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International Business: The
Challenges of Globalization
Ninth Edition
John J. Wild
Kenneth L. Wild
Instructor's Resource Manual
for
International Business: The
Challenges of Globalization
By John J. Capela
Challenges of Globalization
Ninth Edition
John J. Wild
Kenneth L. Wild
Instructor's Resource Manual
for
International Business: The
Challenges of Globalization
By John J. Capela
CHAPTER 1
GLOBALIZATION
LEARNING OBJECTIVES:
1.1 Identify the types of companies active in international business.
1.2 Explain globalization and how it affects markets and production.
1.3 Detail the forces that drive globalization.
1.4 Outline the debate about globalization’s impact on jobs and wages.
1.5 Summarize the debate about income inequality.
1.6 Outline the debate about culture, sovereignty, and the environment.
1.7 Identify how this course will help you develop skills for your career.
CHAPTER OUTLINE:
Introduction
Key Players in International Business
Multinational Corporations
Entrepreneurs and Small Businesses
What Is Globalization?
Globalization of Markets
Reduces Marketing Costs
Creates New Market Opportunities
Levels Uneven Income Streams
Local Buyers’ Needs
Global Sustainability
Three Markets, Three Strategies
Globalization of Production
Access Lower-Cost Workers
Access Technical Expertise
Access Production Inputs
Forces Driving Globalization
Falling Barriers to Trade and Investment
World Trade Organization
Other International Organizations
Regional Trade Agreements
Trade and National Output
Technological Innovation
E-Mail and Videoconferencing
The Internet
Company Intranets and Extranets
Advancements in Transportation Technologies
Measuring Globalization
Debate about Jobs and Wages
Against Globalization
Eliminates Jobs in Developed Nations
GLOBALIZATION
LEARNING OBJECTIVES:
1.1 Identify the types of companies active in international business.
1.2 Explain globalization and how it affects markets and production.
1.3 Detail the forces that drive globalization.
1.4 Outline the debate about globalization’s impact on jobs and wages.
1.5 Summarize the debate about income inequality.
1.6 Outline the debate about culture, sovereignty, and the environment.
1.7 Identify how this course will help you develop skills for your career.
CHAPTER OUTLINE:
Introduction
Key Players in International Business
Multinational Corporations
Entrepreneurs and Small Businesses
What Is Globalization?
Globalization of Markets
Reduces Marketing Costs
Creates New Market Opportunities
Levels Uneven Income Streams
Local Buyers’ Needs
Global Sustainability
Three Markets, Three Strategies
Globalization of Production
Access Lower-Cost Workers
Access Technical Expertise
Access Production Inputs
Forces Driving Globalization
Falling Barriers to Trade and Investment
World Trade Organization
Other International Organizations
Regional Trade Agreements
Trade and National Output
Technological Innovation
E-Mail and Videoconferencing
The Internet
Company Intranets and Extranets
Advancements in Transportation Technologies
Measuring Globalization
Debate about Jobs and Wages
Against Globalization
Eliminates Jobs in Developed Nations
CHAPTER 1
GLOBALIZATION
LEARNING OBJECTIVES:
1.1 Identify the types of companies active in international business.
1.2 Explain globalization and how it affects markets and production.
1.3 Detail the forces that drive globalization.
1.4 Outline the debate about globalization’s impact on jobs and wages.
1.5 Summarize the debate about income inequality.
1.6 Outline the debate about culture, sovereignty, and the environment.
1.7 Identify how this course will help you develop skills for your career.
CHAPTER OUTLINE:
Introduction
Key Players in International Business
Multinational Corporations
Entrepreneurs and Small Businesses
What Is Globalization?
Globalization of Markets
Reduces Marketing Costs
Creates New Market Opportunities
Levels Uneven Income Streams
Local Buyers’ Needs
Global Sustainability
Three Markets, Three Strategies
Globalization of Production
Access Lower-Cost Workers
Access Technical Expertise
Access Production Inputs
Forces Driving Globalization
Falling Barriers to Trade and Investment
World Trade Organization
Other International Organizations
Regional Trade Agreements
Trade and National Output
Technological Innovation
E-Mail and Videoconferencing
The Internet
Company Intranets and Extranets
Advancements in Transportation Technologies
Measuring Globalization
Debate about Jobs and Wages
Against Globalization
Eliminates Jobs in Developed Nations
GLOBALIZATION
LEARNING OBJECTIVES:
1.1 Identify the types of companies active in international business.
1.2 Explain globalization and how it affects markets and production.
1.3 Detail the forces that drive globalization.
1.4 Outline the debate about globalization’s impact on jobs and wages.
1.5 Summarize the debate about income inequality.
1.6 Outline the debate about culture, sovereignty, and the environment.
1.7 Identify how this course will help you develop skills for your career.
CHAPTER OUTLINE:
Introduction
Key Players in International Business
Multinational Corporations
Entrepreneurs and Small Businesses
What Is Globalization?
Globalization of Markets
Reduces Marketing Costs
Creates New Market Opportunities
Levels Uneven Income Streams
Local Buyers’ Needs
Global Sustainability
Three Markets, Three Strategies
Globalization of Production
Access Lower-Cost Workers
Access Technical Expertise
Access Production Inputs
Forces Driving Globalization
Falling Barriers to Trade and Investment
World Trade Organization
Other International Organizations
Regional Trade Agreements
Trade and National Output
Technological Innovation
E-Mail and Videoconferencing
The Internet
Company Intranets and Extranets
Advancements in Transportation Technologies
Measuring Globalization
Debate about Jobs and Wages
Against Globalization
Eliminates Jobs in Developed Nations
Ch 1: Globalization2
Lowers Wages in Developed Nations
Exploits Workers in Developing Nations
For Globalization
Increases Wealth and Efficiency in All Nations
Generates Labor Market Flexibility in Developed Nations
Advances the Economies of Developing Nations
Summary of the Jobs and Wages Debate
Debate about Income Inequality
Inequality within Nations
Inequality between Nations
Global Inequality
Summary of the Income Inequality Debate
Debate about Culture, Sovereignty and the Environment
Globalization and Culture
Globalization and National Sovereignty
Globalization: Menace to Democracy?
Globalization: Guardian of Democracy?
Globalization and the Environment
Developing Skill for Your Career
The Global Business Environment
The Road Ahead for International Business
Bottom Line for Business
A comprehensive set of specially designed PowerPoint slides is available for use
with Chapter 1. These slides and the lecture outline below form a completely integrated
package that simplifies the teaching of this chapter’s material.
Lecture Outline
I. INTRODUCTION
Globalization is reshaping our cultures, our political, legal, and economic
systems, and affecting our standards of living. It alters the global pattern of trade
and investment by expanding markets and multiplying production possibilities.
II. KEY PLAYERS IN INTERNATIONAL BUSINESS
Large firms from developed nations once dominated, but firms from Brazil,
China, and India now play a bigger role. Technological advancements allow small
and midsize companies to better compete.
A. Multinational Corporations
A multinational corporation (MNC) has direct investments abroad in
multiple countries. They generate significant jobs, investment, and tax
revenue for the regions and nations they enter.
1. Profiling the largest multinationals
a. Some MNCs have more employees than small nations have
citizens (e.g., Walmart has 2.2 million employees globally).
Lowers Wages in Developed Nations
Exploits Workers in Developing Nations
For Globalization
Increases Wealth and Efficiency in All Nations
Generates Labor Market Flexibility in Developed Nations
Advances the Economies of Developing Nations
Summary of the Jobs and Wages Debate
Debate about Income Inequality
Inequality within Nations
Inequality between Nations
Global Inequality
Summary of the Income Inequality Debate
Debate about Culture, Sovereignty and the Environment
Globalization and Culture
Globalization and National Sovereignty
Globalization: Menace to Democracy?
Globalization: Guardian of Democracy?
Globalization and the Environment
Developing Skill for Your Career
The Global Business Environment
The Road Ahead for International Business
Bottom Line for Business
A comprehensive set of specially designed PowerPoint slides is available for use
with Chapter 1. These slides and the lecture outline below form a completely integrated
package that simplifies the teaching of this chapter’s material.
Lecture Outline
I. INTRODUCTION
Globalization is reshaping our cultures, our political, legal, and economic
systems, and affecting our standards of living. It alters the global pattern of trade
and investment by expanding markets and multiplying production possibilities.
II. KEY PLAYERS IN INTERNATIONAL BUSINESS
Large firms from developed nations once dominated, but firms from Brazil,
China, and India now play a bigger role. Technological advancements allow small
and midsize companies to better compete.
A. Multinational Corporations
A multinational corporation (MNC) has direct investments abroad in
multiple countries. They generate significant jobs, investment, and tax
revenue for the regions and nations they enter.
1. Profiling the largest multinationals
a. Some MNCs have more employees than small nations have
citizens (e.g., Walmart has 2.2 million employees globally).
Ch 1: Globalization 3
b. If Walmart were a country, it would rank third behind
Norway in terms of economic power (Figure 1.1).
B. Entrepreneurs and Small Businesses
1. They are increasingly active in international business by exporting
earlier and growing faster with help from technology.
2. A born global firm is a company that adopts a global perspective
and engages in international business from or near its inception.
3. Some small Internet companies reach customers solely through the
Web (e.g., Vellus Products, Weekend in Italy).
III. WHAT IS GLOBALIZATION?
Globalization is the trend toward greater economic, cultural, political, and
technological interdependence among national institutions and economies. It is
marked by “denationalization,” which is not “internationalization.”
A. Globalization of Markets
1. Convergence in buyer preferences in markets around the world
a. Reduces marketing costs by standardizing activities
b. Creates market opportunities abroad if home is small or
saturated
c. Levels uneven income streams for global seasonal products
d. Companies must not overlook local buyers’ needs
e. Need for global sustainability—development that meets the
needs of the present without compromising the ability of
future generations to meet their own needs.
2. Global Sustainability, Three Markets, Three Strategies. The
world’s 7 billion people live in three types of markets, yet all
require companies to act in a sustainable manner:
a. Developed markets are solidly middle class and people can
consume almost any product desired. A firm may use the
latest technologies to develop sustainable products in a
sustainable manner.
b. Emerging markets are racing to catch up to rich nations and
are overloading infrastructures. Resource constraints can
force companies to develop sustainable production
methods.
c. Traditional markets have mostly rural populations for
whom poverty and corruption prevail. Here, sustainability
means teaching safe farming practices, environmental
stewardship, and disease awareness.
