of participation is preferred over mere frequency. A class discussion
requires each contributor to build on what has already been said and add
something new to the discussion. Simply repeating earlier comments or
agreeing with the professor or another student is not a contribution.
You need to add new facts, new issues, or new perspectives to the
discussion. To get full credit in the discussions you are expected to
post an original comments and also respond to one or more comments for
an approximate total of 250 or less words. The discussions can include comments on the topics of week “Differences in Culture” or reflections on videos which I will post to Canvas. You may also use current news information to connect with the topics of the week. The
comments you make should be interesting and informative. Just briefly
agreeing or disagreeing without any commentary is insufficient. Waiting
until the last minute to post a comment without engaging in the
discussion will result in a lower score.Chapter  4  
in Culture
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
T. Kothari
How  Do  Cultural  Differences  
Affect  International  Business?    
Ø Understanding and adapting to the local cultural
is important international companies
Ø cross-cultural literacy – an understanding of how
cultural differences across and within nations can
affect the way in which business is practiced
Øcross-cultural literacy is important for business
Ø A relationship may exist between culture and the
costs of doing business in a country or region
Ø MNEs can be agents of cultural change
Ø McDonald’s
T. Kothari
What  Is  Culture?  
Ø Culture – a system of values and norms that are
shared among a group of people and that when
taken together constitute a design for living
Ø values are abstract ideas about what a group believes
to be good, right, and desirable
Ø norms are the social rules and guidelines that
prescribe appropriate behavior in particular situations
Ø Society – a group of people who share a
common set of values and norms
T. Kothari
What  Are  Values  And  Norms?  
Ø Values provide the context within which a
society’s norms are established and
justified and form the bedrock of a culture
Ø Norms include
Øfolkways – the routine conventions of everyday
Ømores – norms that are seen as central to the
functioning of a society and to its social life
T. Kothari
How  Are  Culture,  Society,    
And  The  Nation-­‐State  Related?  
Ø The relationship between a society and a
nation state is not strictly one-to-one
Ø Nation-states are political creations
Øcan contain one or more cultures
Ø A culture can embrace several nations
T. Kothari
What  Determines  Culture?  
Ø The values and norms of a culture evolve
over time
Ø Determinants include
Øpolitical and economic philosophies
Øsocial structure
T. Kothari
What  Determines  Culture?  
Determinants of Culture
T. Kothari
What  Is  A  Social  Structure?  
Ø Social structure – a society’s basic social
Ø Consider
Øthe degree to which the basic unit of social
organization is the individual, as opposed to
the group
Øthe degree to which a society is stratified into
classes or castes
T. Kothari
How  Are  Individuals    
And  Groups  Different?
Ø A group is an association of two or more
people who have a shared sense of
identity and who interact with each other in
structured ways on the basis of a common
set of expectations about each other’s
Øindividuals are involved in families, work
groups, social groups, recreational groups,
Ø Societies place different values on groups
T. Kothari
How  Are  Individuals    
And  Groups  Different?
Ø In Western societies, there is a focus on the
Ø individual achievement is common
Ø dynamism of the U.S. economy
Ø high level of entrepreneurship
Ø But, creates a lack of company loyalty and
failure to gain company specific knowledge
Ø competition between individuals in a company instead
of than team building
Ø less ability to develop a strong network of contacts
within a firm
T. Kothari
How  Are  Individuals    
And  Groups  Different?
Ø In many Asian societies, the group is the
primary unit of social organization
Ødiscourages job switching between firms
Øencourages lifetime employment systems
Øleads to cooperation in solving business
Ø But, might also suppress individual
creativity and initiative
T. Kothari
What  Is  Social  StratiFication?  
Ø All societies are stratified on a
hierarchical basis into social categories,
or social strata
Ø individuals are born into a particular stratum
Ø Must consider
1. mobility between strata
2. the significance placed on social strata in
business contexts
T. Kothari
What  Is  Social  StratiFication?  
