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Title: Cross Cultural management


1
Cross Cultural management
Goals and Corporate Missions
  • Seyla Tith, Mba From France

Angkor Khemra University, Chhba Morn City, KSP
April 2011
2
Introduction
  • Brief course description
  • Emphasis on the main core elements of culture in
    general.
  • Basic strategy for managing cultural differences.
  • Case studies in doing business in different
    cultures and doing business in Cambodia.

3
Introduction
  • Learning outcomes
  • On a successful completion of this course,
    students will be able to
  • Understand the importance of culture in business
    and general management.
  • Use basic strategy to manage businesses in
    different countries.
  • Be able to work effectively in a multi-cultural
    working environment.
  • Identify Cambodian business culture.

4
Introduction
  • Assessment
  • Attendance and participations (10)
  • Mid-term exam (20)
  • Quizz and group assignment (10 to 15 pages) (20)
  • Final exam (50)

5
Introduction
  • Lecture schedule
  • Sunday 1 The meanings and Dimensions of Culture
  • Sunday 2 The meanings and Dimensions of Culture
    (2)
  • Sunday 3 Managing Across Cultures
  • Sunday 4 Managing Across Cultures (2)
  • Sunday 5 Case studies and Cambodian
    contextualization
  • Sunday 6 Group presentation

6
Introduction
  • Text and supporting materials
  • Doh P. Jonathan and Luthans Fred, International
    Management Culture, Strategy, and Behavior,
    McGraw-Hill, Seventh edition, 2009, USA.
  • Mead Richard and Andrews G. Tim, International
    Management Culture and Beyond, Wiley, 2009,
    England.
  • Scarborough Jack, The Origins of Cultural
    Differences and their Impact on Management,
    Quorum Books, 1998, USA.

7
Chapter 1 The Meanings and Dimensions of Culture
  • The nature of culture
  • Cultural diversity
  • Values in Culture
  • Hofstedes cultural dimensions
  • Power distance
  • Uncertainty avoidance
  • Individualism
  • Masculinity
  • Intergrating the dimensions

8
Chapter 1 The Meanings and Dimensions of Culture
  • Trompenaarss cultural dimensions
  • Universalism vs. Particularism
  • Individualism vs. Communitarianism
  • Neutral vs. Emotional
  • Specific vs. Diffuse
  • Achievement vs. Ascription
  • Time
  • Environment
  • Cultural patterns or clusters

9
1.1. The Nature of Culture
  • The word  culture  comes from Latin
     cultura , which refers to cult or worship.
  • In management aspect,  culture  means acquired
    knowledge that people use to interpret experience
    and generate social behavior.
  • This knowledge forms values, creates attitudes,
    and influences behavior.

10
1.1. The Nature of Culture
  • Caracteristics of culture
  • Learned
  • Shared
  • Transgenerational
  • Symbolic
  • Patterned
  • Adaptive
  • If international managers do not know something
    about cultures of the countries they deal with,
    the results can be quite disastrous. For example
    Asians name.

11
1.1. The Nature of Culture
  • 1.1.1. Cultural diversity
  • Most importantly, culture affects how people
    think and behave.
  • Therefore, cultural differences have impacts on
    international mamangement.
  • An example of handshake
  • American (firm), Asian (gentle), British (soft),
    French (light and quick), Latin American
    (moderate grasp)
  • Priorities of cultural values are not the same in
    different countries or groups of countries.

12
1.1. The Nature of Culture
  • 1.1.1. Cultural diversity
  • Basic believes and behaviors that can directly
    affect management approaches
  • Centralized vs. Decentralized decision making
  • Safety vs. Risk
  • Individual vs. Group rewards
  • Informal vs. Formal procedures
  • High vs. Low organizational loyalty
  • Cooperation vs. Competition
  • Short-term vs. Long-term horizons
  • Stability vs. innovation

13
1.1. The Nature of Culture
  • 1.1.1. Cultural diversity
  • Case business customs in South Africa
  • Arrange a meeting before discussing business over
    the phone.
  • Appointments should be made as far in advance as
    possible.
  • When introduced, maintain eye contact, shake
    hands, and provide business cards to everyone.
  • Women are highly respected.
  • Make business plans clear.
  • Patience between proposition and answer.
  • Keep presentation short and concise.