B. Globalization of Production
1. Dispersal of production activities to locations that help a company
to minimize costs or maximize quality
a. Access lower-cost workers to cut overall production costs
b. Access technical expertise
c. Access production inputs unavailable or more costly at
home
b. If Walmart were a country, it would rank third behind
Norway in terms of economic power (Figure 1.1).
B. Entrepreneurs and Small Businesses
1. They are increasingly active in international business by exporting
earlier and growing faster with help from technology.
2. A born global firm is a company that adopts a global perspective
and engages in international business from or near its inception.
3. Some small Internet companies reach customers solely through the
Web (e.g., Vellus Products, Weekend in Italy).
III. WHAT IS GLOBALIZATION?
Globalization is the trend toward greater economic, cultural, political, and
technological interdependence among national institutions and economies. It is
marked by “denationalization,” which is not “internationalization.”
A. Globalization of Markets
1. Convergence in buyer preferences in markets around the world
a. Reduces marketing costs by standardizing activities
b. Creates market opportunities abroad if home is small or
saturated
c. Levels uneven income streams for global seasonal products
d. Companies must not overlook local buyers’ needs
e. Need for global sustainability—development that meets the
needs of the present without compromising the ability of
future generations to meet their own needs.
2. Global Sustainability, Three Markets, Three Strategies. The
world’s 7 billion people live in three types of markets, yet all
require companies to act in a sustainable manner:
a. Developed markets are solidly middle class and people can
consume almost any product desired. A firm may use the
latest technologies to develop sustainable products in a
sustainable manner.
b. Emerging markets are racing to catch up to rich nations and
are overloading infrastructures. Resource constraints can
force companies to develop sustainable production
methods.
c. Traditional markets have mostly rural populations for
whom poverty and corruption prevail. Here, sustainability
means teaching safe farming practices, environmental
stewardship, and disease awareness.
B. Globalization of Production
1. Dispersal of production activities to locations that help a company
to minimize costs or maximize quality
a. Access lower-cost workers to cut overall production costs
b. Access technical expertise
c. Access production inputs unavailable or more costly at
home
Ch 1: Globalization4
IV. FORCES DRIVING GLOBALIZATION
Forces increase competition among nations by leveling the global business
playing field.
A. Falling Barriers to Trade and Investment
1947 General Agreement on Tariffs and Trade (GATT) was designed to
promote free trade by reducing tariffs and nontariff barriers. 1994 GATT
revision (1) reduced tariffs and lowered subsidies for agricultural
products; (2) defined and protected intellectual property rights; and (3)
created the WTO.
1. World Trade Organization
a. World Trade Organization (WTO) is the international
organization that enforces the rules of international trade.
b. WTO goals: (1) to help the free flow of trade, (2) help
negotiate the further opening of markets, and (3) settle
trade disputes.
c. WTO agreements are contracts committing members to fair
and open trade policies. WTO dispute settlement system is
the spine of the global trading system.
2. Other International Organizations
a. World Bank - The initial purpose of the World Bank
(www.worldbank.org) was to finance European
reconstruction following the Second World War. The
World Bank later shifted its focus to the general financial
needs of developing countries, and today it finances many
economic development projects (infrastructure
development) in Africa, South America, and Southeast
Asia.
b. International Monetary Fund - is an agency created to
regulate fixed exchange rates and to enforce the rules of the
international monetary system. Among the purposes of the
IMF (www.imf.org) are promoting international monetary
cooperation, facilitating the expansion and balanced growth
of international trade, avoiding competitive exchange
devaluation, and making financial resources temporarily
available to members suffering from severe balance of
payment problems.
3. Regional Trade Agreements
a. Smaller groups of nations also are integrating their
economies (e.g., NAFTA, European Union).
4. Trade and National Output
a. Effect of the WTO and regional trade pacts is greater global
trade and cross-border investing (Map 1.1).
b. Trade growth has been faster than world output.
c. Gross Domestic Product (GDP) is the value of all goods
and services produced by a domestic economy over a one-
IV. FORCES DRIVING GLOBALIZATION
Forces increase competition among nations by leveling the global business
playing field.
A. Falling Barriers to Trade and Investment
1947 General Agreement on Tariffs and Trade (GATT) was designed to
promote free trade by reducing tariffs and nontariff barriers. 1994 GATT
revision (1) reduced tariffs and lowered subsidies for agricultural
products; (2) defined and protected intellectual property rights; and (3)
created the WTO.
1. World Trade Organization
a. World Trade Organization (WTO) is the international
organization that enforces the rules of international trade.
b. WTO goals: (1) to help the free flow of trade, (2) help
negotiate the further opening of markets, and (3) settle
trade disputes.
c. WTO agreements are contracts committing members to fair
and open trade policies. WTO dispute settlement system is
the spine of the global trading system.
2. Other International Organizations
a. World Bank - The initial purpose of the World Bank
(www.worldbank.org) was to finance European
reconstruction following the Second World War. The
World Bank later shifted its focus to the general financial
needs of developing countries, and today it finances many
economic development projects (infrastructure
development) in Africa, South America, and Southeast
Asia.
b. International Monetary Fund - is an agency created to
regulate fixed exchange rates and to enforce the rules of the
international monetary system. Among the purposes of the
IMF (www.imf.org) are promoting international monetary
cooperation, facilitating the expansion and balanced growth
of international trade, avoiding competitive exchange
devaluation, and making financial resources temporarily
available to members suffering from severe balance of
payment problems.
3. Regional Trade Agreements
a. Smaller groups of nations also are integrating their
economies (e.g., NAFTA, European Union).
4. Trade and National Output
a. Effect of the WTO and regional trade pacts is greater global
trade and cross-border investing (Map 1.1).
b. Trade growth has been faster than world output.
c. Gross Domestic Product (GDP) is the value of all goods
and services produced by a domestic economy over a one-
Loading page 6...
Ch 1: Globalization 5
year period. Gross national product (GNP) adds income
from international activities.
B. Technological Innovation
Technology accelerates globalization by making it easier, faster, and less
costly to move data, goods, and equipment around the world.
1. E-mail and Videoconferencing
a. Speed information flows and ease the tasks of coordination
and control, which are complicated by operating across
borders.
b. Driving growth in videoconferencing are lower-cost
bandwidth and equipment, and decreased travel for cost or
safety reasons.
2. The Internet
a. Helps firms sharpen forecasting, lower inventories,
improve communication with suppliers, and communicate
quickly and cheaply with distant managers
b. Reduces the cost of reaching an international customer
base, which is essential for the competitiveness of small
firms
3. Company Intranets and Extranets
a. Intranets are private networks of company Web sites and
other information sources that allow employee access to
information from distant locations.
b. Extranets are computer networks that give distributors and
suppliers access to a company’s database so they can place
orders or restock inventories electronically and
automatically.
4. Advancements in transportation technologies
a. Make global shipping more efficient and dependable (e.g.,
GPS)
C. Measuring Globalization
1. The KOF Swiss Economic Institute’s Globalization Index ranks
nations on their economic, social, and political engagement.
2. Richest nations are the most global, with many in Europe. The
United States is currently ranked 27th (see Table 1.1).
3. The least global nations are found in Africa, East Asia, South Asia,
Latin America, and the Middle East. Low technological
connectivity slows global integration.
V. DEBATE ABOUT JOBS AND WAGES
A. Against Globalization
1. Eliminates jobs in developed nations as good-paying
manufacturing jobs go abroad to developing countries. Low-priced
goods are not worth lost jobs.
year period. Gross national product (GNP) adds income
from international activities.
B. Technological Innovation
Technology accelerates globalization by making it easier, faster, and less
costly to move data, goods, and equipment around the world.
1. E-mail and Videoconferencing
a. Speed information flows and ease the tasks of coordination
and control, which are complicated by operating across
borders.
b. Driving growth in videoconferencing are lower-cost
bandwidth and equipment, and decreased travel for cost or
safety reasons.
2. The Internet
a. Helps firms sharpen forecasting, lower inventories,
improve communication with suppliers, and communicate
quickly and cheaply with distant managers
b. Reduces the cost of reaching an international customer
base, which is essential for the competitiveness of small
firms
3. Company Intranets and Extranets
a. Intranets are private networks of company Web sites and
other information sources that allow employee access to
information from distant locations.
b. Extranets are computer networks that give distributors and
suppliers access to a company’s database so they can place
orders or restock inventories electronically and
automatically.
4. Advancements in transportation technologies
a. Make global shipping more efficient and dependable (e.g.,
GPS)
C. Measuring Globalization
1. The KOF Swiss Economic Institute’s Globalization Index ranks
nations on their economic, social, and political engagement.
2. Richest nations are the most global, with many in Europe. The
United States is currently ranked 27th (see Table 1.1).
3. The least global nations are found in Africa, East Asia, South Asia,
Latin America, and the Middle East. Low technological
connectivity slows global integration.
V. DEBATE ABOUT JOBS AND WAGES
A. Against Globalization
1. Eliminates jobs in developed nations as good-paying
manufacturing jobs go abroad to developing countries. Low-priced
goods are not worth lost jobs.
Loading page 7...
Ch 1: Globalization6
2. Lowers wages in developed nations by causing worker dislocation
that gradually lowers wages. New jobs that replace lost
manufacturing jobs often pay less.
3. Exploits workers in developing nations who work cheaply
servicing western consumers.
B. For Globalization
1. Increases wealth and efficiency in all nations because trade
openness raises output. Firms grow more efficient and pass savings
on to consumers.
2. Generates labor market flexibility in developed nations that allows
an economy to rapidly deploy labor where demand is relatively
high.
3. Advances the economies of developing nations by injecting capital
that creates higher-paying jobs, which expands the middle class
and raises standards of living.
C. Summary: Although globalization eliminates jobs in some economic
sectors, it creates jobs in other sectors. Gains in national economies are
worth lost livelihoods that individuals may suffer.
D. Globalization’s Impact on Labor, the Environment, and Markets
1. Labor standards
a. Trade unions claim that firms continually move to nations
with low labor standards, which reduces labor’s bargaining
power and forces overall labor standards lower.
b. But studies of developing nations’ export processing zones
instead find evidence that contradicts such claims.
