Unit 2: Culture, Politics, and Economics
Chapter 4: Culture in International Business Review
Key Terms (text pg. 123)
Subculture: A group within a society that shares distinctive cultural features or patterns of behavior that differ from the larger culture.
Counterculture: A subculture whose values and norms deviate from those of the dominant culture, often in opposition to mainstream societal norms.
Cultural Differences: Variations in values, beliefs, behaviors, and customs among different cultures.
Cultural Awareness: Understanding and sensitivity to the cultural norms and practices of others, essential for effective communication and interaction in diverse settings.
International Business: Commercial transactions conducted between individuals or organizations from different countries, involving the exchange of goods, services, or investments across national borders.
Cultural Influence: The impact of cultural factors on various aspects of international business, including consumer behavior, marketing strategies, negotiation styles, and management practices.
Cultural Dimensions Theory: Framework developed by Geert Hofstede to analyze cultural differences based on six dimensions: power distance, uncertainty avoidance, masculinity vs. femininity, individualism vs. collectivism, long-term vs. short-term orientation, and indulgence vs. restraint.
Culture Defined
Subculture: refers to a smaller group within a larger culture that shares its own set of customs, values, norms, and practices distinct from the dominant culture but still exists within it. Subcultures often emerge based on shared interests, lifestyles, beliefs, or experiences.
Counterculture: refers to a subculture that deliberately opposes or rejects the dominant culture's norms, values, and beliefs. Countercultural movements often emerge as a response to perceived injustices or dissatisfaction with mainstream society, advocating for alternative lifestyles or ideologies.
How does a subculture support the values, beliefs, etc. of the overall culture?
Subcultures can support the values and beliefs of the overall culture by providing avenues for diverse expressions within the society. They contribute to social cohesion by allowing individuals with similar interests or backgrounds to form communities while still adhering to overarching cultural norms. Subcultures often enrich the cultural landscape by fostering creativity, innovation, and diversity.
How does counterculture fail to support values, attitudes, beliefs, of the overall culture?
Counterculture, on the other hand, may fail to support the values, attitudes, and beliefs of the overall culture by challenging or directly opposing established norms and traditions. While countercultural movements can prompt societal reflection and change, they may also generate social tensions and conflicts, leading to disruptions in the cohesion of the larger cultural framework.
Cultural Differences
Mexico: Known for its vibrant culture, family orientation, strong sense of community, and celebration of traditions such as Dia de los Muertos and Cinco de Mayo
Brazil: Embraces diversity, known for its carnival celebrations, soccer culture, and rich musical heritage like samba and bossa nova
China: Emphasizes collectivism, respect for authority, and Confucian values, with a focus on harmony, hierarchy, and filial piety
Japan: Values harmony, politeness, and group loyalty, with a strong emphasis on honor, respect, and adherence to social norms
India: Diverse cultural landscape with a focus on spirituality, family, and social hierarchy, influenced by Hinduism, Buddhism, and other religions
Saudi Arabia: Conservative Islamic society with strict gender segregation, adherence to Islamic law (Sharia), and emphasis on hospitality and traditional values
Cultural Awareness and International Business
To what degree should a Canadian wishing to conduct international business be aware of the cultural differences of the country in which it is doing business? (See table posted in the Chapter 4 folder in D2L to get a sense how to rate countries)
Extent of Foreign Operations
Control of Foreign Operations
Degree of Cultural Differences
Number of Foreign Operations
Impact on Indigenous peoples
The Impact of Culture on International Business
How does culture affect which products and services will sell in other markets? For example, how well would pork products sell in a Middle-Eastern market?
What norms can Canadians expect (and have to respect) when doing business abroad in the following areas?
Child Labour – To what extent is hiring children acceptable?
Discrimination– What tolerance does the culture have for homosexuality, a women’s role in the workplace, etc.?
Wages – Morally, wages offered should meet the standard of living in the foreign country and not in line with what is offered at home
Standards and Practices – What are typical hours of work? Are there prayer breaks? Do labour unions exist? What health standards/laws exist?
