The International Business Environment characteristics: Greater difficulties and risks when performing management functions - due to differences in culture, language, economies, laws, political stability, etc.
Characteristics of a culture
Culture is: pervasive, shaped and shared set of beliefs, norms, values and symbols that are guiding our life.
-cultural norms determine behaviors
-values help us judge the nature of things
-beliefs define truth
-…is pervasive in societies
-ETHICS are being part of it
-must be shared to exist
-not all aspects are observable
-only the insiders can understand some aspects of it
-who questions culture becomes an outsider
(managers must know about important features of the culture that they work in)
Culture: -material, technology, economics, social institutions
-social institutions- organizations (church), educational (schools), political (parties, gov)
-system of beliefs on nature of the world (genesis, universe, religion)
-Aesthetics- arts, folklore, music, drama, dance
-Language- most precise: Swiss, German, Scandinavian, least: Japanese, Arabian, Latinoamerican (English is in between- official business language of the world)
Language: Linguistics- meaning of words, Proxemics- psychological distance, Pragmatics- cultural interpretation of words, Nonverbals- gestures, body language, personal space etc.
Culture IS: learnt, shared, transgenerational (cumulative), symbolic, structured, adaptive.
Language division on: time, space, material, friendship, agreements- LANGUAGE IS SHAPED BY CULTURAL VALUES AND FOCI.
Main values of job: USA- freedom, independence, Japan- belonging, group harmony, Arabia- family security.
Management schizophrenia- not being able to adapt to the culture
Increase of using foreign workforce
Organizational culture (defined by Edgar Schine) describes the set of beliefs, expectations, values, norms, and work routines that influence how members of an organization relate to each other and work together to achieve organizational goals. A strong organizational culture exists when members share commitment to an organization’s cultural values, beliefs, and routines, and use them to achieve their goals. Alltogethernow.
Attraction-Socialization-Attrition(ASA)- entrepreneurs tend to hire employees whose personalities are similar to their own. Therefore, many employees in the organization tend to have similar personalities, resulting in a dominant personality profile that shapes the organization’s culture.
Org. culture: Values of the founder, Organizational socialization (learning of values by new workers), Ceremonies and rites- rules of e.g. getting a raise, promotion, meetings, stories and internal language.
Levels of culture: national (dominant in the state), business (ways of doing business), occupational (of lawyers, doctors), organizational (employees of same culture)
Culture influences the way in which managers perform their four main functions
Planning: In an innovative organizational culture, top managers are likely to develop a flexible approach to planning and to encourage participation by subordinates.
Organizing: Because they value creativity, managers in an innovative culture are likely to create
an organic structure that is flat and in which authority is decentralized.
Leading: In an innovative culture, managers are likely to lead by example, encourage employees to take risks and experiment, and to be supportive regardless of success or failure.
Controlling: Managers in innovative cultures tend to recognize that there are multiple, potential paths to success and that failure must be accepted in order for creativity to thrive.
From outside you can only know physical structures and ceremonies of an organization. Only the workers know beliefs, values, preferences and convictions within it.
Mergers of companies: combining cultures, imposing culture, coexistence, rejection.
Hofstede’s Dimensions of Culture(important)
1. Power Distance- acceptance of inequality in working environment (sub ordinance)
2. Uncertainty Avoidance- High uncertainty avoidance means that members of a society feel uncomfortable with uncertainty and ambiguity and put more trust into experts
3. Individualism & Collectivism
- Individualism- strong work ethics, promotions based on achievements
- Collectivism- weak work ethics, promotions based on seniority.
4.Masculinity/Femininity-attitude towards men or/and women (NO SUCH THING AS EQUALITY)
5. Time orientation-Short-Term Orientation- expecting quick effects, quick feedback, quick profits, frequent promotions etc. (long-term – the opposite)
Stages of globalization:
1.Domestic Stage = All production and marketing facilities at home.
2. International Stage = International Division is typically part of the structure, but is not dominant.
3. Multinational Stage = Marketing and production in many countries and 1/4 of sales from outside home country.
4. Global Stage =Making sales and acquiring resources in whatever country offers the best deal.
Global organization- an organization that operates and competes in more than one country.
Multinational/Global Corporations are criticized for: excessive profits, lack of technology transfer, lack of respect for local culture, interference with government and complain about: profit limitations. overpriced resources, foreign exchange restrictions.
Elements of company’s international activity: global outsourcing, exporting, licensing, franchising, direct investment in foreign countries