2. Environmental protection
a. Globalization opponents say it creates a “race to the
bottom” in environmental conditions and regulations:
countries compete in reducing environmental protection
laws.
b. But evidence shows pollution-intensive U.S. firms tend to
invest in countries with stricter environmental standards.
Also, closed economies historically are the worst polluters.
3. Future markets
a. Protesters claim international firms pay locals the lowest
possible wage and export their goods back to the home
country.
b. Today, firms want to build local markets in developing
nations, not simply exploit workers and foment local
animosity.
VI. DEBATE ABOUT INCOME INEQUALITY
A. Inequality within Nations
1. Globalization critics claim that income disparity in rich nations is
increasing as firms move factory jobs to poor nations.
2. Lowers wages in developed nations by causing worker dislocation
that gradually lowers wages. New jobs that replace lost
manufacturing jobs often pay less.
3. Exploits workers in developing nations who work cheaply
servicing western consumers.
B. For Globalization
1. Increases wealth and efficiency in all nations because trade
openness raises output. Firms grow more efficient and pass savings
on to consumers.
2. Generates labor market flexibility in developed nations that allows
an economy to rapidly deploy labor where demand is relatively
high.
3. Advances the economies of developing nations by injecting capital
that creates higher-paying jobs, which expands the middle class
and raises standards of living.
C. Summary: Although globalization eliminates jobs in some economic
sectors, it creates jobs in other sectors. Gains in national economies are
worth lost livelihoods that individuals may suffer.
D. Globalization’s Impact on Labor, the Environment, and Markets
1. Labor standards
a. Trade unions claim that firms continually move to nations
with low labor standards, which reduces labor’s bargaining
power and forces overall labor standards lower.
b. But studies of developing nations’ export processing zones
instead find evidence that contradicts such claims.
2. Environmental protection
a. Globalization opponents say it creates a “race to the
bottom” in environmental conditions and regulations:
countries compete in reducing environmental protection
laws.
b. But evidence shows pollution-intensive U.S. firms tend to
invest in countries with stricter environmental standards.
Also, closed economies historically are the worst polluters.
3. Future markets
a. Protesters claim international firms pay locals the lowest
possible wage and export their goods back to the home
country.
b. Today, firms want to build local markets in developing
nations, not simply exploit workers and foment local
animosity.
VI. DEBATE ABOUT INCOME INEQUALITY
A. Inequality within Nations
1. Globalization critics claim that income disparity in rich nations is
increasing as firms move factory jobs to poor nations.
Loading page 8...
Ch 1: Globalization 7
2. Evidence is mixed, but poor people in developing nations seem to
benefit from an open economy.
B. Inequality between Nations
1. Globalization opponents say it is widening the gap in average
incomes between rich and poor nations.
2. Looking closely at the evidence, we see that open nations are
benefiting from trade whereas closed ones are not.
C. Global Inequality
1. Opponents of globalization say it is widening income inequality
among all people of the world.
2. Studies tend to agree that global inequality has fallen in recent
decades, though they disagree on the extent of the decline.
D. Summary of the Income Inequality Debate
VII. DEBATE ABOUT CULTURE, SOVEREIGNTY AND THE ENVIRONMENT
A. Globalization and Culture
1. Critics say globalization homogenizes our world and lets MNCs
destroy cultural diversity and wipe out small local businesses.
2. Yet globalization allows nations to: (1) specialize and trade for
goods they do not produce, (2) import other peoples’ cultural
goods, and (3) still protect deeper moral and cultural norms.
B. Globalization and National Sovereignty
1. Globalization: Menace to Democracy?
a. Supranational institutions with international goals and
appointed officials undermine national sovereignty and
democracy.
b. Elected officials undercut democracy and local and
regional authority with “international” agreements on
citizens’ behalf.
2. Globalization: Guardian of Democracy?
a. Globalization has helped spread democracy worldwide
(e.g., more democratic nations than ever).
b. Some losses of sovereignty have had positive social
impacts, as in human rights, workers’ rights, and
discrimination.
3. Globalization and the Environment
a. Most international firms today support reasonable
environmental laws because (if for no other reason) they
want to expand future local markets for their goods and
services. They recognize that healthy future markets require
a sustainable approach to business expansion.
VIII. DEVELOPING SKILLS FOR YOUR CAREER
Skills required for a career in International Business include: critical thinking, an
understanding of business ethics and social responsibility, communication and
knowledge application and awareness.
2. Evidence is mixed, but poor people in developing nations seem to
benefit from an open economy.
B. Inequality between Nations
1. Globalization opponents say it is widening the gap in average
incomes between rich and poor nations.
2. Looking closely at the evidence, we see that open nations are
benefiting from trade whereas closed ones are not.
C. Global Inequality
1. Opponents of globalization say it is widening income inequality
among all people of the world.
2. Studies tend to agree that global inequality has fallen in recent
decades, though they disagree on the extent of the decline.
D. Summary of the Income Inequality Debate
VII. DEBATE ABOUT CULTURE, SOVEREIGNTY AND THE ENVIRONMENT
A. Globalization and Culture
1. Critics say globalization homogenizes our world and lets MNCs
destroy cultural diversity and wipe out small local businesses.
2. Yet globalization allows nations to: (1) specialize and trade for
goods they do not produce, (2) import other peoples’ cultural
goods, and (3) still protect deeper moral and cultural norms.
B. Globalization and National Sovereignty
1. Globalization: Menace to Democracy?
a. Supranational institutions with international goals and
appointed officials undermine national sovereignty and
democracy.
b. Elected officials undercut democracy and local and
regional authority with “international” agreements on
citizens’ behalf.
2. Globalization: Guardian of Democracy?
a. Globalization has helped spread democracy worldwide
(e.g., more democratic nations than ever).
b. Some losses of sovereignty have had positive social
impacts, as in human rights, workers’ rights, and
discrimination.
3. Globalization and the Environment
a. Most international firms today support reasonable
environmental laws because (if for no other reason) they
want to expand future local markets for their goods and
services. They recognize that healthy future markets require
a sustainable approach to business expansion.
VIII. DEVELOPING SKILLS FOR YOUR CAREER
Skills required for a career in International Business include: critical thinking, an
understanding of business ethics and social responsibility, communication and
knowledge application and awareness.
Loading page 9...
Ch 1: Globalization8
A. The Global Business Environment – What makes international business
special is that it occurs within a dynamic, integrated system that weaves
together four distinct elements:
1. Globalization is transforming our societies and commercial
activities. It also increases competition everywhere, forcing
companies to be vigilant.
2. Each national business environment consists of unique cultural,
political, legal, and economic characteristics. Companies must be
attentive to nuances and adapt products and practices as needed.
3. The international business environment influences how business is
conducted so firms must closely monitor events.
4. Context of international business management is defined by the
characteristics of the national and international business
environments. Managers must abide by the prevailing rules in each
market in which it operates.
B. The Road Ahead for International Business
Part 1 (Chapter 1): Globalization
Part 2 (Chapters 2–4): National Business Environments
Parts 3 and 4 (Chapters 5–8 and 9–10): International Business
Environment
Part 5 (Chapters 11–16): International Business Management
IX. BOTTOM LINE FOR BUSINESS
A. Harnessing Globalization’s Benefits
1. The most global nations tend to have the greatest equality, robust
environmental protection, inclusive political systems, lowest levels
of corruption, healthiest lifestyles, and be where women have
achieved the most social, educational, and economic progress.
2. The debate has opened a dialogue on how globalization can be
harnessed to make its benefits exceed its costs.
B. Intensified Competition
1. Continued globalization is taking companies into
A. The Global Business Environment – What makes international business
special is that it occurs within a dynamic, integrated system that weaves
together four distinct elements:
1. Globalization is transforming our societies and commercial
activities. It also increases competition everywhere, forcing
companies to be vigilant.
2. Each national business environment consists of unique cultural,
political, legal, and economic characteristics. Companies must be
attentive to nuances and adapt products and practices as needed.
3. The international business environment influences how business is
conducted so firms must closely monitor events.
4. Context of international business management is defined by the
characteristics of the national and international business
environments. Managers must abide by the prevailing rules in each
market in which it operates.
B. The Road Ahead for International Business
Part 1 (Chapter 1): Globalization
Part 2 (Chapters 2–4): National Business Environments
Parts 3 and 4 (Chapters 5–8 and 9–10): International Business
Environment
Part 5 (Chapters 11–16): International Business Management
IX. BOTTOM LINE FOR BUSINESS
A. Harnessing Globalization’s Benefits
1. The most global nations tend to have the greatest equality, robust
environmental protection, inclusive political systems, lowest levels
of corruption, healthiest lifestyles, and be where women have
achieved the most social, educational, and economic progress.
2. The debate has opened a dialogue on how globalization can be
harnessed to make its benefits exceed its costs.
B. Intensified Competition
1. Continued globalization is taking companies into
Loading page 10...
Ch 1: Globalization 9
1. Rich nations could open their markets, slash agricultural subsidies,
and increase development aid. Poor nations could improve their
investment climates and improve social protection for the poor.
2. Rich nations could offer workers their wage insurance, subsidized
health insurance if out of work, and improve education. Rich
nations could help enforce labor standards, help clarify
environmental agreements, and research the environmental
implications of trade agreements.
Quick Study Questions
Quick Study 1
1. Q: What is the value of goods and services that all nations of the world export
every year?
A: Goods worth $16.2 trillion and services worth 4.7 trillion.
2. Q: A business that has direct investments in the form of marketing or
manufacturing subsidiaries abroad in multiple countries is called a what?
A: A business that has direct investments abroad in multiple countries is a
multinational corporation (MNC).
3. Q: A born global firm engages in international business from or near its inception
and does what else?
A: A born global firm also adopts a global perspective.
Quick Study 2
1. Q: Globalization causes the institutions and economies of nations to become
what?
A: Globalization causes institutions and economies of nations to become more
interdependent.
2. Q: What benefits might a company obtain from the globalization of markets?
A: Globalization of markets refers to convergence in buyer preferences in markets
around the world. Potential benefits for companies include: (1) reduced marketing
costs by standardizing activities, (2) market opportunities abroad if home market
is small or saturated, and (3) levels an income stream by letting international sales
offset domestic sales for a company selling a global seasonal product.
3. Q: Sustainability is development that meets present needs without compromising
what?
A: Sustainability is development that meets present needs without compromising
the ability of future generations to meet their own needs.
