International business - national differences

1. National Differences
PART 2

2. 5
TERNATIONAL BUSINES
BLUNDERS

3. FORD in Europe
Between 1988 and 2000, U.S.-based Ford Motor Company acquired European
boutique brands Aston Martin, Jaguar, Volvo and Land Rover.
But the automotive mammoth struggled with the luxury brands and in 2007 and
2008 sold them all off.

4. WAL-MART in
Germany
After opening 85 stores
over the course of eight
years, the U.S. retail giant
abandoned the German
market in 2006 at an
estimated cost of US$1
billion. Walmart's domestic
success is built on
streamlined distribution
channels, high-volumes
sales and low prices —
German policy and attitudes favor the
"mittelstand," small and medium-sized retailers
that know the ins and outs of the country's
restricted business hours, intricate labor laws
and multi-layered distribution systems.
"Unless the German laws and the culture
change, the whole thing that sustains Walmart's
model — which is their ability to discount heavily
and to operate in some cases 24 hours a day —
doesn't work there. If you don't allow them to
differentiate themselves, it makes it very difficult
for them to operate,"
“Worse yet, Germans are less price sensitive
than North Americans. They might even be

5. PEPSI Cola in Asia
Pepsi Cola lost its dominant market
share to the Coke in South East
Asia when Pepsi changed the color
of its vending machine and coolers
from deep “Regal” Blue to light “Ice”
blue. The light blue is associated

7. FIAT in China
Fiat released an ad in Italia in which actor Richard Gee
drives a Lancia Delata from Hollywood to Tibet. Gere is
hated in China for being an outspoken supporter of
Dalai Lama- there was a huge on-line uproar on
Chinese message boards commenting that they would
never buy a Fiat car

9. WPP in Argentina
The ad featured a member of the Argentine Olympic
hockey team training in the Falkland Islands. The
hockey player was filmed doing step-up exercises on a
British war memorial and included the line, "To
compete on English soil, we train on Argentine soil.”

10. ……..coming from the lack of international market a

11. and... not everyone fits the on

12. Semi-Globalization
Globalization? …not really

13. Culture
Administration
Geography
Economy
Nations have differences in…

14. (Pankaj Ghemawat
Professor of Barcelona University)
There are three ways to add
value in a world where
differences still matter
ADAPTATION
AGGREGATION
ARBITRAGE

15. Cultural
facing International business

16. Cultural awareness activity
Discuss in group and answer 2 questions below
• What is culture?
• Why do we study about culture environment in
international business context?
Time allowance: 10 minutes

17. Peter Drucker
(1909-2005)
Austrian-born American management
consultant, educator, and author, whose writings
contributed to the philosophical and practical
foundations of the modern business corporation
“Culture eats strategy for
breakfast..”

19. Perception of each other

20. Self perception

21. Lifestyle

22. Sunday on street

23. Noise in a restaurant

24. Attitude towards punctuality

25. The boss

26. Complexity of self-expression

27. Connections and contacts

28. Problem-solving approach

29. Feeling expression

30. Ideal of beauty

31. “Culture is more often a source of conflict than of synergy.
Cultural differences are a nuisance at best and often a disaster”
Prof. Geert Hosftede

32. WHAT IS CULTURE?
….is the system of Values, Norms and
Beliefs
being shared among group of people

33. “Not right or wrong. Culture is relative.
There is no cultural absolute.
Different nationalities simply perceive the world differently.”

34. Not inherited.
Culture is derived from the social environment.
We are not born with a shared set of values and
attitudes;

35. “Not about individual behavior.
Culture is about groups.
It refers to a collective phenomenon of shared values and
meanings”
CULTURE IS:….

36. LEARNED, ACQUIRED, TRANSFERRED, ADJUSTED,

37. ELEMENTS OF CULTURE
1
Religion
2
Language
3
Aesthetic
5
Eco-
Political
philosophie
s
4
Education
4
Education
6
Social
structure

38. Culture is like an iceb
WHAT YOU KNOW
WHAT YOU MIGHT KNOW
WHAT YOU
REALLY
SHOULD KNOW
WHAT YOU
MAY

40. 4 Main religious: Christianity, Islam, Hinduism, Buddhism

41. “Master Kong”: 551 – 478
BCConfucianism is not a religion, but influences behavior and shapes culture in
many parts of Asia

42. Look 4 the key of “the Diversify”
There are many misunderstandings coming from
the differences in the interpretation of body
language.
Look 4 some examples to prove the above facts
Preparing at home and present on the next class
(***) Encourage recording video clip to illustrate
this issue

43. WORKING IN CROSS – CULTURAL
ENVIRONMENT

44. A nation’s culture resides in the
heart and the soul of its people”

47. “how values in the workplace are influenced by culture”:
1967 – 1973, more than 50 countries
Geert Hosftede

49. Power distance
“The extent to which the less powerful members of institutions and
organizations within a country expect and accept that power is distributed

