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Updated on 05/05/2015

BusAd 170: Introduction to International Business

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My BusAd classes: BusAd-101 (Intro to Business),  BusAd-170 (Intro to International Business),  BusAd-178 (Intro to International Finance) 

International Business: Challenges in a Changing World Key Concepts (Pause-to-Reflect) and Chapter-end Review (Part B) Questions

with your questions

Based on the publisher's lecture-notes

Class Textbook

International Business

by

bullet Chapter 1: Business enterprise in the international environment
bullet Chapter 2: Perspectives on globalization (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 3: The economic environment (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 4: The cultural environment (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 5: The political and legal environment (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 6: International trade and regional integration (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 7: Strategy and organization (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 8: Marketing (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 9: Human resource management (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 10: Supply chains (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 11: Finance and accounting (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 12: Innovation and strategy (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 13: Ecological challenges for business and society (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 14: Corporate social responsibility (Pause-to-Reflect, Part B Review Questions)
bullet Chapter 15: Global governance (Pause-to-Reflect, Part B Review Questions)
Chapter 4:
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The cultural environment
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Pause-to-Reflect (Key Concepts)

This item is for class discussion
Who am I? (page 122)

Students should give their own,

We might answer this question by stating our name, and perhaps the country we call home. A Japanese person might answer with the name of the organization he or she works for. How would you answer this question? How does self-identification fit into an overall picture of a person's culture?

individual,
answers to this question, perhaps by writing their responses down on paper. This avoids students simply answering along the lines of the previous speaker. All responses should then be collected and at least some of them read out; there should be variety, which can generate discussion.

Discussion of the second question follows logically. Self-identification indicates the values which are paramount in a person’s culture. If the person identifies above all with his/her company rather than family, it suggests the company is more important (which is often true for Japanese people). If the person identifies him/herself as a Christian or Muslim, then religion is the most important value in his/her life.
 

Diverse societies (page 127)

To what extent is your home-country environment is diverse, in terms of ethnic groupings, different language groups and multiple religions? How have businesses responded to this diversity in terms of employment and consumer products? How would you respond to those who argue that catering for cultural subgroups is socially divisive, and that assimilation to mainstream culture will go further in building social cohesion?

Answers to the three questions depend on the student’s home country, most particularly the first question.

The second question is more straightforward and offers interesting examples. Take the case of Al Jazeera (Strategic Crossroads 4.2), for instance. The Arab world speaks the same language, albeit with different dialects, and generally has the same religion. But that does not make the entire Arab world a culturally monolithic group, as the example of Iraq, with its three broad segments (e.g., Shia, Sunni and Kurdish), clearly shows. The Al Jazeera English channel has focused on the mainstream English-speaking audience, therefore, rather than simply Arab viewers, with its characteristic approach of balanced and diverse perspectives. From a business point of view, it has faced challenges, as the large US cable operators refused to carry it. However, it has been accessible online, and has online subscribers. As a business, it has emerged as one of the most well known Arab brands.

The last question, regarding social cohesion, is likely to produce disagreement. Those that favor cultural pluralism would argue that a degree of subculture identity is beneficial for social cohesion among, for example, immigrant groups. Attempted assimilation is now often criticized as akin to suppression of minority cultures. Rights of minority cultures are recognized in international human rights law, but national governments tend to be concerned about the risks to cohesion and unity within the state.
 

Intercultural communication
(page 129)

Assume that a retailing company from the UK is wishing to set up a store on a green-field site in Poland, with a view to further expansion. What language policy should it adopt, and why? Should it:
Rely essentially on English, assuming that the Polish will speak English, and getting in agency interpreters for specific situations only?
Hire bilingual English-Polish staff, to act as links with suppliers and authorities?
Hire local Polish staff who speak some English and are familiar with how things are done in Poland?

The student could give reasons for adopting any of these three policies.

The first policy is probably the least desirable, and also unrealistic. Agency interpreters brought in for specific transactions move from job to job and will not be familiar with the business background.

The second policy is possibly the best, although there are limited numbers of genuinely bilingual people. To justify hiring them as employees, they would probably need to have functional roles in addition to their linguistic skills.