1. Rich nations could open their markets, slash agricultural subsidies,
and increase development aid. Poor nations could improve their
investment climates and improve social protection for the poor.
2. Rich nations could offer workers their wage insurance, subsidized
health insurance if out of work, and improve education. Rich
nations could help enforce labor standards, help clarify
environmental agreements, and research the environmental
implications of trade agreements.
Quick Study Questions
Quick Study 1
1. Q: What is the value of goods and services that all nations of the world export
every year?
A: Goods worth $16.2 trillion and services worth 4.7 trillion.
2. Q: A business that has direct investments in the form of marketing or
manufacturing subsidiaries abroad in multiple countries is called a what?
A: A business that has direct investments abroad in multiple countries is a
multinational corporation (MNC).
3. Q: A born global firm engages in international business from or near its inception
and does what else?
A: A born global firm also adopts a global perspective.
Quick Study 2
1. Q: Globalization causes the institutions and economies of nations to become
what?
A: Globalization causes institutions and economies of nations to become more
interdependent.
2. Q: What benefits might a company obtain from the globalization of markets?
A: Globalization of markets refers to convergence in buyer preferences in markets
around the world. Potential benefits for companies include: (1) reduced marketing
costs by standardizing activities, (2) market opportunities abroad if home market
is small or saturated, and (3) levels an income stream by letting international sales
offset domestic sales for a company selling a global seasonal product.
3. Q: Sustainability is development that meets present needs without compromising
what?
A: Sustainability is development that meets present needs without compromising
the ability of future generations to meet their own needs.
Loading page 11...
Ch 1: Globalization10
Quick Study 3
1. Q: What global organizations have helped expand globalization?
A: The 1947 GATT lowered trade barriers and made it cheaper and easier to ship
goods across borders. In 1988 world merchandise trade was 20 times larger than
in 1947; average tariffs dropped from 40 percent to 5 percent. A 1994 GATT
revision created the WTO, which has the power to enforce international trade
rules. Goals of the WTO are: (1) to help the free flow of trade, (2) help negotiate
further opening of markets, and (3) settle trade disputes. WTO agreements are
contracts committing members to fair and open trade policies. The WTO dispute
settlement system is the spine of the global trading system. The World Bank and
the International Monetary Fund have also helped expand globalization.
2. Q: What technological innovations are helping to propel globalization?
A: E-mail and videoconferencing speed information flows and ease the tasks of
coordination and control. Firms use the Web to sharpen forecasting, lower
inventories, and improve communication with suppliers, and to communicate with
distant managers quickly, cheaply, and efficiently. The Web also reduces the cost
of reaching international customers—important for the competitiveness of small
firms. Company intranets allow employees to access information from distant
locations to share best practices. Extranets give distributors and suppliers access
to a company’s database so they can place orders or restock inventories
electronically and automatically. Transportation advancements are facilitating
globalization by making shipping more efficient and dependable.
3. Q: What nations rank high in terms of globalization?
A: Netherlands, Ireland and Belgium are examples of a nations that rank high in
terms of globalization.
Quick Study 4
1. Q: In the debate over jobs and wages, opponents of globalization say that it does
what?
A: Opponents state that globalization eliminates jobs in developed nations,
exploits workers in developing countries, and lowers wages in developed nations.
2. Q: In the debate over jobs and wages, supporters of globalization say that it does
what?
A: Supporters state that globalization generates labor market flexibility in
developed nations and advances the economies of developing nations.
Quick Study 5
1. Q: Evidence suggests that globalization can help developing nations boost
incomes for their poorest citizens in what part of the debate over inequality?
A: Inequality within nations
Quick Study 3
1. Q: What global organizations have helped expand globalization?
A: The 1947 GATT lowered trade barriers and made it cheaper and easier to ship
goods across borders. In 1988 world merchandise trade was 20 times larger than
in 1947; average tariffs dropped from 40 percent to 5 percent. A 1994 GATT
revision created the WTO, which has the power to enforce international trade
rules. Goals of the WTO are: (1) to help the free flow of trade, (2) help negotiate
further opening of markets, and (3) settle trade disputes. WTO agreements are
contracts committing members to fair and open trade policies. The WTO dispute
settlement system is the spine of the global trading system. The World Bank and
the International Monetary Fund have also helped expand globalization.
2. Q: What technological innovations are helping to propel globalization?
A: E-mail and videoconferencing speed information flows and ease the tasks of
coordination and control. Firms use the Web to sharpen forecasting, lower
inventories, and improve communication with suppliers, and to communicate with
distant managers quickly, cheaply, and efficiently. The Web also reduces the cost
of reaching international customers—important for the competitiveness of small
firms. Company intranets allow employees to access information from distant
locations to share best practices. Extranets give distributors and suppliers access
to a company’s database so they can place orders or restock inventories
electronically and automatically. Transportation advancements are facilitating
globalization by making shipping more efficient and dependable.
3. Q: What nations rank high in terms of globalization?
A: Netherlands, Ireland and Belgium are examples of a nations that rank high in
terms of globalization.
Quick Study 4
1. Q: In the debate over jobs and wages, opponents of globalization say that it does
what?
A: Opponents state that globalization eliminates jobs in developed nations,
exploits workers in developing countries, and lowers wages in developed nations.
2. Q: In the debate over jobs and wages, supporters of globalization say that it does
what?
A: Supporters state that globalization generates labor market flexibility in
developed nations and advances the economies of developing nations.
Quick Study 5
1. Q: Evidence suggests that globalization can help developing nations boost
incomes for their poorest citizens in what part of the debate over inequality?
A: Inequality within nations
Loading page 12...
Ch 1: Globalization 11
2. Q: In the debate over inequality between nations, evidence suggests that
developing nations that are open to trade and investment do what?
A: Evidences suggests that developing nations that are open to trade and
investment grow faster than rich nations.
3. Q: Regarding the debate over global inequality, experts tend to agree on what?
A: Experts tend to agree that inequality has fallen in recent decades.
Quick Study 6
1. Q: People opposed to globalization say that it does what to national cultures?
A: People opposed to globalization say that it homogenizes national cultures.
2. Q: Regarding national sovereignty, opponents of globalization say that it does
what?
A: Opponents say that globalization helps supranational organizations gain power,
may force nations to violate the rights of local and state governments, and
undercuts the democratic process and individual liberty.
3. Q: With regard to the physical environment, what do globalization supporters
argue?
A: Supporters argue that companies have invested in nations that were enacting
stricter environmental rules; that few U.S. firms invest to obtain low-cost
resources and then export finished goods to the United States; that firms care for
the environment abroad to nurture future local markets for their goods and
services.
Quick Study 7
1. Q: It helps to think about international business as four elements that occur
within a what?
A: It is helpful to view international business as occurring within an integrated
global system consisting of four main elements: (1) Globalization is a potent force
transforming our societies and commercial activities. (2) Separate national
business environments, including culture and systems of politics, law, and
economics. (3) The international business environment, which is where the
actions of consumers, workers, companies, financial institutions, and governments
from different nations converge. (4) International business management which
involves all the duties of management in a domestic setting, but which are
complicated by a multitude of differences.
2. Q: How does managing an international firm differ from managing a purely
domestic business?
2. Q: In the debate over inequality between nations, evidence suggests that
developing nations that are open to trade and investment do what?
A: Evidences suggests that developing nations that are open to trade and
investment grow faster than rich nations.
3. Q: Regarding the debate over global inequality, experts tend to agree on what?
A: Experts tend to agree that inequality has fallen in recent decades.
Quick Study 6
1. Q: People opposed to globalization say that it does what to national cultures?
A: People opposed to globalization say that it homogenizes national cultures.
2. Q: Regarding national sovereignty, opponents of globalization say that it does
what?
A: Opponents say that globalization helps supranational organizations gain power,
may force nations to violate the rights of local and state governments, and
undercuts the democratic process and individual liberty.
3. Q: With regard to the physical environment, what do globalization supporters
argue?
A: Supporters argue that companies have invested in nations that were enacting
stricter environmental rules; that few U.S. firms invest to obtain low-cost
resources and then export finished goods to the United States; that firms care for
the environment abroad to nurture future local markets for their goods and
services.
Quick Study 7
1. Q: It helps to think about international business as four elements that occur
within a what?
A: It is helpful to view international business as occurring within an integrated
global system consisting of four main elements: (1) Globalization is a potent force
transforming our societies and commercial activities. (2) Separate national
business environments, including culture and systems of politics, law, and
economics. (3) The international business environment, which is where the
actions of consumers, workers, companies, financial institutions, and governments
from different nations converge. (4) International business management which
involves all the duties of management in a domestic setting, but which are
complicated by a multitude of differences.
2. Q: How does managing an international firm differ from managing a purely
domestic business?
Loading page 13...
Ch 1: Globalization12
A: International firms encounter unfamiliar societies. International managers must
scan the globe for opportunities and threats. International firms may need to adapt
practices or products to local conditions.
Ethical Challenge
You are the CEO of a major U.S. apparel company that contracts work to garment
manufacturers abroad. Employees of the contractors report 20-hour workdays, pay lower
than the minimum wage, overcrowded living conditions, physically abusive supervisors,
and confiscation of their passports. Contractors and government officials say local labor
laws are adhered to and enforced, though abuses appear widespread. You send
inspectors to the factories abroad but they uncover no labor violations. A labor-advocacy
group claims that supervisors coached workers to lie to your inspectors about conditions
and threatened workers with time in makeshift jails without food if they talked.
1-5. Should you implement a monitoring system to learn the truth about what is
happening?
A: The implementation of a monitoring system is important. A keener sense of
business ethics and social responsibility are critical to the success of MNC. These
concepts serve as the guiding principles that influence the way individuals and
organizations behave within society. The issues of personal ethical responsibility
and reasoning should impact how managers make ethical decisions under specific
circumstances and how they fared.
1-6. Do you help the factory improve conditions, withdraw your business, or simply do
nothing?
A: The answer depends on the overall outlook of the market and opportunities
that it presents. If the long term opportunities are good, it is important to note the
business does have a social responsibility with regard to topics such as human
rights, fair trade, and sustainable development.
1-7. How might your actions affect your relations with the factory owner and your
ability to do business in the country?
