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 Chapter 5

Managing across Cultures

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 Outline
1- Strategic Predispositions that characterize
responses to different cultures.
2- Meeting the challenges.
3- Cultural differences in selected countries and
regions.

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 Learning Objectives

• Examine the strategic dispositions that

characterize responses to different cultures
• Discuss cross-cultural differences and
similarities
• Review cultural differences in select countries
and regions, and note some of the important
strategic guidelines for doing business in each

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 Strategic Predispositions
Ethnocentric
• Firm allows values and interests of the parent company to guide strategic
decisions

Polycentric
• Company makes strategic decisions tailored to suit the cultures of the
countries where the MNC operates

Regiocentric
• Firm blends its own interests with those of its subsidiaries on a regional
basis

Geocentric
• Company integrates a global systems approach to decision making

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 Strategic Predispositions

• Ethnocentric predisposition
– A nationalistic philosophy of management
whereby the values and interests of the parent
company guide strategic decisions.

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 Strategic Predispositions

• Polycentric predisposition
– A philosophy of management whereby strategic
decisions are tailored to suit the cultures of the
countries where the MNC operates.

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 Strategic Predispositions

• Regiocentric predisposition
– A philosophy of management whereby the firm
tries to blend its own interests with those of its
subsidiaries on a regional basis.

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 Strategic Predispositions

• Geocentric predisposition
– A philosophy of management whereby the
company tries to integrate a global systems
approach to decision making.

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 Table 5.1 - Orientation of an MNC
under Different Profiles

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer
1985, pp. 5–6.

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 Table 5.1 - Orientation of an MNC
under Different Profiles (continued 1)

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer
1985, pp. 5–6.

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 Table 5.1 - Orientation of an MNC
under Different Profiles (continued 2)

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer
1985, pp. 5–6.

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 Globalization Imperative

• Belief that one worldwide approach to doing

business is key to efficiency and effectiveness
• Effective multinational companies (MNCs)
should make efforts to address local needs
– Regional strategies can be used effectively to
capture and maintain worldwide market niches

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 Need for Unique Strategies for
Different Cultures
• Diversity of worldwide industry standards
• Continual demand by local customers for
differentiated and locally-sourced products
• Difficulty of managing global organizations
• Local units should be allowed to use their own
abilities and talents unconstrained by
headquarters

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 Delivery of Marketing Message
Nationality Nature of advertising
Germans • Factual and rational
• Spots feature a standard family of two parents, two children, and
grandmother

French • Avoidance of reasoning or logic

• Emotional, dramatic, and symbolic
• Spots are viewed as cultural events and reviewed as if they were
literature or films

British • Laughter is valued

• Typical broad, self-deprecating commercial mocks both the
advertiser and consumer

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 Challenges Faced by MNCs

• Staying up-to-date of local market conditions

and not assuming that all markets are same
• Knowing the strengths and weaknesses of its
subsidiaries and assisting them in addressing
local demands
• Giving more autonomy to the subsidiary

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 Barriers to Cross-Cultural
Management
Parochialism

• Tendency to view the world through one’s own

eyes and perspectives

Simplification

• Process of exhibiting the same orientation

toward different cultural groups

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 Cross-Cultural Differences
•
and Similarities
Similarities across cultures
– Not possible to do business same way in every global
location
– Procedures and strategies that work well at home
can’t be adopted overseas without modifications
• Differences across cultures
– Far more differences than similarities found in cross-
cultural research
– Wages, compensation, pay equity, maternity leave
– Importance of criteria used in evaluation of
employees

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 Cross-Cultural Similarities

• Russia and U.S.

– Traditional management, communication, human
resources, and networking activities
• Korea and U.S.
– Organizational commitment relates to employees'
position in the hierarchy, tenure in their current
position, and age

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 Cross-Cultural Differences
Examples Human resource management differences
Mexico • Concept of an hourly wage plays a minor role
Austria and Brazil • Employees with one year of service are automatically
given 30 days of paid vacation
Some jurisdictions in • Legislated pay equity between male- and female-
Canada intensive jobs
Japan • Compensation levels are determined by age, length of
service, and educational background
United Kingdom • Employees are allowed up to 40 weeks of maternity
leave, and employers must provide a government-
mandated amount of pay for 18 of those weeks
Majority of large • Head of human resources is on the board of directors
Swedish companies

