INTL MKT EXAM 2

Hofstede's Cultural Dimensions

1. Power Distance Index (PDI)

   • Degree to which people accept inequality in power distribution in business and society.

2. Competition vs. Cooperation (MAS - Masculinity vs. Femininity)

   • Measures focus on competition vs. cooperation and family.

   • No large differences across cultures.

3. Uncertainty Avoidance Index (UAI)

   • Preference for stability vs. comfort with change.

   • Brazil prefers clear, structured instructions, while China is more flexible.

4. Indulgence vs. Restraint (IND)

   • Measures allowance for enjoyment vs. regulation through social norms.

Management Styles Around the World

1. Authority and Decision Making

   • Influenced by Power Distance Index (PDI).

   • Three main decision-making styles:

     1. Top-level management decisions

     2. Decentralized decisions

     3. Committee or group decisions

   • Communication involves words, time perception, space, relationships, and agreements.

2. Management Objectives and Aspirations

   • Personal Security & Job Mobility: Individualistic cultures take more risks.

   • Personal Life: Japanese culture integrates personal and company life.

   • Affiliation & Social Acceptance: Power and achievement play a role in business goals.

3. Formality & Tempo

   • Common mistakes by North Americans:

     • Too informal (e.g., using first names in business settings).

     • Too impatient in business dealings.

   • Cultural view of time:

     • Monochronic: Time is linear, punctuality is crucial.

     • Polychronic: Multitasking and relationship focus.

4. Culture and Business Systems

   • Business behavior shaped by cultural values.

   • Understanding culture provides a competitive edge.

   • Business etiquette is critical.

Impact of American Culture on Management Style

• Master of Destiny vs. Set Destiny

  • Master of Destiny: People control their future through choices and actions.

  • Set Destiny: Life is predetermined by external factors.

• Degree of Adaptation

  • Understanding and respecting local customs is key.

  • Important considerations:

    • Self-reference criteria (own culture influencing perspective).

    • Cultural awareness varies by country.

    • Go local:

      • Local web presence, content, and relationships.

• Cultural Business Practices:

  • Cultural Imperatives: Expected behaviors that must be followed.

  • Cultural Electives: Optional behaviors foreigners may adopt.

  • Cultural Exclusives: Behaviors restricted to locals only.

Sovereignty of Nations & Political Influence

1. Sovereignty:

   • A state’s power over itself and external relations.

   • Characteristics:

     • Independent governance.

     • Legal equality with other nations.

     • Control over economic, social, and political systems.

2. Nationalism:

   • Prioritizing national security over international relations.

   • Protectionist policies:

     • Import restrictions, tariffs.

     • Encouraging domestic consumption.

3. Government Actions on Foreign Investments:

   • Confiscation: Seizing assets without payment.

   • Expropriation: Seizing assets with some compensation.

   • Domestication: Gradual transfer of ownership/control to locals.

Multinational Market Regions

• Purpose: Economic benefit, peace, and reduced trade barriers.

• Goal: Free trade with minimal restrictions.

• Examples: EU, USMCA (formerly NAFTA), ASEAN, APEC.

1. Economic Factors:

   • Shared development and market expansion.

   • Tariff reductions and economic cooperation.

   • Strong unions help resolve disputes.

   • Requires partial surrender of sovereignty.

2. Political Factors:

   • Political stability and compatibility are crucial.

   • Formed in response to external threats.

   • Requires demonstration of cooperation among members.

3. Political Unions:

   • Most integrated form of regional cooperation.

   • Can be voluntary (Commonwealth) or enforced.

   • Examples: European Union (EU), Commonwealth of Independent States (CIS).

   • Brexit: UK exit from the EU caused trade complications.

Geographic & Temporal Proximity

• Facilitates market functions through developed transportation networks.

• Time zones impact trade relationships.

• Immigration policies influence economic integration.

Cultural Factors in Economic Cooperation

• Similar cultures make agreements easier.

• Language is less of a barrier than expected.

• Religious differences still impact cooperation.