A: It’s extremely important that your company be thorough and transparent
throughout the monitoring process. The monitoring process could seem more
impartial by contracting an independent organization to conduct the investigation,
rather than employ someone with whom the company might be suspected as
having social or political connections. You could also have the report made public
to all parties simultaneously to eliminate the perception of the report being
adjusted. To implement and maintain rapid, sustainable improvements: monitor
and verify codes of conduct regarding labor practices, disseminate information to
workers explaining their rights, appeal to government agencies on effective ways
to raise labor standards, explain how their reputation as being “good guys” in the
labor standards arena can create a useful marketing tool and opportunities for
A: International firms encounter unfamiliar societies. International managers must
scan the globe for opportunities and threats. International firms may need to adapt
practices or products to local conditions.
Ethical Challenge
You are the CEO of a major U.S. apparel company that contracts work to garment
manufacturers abroad. Employees of the contractors report 20-hour workdays, pay lower
than the minimum wage, overcrowded living conditions, physically abusive supervisors,
and confiscation of their passports. Contractors and government officials say local labor
laws are adhered to and enforced, though abuses appear widespread. You send
inspectors to the factories abroad but they uncover no labor violations. A labor-advocacy
group claims that supervisors coached workers to lie to your inspectors about conditions
and threatened workers with time in makeshift jails without food if they talked.
1-5. Should you implement a monitoring system to learn the truth about what is
happening?
A: The implementation of a monitoring system is important. A keener sense of
business ethics and social responsibility are critical to the success of MNC. These
concepts serve as the guiding principles that influence the way individuals and
organizations behave within society. The issues of personal ethical responsibility
and reasoning should impact how managers make ethical decisions under specific
circumstances and how they fared.
1-6. Do you help the factory improve conditions, withdraw your business, or simply do
nothing?
A: The answer depends on the overall outlook of the market and opportunities
that it presents. If the long term opportunities are good, it is important to note the
business does have a social responsibility with regard to topics such as human
rights, fair trade, and sustainable development.
1-7. How might your actions affect your relations with the factory owner and your
ability to do business in the country?
A: It’s extremely important that your company be thorough and transparent
throughout the monitoring process. The monitoring process could seem more
impartial by contracting an independent organization to conduct the investigation,
rather than employ someone with whom the company might be suspected as
having social or political connections. You could also have the report made public
to all parties simultaneously to eliminate the perception of the report being
adjusted. To implement and maintain rapid, sustainable improvements: monitor
and verify codes of conduct regarding labor practices, disseminate information to
workers explaining their rights, appeal to government agencies on effective ways
to raise labor standards, explain how their reputation as being “good guys” in the
labor standards arena can create a useful marketing tool and opportunities for
Loading page 14...
Ch 1: Globalization 13
firms and countries by differentiating themselves when competing in the apparel
export market.
Teaming Up
Research Project. Imagine that you and several of your classmates own a company that
manufactures cheap sunglasses. To lower production costs, you choose to move your
factory from your developed country to a more cost-effective nation.
1-8. What elements of the national business environment might influence your decision
where to move production? Are there obstacles to overcome in the international
business environment?
A: The first factor is based on the need potential. For example, if a company
produces air conditioners, it will obviously look at countries with warm climates.
You would then address the Financial and Economic Forces, the analyst should
look at factors such as trends in inflation rates, exchange rates and interest rates.
Credit availability, paying habits of customers and Return of Investment for
similar investments are other factors to be considered. You would then proceed to
look at Political and Legal Forces, The analyst should look at elements such as:
market entry barriers, profit remittance barriers and other barriers such as political
instability, tax laws, safety standards, price controls, etc., and finally followed by
looking at the Sociocultural and Competitive Forces.
1-9. What aspects of the globalization of production and marketing will you expect
will benefit your company after the move?
A: This project gets students to begin pondering the types of elements that must
be considered when selecting a country for investment. At a minimum, students’
responses should consider: (1) the presence of investment barriers in the country;
(2) resources needed to carry out production, as well as their availability and cost;
(3) availability of modern telecommunications to facilitate communication with
the home office; and (4) how the expansion might be financed.
Practicing International Management Case
MTV Goes Global with a Local Beat
1-16. Q: Some people outside the United States say teens exposed to large doses of U.S.
youth culture on MTV will identify less with their own societies and teens in
developing countries will want Western goods they cannot afford. MTV’s
response: “It’s just fun, it’s only TV,” says one executive. What do you think? Are
there dangers in broadcasting U.S.-style programs and ads to developing
countries?
A: The debate over the impact of U.S. programming beamed to other developed
and developing cultures will likely never cease. The U.S. television program The
Simpsons, which depicts a rather unflattering U.S. family, is seen in more than 90
countries. Such a program is unlikely to encourage young people outside the
firms and countries by differentiating themselves when competing in the apparel
export market.
Teaming Up
Research Project. Imagine that you and several of your classmates own a company that
manufactures cheap sunglasses. To lower production costs, you choose to move your
factory from your developed country to a more cost-effective nation.
1-8. What elements of the national business environment might influence your decision
where to move production? Are there obstacles to overcome in the international
business environment?
A: The first factor is based on the need potential. For example, if a company
produces air conditioners, it will obviously look at countries with warm climates.
You would then address the Financial and Economic Forces, the analyst should
look at factors such as trends in inflation rates, exchange rates and interest rates.
Credit availability, paying habits of customers and Return of Investment for
similar investments are other factors to be considered. You would then proceed to
look at Political and Legal Forces, The analyst should look at elements such as:
market entry barriers, profit remittance barriers and other barriers such as political
instability, tax laws, safety standards, price controls, etc., and finally followed by
looking at the Sociocultural and Competitive Forces.
1-9. What aspects of the globalization of production and marketing will you expect
will benefit your company after the move?
A: This project gets students to begin pondering the types of elements that must
be considered when selecting a country for investment. At a minimum, students’
responses should consider: (1) the presence of investment barriers in the country;
(2) resources needed to carry out production, as well as their availability and cost;
(3) availability of modern telecommunications to facilitate communication with
the home office; and (4) how the expansion might be financed.
Practicing International Management Case
MTV Goes Global with a Local Beat
1-16. Q: Some people outside the United States say teens exposed to large doses of U.S.
youth culture on MTV will identify less with their own societies and teens in
developing countries will want Western goods they cannot afford. MTV’s
response: “It’s just fun, it’s only TV,” says one executive. What do you think? Are
there dangers in broadcasting U.S.-style programs and ads to developing
countries?
A: The debate over the impact of U.S. programming beamed to other developed
and developing cultures will likely never cease. The U.S. television program The
Simpsons, which depicts a rather unflattering U.S. family, is seen in more than 90
countries. Such a program is unlikely to encourage young people outside the
Loading page 15...
Ch 1: Globalization14
United States to grow up to be like Homer Simpson. Generally, this program and
others, such asModern Family, the The Ellen Degeneres Show, and Big Bang
Theory, are watched around the world for a glimpse into the humorous or darker
aspects of U.S. culture. On the other hand, local programming can lose out to the
U.S. programming if it is not as entertaining.
In regard to desires among young people for more “Western” goods, this
is a sensitive issue involving elements of economic development and materialism.
It could be argued that it is not ethical to show U.S. programs that depict wealthy
lifestyles in developing countries because they promote discontent in those
markets and promote materialism. However, there are wealthy and poor people in
every nation and, following this line of reasoning, one could argue that such
programs should not be aired in the U.S. market either—incidentally, some
groups do make this argument.
1-17. Q: Digital compression technology made it possible for MTV to program over a
global network. Can you think of other technological innovations that have helped
companies to think globally and act locally?
A: Internet retailers such as Amazon make online books in English available
globally. However, Amazon also has online service to accommodate those in
French- and Spanish-speaking countries. This is a localized approach. The French
version of Amazon can further localize its selections by offering books tailored to
specific Francophone regions such as Africa and Canada, not just France. Clearly,
Amazon can continue to localize by selecting other languages where significant
numbers of readers are.
United States to grow up to be like Homer Simpson. Generally, this program and
others, such asModern Family, the The Ellen Degeneres Show, and Big Bang
Theory, are watched around the world for a glimpse into the humorous or darker
aspects of U.S. culture. On the other hand, local programming can lose out to the
U.S. programming if it is not as entertaining.
In regard to desires among young people for more “Western” goods, this
is a sensitive issue involving elements of economic development and materialism.
It could be argued that it is not ethical to show U.S. programs that depict wealthy
lifestyles in developing countries because they promote discontent in those
markets and promote materialism. However, there are wealthy and poor people in
every nation and, following this line of reasoning, one could argue that such
programs should not be aired in the U.S. market either—incidentally, some
groups do make this argument.
1-17. Q: Digital compression technology made it possible for MTV to program over a
global network. Can you think of other technological innovations that have helped
companies to think globally and act locally?
A: Internet retailers such as Amazon make online books in English available
globally. However, Amazon also has online service to accommodate those in
French- and Spanish-speaking countries. This is a localized approach. The French
version of Amazon can further localize its selections by offering books tailored to
specific Francophone regions such as Africa and Canada, not just France. Clearly,
Amazon can continue to localize by selecting other languages where significant
numbers of readers are.
Loading page 16...
CHAPTER 2
CROSS-CULTURAL BUSINESS
LEARNING OBJECTIVES:
2.1 Explain culture and the need for cultural knowledge.
2.2 Summarize the cultural importance of values and behavior.
2.3 Describe the roles of social structure and education in culture.
2.4 Outline how the major world religions can influence business.
2.5 Explain the importance of personal communication to international business.
2.6 Describe how firms and culture interact in the global workplace.
CHAPTER OUTLINE:
Introduction
What Is Culture?
National Culture
Subcultures
Physical Environment
Need for Cultural Knowledge
Avoiding Ethnocentricity
Developing Cultural Literacy
Values and Behavior
Values
Attitudes
Aesthetics
Appropriate Behavior
Manners
Customs
Folk or Popular Customs
The Business Customs of Gift Giving
Social Structure and Education
Social Group Associations
Family
Gender
Social Status
Social Mobility
Caste System
Class System
Education
The “Brain Drain” Phenomenon
Religion
Christianity
Islam
Hinduism
Buddhism
CROSS-CULTURAL BUSINESS
LEARNING OBJECTIVES:
2.1 Explain culture and the need for cultural knowledge.
2.2 Summarize the cultural importance of values and behavior.
2.3 Describe the roles of social structure and education in culture.
2.4 Outline how the major world religions can influence business.
2.5 Explain the importance of personal communication to international business.
2.6 Describe how firms and culture interact in the global workplace.
CHAPTER OUTLINE:
Introduction
What Is Culture?
