Foreign Trade University – K48E – A16 Group 6 1. s 2. c 3. c 4. c 5. c 6. c Group 6 CULTURE & BUSINESS Contents Introduction A mutually intertwined process of internationalization and globalization has been proceeding very quickly. More and more people recognize that globalization has been the determined tendency of enterprise development in future. As a carrier of economics globalization and internationalization, multinational companies are attracted by non-filled markets, cheap qualified labour force, convenient location or tax relief and nowadays they are able to position and move very quickly any source into any territory that bears, in their opinion, the most suitable conditions for increasing their value. As a result, they have absorbed and accepted more and more people of different races and different nations from different areas, on whom the distinctiveness of culture could be seen clearly. Subsequently, factors that influence behaviour of worker in multicultural environment and preparation of its effective operation in conditions of a multi-national company are stated. Recommended processes for overcoming of cultural differences including basic rules and a process of adapting to a different culture are further developed. 2 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS 1. Definition of culture Culture is a concept familiar to most people. It is difficult, however, to specify what is meant by the concept. The word apparently originates from the Latin word cultura, which is related to cultus, which can be translated as cult or worship. Members of a cult believe in specific ways of doing things, and thus develop a culture which enshrines those beliefs. According to Terpstra and David, culture is a learned, shared, compelling, interrelated set of symbols whose meaning provides a set of orientations for members of a society. These orientations, taken together, provide solutions to problems that all societies must solve if they are to remain viable. There are several elements of this definition that are important for us to gain an understanding of the relationship of cultural issues and international management (Punnett and Ricks 1992): (1) Culture is learned—this means that it is not innate; people are socialized from childhood to learn the rules and norms of their culture. It also means that when one goes to another culture, it is possible to learn the new culture. (2) Culture is shared—this means that the focus is on those things that are shared by members of a particular group rather than on individual differences; as such, it means that it is possible to study and identify group patterns. (3) Culture is compelling—this means that specific behavior is determined by culture without individuals being aware of the influence of their culture; as such, it means that it is important to understand culture in order to understand behavior. (4) Culture is interrelated—this means that while various facets of culture can be examined in isolation, these should be understood in context of the whole; as such, it means that a culture needs to be studied as a complete entity. 3 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS (5) Culture provides orientation to people—this means that a particular group reacts in general in the same way to a given stimulus; as such, it means that understanding a culture can help in determining how group members might react in various situations. Because culture is so fundamental to society, it influences people’s behaviors in critical ways. When interacting within our native cultures, culture acts as a framework of understanding. However, when interacting with different cultures this framework no longer applies due to cross cultural differences. In recent years, the growth in foreign travel for business, study and pleasure, the expansion of international trade and the migration of people seeking work in the multi- national companies have naturally led to a concomitant increase in contacts across national and ethnic borders. When there are significant differences in background knowledge, even the same message may be interpreted differently by different individuals.All of our work involves encouraging and shaping cultural change. Business change is inevitably accompanied with and to some degree facilitated by cultural change. Which aspects of business culture need to change and by how much varies from case to case, from business to business, and often from department to department. 2. Influence of Culture 2.1. Consumer behaviour These people doing business always desire to expand the operation scale from countries to countries, but their success or failure is decided by natives' acceptance. Culture affects consumer behaviors: decision to buy goods or not. If consumers are in a situation to choose from similar goods of different brands in supermarkets, they have trend toward the brand which has well business relationships, long-term benefits for farmers. In contrast, companies which have bad actions: misleading consumers or violating business ethics will be boycotted by the consumers. This has happened on the world market and in our country, there is no exception. Consumers have the psychology not only to buy goods 4 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS by the benefits