Business Meetings and Negotiations
Prepare to make connections to the following tendencies in a real life case:
Time perception – Monochronic vs. Polychronic
Spatial perception – Considers the comfort levels of an individual with personal space and physical contact
Non-Verbal Communication – Be aware of hand signals/body language
Business Etiquette – regards business card presentation, appropriate dress wear, appropriateness of gift giving, greetings, and conversation topics
Culture’s Influence on Workplace Values (Hofstede’s Cultural Dimensions Theory)
Power Distance – Cultural views on superiority due to ascribed status, gender, age, etc. versus cultural views about equality and earned status
The degree to which a culture accepts hierarchical authority and inequality versus equality. High power distance cultures may respect authority and status, while low power distance cultures value equality and fairness.
Uncertainty Avoidance – Cultures’ values toward conformity to rules and low trustworthiness vs. Cultures that value risk taking and change
Refers to a society's tolerance for ambiguity, risk, and change. Cultures with high uncertainty avoidance tend to prefer structure, rules, and predictability, while those with low uncertainty avoidance may embrace innovation and adaptability.
Masculinity vs. Femininity – Assertiveness and ambition vs. nurturing and social support systems
Reflects cultural attitudes toward assertiveness, competitiveness, and gender roles. Masculine cultures value achievement, success, and assertiveness, while feminine cultures prioritize nurturing, cooperation, and quality of life.
Individualism versus Collectivism – Decision-making that benefits self vs. decision-making that benefits the greater good of the group/society
Examines the emphasis on individual autonomy versus group harmony and interdependence. Individualistic cultures prioritize personal goals, independence, and individual rights, while collectivist cultures value cooperation, loyalty, and harmony within the group.
Orientation – Long term goal-setting vs. short-term orientation
Focuses on a society's time horizon and orientation toward tradition versus modernity. Cultures with long-term orientation prioritize perseverance, thrift, and respect for traditions, while short-term oriented cultures may value immediate results, consumption, and adaptability.
Indulgence vs. Restraint – the extent to which people across different cultures control their desires/impulses vs. exercising control based on strict norms
Measures a society's inclination toward gratification of basic human desires and impulses versus regulation and control of these desires. Indulgent cultures may emphasize enjoyment, leisure, and personal freedom, while restrained cultures prioritize self-discipline, moderation, and adherence to social norms.
Chapter 5: Economics and Politics Review
Key Terms (text pg. 175)
Market Economies: Economic systems characterized by private ownership of resources, competition, and minimal government intervention in the allocation of resources and production decisions.
Mixed Economies: Economic systems that combine elements of both market and planned economies, with varying degrees of government intervention and regulation.
Centrally Planned Economies: Economic systems where the government controls the allocation of resources, production, and distribution of goods and services.
Democracies: Political systems where power is vested in the people, who exercise it directly or through elected representatives. Democracies emphasize individual rights, freedom, and participation in decision-making.
Autocracies: Political systems where power is concentrated in the hands of a single individual or a small group, without meaningful participation or accountability to the people.
Economic and Political Systems
Be aware of rules regarding private property, profit, and competition in:
Market Economies
Advantages: Efficiency in resource allocation, innovation, consumer choice, economic growth.
Disadvantages: Economic inequality, market failures, lack of social safety nets.
Mixed Economies
Advantages: Balance between market efficiency and government intervention, provision of public goods and services, regulation of externalities.
Disadvantages: Potential inefficiencies due to government intervention, bureaucratic complexities.
Centrally Planned Economies
Advantages: Centralized decision-making, potential for equitable distribution of resources, emphasis on collective welfare.
Disadvantages: Lack of incentives for innovation, inefficiency in resource allocation, restricted individual freedom.
Be aware of the main differences between Democracies and Autocracies
Democracies
Advantages: Protection of individual rights, accountability, political stability, citizen participation.
Disadvantages: Potential for gridlock, slow decision-making processes, vulnerability to populist movements.