National Culture
Subcultures
Physical Environment
Need for Cultural Knowledge
Avoiding Ethnocentricity
Developing Cultural Literacy
Values and Behavior
Values
Attitudes
Aesthetics
Appropriate Behavior
Manners
Customs
Folk or Popular Customs
The Business Customs of Gift Giving
Social Structure and Education
Social Group Associations
Family
Gender
Social Status
Social Mobility
Caste System
Class System
Education
The “Brain Drain” Phenomenon
Religion
Christianity
Islam
Hinduism
Buddhism
Loading page 17...
Ch 2: Cross-Cultural Business2
Confucianism
Judaism
Shinto
Personal Communication
Spoken and Written Language
Implications for Managers
Language Blunders
Lingua Franca
Body Language
Culture in the Global Workplace
Perception of Time
View of Work
Material Culture
Cultural Change
When Companies Change Cultures
When Culture Changes Companies
Studying Culture in the Workplace
Kluckhohn-Strodtbeck Framework
Case: Dimensions of Japanese Culture
Hofstede Framework
Bottom Line for Business
A comprehensive set of specially designed PowerPoint slides is available for use
with Chapter 2. These slides and the lecture outline below form a completely integrated
package that simplifies the teaching of this chapter’s material.
Lecture Outline
I. INTRODUCTION
This chapter describes culture in the context of international business, explains
how culture affects international business practices and competitiveness, and
presents two methods of classifying cultures.
II. WHAT IS CULTURE?
Culture is the set of values, beliefs, rules, and institutions held by a specific group
of people. Main components include: aesthetics, values and attitudes, manners
and customs, social structure, religion, personal communication, education, and
physical and material environments.
A. National culture
1. Nation-states support and promote the concept of a national culture
by building museums and monuments to preserve the legacies of
important events and people.
2. Nation-states intervene to help preserve their national cultures.
3. Companies get involved in supporting culture, in part, for the
public relations benefit.
Confucianism
Judaism
Shinto
Personal Communication
Spoken and Written Language
Implications for Managers
Language Blunders
Lingua Franca
Body Language
Culture in the Global Workplace
Perception of Time
View of Work
Material Culture
Cultural Change
When Companies Change Cultures
When Culture Changes Companies
Studying Culture in the Workplace
Kluckhohn-Strodtbeck Framework
Case: Dimensions of Japanese Culture
Hofstede Framework
Bottom Line for Business
A comprehensive set of specially designed PowerPoint slides is available for use
with Chapter 2. These slides and the lecture outline below form a completely integrated
package that simplifies the teaching of this chapter’s material.
Lecture Outline
I. INTRODUCTION
This chapter describes culture in the context of international business, explains
how culture affects international business practices and competitiveness, and
presents two methods of classifying cultures.
II. WHAT IS CULTURE?
Culture is the set of values, beliefs, rules, and institutions held by a specific group
of people. Main components include: aesthetics, values and attitudes, manners
and customs, social structure, religion, personal communication, education, and
physical and material environments.
A. National culture
1. Nation-states support and promote the concept of a national culture
by building museums and monuments to preserve the legacies of
important events and people.
2. Nation-states intervene to help preserve their national cultures.
3. Companies get involved in supporting culture, in part, for the
public relations benefit.
Loading page 18...
Ch 2: Cross-Cultural Business 3
B. Subcultures
1. A subculture is a group of people who share a unique way of life
within a larger, dominant culture. It can differ from the dominant
culture in language, race, lifestyle, values, attitudes, and so on.
2. Companies must be mindful of subcultures when formulating
business strategies (e.g., China has 50 ethnic groups).
3. Decisions regarding product design, packaging, and advertising
must consider distinct cultures.
4. Subcultures also can extend beyond national borders.
C. Physical Environment—These heavily influence a culture’s development
and pace of change.
1. Topography: all physical features that characterize the surface of a
geographic region. Cultures isolated by impassable mountains or
large bodies of water are less exposed to the cultural traits of others
and change slowly. Topography impacts product needs.
2. Topography impacts personal communication (e.g., mountains and
the Gobi Desert consume two-thirds of China).
3. Climate affects where people settle and directs systems of
distribution (e.g., Australian desert, jungles, and coastal areas).
4. Climate plays a large role in lifestyle, clothing, and work habits,
such as organizing production schedules for idled machines.
D. Need for Cultural Knowledge
1. Avoiding Ethnocentricity
a. Ethnocentricity is the belief that one’s own ethnic group or
culture is superior to that of others. It causes people to view
other culture in terms of their own and overlook beneficial
aspects of other cultures.
b. Ethnocentricity can undermine business can undermine
business projects when employees are insensitive to
cultural nuances.
2. Developing Cultural Literacy
a. Managers working directly in international business should
develop cultural literacy—detailed knowledge about a
culture that enables a person to function effectively within
it.
b. Cultural literacy brings a company closer to customer needs
and improves competitiveness.
III. VALUES AND BEHAVIOR
A. Values are ideas, beliefs and customs to which people are emotionally
attached. They affect work ethic and desire for material possession. Some
cultures value leisure while others value hard work.
B. Attitudes
1. Attitudes are positive or negative evaluations, feelings, and
tendencies that individuals harbor toward objects or concepts.
B. Subcultures
1. A subculture is a group of people who share a unique way of life
within a larger, dominant culture. It can differ from the dominant
culture in language, race, lifestyle, values, attitudes, and so on.
2. Companies must be mindful of subcultures when formulating
business strategies (e.g., China has 50 ethnic groups).
3. Decisions regarding product design, packaging, and advertising
must consider distinct cultures.
4. Subcultures also can extend beyond national borders.
C. Physical Environment—These heavily influence a culture’s development
and pace of change.
1. Topography: all physical features that characterize the surface of a
geographic region. Cultures isolated by impassable mountains or
large bodies of water are less exposed to the cultural traits of others
and change slowly. Topography impacts product needs.
2. Topography impacts personal communication (e.g., mountains and
the Gobi Desert consume two-thirds of China).
3. Climate affects where people settle and directs systems of
distribution (e.g., Australian desert, jungles, and coastal areas).
4. Climate plays a large role in lifestyle, clothing, and work habits,
such as organizing production schedules for idled machines.
D. Need for Cultural Knowledge
1. Avoiding Ethnocentricity
a. Ethnocentricity is the belief that one’s own ethnic group or
culture is superior to that of others. It causes people to view
other culture in terms of their own and overlook beneficial
aspects of other cultures.
b. Ethnocentricity can undermine business can undermine
business projects when employees are insensitive to
cultural nuances.
2. Developing Cultural Literacy
a. Managers working directly in international business should
develop cultural literacy—detailed knowledge about a
culture that enables a person to function effectively within
it.
b. Cultural literacy brings a company closer to customer needs
and improves competitiveness.
III. VALUES AND BEHAVIOR
A. Values are ideas, beliefs and customs to which people are emotionally
attached. They affect work ethic and desire for material possession. Some
cultures value leisure while others value hard work.
B. Attitudes
1. Attitudes are positive or negative evaluations, feelings, and
tendencies that individuals harbor toward objects or concepts.
Loading page 19...
Ch 2: Cross-Cultural Business4
Learned from role models and formed within a cultural context.
More flexible than values.
C. Aesthetics
1. Aesthetics is what a culture considers to be in “good taste” in the
arts, the imagery evoked by certain expressions, and the
symbolism of colors.
2. Appropriate colors for advertising, product packaging, and even
work uniforms can enhance success (e.g., Green in Islam).
3. Blunders can result from selecting inappropriate colors and
symbols for advertising, product packaging, and architecture.
4. Music is deeply cultural and must be considered in promotions.
5. It is also an important consideration in marketing over the Internet.
D. Appropriate Behavior—it is important to understand manners and customs
to avoid mistakes abroad. In depth knowledge improves the abilities of
managers.
1. Manners are appropriate ways of behaving, speaking, and dressing
in a culture (e.g., conducting business during meals in the United
States). Another current example: Jack Ma founded Alibaba
(www.alibaba.com) as a way for suppliers and buyers to increase
efficiency by cutting through layers of intermediaries and trading
companies. But he realized early that his Chinese clients needed
training in business etiquette to cross the cultural divide and do
business with people from Western cultures. Therefore, Alibaba
offers seminars on business manners that instruct clients to spend
more time chitchatting with clients and conversing more casually.
2. Customs are habits or ways of behaving in specific circumstances
that are passed down through generations in a culture. Customs
define appropriate habits or behaviors in specific situations.
a. Folk customs are behaviors, dating back generations,
practiced within a homogeneous group of people (e.g.,
dragon boat festival in China).
b. A popular custom is behavior practiced by a heterogeneous
group or by several groups (e.g., blue jeans, “burgers ’n
fries”).
c. The business custom of gift giving – slthough giving token
gifts to business and government associates is customary,
the proper type of gift varies. Cultures differ in their legal
and ethical rules regarding bribery. The U.S. Foreign
Corrupt Practices Act prohibits companies from giving
large gifts to win business favors, applies to U.S. firms
operating at home and abroad.
IV. SOCIAL STRUCTURE AND EDUCATION
Social structure embodies a culture’s fundamental organization, including groups
and institutions, social positions and relationships, and resource distribution.
A. Social Group Associations
Learned from role models and formed within a cultural context.
More flexible than values.
C. Aesthetics
1. Aesthetics is what a culture considers to be in “good taste” in the
arts, the imagery evoked by certain expressions, and the
symbolism of colors.
2. Appropriate colors for advertising, product packaging, and even
work uniforms can enhance success (e.g., Green in Islam).
3. Blunders can result from selecting inappropriate colors and
symbols for advertising, product packaging, and architecture.
4. Music is deeply cultural and must be considered in promotions.
5. It is also an important consideration in marketing over the Internet.
D. Appropriate Behavior—it is important to understand manners and customs
to avoid mistakes abroad. In depth knowledge improves the abilities of
managers.