of it, but also to make decisions by emotional factors and brand. Toyota Vietnam is a typical example. On 1/4/2011 to discuss with the press, Toyota Vietnam representative acknowledged that there were nearly 9000 cars, which has some technical errors. However, they said this error didn’t affect the safety of the car. According to the evaluation of TMV’s leaders, all the problems mentioned above did not affect operation of vehicle safety well as elements of user. Thus, TMV would not carry out the recovery. Since that, Vietnamese consumers have trend to avoid the Toyota as thinking of buying car. The relationship between culture and consumer behavior: Cultural barriers for market development is clear. To overcome this barrier, manufacturers must always understand local culture and cultural impact on buying decision. For example, one of the most interesting is that people of Indonesia are very polite and always say "Yes" in answer although sometimes the answer is not really correct. They believe that saying "no" will be rude. To conclude, culture affects the choice of the consumer, beliefs and attitudes of individuals. 2.2. Marketing Activities Cultural influences marketing activities of enterprises overall: - Culture affects a range of issues such as strategic marketing and business options, target markets, marketing strategies and general decisions on business operating and marketing. - Culture also affects the strategies and measures for specific tasks, specific acts of market activities in the marketing process. - Culture affects the marketing tools, combine enterprise system of special tools of production, distribution and promotion The value of culture has widely influenced in society and created a common feature in 5 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS demand, desire, behavior of consumers in one country. For instance, the traditional food culture of Vietnam is the same as rice with bowl, chopsticks, etc. In many Western countries, they are bread, butter, milk, meat with spoons, forks, etc Today, multinational companies also pay special attention to cross-cultural issues and also spend millions of dollars to train staff on this. It does not merely help to solve problems between employees and customers in different countries but also to solve problems appearing in specific environments. Everyone recognizes that each different type of culture will create different solutions and therefore they will have to adapt quickly to new environment though it is extremely difficult even when they were well trained. 2.3. Brand Name Culture has become a factor which impacts strongly upon all aspects of business operations and also a powerful resource in any business activities such as marketing, branding, customer-oriented finding. Hence, business culture becomes a key for evaluating a company. Although in economic- powered countries like the U.S., Japan, China or other developing countries like Vietnam, the construction of business culture is one of the top concerns of enterprises and organizations. In fact, if the enterprise has strong business culture, it will survive and develop stably, such as Honda Motor Corporation - the leading brand of automotive world, Matsushita - the company leading the electronics products in the world and Mc Donald Japanese or American. In Vietnam, even large corporations such as: FPT, or Trung Nguyen Coffee Company have their own specific business culture. In the moving and changing world, products, technology, factories, management and people will gradually fade but the brand and corporate culture will survive and develop over time if they know how to handle the brand's ambitions. For example, one of the core values of the Sony (1950) is to increase the value of Japanese culture; Walt Disney’s (1923) is to bring happiness to people. Time has passed; the only remaining difference between the companies today is probably 6 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS cultural factors. Other factors such as technology, business processes do almost not make difference. The reason we distinguish between Mercedes and Toyota is not the quality but that is the culture and brand image. If the brand does not have aggregation of special culture and personality, it is hard to survive for a long time on global competitive market. The successful brands for many decades from Japan and the United States say that they sell "high quality" "cultural value" or "lifestyle "their own nation in their goods. To sum up, product is made by human hands, but hidden inside is the combination of general knowledge and experience accumulated in the process of business activities. Therefore, brand is the crystallization of culture inside each product. 2.4. Relationship inside Company Culture has become an ID (identification number) for each companies, it helps us to distinguish the company with another. Culture is shown in working style and behavior of employees both at work and in life. Many companies build their own culture on the basic cultural traditions. Company culture becomes a factor encouraging loyalty and enthusiastic morale of the staff. 