1. Social mobility – the extent to which individuals
can move out of the strata into which they are
Ø caste system – closed system of stratification in
which social position is determined by the family
into which a person is born
Ø change is usually not possible during an
individual’s lifetime
Ø class system – form of open social stratification
Ø position a person has by birth can be changed
through achievement or luck
T. Kothari
What  Is  Social  StratiFication?  
2. The significance attached to social strata
in business contacts
Ø class consciousness – a condition where people
tend to perceive themselves in terms of their
class background, and this shapes their
relationships with others
Ø an antagonistic relationship between
management and labor raises the cost of
production in countries with significant class
T. Kothari
How  Do  Religious  And  
Ethical  Systems  Differ?  
Ø Religion – a system of shared beliefs and
rituals that are concerned with the realm of the
Ø Four religions dominate society
Confucianism is also important in influencing
behavior and culture in many parts of Asia
T. Kothari
How  Do  Religious  And  
Ethical  Systems  Differ?  
World Religions
T. Kothari
How  Do  Religious  And  
Ethical  Systems  Differ?  
Ø Ethical systems – a set of moral
principles, or values, that are used to
guide and shape behavior
Ø Religion and ethics are often closely
Ø ex. Christian or Islamic ethics
T. Kothari
What  Is  Christianity?  
Ø Christianity
Øthe world’s largest religion
Øfound throughout Europe, the Americas, and
other countries settled by Europeans
Øthe Protestant work ethic (Max Weber, 1804)
Øhard work, wealth creation, and frugality is the
driving force of capitalism
T. Kothari
What  Is  Islam?  
Ø Islam
Ø the world’s second largest religion dating to AD 610
Ø there is only one true omnipotent God
Ø an all-embracing way of life that governs one’s being
Ø associated in the Western media with militants,
terrorists, and violent upheavals
Øbut, in fact teaches peace, justice, and tolerance
Ø fundamentalists have gained political power and
blame the West for many social problems
Ø people do not own property, but only act as stewards
for God
Ø supportive of business, but the way business is
practiced is prescribed
T. Kothari
What  Is  Hinduism?  
Ø Hinduism
Øpracticed primarily on the Indian sub-continent
Øfocuses on the importance of achieving
spiritual growth and development, which may
require material and physical self-denial
ØHindus are valued by their spiritual rather than
material achievements
Øpromotion and adding new responsibilities
may not be important, or may be infeasible
due to the employee’s caste
T. Kothari
What  Is  Buddhism?  
Ø Buddhism
Øhas about 350 millions followers
Østresses spiritual growth and the afterlife,
rather than achievement while in this world
Ødoes not emphasize wealth creation
Øentrepreneurial behavior is not stressed
Ødoes not support the caste system, individuals
do have some mobility and can work with
individuals from different classes
T. Kothari
What  Is  Confucianism?  
Ø Confucianism
Øideology practiced mainly in China
Øteaches the importance of attaining personal
salvation through right action
Øhigh morals, ethical conduct, and loyalty to
others are stressed
Øthree key teachings of Confucianism – loyalty,
reciprocal obligations, and honesty – may all
lead to a lowering of the cost of doing
business in Confucian societies
T. Kothari
What  Is  The  Role    
Of  Language  In  Culture?    
Ø Language – the spoken and unspoken
(nonverbal communication such as facial
expressions, personal space, and hand
gestures ) means of communication
Øcountries with more than one language often
have more than one culture
ØCanada, Belgium, Spain
T. Kothari
What  Is  The  Role    
Of  Language  In  Culture?    
Ø Language is one of the defining characteristics
of culture
Ø Chinese is the mother tongue of the largest number of
Ø English is the most widely spoken language in the
Ø English is also becoming the language of international
Ø but, knowledge of the local language is still beneficial,
and in some cases, critical for business success
Ø failing to understand the nonverbal cues of another
culture can lead to communication failure
T. Kothari
What  Is  The  Role    
Of  Education  In  Culture?  
