chapter five
Managing Across Cultures
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Chapter Outline
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Strategic predispositions of companies
Globalization vs. national responsiveness
Doing business in selected cultures
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Strategic Predispositions
Four distinct predispositions toward doing
things in a particular way:
1. Ethnocentric
2. Polycentric
3. Region-centric
4. Geocentric
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Strategic Predispositions
• Ethnocentric predisposition
– A nationalistic philosophy of management
whereby the values and interests of the
parent company guide strategic decisions.
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Strategic Predispositions
• Polycentric predisposition
– A philosophy of management whereby strategic
decisions are tailored to suit the cultures of the
countries where the MNC operates.
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Strategic Predispositions
• Region-centric predisposition
– A philosophy of management whereby the firm
tries to blend its own interests with those of its
subsidiaries on a regional basis.
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Strategic Predispositions
• Geocentric predisposition
– A philosophy of management whereby the
company tries to integrate a global systems
approach to decision making.
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Strategic Predispositions in Action
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Meeting the Challenge:
Globalization vs. Responsiveness
• The Globalization Imperative:
– Belief that one worldwide approach to doing
business is key to efficiency and effectiveness.
– An overwhelming majority of large and mediumsized firms use this approach
– Typically an ethnocentric approach
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Meeting the Challenge: Responding
to Local or Regional Needs
• Many factors can create a need to develop
unique strategies for different cultures, or
strategies for different regions
• Diversity of worldwide industry standards
• Continual demand by local customers for
differentiated products
• Importance of being insider as in case of
customer who prefers to “buy local”
• Difficulty of managing global organizations
• Need to allow subsidiaries to use their own
abilities and talents with minimal oversight from
headquarters
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Globalization vs.
National Responsiveness
• Advertising (for example)
– French
• Avoid reasoning or logic
• Advertising predominantly emotional, dramatic, symbolic
• Spots viewed as cultural events – art for sake of money –
and reviewed as if they were literatures or films
– British
• Value laughter above all else
• Typical broad, self-deprecating British commercial amuses
by mocking both advertiser and consumer
– Germans
• Want factual and rational advertising
• Typical German spot features standard family of 2 parents,
two children, and grandmother
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Cultural Aspects of
Doing Business Abroad
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China
Russia
India
France
Brazil
Arab countries
Poland
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Doing Business in China
• Technical competence is the primary criterion for
doing business in China
• Time is a major cultural difference between many
Western countries and China – Chinese are patient
negotiators and may take advantage of American
impatience or time constraints.
• Guanxi :Good connections that result in lower costs,
increased business, and better business
opportunities.
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Negotiating in China
• Realize that China is a collective society. Older
Chinese may place values and principles above
money and expediency. They value the good of their
country or group.
• Age and rank are respected in China. Your
negotiating team should be composed of mid-level
and senior executives, middle aged or older.
• Early negotiations are likely to focus on general
principles. The Chinese will be reluctant to change
those later.
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Negotiating in China (2)
• Understand that Chinese are slow to decide on a
course of action, but stick to the decision once it is
made
• Chinese negotiators expect concessions but do not
always make a concession in return.
• China is a neutral culture. Do not display emotions
during negotiations.
• Take a long-term perspective toward business
opportunities.
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Negotiating in Russia
• Build personal relationships with partners
• Be careful to uphold your own business
ethics and the policies of your company
• Be patient
• Stress exclusivity
– Deal with just one firm at a time
• Do not share your company's financial
information
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Negotiating in Russia (2)
• Stress mutual gain
• Clarify terminology
• Be careful about compromising or settling things
quickly – most concessions should be made at the
end.
• Russians believe that contracts are binding only if
they are mutually beneficial. Continue to stress the
benefits of the deal to them.
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Doing Business in India
• Many business people speak English.
• When dealing with people from India, one
should
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Be on time for meetings
Avoid asking personal questions
Use formal titles when addressing others
Avoid public displays of affection
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Doing Business in France
• Social class and status are more important in
France than in the United States
• In contrast to Americans, the French are:
– More tolerant of different points of view
– More inclined to determine a person’s
trustworthiness on the basis of personal
characteristics rather than accomplishments
– Less ambitious and competitive
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Doing Business in France (2)
• French workers are highly productive and do
quality work. They value quality of life, and
most do not like to work overtime.
• Power distance is moderately high in France.
Companies usually have highly centralized
organizations. Top executives are usually
autocratic. Their decisions are seldom
questioned.
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Negotiating in France
• In negotiations the French try to find out what all of
the other side’s aims and demands are at the
beginning, but they reveal their own hand only late in
the negotiations.
• The French do not like being rushed into making a
decision. They rarely make important decisions
during a meeting.
• The French tend to be very precise and logical in
their approach to things, and will often not make
concessions in negotiations unless their logic has
been defeated.
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Doing Business in Brazil
• Form strong relationships before discussing
business.
• Face-to-face meetings are essential
• Presentations should be informative, accurate,
and expressive.
• Be patient. Negotiations can be lengthy.
• Appearance is important.
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Doing Business in Arab Countries
• There are cultural and legal differences
among different Arab countries.
• In most Arab countries, people gain status by
family and social connections. Connections are
very important in doing business.
• Dignity and respect are very important. Do not
display feelings of superiority or self-importance.
Show even more respect to older people.
• Power distance is high.
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Doing Business in Arab Countries (2)
• Do not take credit for joint efforts. The importance of
group efforts is emphasized.
• Go through the necessary government channels to
get approval for what you want to do.
• Develop strong business relationships.
• Stress the mutual benefits of doing business.
• Important decisions are usually made in person.
• Be patient. Do not make too many concessions in
an effort to speed up negotiations.
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Doing Business in Poland
• Design products for Poland and use a Polish
advertising agency.
• Do your homework. Poles are often shrewd
negotiators.
• Be prepared to provide data. People are not
impressed by "sales talk".
• Be prepared to make a long-term commitment.
• Take time to build relationships and gain trust.
• Be willing to "give something back" to the community.
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Doing Business in Poland (2)
• Local governments have a large role in business
regulation and taxation. Some areas are more
conducive to business than others.
• When dealing with older Poles, use professional titles
(example: engineer), and do not call people by their
first names until you are invited to do so.
• Business entertainment is less elaborate than in the
U. S. Entertainment should be reciprocated.
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