14
1.1. The Nature of Culture
  • 1.1.1. Cultural diversity
  • Using graphics to depict cultural diversity
  • Concentric circles

15
1.1. The Nature of Culture
  • 1.1.1. Cultural diversity
  • Using graphics to depict cultural diversity
  • Normal distribution comparing cultures as
    overlapping normal distribution and stereotyping
    from the cultural extremes

16
1.1. The Nature of Culture
  • 1.1.1. Cultural diversity
  • Using graphics to depict cultural diversity
  • The cultural differences are depicted in the
    first graphic. The two curves have only limited
    overlap.
  • In the second graphic, the tail ends of the two
    curves identify the stereotypical views held by
    members of one culture about the other.
  • This stereotype is often exaggerated and helping
    reinforce the differences between the two
    cultures, thus reducing the likelihood of
    achieving cooperation and communication.
  • This is one reason why an understanding of
    national culture is so important in the study of
    cross-cultural management.

17
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Values are basic convictions that people have
    regarding what is right and wrong, good and bad,
    important and unimportant.
  • These values are learned from the culture in
    which the individual is reared, and they help
    direct the persons behavior.
  • Differences in cultural values often result in
    varying management practices.

18
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Value differences and similarities across
    cultures
  • There are both differences and similarities
    between the work values and managerial values of
    different cultural groups.
  • Personal-value questionnaire (PVQ) 66 concepts
    related to business goals, personal goals, ideas
    associated with people and groups of people, and
    ideas about general topics, such as ideology and
    philosophy.

19
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Value differences and similarities across
    cultures
  • The result of the survey found out that Japanese
    managers placed high value on respect to
    superiors and company commitment. Korean managers
    placed high value on personal forcefulness and
    low value on recognition of others. Indian
    managers place high value on the nonaggressive
    pursuit of objectives.

20
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Value differences and similarities across
    cultures
  • However, when they examined the managerial values
    among the U.S., Japanese, Australian, and Indian
    managers, they found that more successful
    managers appear to favor pragmatic, dynamic,
    achievement-oriented values, while less
    successful managers prefer more static and
    passive values.

21
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Values in transition
  • Do value change over time?
  • Normally, personal value systems are relatively
    stable and do not change rapidly.
  • However, changes are taking place in managerial
    values as a result of both culture and
    technology.
  • Example of Japanese managers who work in Japanese
    firms based in the United States.

22
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Values in transition (Example of stateside Jap)
  • Lifetime employment
  • Formal authority
  • Group orientation, cooperation, conformity, and
    compromise
  • Seniority
  • Paternalism
  • Era of personal responsibility at home (in
    Japan) dynamism and revitalization of the
    society.

23
1.1. The Nature of Culture
  • 1.1.2. Values in culture
  • Values in transition What bout Cambodia? Is our
    value changing? If yes, to which direction?
  • A recall on evolutionary theory of Charles
    Darwin, a biological theory which is highly
    applicable to human society.
  • Example of your real life problems and solutions.

24
1.2. Hofstedes Cultural Dimensions
  • Geert Hofstede is a Dutch researcher who tried to
    indentify why people from various cultures behave
    as they do.
  • He introduced 4 main dimensions of any culture
    into his research.
  • 116 000 respondents from over 70 different
    countries around the world. (The largest
    organizationally based study ever conducted.)

25
1.2. Hofstedes Cultural Dimensions
  • Power distance
  • The extent to which less powerful members of
    institutions and organizations accept that power
    is distributed unequally.
  • Countries in which people blindly obey the
    orders of their superiors have high power
    distance. This should be observed at lower levels
    or even upper levels.

