Coping with cultural differences in international business: A study on Nike Inc.

Coping with cultural
differences in
international
business- A study on
Nike Inc.

ii
REPORT
Prepared for
Yeasmin Islam
Lecturer- Management
School Of Business and Economics
Prepared by
Group name: Team Extreme
Section: C
Course title: International Business
Course code: IBS 3121
August 27, 2017
United International University

iii
Group List
S.L. Name: ID Class S.L
1. Farzana Khan 111 121 635 02
2. Umaiya Sadia 114 151 027 38
3. Sanjida Khan 114 151 009 37
4. Ayesha Akter Asha 111 141 271 04
5. Shagufta Rahman 111 151 022 11
6. Taiyeb Ahmed 111 151 349 21
7. Afrina Alam 114 131 001 35

iv
Letter of Transmittal
April 27, 2017
Yeasmin Islam
Lecturer - Management
School of Business and Economics
United International University
Subject: Submission of the report on “Coping with cultural differences in international business-
A study on Nike Inc.”
Ma’am,
We are pleased to submit the report that you asked for and give us the authorization to work on
“Coping with cultural differences in international business- A study on Nike Inc.”
We tried our best to work on it carefully and sincerely to make the report informative.
The study we conducted enhanced our knowledge to make an executive report. This report has
given us an exceptional experience that might have immense uses in the future endeavors and we
sincerely hope that it would be able to fulfill your expectations.
We have put our sincere effort to give this report a presentable shape and make it as informative
and precise as possible. We thank you for providing us with this unique opportunity.
Yours Sincerely,
On behalf of the members of
Shagufta Rahman.

v
Executive Summary
The culture of a country greatly affects the way business is practiced in that country. When a
company from one country comes to another country to do their business, its business strategy is
also affected by the country’s culture. In this report, we have tried to find out the factors that
define the culture of a country. Then different aspects of culture have been shown that affects the
local business in a country. We have also distinguished the different characteristics that make
one country’s culture different from others and identified how these differences influence the
international business. Finally, we have shown various mechanisms which can be followed to
cope up with the culture for the local business and also with the cultural differences for the
international business.

Table of Contents
Group List........................................................................................................................................ iii
Letter of Transmittal..........................................................................................................................iv
Executive Summary............................................................................................................................v
Chapter-1 (Introduction) .....................................................................................................................2
Background of the report.................................................................................................................2
Objective of the report:....................................................................................................................3
Source and methods of collecting data: ................................................................................................3
Limitation of the report: ..................................................................................................................3
Chapter-2 (Overview of the Company).................................................................................................4
Chapter-3 (Culture of the Home Country) ............................................................................................6
Language .......................................................................................................................................6
Religion..........................................................................................................................................7
Education .......................................................................................................................................7
Economic Philosophy ......................................................................................................................8
Social Structure ..............................................................................................................................9
Political Philosophy.......................................................................................................................10
Chapter 4 (Culture of the Host Country).............................................................................................12
Language .....................................................................................................................................12
Religion .......................................................................................................................................13
Education .....................................................................................................................................13
Economic Philosophy....................................................................................................................14
Social Structure ............................................................................................................................15
Ruling Class..............................................................................................................................16
Scholar Class ............................................................................................................................16
Working Class ..........................................................................................................................16
Business Class / Merchants........................................................................................................16
Political Philosophy ......................................................................................................................16
Chapter 5 (Comparison between home country and host country culture) .............................................18
Chapter 6 (Techniques to cope up with cultural differences)................................................................21
Chapter-7 (Conclusion).....................................................................................................................23

1
References .......................................................................................................................................24

