor, Department of Marketing, University of Dhaka, for giving me the opportunity and
required guideline to pursue such an interesting study. A special thanks to all of my
classmates for the inspiration, suggestion and help they provided throughout the process.

……………………..............
Md. Ehsanul Haque
ID No.: 40713052
EMBA, 13th Batch
Department of Marketing
University of Dhaka

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Learning Objectives
Culture, with all its elements, profoundly affects management style and overall business
systems. That is why we found different management style and business systems around the
world. A lack of empathy for and knowledge of foreign business practices can create
insurmountable barriers to successful business relations. This is why the essay is concentrated
to this varying aspect of international business. Here we will proceed topic by topic with the
following leaning objectives:
 The necessity for adapting to cultural differences.
 How and why management styles vary around the world.
 The extent and implications of gender bias in other countries.
 The importance of cultural differences in business ethics.
 The differences between relationship-oriented and information-oriented cultures.

Required Adaptation
Adaptation is a key concept in international marketing. Adaptation, at least accommodation, is
required on small matters as well as large ones. As a guide to adaptation, all who wish to deal
with individuals, firms, or authorities in foreign countries should be able to meet 10 basic
criteria:
- 1) open tolerance
- 2) flexibility
- 3) humility
- 4) justice/fairness
- 5) ability to adjust to varying tempos
- 6) curiosity/interest
- 7) knowledge of the country
- 8) liking for others
- 9) ability to command respect
- 10) ability to integrate oneself into the environment

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Degree of Adaptation
Adaptation does not require business executives to forsake their ways and change to local
customs; rather, executives must be aware of local custom and be willing to accommodate to
those differences that can cause misunderstanding. Essential to effective adaptation is
awareness of one’s own culture and the recognition that differences in others can cause
anxiety, frustration, and misunderstanding of the host’s intentions. The self-reference criterion
(SRC) is especially operative in business customs. The key to adaptation is to remain
Bangladeshi but to develop an understanding of and willingness to accommodate the
differences that exist.

Cultural Imperatives, Electives and Exclusives

Business customs can be grouped into three categories- Imperatives, Electives and Exclusives.
An international marketer must appreciate the nuances of these three.

Cultural Imperatives are the business customs and expectations that must be met and
conformed to or avoided if relationships are to be successful. Successful businesspeople know
the Chinese word guanxi, the Japanese ningen kankei, or the Latin American compadre. All
refer to friendship, human relations or attaining a level of trust. Establishing friendship is an
imperative in many cultures. If friendship is not established, the marketer risks not earning
trust and acceptance. But the significance of establishing friendship cannot be
overemphasized, especially in those countries where family relationships are close.

In some cultures a person’s demeanor is more critical than in other cultures. But the more
critical thing is what may be an imperative to avoid in one culture is an imperative to do in
another.

Cultural electives relate to areas of behavior or to customs that cultural aliens may wish to
conform to or participate in but that are not required. A symbolic attempt to participate in
such customs is not only acceptable but also may help to establish rapport.

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The majority of customs fit into the elective category. But one should remain conscious about
that a cultural elective in one county may be an imperative in another.
.
Cultural exclusives are those customs or behavior patterns reserved exclusively for the locals
and from which the foreigner is barred. A foreigner must carefully refrain from participating
in the exclusives. Luckily there are not many imperatives or exclusives. But most offensive
behavior results from not recognizing them.

The Impact of Bangladeshi Culture on Management Style

We, the Bangladeshi, have a distinct cultural background and used to follow some unique
customs. These have left some impact on our Management Style and Business Systems. To
me the impacts are as follows:
 Independent enterprise as the instrument of social action.
 Personnel selection and reward based on merit; sometimes based on seniority.
 Decisions based on subjective analysis.
 Narrow sharing in decision making.
 Virtually no quest for improvement.
 Competition producing efficiency; sometimes no competition in case of monopoly or
oligopoly market.

Management Style around the World

Because of diverse structure, management values and behaviors encountered in international
business, there is considerable variation in the ways business is conducted. Here we will use
two dimensions of Hofstede’s cultural values, the Individualism/Collectivism Index (IDV)
and Power Distance Index (PDI), in examining methods of doing business cross culturally.

Authority and Decision Making

In high PDI Countries (e.g. Mexico, Malaysia) understanding the rank and status of clients
and business partners is much more important than in low PDI countries (e.g. Denmark,

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Israel). The challenge to identify the individual with authority is crucial for an international
marketer. The following three authority patterns typically exist around the world:
 Top-level management decisions.
 Decentralized decisions.
 Committee or group decisions.

