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CHAPTER 3:
What Is Culture?
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Key Terms
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culture
subculture
counterculture
rationalization
monochronic
polychronic
spatial perception
cultural dimensions
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Chapter Objectives
By the time you finish this chapter, you should be able to:
 Analyze the ways in which cultural factors influence
international business methods and operations
 Analyze differences across cultures in perceptions,
interpretations, and attitudes that might affect how
individuals work in another country
 Compare management and negotiation strategies
in other countries with those in Canada
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Culture Defined
Culture
The knowledge, experience, beliefs, values,
attitudes, religion, symbols, and possessions
acquired by a group of people who have lived in
the same region or country for generations.
Culture is transmitted
from one generation to the
next through education
and by example.
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Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Culture Defined
Subculture
A cultural group within a larger or predominant culture,
distinguished from it by factors such as class, ethnic
background, and religion, and unified by shared beliefs
and interests.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Culture Defined
Counterculture
A culture that has values or lifestyles that are in
opposition to those of the current accepted culture.
Members of a counterculture openly reject the
established cultural values that surround them.
Examples of countercultures include punk, emo, nu
metal, and gangsta rap.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Differences
Cultural determinants
The main factors that shape the culture of a specific
group. These include religion, politics, topography,
climate, and history.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
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Cultural Differences
Chapter 3:
WHAT IS CULTURE?
The Culture of Saudi Arabia
 Revolves around the religion of Islam
 Activity stops five times a day for prayer
 Friday is the holiest day for Muslims;
weekend begins on Thursday and ends on
Saturday
 Clothing is loose and flowing as climate is
extremely hot
 Women must wear clothing that leaves
only the hands, feet, and face bare
 Criminal cases are tried under sharia
courts, which enforce a strict, conservative
version of Sunni Islam
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Differences
The Culture of Japan
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 Predominant religious beliefs are Shintoism and Buddhism
 Belief in the “natural order of things” has translated into
hierarchical relationships among people
 Western culture is embraced, but traditional Japanese culture is
still dominant in terms of food choices, sports, and entertainment
 Definite sense of etiquette and rules of behaviour
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Awareness and Business
Cultural Awareness and Business
Canadian firms that want to “go global” must determine
the extent and importance of cultural differences between
Canada and their target nations.
They must decide whether and to what extent products
and processes can be adapted to a foreign environment.
Some cultural traits can be studied and learned; others
can only be understood by living in a country and
experiencing the culture first-hand.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Awareness and Business
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Awareness and Business
Extent of Foreign Operations
 Level of cultural awareness depends on how
much business a company does in a foreign
country and the type of business it does there.
 Primarily domestic operations that export to only
one or two foreign markets don’t need to be as
conscious of cultural differences as businesses
that have manufacturing, retail, and other interests
in another country.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Awareness and Business
Control of Foreign Operations
 Companies that have branch plants or distribution
outlets in other countries that are managed by
local people do not need to have as much
knowledge about cultural differences.
 If all of a business’s foreign dealings are handled
domestically, the required level of cultural
awareness is high.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Awareness and Business
Degree of Cultural Differences
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If the culture of the foreign market is similar to
Canadian culture, companies do not need to
spend much time examining cultural differences.
When the language, habits, beliefs, and attitudes
of a culture are markedly different from
Canada’s, it is important to study the culture of
the foreign market.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Cultural Awareness and Differences
Number of Foreign Operations
 Companies conducting business in several foreign
markets must be aware that each country has a
distinct culture.
 The more operations a business has in foreign
markets, the greater the need for cultural
knowledge.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on International Business
Impact of Culture in Business
Culture’s role in business can be as important as the
influence of tariffs, legal regulations, and
competition.
Failure to consider that influence could ruin a
negotiation, derail a marketing campaign, and cause
labour unrest.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on International Business
Culture has a direct impact on products.
It is important to consider factors such as climate and
religious beliefs when considering entering a foreign
market. For example, there is no market for Canadian
pork in Israel, as Jewish culture forbids eating this
product.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on International Business
Culture also has a direct impact on services.
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Canada’s financial service industry has successfully
entered foreign markets.
As attitudes towards money are often culturally
determined, Canadian banks in foreign countries
must understand their clients’
culture to meet their savings
goals.
For example, many Japanese
families save for speciallymade kimonos for their
daughters.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on the Labour Market
The Canadian government, influenced by
labour unions and cultural values, regulates
the labour force:
 Provides minimum wage
 Mandates workplace safety
 Prevents discrimination
 legislates holidays and hours of work
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on the Labour Market
Rationalization
Any attempt to increase a company’s effectiveness or
efficiency, including downsizing, cutbacks, layoffs,
and relocating corporate functions and activities to
countries that have cheaper labour and few or no
union problems.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on the Labour Market
Not all countries share Canada’s values in
terms of labour and the workplace. Canadian
business people may encounter differences in
the following areas:
 Child labour
 Discrimination
 Wages
 Standards and practices
 Indigenous cultures
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
The Impact of Culture on the Labour Market
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Meetings and Negotiations
Every country has a meeting culture that is
based on the following factors:
 Time perception—monochronic or polychronic
 Spatial perception—individual comfort levels with
personal space and physical contact
 Non-verbal communication—eye contact and body
language
 Business etiquette—appropriate topics of
conversation, whether or not you should present a
gift, etc.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Meetings and Negotiations
Members of different cultures perceive time in
one of two ways:
Monochronic
Time is seen as linear and sequential, and focus is placed
on one thing at a time in a logical progression.
Polychronic
Time is seen as involving many things happening
simultaneously with the participation of many people. Time
is flexible, and schedules are not of primary importance.
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Meetings and Negotiations
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Culture’s Influence on the Workplace
Cultural dimensions (identified by Geert Hofstede)
 Power Distance (PDI)—how the difference in power
between people is perceived
 Uncertainty Avoidance (UAI)—how do various cultures
adapt to change
 Masculinity vs Femininity (MAS)—the degree to which
a culture values assertiveness, competitiveness,
ambition, and the accumulation of material goods
 Individualism vs Collectivism (IDV)—the extent to which
people are expected to make their own decisions
regarding their choice of education, job, etc.
 Orientation (LTO)—the degree to which cultures value
short- or long-term goals
Chapter 3:
WHAT IS CULTURE?
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.