Transcript International Business

International Business
Fall 2013 – Lecture 3
Instructor : RAZA ILLAHE
Lahore Leads University
Objectives of the Lecture
No.2
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To Understand Behavioural Practices Affecting Business in
context of International Business
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To know how to deal with cultural differences while doing
Business
Mini Case Study about a café launce in Saudi Arabia.
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Behavioural Practices
Affecting Business
1.
Issues in Social Ranking (Stratification)
2.
Work Motivation
3.
Relationship Preferences
4.
Information and Task Processing
5.
Communications
Issues in Social Ranking
(Stratification)
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‘By Birth’ Group (Ascribed) and
Acquired Group Membership
Issues in Social Ranking
By Birth Group Membership(Ascribed)
Gender
Family
Age
Caste
Ethnicity
National Origin etc
Issues in Social Ranking
Acquired Group Membership
Political
Spiritual
Religion
Professional
Sports etc
Issues in Social Ranking
Example :
In marketing campaigns; Spokesperson is prefer to belong
from a group that appeals target audience.
Employment practice ;
In British banks ; Staff reduction = middle managers , high
salaried ,average performance
German Banks ; Staff reduction = Young managers ?
Issues in Social Ranking
Performance Orientation
In some cultures , eligibility for job is based on competence.
This fosters a work environment based on competition instead of
cooperation.
Example : In Japan , cooperation is more important ,they prefer
seniority and ability to work together. Highlighting
cooperation.
While in many western countries, performance /
competence is ranked highly.
Issues in Social Ranking
Open and Closed Societies
Society is more open , means giving less
importance to ‘by birth’ characteristics.
More closed societies gives importance to ‘by birth’
characteristics.
Issues in Social Ranking
Open and Closed Societies
Most Western democracies are more open, while
many eastern countries are considered more closed
societies.
Issues in Social Ranking
Examples
Closed Society – MALAYSIA
Three ethnic groups , Indian, Chinese and Malay.
Preference is given to Malays for government jobs
and there is a special quota for them, in order to
ensure their influence in Malaysian society.
Issues in Social Ranking
Examples
Saudi Arabia : Jobs for locals
Jobs for foreigners
Type of foreigners ?
Subcontinent,Europeans,Africans
Issues in Social Ranking
Gender Based Groups
Country-specific differences in attitudes
towards gender.
Issues in Social Ranking
Saudi Arabia :
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Women account for only 7 % of workforce.
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Must work separately from men.
Lithuania :
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When jobs are very less ,society agrees that men have more
right to get jobs ,than woman.
UAE :
Job ads, specify if its for men or women. Age range , visa
status ,marital status etc.
Issues in Social Ranking
Age Based Groups
Countries treat their age groups differently. All
countries enforce age –related laws.
Issues in Social Ranking
Age Based Groups
Employment
Driver’s License
Civic Duty
e.g Voting , Military service, Judiciary
Rights to obtain products
e.g cigarettes and alcohol
Issues in Social Ranking
Age Based Groups
Example : Finland, Holland and many
countries mandatory retirement age.
Example : Driver’s License age ?
Car Sales
Example : Children ads on T.V is a multimillion industry. While in
Sweden ads for children are prohibited.
Example : Can’t force to retire seniors at 65,while its acceptable in
other countries.
Age = wisdom ,better decision making, company direction.
CASE STUDY- Saudi Arabia
Issues in Social Ranking
Family Based Groups
Family’s Social Status or respectability instead of
Individual achievement.
Small family run companies are more hard to grow
because owners don’t share managerial or top
level responsibility
Family Based Groups
In such culture, there is a possibility that business
growth is hampered by such family oriented
mindset as the country region may lack large-scale
operations necessary to long-term growth.
Issues in Social Ranking
Occupation
Some occupations are considered
high prestige occupations ,in some cultures
,while some are of low prestige.
Issues in Social Ranking
Examples :
In U.S teenagers get babysitting, newspaper delivery and grocery shops jobs. They
grow older, get training and education, get better jobs that are perceived as of
high prestige.
On the other hand, In poor countries, people can start with low prestige jobs in
teenage ,and as adults can keep them, as there are lack of opportunities.