1. Manners are appropriate ways of behaving, speaking, and dressing
in a culture (e.g., conducting business during meals in the United
States). Another current example: Jack Ma founded Alibaba
(www.alibaba.com) as a way for suppliers and buyers to increase
efficiency by cutting through layers of intermediaries and trading
companies. But he realized early that his Chinese clients needed
training in business etiquette to cross the cultural divide and do
business with people from Western cultures. Therefore, Alibaba
offers seminars on business manners that instruct clients to spend
more time chitchatting with clients and conversing more casually.
2. Customs are habits or ways of behaving in specific circumstances
that are passed down through generations in a culture. Customs
define appropriate habits or behaviors in specific situations.
a. Folk customs are behaviors, dating back generations,
practiced within a homogeneous group of people (e.g.,
dragon boat festival in China).
b. A popular custom is behavior practiced by a heterogeneous
group or by several groups (e.g., blue jeans, “burgers ’n
fries”).
c. The business custom of gift giving – slthough giving token
gifts to business and government associates is customary,
the proper type of gift varies. Cultures differ in their legal
and ethical rules regarding bribery. The U.S. Foreign
Corrupt Practices Act prohibits companies from giving
large gifts to win business favors, applies to U.S. firms
operating at home and abroad.
IV. SOCIAL STRUCTURE AND EDUCATION
Social structure embodies a culture’s fundamental organization, including groups
and institutions, social positions and relationships, and resource distribution.
A. Social Group Associations
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Ch 2: Cross-Cultural Business 5
A social group is a collection of two or more people who identify and
interact with one another. Contribute to identity and self-image.
1. Family
a. Nuclear family consists of immediate relatives, including
parents, brothers, and sisters. Prevails in Australia, Canada,
United States, and in Europe.
b. Extended family includes grandparents, aunts and uncles,
cousins, and relatives through marriage. More important in
Asia, Middle East, North Africa, and Latin America.
2. Gender
a. Gender refers to socially learned traits associated with, and
expected of, men or women. Sociologists regard gender as
a category—people who share some status.
b. Countries vary regarding gender equality at work.
B. Social Status
1. Social stratification is the process of ranking people into social
layers according to family heritage, income, and occupation.
2. Top layer: royalty, government officials, and business leaders.
Middle layer: scientists, medical doctors, and others with a
university education. Bottom layer: manual and clerical workers
with vocational training or secondary-school educations.
3. Rankings can and do change over time.
C. Social Mobility
1. Social mobility is the ease with which individuals can move up or
down a culture’s “social ladder.”
2. Caste system: people are born into a social ranking, with no
opportunity for social mobility.
3. Class system: personal ability and actions decide status and
mobility. Highly class-conscious cultures can offer less mobility
but experience more class conflict.
D. Education
Education passes on traditions, customs, and values. Cultures educate
young people through schooling, parenting, religious teachings, and group
memberships. Families and other groups provide informal instruction
about customs and how to socialize with others.
1. Education Level
a. Excellent basic education attracts high-wage industries that
invest in training and increase productivity. Skilled, well-
educated workforce attracts high-paying jobs; a poorly
educated one attracts low-paying jobs.
(See: Table 2.1 Illiteracy Rates of Selected Countries)
b. Newly industrialized economies in Asia owe much of their
economic development to solid education systems.
2. The “Brain Drain” Phenomenon
a. Brain drain: departure of highly educated people from one
profession, geographic region, or nation to another.
A social group is a collection of two or more people who identify and
interact with one another. Contribute to identity and self-image.
1. Family
a. Nuclear family consists of immediate relatives, including
parents, brothers, and sisters. Prevails in Australia, Canada,
United States, and in Europe.
b. Extended family includes grandparents, aunts and uncles,
cousins, and relatives through marriage. More important in
Asia, Middle East, North Africa, and Latin America.
2. Gender
a. Gender refers to socially learned traits associated with, and
expected of, men or women. Sociologists regard gender as
a category—people who share some status.
b. Countries vary regarding gender equality at work.
B. Social Status
1. Social stratification is the process of ranking people into social
layers according to family heritage, income, and occupation.
2. Top layer: royalty, government officials, and business leaders.
Middle layer: scientists, medical doctors, and others with a
university education. Bottom layer: manual and clerical workers
with vocational training or secondary-school educations.
3. Rankings can and do change over time.
C. Social Mobility
1. Social mobility is the ease with which individuals can move up or
down a culture’s “social ladder.”
2. Caste system: people are born into a social ranking, with no
opportunity for social mobility.
3. Class system: personal ability and actions decide status and
mobility. Highly class-conscious cultures can offer less mobility
but experience more class conflict.
D. Education
Education passes on traditions, customs, and values. Cultures educate
young people through schooling, parenting, religious teachings, and group
memberships. Families and other groups provide informal instruction
about customs and how to socialize with others.
1. Education Level
a. Excellent basic education attracts high-wage industries that
invest in training and increase productivity. Skilled, well-
educated workforce attracts high-paying jobs; a poorly
educated one attracts low-paying jobs.
(See: Table 2.1 Illiteracy Rates of Selected Countries)
b. Newly industrialized economies in Asia owe much of their
economic development to solid education systems.
2. The “Brain Drain” Phenomenon
a. Brain drain: departure of highly educated people from one
profession, geographic region, or nation to another.
Loading page 21...
Ch 2: Cross-Cultural Business6
b. Reverse brain drain: professionals return to their
homelands.
V. RELIGION
Human values often derive from religious beliefs. Different religions take
different views of work, savings, and material goods. Beliefs influence
competitiveness, economic development, and business strategies.
A. Christianity
1. Founded in Palestine 2,000 years ago among Jews who believed
that Jesus of Nazareth was the messiah. With 2 billion followers, it
is the world’s single largest religion.
2. More than 300 denominations but most are Roman Catholic,
Protestant, or Eastern Orthodox.
3. Roman Catholics are to refrain from placing materialism above
God and people. Protestants believe that salvation comes from
faith in God and that hard work gives glory to God.
4. Christian organizations sometimes get involved in social causes
that affect business policy (e.g., Walt Disney Company, Ryanair,
Hyundai).
B. Islam
1. Founded by Muhammad in 600 A.D. in Mecca, Saudi Arabia—the
holy city of Islam. World’s second largest religion with 1.3 billion
adherents. Word Islam means “submission to Allah” and Muslim
means “one who submits to Allah.”
2. Religion strongly affects the goods and services acceptable to
Muslim consumers (e.g., alcohol, pork, interest on loans).
C. Hinduism
1. Founded 4,000 years ago in present-day India, where more than 90
percent of its nearly 900 million adherents live.
2. Some say it is a way of life rather than a religion. Caste system is
integral to the Hindu faith. Believe in reincarnation—rebirth of the
human soul at the time of death. Do not eat or willfully harm living
creatures as they may be reincarnated human souls.
3. Cows considered sacred animals so eating beef is not allowed (e.g.,
McDonald’s replaces beef with lamb).
D. Buddhism
1. Founded 2,600 years ago in India by a Hindu prince named
Siddhartha Gautama. About 380 million followers, mostly in Asia:
China, Tibet, Korea, Japan, Vietnam, and Thailand.
2. Promotes a life centered on spiritual rather than worldly matters.
Buddhists seek nirvana (escape from reincarnation) through
charity, modesty, compassion for others, restraint from violence,
and general self-control.
E. Confucianism
1. Founded 2,500 years ago by exiled politician and philosopher
Confucius. China is home to most of the 225 million followers.
b. Reverse brain drain: professionals return to their
homelands.
V. RELIGION
Human values often derive from religious beliefs. Different religions take
different views of work, savings, and material goods. Beliefs influence
competitiveness, economic development, and business strategies.
A. Christianity
1. Founded in Palestine 2,000 years ago among Jews who believed
that Jesus of Nazareth was the messiah. With 2 billion followers, it
is the world’s single largest religion.
2. More than 300 denominations but most are Roman Catholic,
Protestant, or Eastern Orthodox.
3. Roman Catholics are to refrain from placing materialism above
God and people. Protestants believe that salvation comes from
faith in God and that hard work gives glory to God.
4. Christian organizations sometimes get involved in social causes
that affect business policy (e.g., Walt Disney Company, Ryanair,
Hyundai).
B. Islam
1. Founded by Muhammad in 600 A.D. in Mecca, Saudi Arabia—the
holy city of Islam. World’s second largest religion with 1.3 billion
adherents. Word Islam means “submission to Allah” and Muslim
means “one who submits to Allah.”
2. Religion strongly affects the goods and services acceptable to
Muslim consumers (e.g., alcohol, pork, interest on loans).
C. Hinduism
1. Founded 4,000 years ago in present-day India, where more than 90
percent of its nearly 900 million adherents live.
2. Some say it is a way of life rather than a religion. Caste system is
integral to the Hindu faith. Believe in reincarnation—rebirth of the
human soul at the time of death. Do not eat or willfully harm living
creatures as they may be reincarnated human souls.
3. Cows considered sacred animals so eating beef is not allowed (e.g.,
McDonald’s replaces beef with lamb).
D. Buddhism
1. Founded 2,600 years ago in India by a Hindu prince named
Siddhartha Gautama. About 380 million followers, mostly in Asia:
China, Tibet, Korea, Japan, Vietnam, and Thailand.
2. Promotes a life centered on spiritual rather than worldly matters.
Buddhists seek nirvana (escape from reincarnation) through
charity, modesty, compassion for others, restraint from violence,
and general self-control.
E. Confucianism
1. Founded 2,500 years ago by exiled politician and philosopher
Confucius. China is home to most of the 225 million followers.
Loading page 22...
Ch 2: Cross-Cultural Business 7
2. Confucian thought ingrained in the cultures of Japan, South Korea,
and nations with large numbers of ethnic Chinese, including
Singapore.
3. South Korean business practice reflects Confucian thought in its
rigid organizational structure and reverence for authority (e.g.,
Korean-style management in overseas subsidiaries).
4. For centuries, people despised merchants because earning money
violated Confucian beliefs. Many Chinese moved to Indonesia,
Malaysia, Singapore, and Thailand to do business.
F. Judaism
1. Founded more than 3,000 years ago and 18 million followers. Was
the first religion to teach belief in one God. Orthodox (“fully
observant”) Jews make up 12 percent of Israel and constitute an
increasingly important economic segment.
2. Important observances are Rosh Hashanah (the Jewish New Year),
Yom Kippur (the Day of Atonement), Passover (the Exodus from
Egypt), and Hanukkah (a victory over the Syrians).