26
1.2. Hofstedes Cultural Dimensions
  • Uncertainty avoidance
  • The extent to which people feel threatened by
    ambiguous situations and have created beliefs and
    institutions that try to avoid these.
  • Countries populated with people who do not like
    uncertainty tend to have a high need for security
    and a strong belief in experts and their
    knowledge examples include Germany, Japan, and
    Spain.

27
1.2. Hofstedes Cultural Dimensions
  • Individualism
  • The tendency of people to look after themselves
    and their immediate family only.
  • Collectivism (in contrast to individualism) is
    the tendency of people to belong to groups or
    collectives and to look after each other in
    exchange for loyalty.
  • Hoftstedes findings show that the wealthy
    countries have higher individualism scores and
    poorer countries higher collectivism scores. (GNP
    based wealth)

28
1.2. Hofstedes Cultural Dimensions
  • Masculinity
  • A cultural characteristic in which the dominant
    values in society are success, money, and things.
  • In contrast, femininity is the term used by
    Hofstede to describe a situation in which the
    dominant values in society are caring for others
    and the quality of life.

29
1.2. Hofstedes Cultural Dimensions
  • Integrating the dimensions
  • A description of the four dimensions of culture
    is useful in helping to explain the differences
    between various countries.
  • Hofstedes research has extended beyond this
    focus and shown how countries can be described in
    terms of pairs of dimensions.
  • Pairings and clusters can provide useful
    summaries for international environment.
  • Example of pairing between PDI and UAI

30
1.3. Trompenaarss Cultural Dimensions
  • Another Dutch researcher who also gains a lot of
    attention on his research is Fons Trompenaars.
  • He has conducted a research over a 10-year
    period. Over 15 000 questionnaires were
    administered with managers from 28 countries.
  • Trompenaars derived five relationship
    orientations that address the ways in which
    people deal with each other. He also include
    attitudes towards time and environment.

31
1.3. Trompenaarss Cultural Dimensions
  • Universalism vs. Particularism
  • Universalism is the belief that ideas and
    practices can be applied everywhere in the world
    without modification.
  • Particularism is the belief that circumstances
    dictate how ideas and practices should be applied
    and that something cannot be done the same
    everywhere.

32
1.3. Trompenaarss Cultural Dimensions
  • Individualism vs. Communitarianism
  • Communitarianism refers to people regarding
    themselves as part of a group.
  • Individualism refers to people regarding
    themselves as individuals.

33
1.3. Trompenaarss Cultural Dimensions
  • Neutral vs. Emotional
  • Neutral culture is a culture in which emotions
    are held in check.
  • Emotional culture is a culture in which emotions
    are expressed openly and naturally.

34
1.3. Trompenaarss Cultural Dimensions
  • Specific vs. Diffuse
  • A specific culture is a culture in which
    individuals have a large public space they
    readily share with others and a small private
    space they guard closely and share with only
    close friends and associates.
  • A diffuse culture is one in which public space
    and private space are similar in size and
    individuals guard their public space carefully,
    because entry into public space affords entry
    into private space as well.

35
1.3. Trompenaarss Cultural Dimensions
  • Achievement vs. Ascription
  • Achievement culture is a culture in which people
    are accorded status based on how well they
    perform their functions.
  • Ascription culture is a culture in which status
    is attributed based on who or what a person is.

36
1.3. Trompenaarss Cultural Dimensions
  • Time
  • Sequential people tend to do only one activity
    at a time, keep appointments strictly, and show a
    strong preference for following plans as they are
    laid out and not deviating from them.
  • Synchronous people tend to do more than one
    activity at a time, appointments are approximate
    and may be changed at a moments notice, and
    schedules generally are subordinate to
    relationships.