50. LOW POWER DISTANCE
• Minimize the inequalities among
people
• Interdependence
• Flat hierarchy pyramid
• Power decentralization
• Narrow salary range
• Subordinated expect to be consulted
• The boss is democrat
HIGH POWER DISTANCE
• Inequalities among people
• Less powerful people depend on the
more
• Slope hierarchy pyramid
• Power centralization
• Wide salary range
• Subordinated expect to be told what to
do
• The boss is good father

52. High
Low
POWER
DISTANCE
• Viet Nam
• Malaysia
• Arab Countries
• Mexico
• India
• France
• Italy
• Japan
• Spain
• Argentina
• US
• Germany
• UK
• Denmark
• Israel
• Austria

53. Example
• A company from Austria is considering entering the Vietnam market. What
should they do?
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40
60
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Austria Viet Nam
1. Give clear and explicit directions to the Vietnamese staffs
2. Deadlines should be highlighted and stressed
3. Do not expect subordinates to take initiative
4. Be more authoritarian in management style
5. Show respect to the older and the upper ladder

54. Uncertainty avoidance
“The extent to which members of a society feel threaten by uncertain or
unknown situations”

56. WEAK UNCERTAINTY
AVOIDANCE
• each day is accepted as it comes
• Low stress
• Precision and punctuality have to be
learned
• Tolerance to innovation
• Motivation by achievement
STRONG UNCERTAINTY
AVOIDANCE
• continuous threat that must be
fought
• High stress
• Precision and punctuality come
naturally
• Resistance to innovation
• Motivation by security

57. High
Low
DESIREFOR
STABILITY
• VietNam
• Greece
• Japan
• France
• Korea
• Arab Countries
• Germany
• Australia
• Canada
• US
UK
• India
• Denmark
• Singapore

58. Example
 A company from France is considering investing in Denmark. What
should they do? 86
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20
40
60
80
100
France Denmark
1. Try to be more flexible or open in his approach to new ideas
2. Be prepared to push through agreed plans quickly as soon as possible
3. Allow employees the autonomy and space to execute their tasks on their own;
only guidelines and resources will be expected of him

59. Individualism
“The tendency of people to look after themselves and their immediate family
and neglect the needs of society”

61. LOW INDIVIDUALISM
• learn to think in terms of “we”
• Diplomas provide entry to higher
status groups
• Relationship employer- employee
is perceived in moral terms, like a
family
• Management is management of
groups
• Relationship prevails over task
HIGH INDIVIDUALISM
• learn to think in terms of “I”
• Diplomas increase economic worth
and/or self- respect
• Relationship employer-employee is a
contract based on mutual advantage
• Management is management of
individuals
• Task prevails over relationship

62. High
Low
• Australia
• US
• UK
• Canada
• France
• Germany
• Spain
• Japan
• Mexico
Italy
• Korea
• Singapore
INDIVIDUAL
LEVEL

63. Example
 A company from UK is considering investing in Mexico. What should
they do? 96
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40
60
80
100
UK Mexico
1. Note that individuals have a strong sense of responsibility for their family
2. Remember that praise should be directed to a team rather than individuals
3. Understand that rewards depend upon seniority and experience
4. Be aware that the decision making process will be rather slow, as many
members across the hierarchy need to be consulted

64. Masculinity
“The tendency within a society to emphasize traditional gender
roles”

66. LOW MASCULINITY
• caring for others and preservation
• People and warm relationships are
important
• Sympathy for the weak
• In family, both fathers and mothers
deal with facts and feelings
• Managers use intuition and strive
for consensus
• Resolution of conflicts by
compromise and negotiation
HIGH MASCULINITY
• material success and progress
• Money and things are important
• Sympathy for the strong
• In family, fathers deal with facts
and mothers with feelings
• Managers are expected to be
decisive and assertive
• Resolution of conflicts by fighting
them out

67. High
Low
• Japan
• Mexico
• Germany
• UK
• US
• Arabia
• France
• Korea
• Portugal
• Denmark
• Sweden
MACULINITY
LEVEL

68. Example
 A company from Denmark is considering investing in Mexico. What
should they do?
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40
60
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Denmark Mexico
1. Be aware that people will discuss business anytime, even at social gatherings
2. Avoid asking personal questions in business situations
3. Take into account that people are not interested in developing closer
friendships
4. Communicate directly, unemotionally and concisely

69. Long- term orientation
“A basic orientation towards time that values patience”

70. SHORT- TERM ORIENTATION
• Respect for traditions
• Little money available for
investment
• Quick results expected
• Respect for social and status
obligations regardless of cost
• Concern with possessing the
Truth
LONG-TERM ORIENTATION
• Adaptation of traditions to a modern
context
• Funds available for investment
• Perseverance towards slow results
• Respect for social and status
obligations within limits
• Concern with respecting the
demands of Virtue

71. Future ahead
Give example and suggest for Long-term
orientation manager when doing business in short
term –orientation country and vice versa.
Preparing at home and present on the next class