2.5. Strategy While the process of globalization is happening very quickly, in order to join international economy, enterprises do not only have business activities within a country but also gradually reach the international market However, in the process of penetrating foreign markets, enterprises often face barriers that they can not easily overcome, such as erupts sanctions, tariffs, quotas,… One of the most important barriers is cultural barriers. The barrier starts from differences in languages, customs, habits, ect… With a total of more than 200 countries around the world, there are a variety of used languages. This has made business have difficulty in launching their products on foreign markets. Many businesses have to make much efforts and spend a lot of money to find their meaningful, impressive names and slogans, but sometimes these 7 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS names slogans make world market turns their back on the products – penetrating plans of the corporate fail Parker Ballpoint pen, a world famous pen company, while entering the market of Mexico, they use the slogan “the pen is smooth to write and it doesn’t puncture your pocket. “However, a disastrous mistake happens to two English homophones in Mexico, the people of this country translated this into “it will not penetrate, but make you pregnant”. Or "Nova," a compact car produced by Chevrolet. The company was actually surprised because they had not sell a car in South America before they have understood that "Nova" means "It doesn’t work” 2.6. Daily Talking There are some examples: Shake hand In America, the cultural gesture shake hand when greeting is considered as a standard person-to-person behavior. In fact in the U.S., refusing a shake hand is very rude. In Saudi Arabia, you can shake hand with a man after meeting him but you cannot do this with the woman at all in the greeting. According to Sharia law, it is immoral for a woman to greet any man in public except her husband. A-OK America and England, the OK hand is quite popular and considered a general gesture that denotes an agreement of feeling.but this gesture in Brazil is equivalent to using your middle finger as a gesture in America. The OK hand is also considered as an insult in most Latin American countries, Austria and France. 3. How to Communicate in Global Companies Based on above analysis, here comes the suggestion about how to enhance the effective cross-cultural communication in Global Companies to strengthen Global Corporate Culture. 8 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS 3.1 Fundamental Principles Global corporate culture is the internal driving force of enterprise development. It can restrain the staffs’ behavior. North-West Airline’s former CEO Herb has said: “Your competitors can imitate everything of your enterprise except your corporate culture”. So, under no conditions should global companies abandon their core cultures. Since there are various cultures in global companies, global corporate culture must be strengthened so as to avoid the loss of core values under cross-cultural shock. 3.2 The Basic Tasks of the Management Team 3.2.1 Cross-Cultural Training ‘Cross-cultural Consciousness’ is very important to a member of Global Companies since it enables the member to be sensitive about the differences between different cultures. It usually can be gained systematically through Cross-Cultural training. Therefore managers of Global Companies should devote efforts to this training. According to the main factors that influence cross-cultural communication, cross-cultural training should comprise the training about different cultures, foreign language, amalgamation of different management styles, skills of communication and solution of cultural contrast. 3.2.2 Team Building Activities It is not enough to teach the staff only the theory of cross-cultural communication. Every theory can be completely understood and mastered only when it is applied. Therefore, besides theoretical training, managers of Global Companies should also contribute to the team Building Activities including various parties, competitions etc These activities will provide more occasions for staff to communicate without pressure. As is proved, it is easier for people to behave open-mindedly and to eliminate estrangement and misunderstanding when they are out of work place. 9 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS 3.2.3 Self-improvement According to Global Companies’ characteristics- cross national and cross cultural, manager of Global Companies should have the following competences: - Adaptability to different cultures in and out of the work place - Cross-cultural communication - Leading, motivating and managing multicultural teams Therefore he/she must improve his/her cross-cultural communication ability through self- learning, training and practice. 