3. Employers must be aware of Jewish holidays. Because Sabbath
lasts from sundown on Friday to sundown on Saturday, work
schedules might need adjustment.
4. Marketers must take into account foods banned among observant
Jews (e.g., pork and shellfish prohibited, meat stored and served
separately from milk) and “kosher” foods.
G. Shinto
1. Means “way of the gods” and arose as the native religion of the
Japanese. Teaches sincere and ethical behavior, loyalty and respect
toward others, and enjoyment of life. Shinto claims about 4 million
strict adherents in Japan.
2. Shinto beliefs are reflected in the workplace through lifetime
employment (although this is waning today) and the traditional
trust extended between firms and customers.
3. Japanese competitiveness in world markets has benefited from
loyal workforces, low employee turnover, and good labor–
management cooperation.
VII. PERSONAL COMMUNICATION
Every culture has a communication system to convey thoughts, feelings,
knowledge, and information through speech, writing, and actions. A culture’s
spoken and body language can help explain people’s thoughts and behaviors.
A. Spoken and Written Language
1. Linguistically different segments of a population are often
culturally, socially, and politically distinct. The importance of
understanding local languages is becoming increasingly apparent
on the Internet. Roughly one-half to two-thirds of all web pages are
in English, but around three-fourths of all Internet users are
nonnative English speakers. Language proficiency is also crucial in
2. Confucian thought ingrained in the cultures of Japan, South Korea,
and nations with large numbers of ethnic Chinese, including
Singapore.
3. South Korean business practice reflects Confucian thought in its
rigid organizational structure and reverence for authority (e.g.,
Korean-style management in overseas subsidiaries).
4. For centuries, people despised merchants because earning money
violated Confucian beliefs. Many Chinese moved to Indonesia,
Malaysia, Singapore, and Thailand to do business.
F. Judaism
1. Founded more than 3,000 years ago and 18 million followers. Was
the first religion to teach belief in one God. Orthodox (“fully
observant”) Jews make up 12 percent of Israel and constitute an
increasingly important economic segment.
2. Important observances are Rosh Hashanah (the Jewish New Year),
Yom Kippur (the Day of Atonement), Passover (the Exodus from
Egypt), and Hanukkah (a victory over the Syrians).
3. Employers must be aware of Jewish holidays. Because Sabbath
lasts from sundown on Friday to sundown on Saturday, work
schedules might need adjustment.
4. Marketers must take into account foods banned among observant
Jews (e.g., pork and shellfish prohibited, meat stored and served
separately from milk) and “kosher” foods.
G. Shinto
1. Means “way of the gods” and arose as the native religion of the
Japanese. Teaches sincere and ethical behavior, loyalty and respect
toward others, and enjoyment of life. Shinto claims about 4 million
strict adherents in Japan.
2. Shinto beliefs are reflected in the workplace through lifetime
employment (although this is waning today) and the traditional
trust extended between firms and customers.
3. Japanese competitiveness in world markets has benefited from
loyal workforces, low employee turnover, and good labor–
management cooperation.
VII. PERSONAL COMMUNICATION
Every culture has a communication system to convey thoughts, feelings,
knowledge, and information through speech, writing, and actions. A culture’s
spoken and body language can help explain people’s thoughts and behaviors.
A. Spoken and Written Language
1. Linguistically different segments of a population are often
culturally, socially, and politically distinct. The importance of
understanding local languages is becoming increasingly apparent
on the Internet. Roughly one-half to two-thirds of all web pages are
in English, but around three-fourths of all Internet users are
nonnative English speakers. Language proficiency is also crucial in
Loading page 23...
Ch 2: Cross-Cultural Business8
production facilities where non-native managers are supervising
local employees. Finally, it is important to marketers because they
prize insights into the interests, values, attitudes, and habits of
teenagers to better target their promotions.
2. Companies have made language blunders in their international
business dealings.
3. A lingua franca is a third or “link” language that is understood by
two parties who speak different languages.
4. Some languages are dying out, whereas some languages are
growing, including Mandarin, Spanish, and English.
B. Body Language
1. Communicated through unspoken cues, including hand gestures,
facial expressions, physical greetings, eye contact, and the
manipulation of personal space.
2. Communicates information and feelings and differs among
cultures. Most is subtle and takes time to interpret.
3. Proximity is an element of body language; standing too close may
invade personal space and appear aggressive.
VIII. CULTURE IN THE GLOBAL WORKPLACE
A. Perceptions of Time
1. Latin American,Indian and Mediterranean cultures are casual about
time; people in Japan and the United States arrive promptly for
meeting and keep tight schedules.
2. Americans strive toward workplace efficiency and may leave work
early if their work is done because they value individual results.
Japanese look busy even when business is slow to demonstrate
dedication—an attitude grounded in cohesion, loyalty and harmony
B. View of Work
1. Some cultures have a strong work ethic, others stress a balanced
pace in work and leisure (e.g., “Work to live, or live to work”)
2. Many European nations are trying to foster an entrepreneurial
spirit to achieve the job growth realized in the United States.
C. Material Culture—includes all technology a culture uses to manufacture
goods and provide services, and can measure a culture’s technological
advancement.
1. A firm enters a market under one of two conditions: (1) demand
for its products has developed, or (2) the market is capable of
supporting its production operations.
2. Changes in material culture can change other aspects of culture.
3. Many nations display uneven levels of material culture across
geography, markets, and industries.
D. Cultural Change
production facilities where non-native managers are supervising
local employees. Finally, it is important to marketers because they
prize insights into the interests, values, attitudes, and habits of
teenagers to better target their promotions.
2. Companies have made language blunders in their international
business dealings.
3. A lingua franca is a third or “link” language that is understood by
two parties who speak different languages.
4. Some languages are dying out, whereas some languages are
growing, including Mandarin, Spanish, and English.
B. Body Language
1. Communicated through unspoken cues, including hand gestures,
facial expressions, physical greetings, eye contact, and the
manipulation of personal space.
2. Communicates information and feelings and differs among
cultures. Most is subtle and takes time to interpret.
3. Proximity is an element of body language; standing too close may
invade personal space and appear aggressive.
VIII. CULTURE IN THE GLOBAL WORKPLACE
A. Perceptions of Time
1. Latin American,Indian and Mediterranean cultures are casual about
time; people in Japan and the United States arrive promptly for
meeting and keep tight schedules.
2. Americans strive toward workplace efficiency and may leave work
early if their work is done because they value individual results.
Japanese look busy even when business is slow to demonstrate
dedication—an attitude grounded in cohesion, loyalty and harmony
B. View of Work
1. Some cultures have a strong work ethic, others stress a balanced
pace in work and leisure (e.g., “Work to live, or live to work”)
2. Many European nations are trying to foster an entrepreneurial
spirit to achieve the job growth realized in the United States.
C. Material Culture—includes all technology a culture uses to manufacture
goods and provide services, and can measure a culture’s technological
advancement.
1. A firm enters a market under one of two conditions: (1) demand
for its products has developed, or (2) the market is capable of
supporting its production operations.
2. Changes in material culture can change other aspects of culture.
3. Many nations display uneven levels of material culture across
geography, markets, and industries.
D. Cultural Change
Loading page 24...
Ch 2: Cross-Cultural Business 9
2. Cultural diffusion is the process whereby cultural traits spread
from one culture to another. Globalization and technology are
increasing the pace of cultural diffusion and change.
3. Culture can force companies to adjust business policies and
practices, such as using situational management.
4. Rapid cultural diffusion and increased human interaction across
borders cause cultures to converge. Convergence is taking place in
some market segments for some products.
E. When Companies Change Culture
1. Cultural Imperialism is the replacement of one culture’s traditions,
folk heroes, and artifacts with substitutes from another.
IX. STUDYING CULTURE IN THE WORKPLACE
People in different cultures respond differently in similar business situations. Two
ways to classify cultures based on characteristics such as values, attitudes, and
social structure.
A. Kluckhohn–Strodtbeck Framework
The Kluckhohn–Strodtbeck Framework compares cultures along six
dimensions, asking the following questions:
1. Do people believe that their environment controls them, that they
control the environment, or that they are part of nature?
2. Do people focus on past events, on the present, or on the future
implications of their actions?
3. Are people easily controlled and not to be trusted, or can they be
trusted to act freely and responsibly?
4. Do people desire accomplishments in life, carefree lives, or
spiritual and contemplative lives?
5. Do people believe that individuals or groups are responsible for
each person’s welfare?
6. Do people prefer to conduct most activities in private or in public?
a. Dimensions of Japanese Culture:
i. Japanese believe in a delicate balance between
people and environment that must be maintained.
ii. Japanese culture emphasizes the future.
iii. Japanese culture treats people as quite trustworthy.
iv. Japanese are accomplishment oriented for
2. Cultural diffusion is the process whereby cultural traits spread
from one culture to another. Globalization and technology are
increasing the pace of cultural diffusion and change.
3. Culture can force companies to adjust business policies and
practices, such as using situational management.
4. Rapid cultural diffusion and increased human interaction across
borders cause cultures to converge. Convergence is taking place in
some market segments for some products.
E. When Companies Change Culture
1. Cultural Imperialism is the replacement of one culture’s traditions,
folk heroes, and artifacts with substitutes from another.
IX. STUDYING CULTURE IN THE WORKPLACE
People in different cultures respond differently in similar business situations. Two
ways to classify cultures based on characteristics such as values, attitudes, and
social structure.
A. Kluckhohn–Strodtbeck Framework
The Kluckhohn–Strodtbeck Framework compares cultures along six
dimensions, asking the following questions:
1. Do people believe that their environment controls them, that they
control the environment, or that they are part of nature?
2. Do people focus on past events, on the present, or on the future
implications of their actions?
3. Are people easily controlled and not to be trusted, or can they be
trusted to act freely and responsibly?
4. Do people desire accomplishments in life, carefree lives, or
spiritual and contemplative lives?
5. Do people believe that individuals or groups are responsible for
each person’s welfare?
6. Do people prefer to conduct most activities in private or in public?
a. Dimensions of Japanese Culture:
i. Japanese believe in a delicate balance between
people and environment that must be maintained.
ii. Japanese culture emphasizes the future.
iii. Japanese culture treats people as quite trustworthy.
iv. Japanese are accomplishment oriented for
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Business Management