37
1.3. Trompenaarss Cultural Dimensions
  • Environment
  • Inner-directed what-happens-to-me-is-my-
    own-doing attitude.
  • Outer-directed Sometimes-I-feel-that-I-do-not-hav
    e-enough-control-over-the-directions-my-life-is-ta
    king attitude.
  • Cultural clusters Anglo cluster, Asian cluster,
    Latin American cluster, Latin European cluster,
    Germanic cluster.

38
Chapter 2 Managing Across Cultures
  • The main objectives of the chapter is to
  • Examine the strategic dispositions that
    characterize responses to different cultures.
  • Discuss cross-cultural differences and
    similarities.

39
Chapter 2 Managing Across Cultures
  • The strategy for Managing Across Culgture
  • Strategic predispositions
  • Meeting the challenge
  • Cross-cultural differences and similarities
  • Parochialism and simplification
  • Similarities across cultures

40
2.1. The strategy for managing across cultures
  • As MNCs become more transnational, their
    strategies must address the cultural similarities
    and differences in their varied markets.
  • A good example of Renault, a French auto giant.

41
2.1. The strategy for managing across cultures
  • Strategic predispositions
  • Most MNCs have a cultural strategic
    predisposition toward doing things in a
    particular way.
  • Four distinct predispositions have been
    identified ethnocentric, polycentric,
    regiocentric and geocentric.

42
2.1. The strategy for managing across cultures
  • Ethnocentric
  • Ethnocentric predisposition is a nationalistic
    philosophy of management whereby the values and
    interests of the parent company guide strategic
    decisions.

43
2.1. The strategy for managing across cultures
  • Polycentric
  • Polycentric predisposition is a philosophy of
    management whereby strategic decisions are
    tailored to suit the cultures of the countries
    where the MNC operates.

44
2.1. The strategy for managing across cultures
  • Regiocentric
  • Regiocentric predisposition is a philosophy of
    management whereby the firm tries to blend its
    own interests with those of its subsidiaries on a
    regional basis.

45
2.1. The strategy for managing across cultures
  • Geocentric
  • Geocentric predisposition is a philosophy of
    management whereby the company tries to integrate
    a global systems approach to decision making.

46
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Mission
  • Ethnocentric Profitability
  • Polycentric Public acceptance
  • Regiocentric Both profitability and public
    acceptance
  • Geocentric Both profitability and public
    acceptance

47
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Governance
  • Ethnocentric Top-down
  • Polycentric Bottom-up
  • Regiocentric Mutually negociated between region
    and its subsidiaries
  • Geocentric Mutually negociated at all levels of
    the corporation

48
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Strategy
  • Ethnocentric Global integration
  • Polycentric National responsiveness
  • Regiocentric Regional integration and national
    responsiveness
  • Geocentric Glogal integration and national
    responsiveness

49
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Structure
  • Ethnocentric Hierarchical product divisions
  • Polycentric Hierarchical area divisions, with
    autonomous national units
  • Regiocentric Product and regional organization
    tied through a matrix
  • Geocentric A network of organizations

50
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Culture
  • Ethnocentric Home country
  • Polycentric Host country
  • Regiocentric Regional
  • Geocentric Global

51
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Technology
  • Ethnocentric Mass production
  • Polycentric Batch production
  • Regiocentric Flexible manufacturing
  • Geocentric Flexible manufacturing

52
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Marketing
  • Ethnocentric Product development determined
    primarily by the needs of home country customers
  • Polycentric Local product development based on
    local needs
  • Regiocentric Standardize within region, but not
    across regions
  • Geocentric Global products with local variations

53
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Finance
  • Ethnocentric Repatriation of profits to home
    country
  • Polycentric Retention of profits in host country
  • Regiocentric Redistribution with region
  • Geocentric Redistribution globally

54
2.1. The strategy for managing across cultures
  • Orientation of an MNC under different profiles
  • Personnel practices
  • Ethnocentric People of home country developed
    for key positions everywhere in the world
  • Polycentric People of local nationality
    developed for key positions in their own country
  • Regiocentric Regional people developed for key
    positions anywhere in the region
  • Geocentric Best people everywhere in the world
    developed for key positions everywhere in the
    world

55
2.1. The strategy for managing across cultures
  • Meeting the challenge
  • Despite the need for and tendency of MNCs to
    address regional differentiation issues, many
    MNCs are committed to a globalization imperative.
  • Globalization imperative is a belief that one
    worldwide approach to doing business is the key
    to both efficiency and effectiveness.

