International Business Environment

UNIT 2

Cultural & Social Environment

culture is Ways of Living , built up by a group of human beings, which are transmitted from one generation to another. Culture includes both conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next. Geert Hofstede :culture is "the collective programming of the mind that distinguishes the members of one category of people from those of another.

culture is learned, not innate all facets of culture are interrelated because it is shared by the members of a group, culture defines the boundaries between different groups. Culture consists of learned responses to recurring situations.( Taste and preferences for food and drink, for example, represent learned responses that are highly variable from culture to culture ) Preference for color is culturally influenced as well.

Some Definitions
Values

are general beliefs that either define what is right or wrong; or general preferences in a given community. Belief is an organized pattern of knowledge that an individual holds to be true about the world. Attitude is a learned pre-disposition to act or react in a certain way . Behavior is a form of action.

Culture & Its Characteristics

1

Culture is prescriptive. It prescribes the kinds of behavior considered acceptable in the society.

2. Culture is socially shared. Culture, out of necessity, must be based on social interaction and creation. It cannot exist by itself. It must be shared by members of a society, thus acting to reinforce cultures prescriptive nature.

3. Culture facilitates communication. Culture usually imposes common habits of thought and feeling among people. Thus, within a given group culture makes it easier for people to communicate with one another. 4. Culture is learned. Culture is not inherited genetically-it must be learned and acquired. Socialization or enculturation occurs when a person absorbs or learns the culture in which he or she is raised. In contrast, if a person learns the culture of a society other than the one in which he or she was raised, the process of acculturation occurs.

5. Culture is subjective. People in different cultures often have different ideas about the same object. What is acceptable in one culture may not necessarily be so in another.
6. Culture is enduring. Because culture is shared and passed along from generation to generation, it is relatively stable and somewhat permanent. Old habits are hard to break, and people tend to maintain its own heritage in spite of a continuously changing world. (why India and China, despite severe overcrowding, have a great difficulty with birth control)

7. Culture is cumulative. Culture is based on hundreds or even thousands of years of accumulated circumstances. Each generation adds something of its own to the culture before passing the heritage on to the next generation. 8. Culture is dynamic. Culture is passed along from generation to generation, but one should not assume that culture is static and immune to change. Far from being the case, culture is constantly changing-it adapts itself to new situations and new sources of knowledge.

Cultural Dimensions
Meaning

of Time:

Workweek in Middle East Punctuality

Language

of friendship

Dinner Invitation in India :real friendship In china : social gathering USA : dinner is a necessity

Influence of Culture of Consumption

Consumption patterns, living styles, and the priority of needs are all dictated by culture. Culture prescribes the manner in which people satisfy their desires. E.g., consumption of beef. The Chinese eat such things as fish stomachs and birds nest soup, The Japanese eat uncooked seafood, and the Iraqis eat dried, salted locusts as snacks while drinking. The French eat snails. Americans and Europeans use honey

 Food

preparation methods are also dictated by culture preferences. (Asians chicken boiled/broiled rather than fried) Culture also affects what should not be purchased. Muslims do not buy Pork/ do not smoke or drink.

Opportunity

for non alcoholic beverage like Moussy which conforms to religious beliefs of Islam ( 50% sales come from RSA)

Culture & Thinking Process

A country may be classified as either a highcontext culture or a low-context culture. The context of a culture is either high or low in terms of in-depth background information. Refers to how communication is conveyed and perceived.

 North

America and northern Europe (e.g. Germany, Switzerland and Scandinavian countries) are examples of low-context cultures.

messages

are explicit and clear in the sense that actual words are used to convey the main part of information in communication.

 Japan,

France, Spain, Italy, Asia, Africa and the Middle Eastern Arab nations in contrast, are high-context culture. communication may be indirect, and expressive manner in which the message is delivered becomes critical.

the

the

verbal part (i.e. words) does not carry most of the information, much of the information is contained in the non-verbal part of the message to be communicated.

 The

context of communication is high because it includes a great deal of additional information, such as the message senders values, position, background, and associations in the society. the message cannot be understood without its context.

Elements of culture
Language

Verbal

language Non verbal language Manners and costume Social institutions Education Aesthetics Religion

Non-Verbal Communication

Subculture
Because

of differing cultures, worldwide consumer homogeneity does not exist. in consumer groups are everywhere. people who presumably speak the same language may also encounter communication problems.

Differences

Even

A subculture is a distinct and identifiable cultural group that has values in common with the overall society but also has certain characteristics that are unique to it.

Thus, subcultures are groups of people within a larger society. The various subcultures share some basic traits of the wider culture, they also preserve their own customs and lifestyles, making them significantly different from other groups within the larger culture of which they are a part.