The third policy is more realistic. Polish people familiar with how things are done are essential to the enterprise. Their English language skills in relation to the business, even if limited, are helpful. A combination of the second and third policies would probably be the best solution.

 

Applying cultural theories
(page 133)

Consider the national cultural environment with which you are most familiar. To what extent do Hofstede's cultural dimensions paint a helpful picture of the national culture? What are the limitations of this, and other, culture theories?

 

The answers to the first two questions depend on the student’s national culture. The third question invites critical discussion. Here are some of the limitations:

  • Hofstede’s theory is based on research which is now dated.

  • The use of dimensions or categories is somewhat artificial – cultures cannot be dissected so cleanly, as each facet is interdependent with the others.

  • Analyzing national cultures according to a theory assumes it is static, when in fact cultures are constantly changing.

  • Conclusions about cultures based on quantifying responses to questionnaires is problematic in the context of data which are essentially more qualitative than quantitative.

Organizational cultures with national roots (page 135)

Link the following characteristics of organizational culture with countries in which they are likely to occur, stating your reasons:
All procedures governed strictly by the rule book.
Open, relaxed communication among employees
     at all levels.
Emphasis on strong corporate identity, reinforced
    with highly visible symbols.
Hierarchical, with detailed job descriptions. 

  • All procedures governed strictly by the rule book. Western individualist cultures, such as the US, would have this characteristic, but mainly in large bureaucratic organizations.

  • Open, relaxed communication among employees of all levels. This characterizes national cultures with low power distance. The Scandinavian countries are examples.

  • Emphasis on strong corporate identity, reinforced with highly visible symbols. More collectivist cultures are likely to have organizations which subsume the individual in a strong corporate identity. Japanese companies are an example. Company rituals reinforce the feeling of identity.

  • Hierarchical, with detailed job descriptions. The job-oriented culture is more likely to be found in the individualist, low-context cultures, such as the US and UK, in which contractual relationships predominate over social relationships. Hierarchies define each position precisely, so that there is continuity in the performance of the tasks even when the people change.

The urban-rural divide (page 142)

Developing economies typically exhibit an urban-rural divide, as salaried work in the cities surges forward, while agricultural employment shrinks, leading to poverty in rural areas. What steps can be taken by governments to bring about more even development?

 

This is a problem in many developing and emerging economies. What governments can do:

  • Encourage businesses to set up in rural areas, both local firms and those from outside the region. Much of the labor in cities is provided by migrant workers from the countryside. If there is work available near to home, this is a viable alternative. A drawback is that roads and other infrastructure are poor in rural areas – hence the next recommendation.

  • Invest in infrastructure such as roads in rural areas.

  • Invest in education and training in rural areas, so that workers from these areas are able to take jobs in other sectors.

Cultural diversity (page 148)

In what ways can business combine business success and social development in minority communities, either indigenous or immigrant?

 

Minority communities often lag behind in economic development and suffer from high unemployment. The high levels of unemployment do not reflect unwillingness to work but few opportunities. Employment in small family businesses, in which the native language is the main medium of communication, is typical in such communities, but these offer few jobs (mainly to the family) and little prospect of moving on to careers in the society.

Businesses which invest in these communities can offer regular salaried employment, training and career development. They will be sensitive to the cultural needs of workers – for example, Muslim workers. In immigrant communities, they can offer language classes at modest expense for both workers and their families – these can be helpful for the business, and also help families to become more able to cope in the new country.

We tend to think of government social programs in connection with helping to build cohesion, but this pause to reflect turns our attention to the role of businesses, which can combine economic with social benefits.
 

Culture and globalization
(page 151)

Weigh up the arguments that cultural differences are fading away against the arguments that cultural differences are still important in a globalized world. Which side in this debate do you feel is more accurate, and why?

 

The globalization argument: As consumer society spreads, lifestyles among the world’s people, especially the new urban middle classes, are converging. Their spending power makes them influential in consumer markets which MNEs are targeting for future growth. The rise of global brands, global products and worldwide distribution networks reinforce the convergence in consumer markets. As lifestyles become similar, national differences and the influence of family background gradually fade away. The rise of the English language globally is indicative of this cultural globalization.