Top-level management decision making is generally found in those situations where family
or close ownership gives absolute control to owners and where business are small enough to
make such centralized decision making possible. This is also true for government-owned
companies where professional managers must follow decisions made by politicians.

Decentralized decision is generally found in large business corporations where highly

developed management system is available and going with centralized system is impossible.
Committee or group decisions are made on consensus. It is more common in Asian cultures
where emphasis on harmony and collectivism persists.

Management Objectives and Aspirations

The training and background of managers significantly affect their personal and business
outlooks. In dealing with foreign business, a marketer must be aware of the varying objectives
and aspirations of management.

Personal security and Job mobility are the basic factors of human motivation and therefore
have widespread economic and social implications. The meaning of security is ambiguous. To
some it is a big paycheck, to some it is adequate retirement plans and other welfare benefits.
The concept of mobility also varies. Some people want lifetime positions with their company,
others prefer moving company to company within the business hierarchy.

Personal life takes priority over profit, security, or any other goal in many cultures. On the
contrary, to the Japanese, personal life is company life. The even may find themselves

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“working in a dream”. Affiliation with a large company and social acceptance by neighbors
and fellow workers appears to be a predominant goal within business in many countries.

Power and achievement is an important motivating factor to managers throughout the world.
In some countries (e.g. South American) business leaders are not only profit oriented but also
wants to become social and political leaders.

Communication Styles
Although the basic forms of business communication is similar throughout the world, the
symbolic meanings of time, space, things, friendships and agreements varies across cultures.

Face-to-face communication or verbal communication is explicit but much business

communication depends on implicit messages that are not verbalized. So managers must
remain conscious to reveal the unspoken attitudes and information.

Edward Hall, an anthropologist, found messages are explicit and carry most of the
information in some cultures. But in some cultures the contextual part rather than the message
contains the most. He places 11 cultures along a high context/low context continuum.

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Internet communications or e-mail usage and web surfing rate by business personnel are
affected by cultures. Businesspeople in high-context cultures do not use the medium to the
same extent as those in low-context cultures.
During development of a company’s website, language consideration should be at the top.
Because nothing about the Web will change the extent to which people identify with their
own language and cultures. Country-specific Web sites can be a good solution in this
scenario. Besides Web site should be examined for any symbols, icons, colors and other
nonverbal impressions that could convey and unwanted message.

Formality and tempo

Formality and tempo varies widely across the cultures. Calling by first name is restricted only
for close people and prohibited for lower rank people in many culture (e.g. Germany). Casual
manners are the symbol of rank showing to the French and to Americans’ to downplay it.
Again Arabs take prolonged negotiation to take any decision and do not like to be rushed.

P-Time versus M-Time

Monochronic time or M-time cultures tend to concentrate on one thing at a time. They
divide time into small units and are concerned with promptness. Most low-context cultures
operate on M-Time

Polychronic time or P-time is more dominant in high-context cultures. It is characterized by

the simultaneous occurrence of many things and by a great involvement with people. It allows
for relationships to build and context to be absorbed as parts of high-context cultures.
Most cultures offer a mix of P-time and M-time behavior, but have a tendency to be either
more P-time or M-time in regard to the role time plays. As global markets expand more
businesspeople from P-time cultures are adapting to M-time.

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Negotiations Emphasis
Business negotiations are perhaps the most fundamental business rituals. The basic elements
of business negotiations are the same in any country. They relate to the product, its price and
terms, services associated with the product, and finally, friendship between vendors and
customers. One standard rule in negotiating is “know thyself” first, and second, “know your
counterpart.”

Gender Bias in International Business

Women represent only 18% of the employees who are chosen for international assignments
even in America. And in many cultures women are not typically found in upper levels of
management, and men and women are treated very differently (e.g. Asia, Middle East, Latin
America).

Business Ethics
The ethical standard or what is right are not clearly defined and creates problem even for
domestic marketer. It is infinitely more complex in the international marketplace because
value judgments differ widely among culturally diverse groups.

Corruption Defined
The meaning of Corruption varies considerably around the world. In communist countries
Profits can be seen as a corruption. To Japanese Individualism is a corruption. Rampant
Consumerism is considered as corruption in India. Many sub-Saharan counties see intellectual
property laws as a kind of exploitation that prevents treatment of AIDS for millions. In
Southeast Asia, during financial crisis, currency speculators decried as the worst kind of
corruption.