56
2.1. The strategy for managing across cultures
  • Meeting the challenge
  • One study, involving extensive examination of 115
    medium and large MNCs and 103 affiliated
    subsidiaries in the United States, Canada,
    France, Germany, Japan, and the United Kingdom,
    found an overwhelming majority used the same
    strategies abroad as at home.

57
2.1. The strategy for managing across cultures
  • Meeting the challenge
  • Despite these tendencies to use home strategies,
    effective MNCs are continuing their efforts to
    address local needs.
  • A number of factors are helping facilitate this
    need to develop unique strategies for different
    cultures, including
  • The diversity of worldwide industry standards
    such as those in broadcasting, where television
    sets must be manufactured on a country-by-country
    basis.

58
2.1. The strategy for managing across cultures
  • A number of factors are helping facilitate this
    need to develop unique strategies for different
    cultures, including
  • A continual demand by local customers for
    differentiated products, as in the case of
    consumer goods that must meet local tastes.
  • The importance of being an insider, as in the
    case of customers who prefer to buy local
    product.
  • The difficulty of managing global organizations,
    as in the case of some local subsidiaries that
    want more decentralization and others that want
    less.

59
2.1. The strategy for managing across cultures
  • A number of factors are helping facilitate this
    need to develop unique strategies for different
    cultures, including
  • The need to allow subsidiaries to use their own
    abilities and talents and not be restrained by
    headquarters, as in the case of local units that
    know how to customize products for their market
    and generate high returns on investment with
    limited production output.

60
2.1. The strategy for managing across cultures
  • By responding to cultural needs of local
    operations and customers, MNCs find that regional
    strategies can be used effectively in capturing
    and maintaining worldwide market niches.

61
2.1. The strategy for managing across cultures
  • Example of the cosmetics marketing which varies
    greatly in consumer use.
  • Germans want advertising that is factual and
    rational they fear being manipulated by the
    hidden persuader. The typical German spot
    features the standard family of two parents, two
    children, and grandmother.
  • The French avoid reasoning or logic. Their
    advertising is predominantly emotional, dramatic,
    and symbolic. Spots are viewed as cultural events
    or art for the sake of money and are reviewed as
    if they were literature or films.

62
2.1. The strategy for managing across cultures
  • Example of the cosmetics marketing which varies
    greatly in consumer use.
  • The British value laughter above all else. The
    typical broad, self-depreciating British
    commercial amuses by mocking both the advertiser
    and consumer.

63
2.1. The strategy for managing across cultures
  • In some cases, however, both the product and the
    marketing message are similar worldwide.
  • This is particularly true for high-end products,
    where the lifestyles and expectations of the
    market niche are similar regardless of the
    country.
  • Example of Heineken beer, Hummer car, and the
    Financial Times. Regardless of geographic locale,
    these products appeal to all the consumer niches
    that are homogeneous.

64
2.1. The strategy for managing across cultures
  • The same is true at the lower end of the market
    for goods that are impulse purchases, novel
    products, or fast food, such as Coca-Colas soft
    drinks, pop music, ice-cream bars, etc.

65
2.1. The strategy for managing across cultures
  • However, it is most necessary to modify products
    as well as the market approach for the regional
    or local market.
  • One analysis noted that the more marketers
    understand about the way in which a particular
    culture tends to view emotion, enjoyment,
    friendship, humor, rules, status, and other
    culturally based behaviors, the more control they
    have over creating marketing messages that will
    be interpreted in the desired way.