The argument against cultural globalization: Although industrialization and the rise of urban lifestyles are held up as indicative of cultural globalization, in many ways the world is becoming more fragmented in terms of cultural identity. Societal groups in developed, developing and emerging economies assert distinctive cultures from a variety of perspectives – ethnic, religious, immigrant and indigenous groups are among them. Separatist groups and movements proliferate, claiming to represent the legitimate aspirations of their members. A new assertiveness of cultural identity could be seen as a reaction against perceived threats from globalization. MNEs in consumer markets, which offer distinctive products, brands and marketing communications designed for local markets, are indicative of the cultural diversity which persists.
 

 

 

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Part B review questions (page 152)

  1. Global companies and brands can claim considerable success in diverse markets. Is national culture becoming more, or less, important in the international environment, in terms of markets for consumer products?


    First define what is meant by ‘national culture’, noting that this term, used by Hofstede, can be misleading. In most countries, there is a mixture of differing cultures, often based on regions or language groups. The entirely homogeneous national culture is unusual – Japan is sometimes pointed to, but even here, there is a Korean minority which is culturally different, as well as indigenous peoples. The large emerging markets, China and India, are home to numerous different cultures and cultural identities (students will be aware of the ‘free Tibet’ activists).

    Although global companies and brands can claim success, the success is often based on adapting products to national markets. Therefore, national culture remains important, but its influence varies according to the product: in food and

    media content, which are culturally sensitive, national markets matter more than in markets for TVs, for example.

     

  2. The polycentric company would seem to be better adapted to international expansion than the ethnocentric one, yet most of the world’s largest companies seem to be ethnocentric. How do you explain this apparent inconsistency?

    Start by defining each of these categories, and giving some examples. There are large MNEs which are polycentric, such as Nestlé of Switzerland, but the ones which come to mind are the likes of Coca-Cola, Microsoft, Ford and Toyota.

    Possible reasons:

  • The company with a strong corporate culture which is associated with a strong national culture (as well as strong economy) is in an advantageous position to launch international expansion.

  • The ethnocentric company may take a variety of approaches. Some stay at home, content with operating within the culture they are familiar with.

  • Some ethnocentric companies have a kind of missionary zeal, convinced that they are the best at what they do, and wish to prove it by conquering other markets, or even the world! It is not surprising that the ethnocentric company is sometimes accused of arrogance.

  1. Which organizations with distinctive cultures have featured in this chapter? Has their culture been a benefit or a drawback in terms of achieving organizational goals?

  • Chugai of Japan – corporate culture was probably a drawback, and the takeover had to be managed sensitively.

  • Citigroup – corporate culture was probably a drawback; the CEO admitted the company was too US-centric.

  • Al Jazeera – distinctive culture of the firm was a benefit, aiding expansion and building the brand.

  • B&Q – corporate culture was probably a benefit. B&Q was formed in the UK, but managers have adapted to local conditions as it has expanded internationally. It has built up relations with local suppliers, installers and authorities.

  • Home Depot – corporate culture was originally entrepreneurial, but became more cautious and planning-oriented under Nardelli. The culture, which was also US-centric, was a drawback for expanding in China.

  1. Give advice to a Western business hoping to enter a joint venture with an Asian partner in an Asian country. Advise on negotiating the terms of the agreement, management arrangements and day-to-day decision-making.

    First, the firm must do research on possible partners (recall the example of Roche). Negotiating must emphasize relationships rather than contractual terms; it must not be rushed, and time spent getting to know the people on the other side is well spent. Although the Western business would be tempted to introduce its own management system, this is probably too radical a shift for the local staff (recall Citigroup). Management arrangements should combine local practices with Western principles.

    Day-to-day decision-making is often best left to the local partner, within the broad strategy agreed when the joint venture company was set up. Trust between the partners, and willingness to let the new ‘offspring’ evolve its own way of doing things, can help the project to succeed, although partners sometimes wish to keep a tight rein on the new business.

 

 

BusAd 170
Chapter Review:
Chapter 1 Chapter   2 Chapter   3 Chapter   4 Chapter   5 Chapter   6 Chapter   7 Chapter 8
Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15  

 

Updated on 05/05/2015