Understanding Global Business Environments: Cultural Factors & Long-Term Orientation, Slides of Business Management and Analysis

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Globalization

When you are bored, get a hobby, don’t go

global

The fundamentals of business don’t

change, but the environment does.

The Environment from Three Vantage

Points

 Economic

 Legal/Political

 Sociocultural

Characteristics of the Environment

 Economic

 Level of economic development

 Country’s infrastructure

 Availability of resources and markets

 Labor, material, demand for product, ect.

 Exchange rates

Characteristics of the Environment

 Sociocultural

 Cultural factors are the most complex

 They include

 Language

 Religion

 Social Organization

 Levels of Education

 Leadership and Management styles

 Hofstede’s studies on culture and societal

values in 60 countries.

Hofstede’s Leadership Study

 18 year study

 150,000 people

 60 Countries

 Five Dimensions of Leadership, each on a continuum from high to low, based on societal values.

 Individualism, Power Distance, Uncertainty

Avoidance, Masculinity, Time Orientation

Power Distance

 Power distance reflects the extent to which members of a social

system accept the notion that members have different levels of

power.

 High power distance suggests that leaders make decisions

simply because they are the leader (France, Japan, Spain, and

Mexico).

 Low power distance suggests that social system members do

not automatically acknowledge the power of a hierarchy

(Germany, Israel, Ireland, and the United States).

Uncertainty Avoidance

 Low uncertainty avoidance is reflected by people who

accept the unknown and tolerate risk and unconventional behavior (Australia, Canada, and the United States).

 High uncertainty avoidance is characterized by people who want predictable and certain futures (Argentina, Israel, Japan, and Italy).

Time Orientation

 Long-term orientation is characterized by a long-range

perspective coupled with a concern for thrift and weak

expectations for quick returns on investments (Pacific Rim

countries).

 Short-term orientation is characterized by demands for

immediate results and a low propensity to save (Canada and the

United States).

PD ID MA UA LT USA 40 L 91 H 62 H 46 L 29 L Germany 35 L 67 H 66 H 65 M 31 M Japan 54 M 46 M 95 H 92 H 80 H France 68 H 71 H 43 M 86 H 30L Netherlands 38 L 80 H 14 L 53 M 44 M Hong Kong 68 H 25 L 57 H 29 L 96 H Indonesia 78 H 14 L 46 M 48 L 25L West Africa 77 H 20 L 46 M 54 M 16 L Russia 95H 50M 40L 90H 10L China 80H 20L 50M 60*M 118 H

PD = Power Distance; ID = Individualism; MA Masculinity; UA Uncertainty Avoidance; LT = Long-Term Orientation

H = top third, M = medium third, L = bottom third (among 53 countries and regions for the first four dimensions; among 23 countries for the fifth)

Definitions

 Intercultural communication produces stress - flight or

adapt

 Adaptations ( changes over a long time) are called

acculturation or structural coupling.

 Changes in psychological characteristics in response

to environment to achieve a cultural fit.  Physical changes from foods, water, climate, housing bathing etc.  Social changes in language, customs mores

Culture Shock

 Severe negative reactions that may precede

acculturation

 Characteristics

 Losing all signs of social intercourse

 Barrage of new stimuli which are difficult to

interpret-the culture changes

 Constant need for monitroing, loss of

predictability and fatigue

 May occur in both directions