4. How to operate business in different cultures How do successful global marketing companies such as McDonald's overcome troublesome cross-cultural variations in taste preferences? How could a small bank such as HSBC in Hong Kong became a global brand? In today’s global business environment, more and more of us are required to understand people who comes from countries and cultures different from our own. While there is no short and easy way to learn about a given culture in any depth, there are some two iron rules that lead to success in communicating and conducting business with people of backgrounds unlike our own. - In International Business,the Seller Is Expected to Adapt to the Buyer. The buyer in an international transaction is in the fortunate position of being able to largely ignore cultural differences. However, in the position of a company, ignoring the custiomer behaviour just like we ourselves are killing our own companies. Pepsi firms enter the market when Taiwan was honored with the English slogan "Towards the Age of Pepso." But the meaning of this sentence polished people here have been read clumsily 10 Chapter: 5. Skills for Eliminating the Barriers to Communication [...]... different cultures, can miscommunication be avoided In order to eliminate miscommunication, first we must learn about our own culture, through which we can increase the sensitivity and cognition about other cultures; then we also need to 11 Communication Chapter: 5 Skills for Eliminating the Barriers to Group 6 CULTURE & BUSINESS learn about the basic theory of cross -culture and other nations’ cultures,... POLYCHRONIC BUSINESS CULTURES 13 Communication The Arab World, Africa, Latin America, Chapter: 5 Skills for Eliminating the Barriers to South and Southeast Asia Group 6 CULTURE & BUSINESS Deal-focused cultures are relatively open to doing business with strangers A third group Figure 5.2 of cultures falls somewhere in between Most southern and eastern Europeans tend to DEAL-FOCUSED CULTURES: Nordic and... vs Formal Cultures: Formal cultures tend to be organized in steep hierarchies which reflect major differences Figure 5.3 in status and power In contrast, informal cultures value moreINFORMAL organizations egalitarian CULTURES VERY with smaller differences in status and power Australia, USA MODERATELY Why does this matter when we are doing business abroad? Because contrasting values INFORMAL CULTURES... 6 CULTURE & BUSINESS used differently between languages or cultural groups, however, even active listening can overlook misunderstandings As being said, the first skill to over come the diversity culture problems is knowledge But there are too many countries in this world, learning too much can make us confused In such cases, four basic Patterns of Cross-Cultural Business Behavior, ways in which cultures,... doing business with CULTURES Australia/New Zealand, Eastern strangers, especially strangers who also happen to be foreigners Because of this key cultural value, relationship-oriented firms typically wantEurope, Southern Europe, Singapore, Hong to know their prospective Kong, Taiwan, China, business partners very well before talking business with them In contrast, the South Korea strongly POLYCHRONIC BUSINESS. .. to remember about the variable orientation to time is that while it is rude not to be strictly punctual in a monochronic culture, it is equally rude to look down on polychronic cultures who refuse to be on time ii Deal-Focus vs Relationship-Focus Figure 5.1 VERY MONOCHRONIC BUSINESS CULTURES Nordic and Germanic Europe, Relationship-focused people prefer to deal with family, friends and person Japan North... race or culture is not superior to any other race or culture, if you are proud of your heritage, so do the others It is a better beginning to have an open mind, and a will to change, accept and respect different cultures, and at the same time we can learn others’ expectation to us So we consider that the first step to studying crossnational communication is to establish the sensitivity about other cultures... CULTURES Canada, cause conflict at the conference table On the one hand, business people from Norway formal, New Zealand, Denmark, hierarchical cultures may be offended by the breezy familiarity of CULTURES Most of MORE FORMAL counterparts from informal, relatively egalitarian societies On the other Europe,those from informal cultures hand Mediterranean Region, Arab World, Latin America, may see their... why I no longer wish to do business with your company." To repeat, formality has to with relative status, organizational hierarchies and how to show respect to persons of high status That is why international marketers always should know whether they are dealing with formal or informal cultures iv Expressive and Reserved Cultures A person live in Italy, a very expressive culture, will build up his... face and keep both hands folded in front of him Eastern Europe, South Asia RESERVED CULTURES East and Southeast Asia, Nordic and Germanic 16 Communication Europe Chapter: 5 Skills for Eliminating the Barriers to Group 6 CULTURE & BUSINESS To understand about this 4 th group, here are some aspects of Expressive and Reserved Cultures: Distance Behavior: The 'Space Bubble' Every human being is surrounded . adapting to a different culture are further developed. 2 Chapter: 5. Skills for Eliminating the Barriers to Communication Group 6 CULTURE & BUSINESS 1. Definition of culture Culture is a concept. America, South and Southeast Asia. Group 6 CULTURE & BUSINESS Deal-focused cultures are relatively open to doing business with strangers. A third group of cultures falls somewhere in between varies from case to case, from business to business, and often from department to department. 2. Influence of Culture 2.1. Consumer behaviour These people doing business always desire to expand