66
2.1. The strategy for managing across cultures
  • The need to adjust global strategies for regional
    markets presents three major challenges for most
    MNCs.

67
2.1. The strategy for managing across cultures
  • First, the MNCs must stay abreast of local market
    conditions and sidestep the temptation to assume
    that all markets are basically the same.
  • Second, the MNCs must know the strengths and
    weaknesses of its subsidiaries so that it can
    provide these units with the assistance needed in
    addressing local demands.
  • Third, the MNCs must give the subsidiary more
    autonomy so that it can respond to changes in
    local demands.

68
2.1. The strategy for managing across cultures
  • These are the overall findings of a report that
    looked into the development of customized
    executive education programs.
  • Specifically, there are 10 factors or guidelines
    that successful global firms seem to employ.

69
2.1. The strategy for managing across cultures
  1. See themselves as multinational enterprises and
    are led by a management team that is comfortable
    in the world arena.
  2. Develop integrated and innovative strategies that
    make it difficult and costly for other firms to
    compete.
  3. Aggressively and effectively implement their
    worldwide strategy and back it with large
    investments.
  4. Understand that innovation no longer is confined
    in the US and develop systems for tapping
    innovation abroad.

70
2.1. The strategy for managing across cultures
  1. Operate as if the world were one large market
    rather than a series of individual, small
    markets.
  2. Have organization structures that are designed to
    handle their unique problems and challenges and
    thus provide them the greatest efficiency.
  3. Develop a system that keeps them informed about
    political changes around the world and the
    implications of these changes on the firm.

71
2.1. The strategy for managing across cultures
  1. Have management teams that are international in
    composition and thus better able to respond to
    the various demands of their respective markets.
  2. Allow their outside directors to play an active
    role in the operation of the enterprise.
  3. Are well managed and tend to follow such
    important guidelines as sticking close to the
    customer, have lean organization structures, and
    encouraging autonomy and entrepreneurial activity
    among the personnel.

72
2.2. Cross-Cultural Differences and Similarities
  • The way in which MNCs manage their home
    businesses often should be different from the way
    they manage their overseas operations.
  • Because of this cultural difference, MNCs are
    endangered for drifting toward parochialism and
    simplification, the two things that MNCs must
    avoid.

73
2.2. Cross-Cultural Differences and Similarities
  • Parochialism is the tendency to view the world
    through ones own eyes and perspectives.
  • Simplification is the process of exhibiting the
    same orientation toward different cultural
    groups.
  • Example of a member of the purchasing department
    of a large European oil company who was
    negotiating an order with a Korean supplier.

74
2.2. Cross-Cultural Differences and Similarities
  • To avoid the simplification, we must understand
    the range of variations in cultural orientations.

75
2.2. Cross-Cultural Differences and Similarities
  • What is the nature of people?
  • Good (changeable/unchangeable)
  • A mixture of good and evil
  • Evil (changeable/unchangeable)
  • What is the persons relationship to nature?
  • Dominant
  • In harmony with nature
  • Subjugation

76
2.2. Cross-Cultural Differences and Similarities
  • What is the persons relationship to other
    people?
  • Lineal (hierarchic)
  • Collateral (collectivist)
  • Individualist
  • What is the modality of human activity?
  • Doing
  • Being and becoming
  • Being

77
2.2. Cross-Cultural Differences and Similarities
  • What is the temporal focus of human activity?
  • Future
  • Present
  • Past
  • What is the conception of space?
  • Private
  • Mixed
  • Public

78
2.2. Cross-Cultural Differences and Similarities
  • Similarities across cultures
  • Russians and Americans
  • Koreans and Americans

79
2.2. Cross-Cultural Differences and Similarities
  • Many differences across cultures
  • Netherlands
  • France
  • Germany
  • Britain

80
2.2. Cross-Cultural Differences and Similarities
  • HR management aspect
  • A partially completed contingency Matrix for
    International Human Resource Management
  • Germany
  • Mexico
  • Japan
  • China
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