Culture
shared values attitudes and beliefs
What can culture be based on
nationality, ethnicity, gender, religion, political ideology, education, work organization, profession, age, income level, etc.
Culture is an integral part of a nation’s
operating environment
Bringing together people of diverse backgrounds and experience
can give companies a deeper knowledge about products and services and ways in which to produce and deliver them
Cultural collision
when a company implements practices that are less effective or when employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors
Problem areas that can hinder managers’ cultural awareness:
- the assumption that all societal subgroups are similar
- difficulty in accepting that one’s culture is not superior to others
How to Access the Risk of Cultural Diversity / Collision
Social stratification ;
Work motivation;
Relationship preference;
Risk-taking behavior;
Information and task processing
nation vs state
A nation is a group of people with a common language, history, culture, and (usually) geographic territory.
A state is an association of people characterized by formal institutions of government, including laws; permanent territorial boundaries; and sovereignty (political independence).
Systemic Risk
risks that impact all firms that operate in a particular political system
Procedural risk
the risk evolving from the daily movement of people, products, and funds from point to point in the global market. Each move creates a procedural transaction between the units involved, whether units of a company or units of a country. Political actions sometimes create frictions that interfere with these transactions
Distributive risk
is a result of the profits generated by foreign companies in the local economy. If the host country questions the distributive justice of the rewards of operating in its market, it may wonder whether, as the business grows more successful, it is receiving its “fair” share of the growing profits
catastrophic risk
includes random political developments that adversely affect the operations of every company in a country. Typically, it arises from specific dramatic events, such as ethnic unrest, illegal regime change, civil disorder, or insurrection. It disrupts the business environment in a way that affects every firm in the country. If such disruptions spiral out of control, they devastate companies and nations
Individualism
Under an individualistic paradigm, political officials and agencies play a limited role in society
collectivism
Under a collectivist paradigm, the government defines economic needs and priorities, and it partners with business in major ways
Rule of Man
ultimate power in the hands of one person and is the cornerstone of totalitarian governments
Rule of Law
hallmark of democratic governments and holds that authority comes from written and transparent laws
Customary Law
unwritten legal principles and norms that has evolved over time within a specific community or society. It is based on the customs, traditions, practices, and beliefs of the community and is often passed down orally from one generation to another.
civil law
a codified set of laws, statutes, and codes that serve as the primary source of legal authority
common law
based upon tradition, judge-made precedent, custom, and usage; therefore, courts play an important role in interpreting the law; derived from judicial decisions and precedents established through court rulings and custom over time.
mixed system
emerges when two or more legal systems are used within a single country
Legal issues (operational concerns)
Tax, Labor, Administrative
Legal issues (Strategic concerns)
Product safety and liability
Marketplace behavior
Product origin
Legal jurisdiction
Arbitration
Intelectual property rights
Polycentric approach
Act abroad like local companies do => high response
Ethnocentric approach
Own practices are superior to those of other countries => Low response