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 Approaches for Formulating Effective
Compensation Strategies in Different Clusters
Examples Strategies
Pacific Rim countries • Incentive plans should be group-based
Japan, Hong Kong, Malaysia, • High salaries should be paid to senior-level
the Philippines, and Singapore managers
Italy and Belgium • Higher salaries should be paid to local senior-
level managers
Portugal and Greece • Profit-sharing plans are effective
Denmark, the Netherlands, and • Personal-incentive plans are useful
Germany
Great Britain, Ireland, and the • Compensation plans should provide opportunity
United States for earnings, recognition, advancement, and
challenge

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 GLOBE Project

• Provides an extensive breakdown of:

– How managers behave
– How different cultures can affect the perspectives
of managers

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 Business in China

• Despite China’s global presence, many MNC’s

still find that doing business in China can be a
long, and hard process.
• Primary criterion - Technical competence
• Value is placed on punctuality, patience,
guanxi networking, and reciprocity
– Guanxi: Good connections

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 Business in China
• Doing Business in China
1. The Chinese place values and principles above money
and expediency.
2. Business meetings typically start with pleasantries such
as tea and general conversation about the guest’s trip to
the country, local accommodations, and family.
3. The Chinese host will give the appropriate indication for
when a meeting is to begin and when the meeting is over.
4. Once the Chinese decide who and what is best, they
tend to stick with these decisions. Although slow in
formulating a plan of action, once they get started, they
make fairly good progress.
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 Business in China
5. In negotiations, mutuality is important. If the
Chinese give reductions, they expect some in return.
6. Because negotiating can involve a loss of face, it is
common to find Chinese carrying out the whole
process through intermediaries.
7. During negotiations, it is important not to show
excessive emotion of any kind. Anger or frustration
is viewed as antisocial and unseemly.
8. Negotiations should be viewed with a long-term
perspective. Those who will do best are the ones
who realize they are investing in a long-term
relationship.
https://www.youtube.com/watch?v=Iw7Q1LiNXig
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 Business in Russia
• Building personal relationships with partners is
important
• Working with local consultants can be valuable
• Gift-giving is considered ethical when engaging
in business transactions
• Be patient. In order to get something done in
Russia, it often takes months of waiting.
• Russians like to do business face-to-face
• Fix and reinforce the final agreements with a
nice dinner and an invitation to visit your
country and see your facilities.
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 Business in India
• India has become a desirable market because
of unsaturated consumer markets with cheap
labor and production locations
• Bureaucratic restrictions have been lifted to
attract foreign investment and raise economic
growth rate
• It is important to be on time for meetings.
• Personal questions should not be asked unless
the other individual is a friend or close
associate.
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 Doing Business in India
• Bargaining for goods and services is common;
this contrasts with Western traditions, where
bargaining might be considered rude.
• Titles are important, so people who are doctors
or professors should be addressed accordingly.
• Public displays of affection are considered to be
inappropriate, so one should refrain from
backslapping or touching others.
• https://www.bbc.com/news/av/business-
16758384/how-to-do-business-in-india
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 Business in France
• French culture is markedly different from that in
the United States. In France, social class and
status are very important.
• Social interactions are affected by class
stereotypes
• French organizations tend to be highly centralized
and have rigid structures
• Management is autocratic in nature
• In the workplace, many French people are not
motivated by competition or the desire to
compete fellow workers.
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 Business in Brazil
• Brazilian businesspeople tend to have a
relaxed work ethic
• Physical contact is an acceptable form of
communication. Brazilians stand close to
others when having a conversation and may
touch the person’s back, arm, or elbow as a
greeting or sign of respect.
• Face-to-face interaction is preferred
• Patience is key when managing business
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 Doing Business in Brazil
• Appearance is very important. It reflects you
and your company. Men should polish their
shoes and wear conservative dark suits.
Women should dress nicely, but avoid being
too conservative or formal. Think fashion.
• Patience is key. Brazilians will be very loyal and
committed once the agreement is reached.
• It is not acceptable to be ill-prepared.
Presentations should be informative and
expressive
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 Business in Arab Countries
• Arab businesspeople:
– Arabs view time differently with no concern for
missed meetings as they believe they have no
control over time in the first place.
– Tend to attach a great deal of importance to status
and rank
• Business-related discussions may not occur
until the third or fourth meeting
• One should not take credit for joint efforts.

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 Business in Arab Countries
• Much of what gets done is a result of going
through administrative channels in the country.
• Connections are extremely important in
conducting business.
• Important decisions usually are made in person,
not by correspondence or telephone. This is
why an MNC manager’s personal presence
often is a prerequisite for success in the Arab
world.
• https://www.youtube.com/watch?v=U9XoD9V9
Bvg
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