Ø Formal education is the medium through which
individuals learn many of the language,
conceptual, and mathematical skills that are
indispensable in a modern society
Ø important in determining a nation’s competitive
ØJapan’s postwar success can be linked to its
excellent education system
Ø general education levels can be a good index for the
kinds of products that might sell in a country
Øex. impact of literacy rates
T. Kothari
How  Does  Culture    
Impact  The  Workplace?  
Ø Management processes and practices
must be adapted to culturally-determined
work-related values
Ø Geert Hofstede studied culture using
data collected from 1967 to 1973 for
100,000 employees of IBM
Ø Hofstede identified four dimensions that
summarized different cultures
T. Kothari
How  Does  Culture    
Impact  The  Workplace?  
Ø Hofstede’s dimensions of culture:
1. Power distance – how a society deals with the
fact that people are unequal in physical and
intellectual capabilities
2. Individualism versus collectivism – the
relationship between the individual and his
3. Uncertainty avoidance- the extent to which
different cultures socialize their members into
accepting ambiguous situations and tolerating
4. Masculinity versus femininity -the relationship
between gender and work roles
T. Kothari
How  Does  Culture    
Impact  The  Workplace?  
Work-Related Values for 20 Countries
T. Kothari
How  Does  Culture    
Impact  The  Workplace?  
Ø Hofstede later expanded added a fifth
dimension called Confucian dynamism or
long-term orientation
Øcaptures attitudes toward time, persistence,
ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and
ØJapan, Hong Kong, and Thailand scored high on
this dimension
Øthe U.S. and Canada scored low
T. Kothari
Was  Hofstede  Right?  
Ø Hofstede’s work has been criticized for several
Ø made the assumption there is a one-to-one
relationship between culture and the nation-state
Ø study may have been culturally bound
Ø used IBM as sole source of information
Ø culture is not static – it evolves
Ø But, it is a starting point for understanding how
cultures differ, and the implications of those
differences for managers
T. Kothari
Does  Culture  Change?  
Ø Culture evolves over time
Øchanges in value systems can be slow and
painful for a society
Ø Social turmoil – an inevitable outcome of
cultural change
Øas countries become economically stronger,
cultural change is particularly common
Øeconomic progress encourages a shift from
collectivism to individualism
Øglobalization also brings cultural change
T. Kothari
What  Do  Cultural  Differences  
Mean  For  Managers?  
1. It is important to develop cross-cultural literacy
Ø companies that are ill informed about the practices
of another culture are unlikely to succeed in that
Ø To avoid being ill-informed
Ø consider hiring local citizens
Ø transfer executives to foreign locations on a regular
Ø Managers must also guard against
Ø a belief in the superiority of one’s own culture
T. Kothari
What  Do  Cultural  Differences  
Mean  For  Managers?  
2. There is a connection between culture
and national competitive advantage
Ø suggests which countries are likely to
produce the most viable competitors
Ø has implications for the choice of countries
in which to locate production facilities and do
T. Kothari
Good evening everyone,
This week’s lecture is crucial to acknowledge when doing business globally because cultural
differences can impact one’s experience. The opening case for Chapter 4, “Why did Walmart Fail in
Germany” emphasizes the importance of etiquette. Preparation is essential when doing business
globally because every country holds different values and norms. Learning about the country you
are visiting prevents the likelihood of embarrassing yourself or accidentally offending a colleague.
Because Ron Tiarks, the first CEO of Walmart, entered Germany without the comprehensive
knowledge and understanding of their values and lifestyle, Walmart had a challenging time trying
to become successful in Germany. Several mistakes made by Tiarks and the rest of the CEO’s that
took his position after was mainly because of ignorance. To be specific, they failed to understand
the shopping culture and the different legal/institutional framework in Germany. Although
German executives attempted to advise Tiarks, he ignored them and continued to be close-
minded. As a result, Walmart was classified as “American Junk” by German shoppers. Compared
to Americans who consider low-priced items a win-win, Germans value quality and would rather
place their money on worthy products, despite the price. Clearly, culture impacts the workplace. It
is highly important to enlighten yourself with the cultural characteristics of a country to boost
your relationships and potential business success.
Edited by Michaela Manuguid on Feb 20 at 7:14pm

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