Indonesia for instance, has more than 300 ethnic groups, with lifestyles and cultures significantly different.

Many ways to classify subculture-race, demographic, social variables may be used.

Each subcultural group is a part of the larger culture while possessing its own unique cultural, demographic, and consumption characteristics, a marketing question is the language that should be used so as to effectively appeal to a particular subculture eg.,spanish for Hispanics.

Cultural Values
Geert

Hofstede - Studying over 90,000 people in 66 countries, he found that the cultures of the nations studied differed along four primary dimensions business and consumer behavior patterns can be closely linked to these four primary dimensions.

various

Research evidence - four cultural dimensions can be used to classify countries into groups that will respond in a similar way in business and market contexts. The four dimensions are:
1. The Individualism/Collective Index (IDV), which focuses on self-orientation. 2.The Power Distance Index (PDI), which focuses on authority orientation. 3. The Uncertainty Avoidance Index (UAI), which focuses on risk orientation. 4. The Masculinity/Femininity Index (MAS), which focuses on achievement orientation.

1)

Individualism/Collective Index (IDV) : preference of behavior that promotes one self-interest. Cultures that are high in IDV reflect an I mentality and tend to reward and accept individual initiative those low in individualism reflect a we mentality and generally subjugate the individual to the group. Individualism -ties between individuals are loose; everyone is expected to look after himself or herself and his or her immediate family.

2) Power Distance Index (PDI) : measures the tolerance of social inequality, that is, inequality between superiors and subordinates within a social system.

Cultures with high PDI scores tend to be hierarchical, with members citing force, manipulation and inheritance as sources of power. low scores, on the other hand, tend to value equality and cite knowledge and respect as sources of power. cultures with high PDI scores are more apt to have a general distrust of others since power is seen to rest with individuals and is coercive rather than legitimate.

3) Uncertainty Avoidance Index (UAI) : intolerance of ambiguity and uncertainty among members of a society.

Cultures with high UAI scores are highly intolerant of ambiguity, and as a result tend to be distrustful of new ideas or behaviors. Those with very high level of UAI thus accord a high level of authority to rules as a means of avoiding risk.
Cultures scoring low are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks.

4)Masculinity/Femininity (MAS): refers to ones desire for achievement and entrepreneurial tendencies, and the extent to which the dominant values in society are masculine.

Assertiveness, the acquisition of money and not caring for others, and the quality of life or people are all cultural traits in countries with high MAS scores.
Low-scoring cultures are associated with fluid sex roles, equality between the sexes, and an emphasis on service, interdependence, and people. In societies that make a sharp division, men are supposed to have dominant, assertive roles and women more service-oriented, caring roles.

Technological Environment
Relationship

between business and technology exist Galbrath : Technology is systematic application of scientific or other organized knowledge to practical task.

J.K.

Technology

feed itself. Technology makes more technology possible

Social Impact of Technology

Technology reaches people through business High expectation of consumer

System complexity
Social change Technological Phases

Phase

Time period

Activity

Primary skill

Nomadic Agarian Agarian

Untill 1650

Harvest

Manual

1650-1900

Plant and Harvest

Manual

Industrial

1900-1960

Material Good

Manual & Machine

Machine & Intellectual

Service

1960-75

Focused Services

Knowledge

1975-till date

Abstractive Work

Intellectual and Electronic

Technology and Economy

1. Increased Productivity
Technology Productivity

Quality and Quantity

Need to Spend on Research & Development Technology transfer Jobs tend to become more intellectual Problem of techno structure : ESOP

Need for multi professional

Increased regulation & stiff opposition

Rise and decline of product & organization

Insatiable demand of capital

Technology at plant level

Technology and organization structure Resistance to change Problems for importing technology Inability to absorb technology

T.Q.M. / B.P.R.E. / F.M.S.

Fear of risk

Class Exercise
Examine the following comparison of cultural values in Mexico and the United States. Based on your analysis, use the discussion in this chapter on the dimensions and drivers of culture, as well as their management implications, to formulate a policy for marketing automobiles to consumers from each of these countries. What features should you emphasize in cars? What attributes should you emphasize in advertising cars?

 Typical

Values of Mexico Leisure considered essential for full life Money is for enjoying life Long-term orientation Relatively collectivist society Strongly male-dominated society Relationships are strongly valued Subordinates are used to being assigned tasks, not authority

 Typical

Values of the United States Leisure considered a reward for hard work Money is often an end in itself Short-term orientation Strongly individualistic society Men and women are relatively equal Getting the transaction done is more important than building lasting relationships Subordinates prefer higher degree of autonomy