Autocracies
Advantages: Rapid decision-making, political stability (if centralized power is benevolent), potential for efficient resource allocation.
Disadvantages: Lack of political freedoms, repression of dissent, potential for abuse of power.
State the advantages and disadvantages associated with these Economic and Political systems
Classifications of Economic Development
Describe the characteristics of countries defined as:
Underdeveloped Economies: Characterized by low GDP per capita, high poverty rates, inadequate infrastructure, and limited access to basic services and education.
Developing Economies: Experiencing rapid industrialization and urbanization, with improving living standards, infrastructure, and access to education and healthcare.
Economies in Transition: Formerly centrally planned economies undergoing market-oriented reforms to transition to market-based systems, often facing challenges of privatization, deregulation, and economic restructuring.
Developed Economies: Advanced industrialized nations with high GDP per capita, well-developed infrastructure, mature financial markets, and high standards of living.
Recall the Index of Economic Freedom as a metric for the rating of a country’s liberalization when it comes to property rights, government integrity, judicial effectiveness, labor freedom, and investment freedom
The Business Cycle
You may be required to draw and label the business cycle (i.e. “hills and valleys”)
Be able to describe the state of consumer spending, business profits, employment, and wages during recessionary periods and expansionary (growth) periods
The business cycle refers to the fluctuations in economic activity characterized by periods of expansion (growth) and contraction (recession).
During recessionary periods, consumer spending, business profits, employment, and wages typically decline, leading to economic contraction and reduced economic activity.
Can you identify leading, coincident, and lagging economic indicators?
Leading economic indicators precede changes in economic activity (e.g., consumer confidence), coincident indicators move in tandem with economic activity (e.g., GDP), and lagging indicators follow changes in economic activity (e.g., unemployment rates).
What effects do governments and central banks have on the business cycle, using fiscal and monetary policy?
Governments and central banks use fiscal and monetary policies to influence the business cycle. Fiscal policy involves government spending and taxation, while monetary policy involves controlling interest rates and money supply to stimulate or cool down economic activity.
Economics of Trade
An application question may involve two countries and two products. Determine:
Who has Absolute Advantage in what?
Occurs when a country can produce a good or service using fewer resources (or at a lower opportunity cost) than another country.
Calculate Opportunity Costs
The cost of foregoing the next best alternative when making a decision.
Who has Comparative Advantage in what?
Exists when a country has a lower opportunity cost of producing a good or service compared to another country.
Who should specialize in the production of what?
Focusing on producing goods or services in which a country has a comparative advantage, leading to increased efficiency and higher overall output.
Reconstruct a table that shows new amounts when countries specialize in one area of production
The Role of Government in International Business
Comment on how government can affect international trade through:
Tax Policies and Tariffs: Governments use taxes and tariffs to regulate trade, protect domestic industries, and generate revenue.
Immigration Laws: Immigration policies affect the movement of labor and talent, influencing workforce demographics and skills availability.
Education: Government investment in education impacts workforce quality, skills development, and innovation capacity.
Military: National security and geopolitical considerations influence international trade relations and economic stability.
Environmental Policies: Regulations regarding environmental protection impact industries' operations, resource use, and sustainability practices.
Infrastructure: Government investment in infrastructure, such as transportation and communication networks, affects trade facilitation and economic development.
Describe the basic functions and purpose of:
Government Trade Offices: Promote international trade, facilitate market access, provide trade-related information and assistance to businesses.
Government Embassies, High Commissions, and Consulates: Represent the interests of a country abroad, provide diplomatic support, and assist citizens and businesses overseas.
Trade Missions: Organized visits by government officials and business representatives to foreign countries to promote trade, explore business opportunities, and foster economic relations.
Consider corporate influence on governments by:
Understanding how money from sponsoring political campaigns by big corporations can persuade government policies
Political Campaign Sponsorship: Corporations may financially support political campaigns to influence policymakers and advance their interests.
Lobbying: Corporations engage in lobbying activities to persuade lawmakers to adopt policies favorable to their business objectives, often through advocacy groups or industry associations.