Irish Prefer high risk tolerance than Germans and like to be self-employed.
Europeans have less risk taking behavior than U.S
Behavioural Practices
Affecting Business
1.
Issues in Social Ranking (Stratification)
2.
Work Motivation
3.
Relationship Preferences
4.
Information and Task Processing
5.
Communications
Behavioural Practices
Affecting Business
Work Motivation
Higher level of motivations lead to higher productivity
levels , and lower production costs.
Important for businesses to understand about a new
country, their motivation levels, what motivates
them and how they get motivation.
Work Motivation
Materialism
Desire of more material wealth leads to more
motivation. In cultures where material.
Positive for economic development.
Some cultures are more inclined to material wealth
while some are not.
Work Motivation
Productivity / Leisure Trade off
Some cultures place less value to leisure time,
resulting in long hours ,less holidays and spend less
money on leisure and holidays.
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In Japan people take less time off than any
other developed country.
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In rural Pakistan and India, a simple village
life without much material things seems to
be desirable way.
Work Motivation
Assertiveness : Masculinity- Femininity Index
Measure of attitudes towards work and achievements
of employees in 50 countries. Used MasculinityFemininity Index.
Work Motivation
Assertiveness : Masculinity- Femininity Index
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HIGH MASCULINITY :
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Admire Successful Achievers
Less Sympathy for unfortunate
Prefer to be better than others instead of equal
Money and things orientation
Preference for performance and quality
E.g Austria, Venezuela, Switzerland,
LOW MASCULINITY
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Prefer Equality and More sympathy for unfortunate
E.g Sweden, Norway, Denmark, Holland
Example from a low masculinity country :
Local manager requires smooth, social relations and prefer
continuing relations with suppliers of a manufacturing unit, as
compared to lower cost or faster delivery.
Local manager may give more value to employee welfare than a
foreign owner’s financial goals of growth and efficiency.
Work Motivation
Hierarchy of Needs
Maslow’s hierarchy of needs model has various
needs that are ranked accordingly.
He divided human needs into 5 categories.
Maslow’s Hierarchy of Needs
SelfActualisation
Esteem
Affiliation/friendship/
belonging
Security
Physiological Needs
Maslow’s Hierarchy of Needs
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Different People Rank these needs differently, in
various countries. Order can be different.
This theory can be used to understand reward
preferences of employees.
In poorer countries, employees might be satisfied
with food and shelter
In economically better countries, they may look for
rewards that fulfill their higher needs such as
esteem or affiliation.
Behavioural Practices
Affecting Business
1.
Issues in Social Ranking (Stratification)
2.
Work Motivation
3.
Relationship Preferences
4.
Information and Task Processing
5.
Communications
Relationship Preferences
Power Distance
Power Distance
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Power Distance is high at some place.
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High Power Distance means, autocratic style of
management. Less communication between
decision makers.
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Power Distance is low at other countries.
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Low Power Distance means, consultative style of
management. More communication between
decision makers and employees.
Power Distance
Example :
A Dutch company is operating in morocco. Dutch
managers prefer consultative style of management.
They consult and communicate before making a
move.
On the other hand, Moroccans prefer to be told what to
do and get really uncomfortable when management
involves them with decisions. Leading to
deterioration in performance ,instead of improving.
Relationship Preferences
Individualism Vs. Collectivism
Individualism
A theory stating the political and economic independence of
the individual and stressing individual initiative, action, and
interests.
Collectivism
Presents that humans are dependent on each other. Group
goals have priority over individual goals.
Relationship Preferences
Individualism Vs. Collectivism
Safe work environment motivate employees in collective society
While, challenging work environments motivate employees in
individualistic societies.
Example :
Levis Strauss used team-based production system in
Asia and got high productivity.
Used same system in U.S and skilled workers, started
to hate the system and overal productivity got much
lower.
So Levis was forced to use a system suitable to
domestic workforce.
COMPANY AND MANAGEMENT
ORIENTATIONS
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Polycentrism
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Ethnocentrism
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Should act like local companies
One’s own culture is superior to that of other cultures
Geocentrism
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Balance their organisation cultures with both home and
host country needs.
END of Lecture No. 3