The Western Focus on Bribery

In 1970s, bribery became a national issue with public disclosure of political payoffs to foreign
recipients by U.S. firms. The decision to pay a bribe creates a major conflict between what is
ethical and proper and what is profitable and sometimes necessary for business. At that time

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many executives were faced with charges of violating SEC(Securities and Exchange
Commission).

The US advocacy of global anti-bribery laws has led to an accord by the member nations of
the OECD (Organization for Economic Cooperation and Development) to force their
companies to follow rules similar to those bind US firms. An international organization, TI
(Transparency International) pursues a survey every year to rank various countries corruption
level based on CPI (Corruption Perception Index). Its objective is to encourage government to
establish and enforce effective anticorruption laws and policies.

Transparency International Corruption Perception Index

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Bribery: Variations on a Theme
The forms of bribery may vary across cultures. But we can generalize them in the following
manner:
Bribery is the voluntary offered payment by someone seeking unlawful advantage.
Extortion is the payments that are extracted under duress by someone in authority from a
person seeking only what he are she is lawfully entitled to that.
Lubrication involves a relatively small sum of cash, a gift, or a service given to a low-
ranking official in a country where such offerings are not prohibited by law.
Subornation involves giving large sums of money, frequently not properly accounted for,
and designed to entice an official to commit an illegal act on behalf of the one offering the
bribe.
Agent’s Fees is relevant when a businessperson is uncertain of a country’s rules and
regulations. An agent may be hired to represent the company in that country and a part of the
agent fees may be used in bribery.

Ethical and Socially Responsible Decisions

Generally laws are the markers of past behavior that society has deemed unethical or socially
irresponsible. In normal business operations, difficulties arise in making decisions,
establishing policies, and engaging in business operations in five broad areas:
 Employment practices and policies
 Consumer protection
 Environmental protection
 Political payments and involvement in political affairs of the country
 Basic human rights and fundamental freedoms

Three ethical principles to help the marketer distinguish between right and wrong, determine
what ought to be done, and properly justify his or her actions:
1. Utilitarian Ethics: Does the action optimize the “common good” or benefits of all
constituencies? And who are the pertinent constituencies?
2. Rights of the Parties: Does the action respect the rights of the individuals involved?

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3. Justice or Fairness: Does the action respect the canons of justice or fairness to all parties
involved?

Cultural Influence on Strategic Thinking

Culture lefts impact on strategic thinking of mangers throughout the world. According to
Lester Thurow, in USA and UK “individualistic” kind of capitalism persists. And a
“communitarian” form of capitalism is seen in Japan and Germany. in Japan and Germany the
business systems are typified by cooperation among government, management and labor. But
adversarial relationship among labor, management and government are common in UK and
USA. Another kind of capitalism is found in Chinese cultures. Its distinguishing
characteristics are more entrepreneurial approach and an emphasis on guanxi (one’s network
of personal connection).

A Synthesis, Relationship-Oriented vs. Information-Oriented Cultures

Studies are noting a strong relationship between Hall’s high/low context and Hofstede’s
Individualism/Collective and Power Distance indexes. This synthesis can be shown by the
following exhibit.
Information Oriented (IO) Relationship Oriented (RO)
Low context High context
Individualism Collectivism
Low power distance High power distance (including gender)
Bribery less common Bribery more common
Low distance from English High distance from English
Linguistic directness Linguistic indirectness
Monochronic time Polychronic time
Internet Face-to-face
Foreground Background
Competition Reduce transaction costs
e.g.: United States e.g.: Japan
Dimensions of Culture, A Synthesis.

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The pattern displayed is only suggestive, not definitive. Not every culture fits every
dimension of culture in a precise way. But this synthesis of cultural differences allows us to
make useful predictions about unfamiliar cultures in a simple and logical way.

Summary
 Some cultures appear to emphasize the importance of information and competition
while others focus more on relationships and transaction cost reductions.
 Businesspersons working in another country must be sensitive to the business
environment and must be willing to adapt when necessary.
 Understanding the culture you are entering is the only sound basis for planning.
 Business behavior is derived in large part from the basic cultural environment in
which the business operates and, as such, is subject to the extreme diversity
encountered among various cultures and subcultures.
 Environmental considerations significantly affect the attitudes, behavior, and outlook
of foreign businesspeople.
 Varying motivational patterns inevitably affect methods of doing business in different
countries.
 The international trader must be constantly alert and prepared to adapt when
necessary.
 No matter how long in a country, the outsider is not a local; in many countries that
person may always be treated as an outsider.
 One must avoid the critical mistake of assuming that knowledge of one culture will
provide acceptability in another.

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