2
Chapter-1 (Introduction)
Backgroundof the report
Doing business on a global basis requires a good understanding of different cultures. What works
in your country might not work well in another. The influence of the different cultures in the
global business world is essential for building successful International Relations. This issue is
based on the new global business perspectives and what is important to consider in developing
an International Business plan. Companies have the challenge of presenting and expanding into
new horizons, and it is really important to fully understand those new markets that the company
is planning to expand in. Nowadays, a company’s business dealings are increasingly more
international, and the need for effective cross-cultural communication has become essential:
knowing a foreign culture is a long-term process of assimilation, comprehension and integration
and is undoubtedly the key to successful business expansion globally. Taking time to know the
culture of the country in which you are going to be doing business with is really important as it
shows a sign of respect and it will be strongly appreciated; in fact, not doing so will cause
uncomfortable situations between companies (that could result in the failure of the business.) So
it is important to say that those who effectively respond to the culture and lifestyle of the country
where they plan to expand have more possibilities of developing successful businesses than those
who don’t.
This report focuses on two home and host countries culture of a multinational business. At first
the report is aimed at determining what the business is like, than determining the cultures of
home and host countries, making differences among them and lastly finding out the mechanism
to cope up with the differences. This report is focused at helping the managers at making a total
plan on analyzing the prospects and results of cultural differences which will give them a better
understanding on how to implement their business plan in different nations.
Figure 1 Determinants of culture
Culture
norms
and value
system
Religio
n Political
Philosop
hy
Economi
c
Philosop
hy
Educati
on
Languag
e
Social
Struture

3
Objective of the report:
 To identify the factors to define home country and host country’s culture.
 To know the effects of culture on the way business is practiced in home country and host
country.
 To know the difference between cultural aspects of home and host country.
 To know the effects of culture in international business.
 To identify the mechanism to cope up with the differences in culture across or within the
nations.
Source and methods of collecting data:
The data has been collected from sources like books, articles, issues by searching through the
internet, in this sense we had collected secondary data.
The links, books and writers, issues and articles and there writers of the sources that we had gone
through while collecting the data has been mentioned in the proceeding reference part at the end
of this report.
Limitation of the report:
The limitations faced while doing the report have mentioned below:
 The time assigned for making the report is not enough to make this report informative.
 As the report is less informative, it has missed many of the core issues and discussions
that might be important for the report.
 Because of shortage of time the report is not done efficiently.
 As every country in this world is different from one other on the basis of culture, so
basing on the culture of only two country it is not possible to portrait the cultural
differences of the countries in this world, as almost every country in the world more or
less participating in the international business.

4
Chapter-2 (Overview of the Company)
Founded January 25, 1964
Founder Bill Bowerman
Phil Knight
Formerly called Blue Ribbon Sports (1964-1971)
Headquarters Washington County, Oregon, United States
(Near Beaverton, Oregon)
Industry Apparel, accessories, sports equipment
Area served Worldwide
Key people Phil Knight (Chairman Emeritus)
Mark Parker (Chairman, President & CEO)
Revenue US $30.601 billion (2015)
Owner Phil Knight and his family
Operating Segments North America, Western Europe, Central &
Eastern Europe, Greater China, Japan and
Emerging Markets.
Portfolio brands The NIKE Brand, Jordan Brand, Hurley and
Converse.
The Company's Jordan Brand designs,
distributes and licenses athletic and casual
footwear, apparel and accessories focused on
basketball using the Jump man trademark. The
Company's Hurley brand designs and
distributes a range of action sports and youth
lifestyle apparel and accessories under the
Hurley trademark. The Company's brand,
Converse, designs, distributes and licenses
casual sneakers, apparel and accessories under
the Converse, Chuck Taylor, All Star, One
Star, Star Chevron and Jack Purcell
trademarks. Converse Direct to Consumer
operations include e-commerce business.
Selling The Company sells its products to retail
accounts, through its retail stores and Internet
Websites, and through a mix of independent
distributors and licensees across the world.
Manufacturing The Company's products are manufactured by
independent contractors.
Product offerings As of May 31, 2016, the Company focused its
NIKE brand product offerings in nine
categories: Running, NIKE Basketball, the
Jordan Brand, Football (Soccer), Men's
Training, Women's Training, Action Sports,
Sportswear (its sports-inspired lifestyle
products) and Golf. Men's Training includes its

5
baseball and American football product
offerings. The Company also markets products
designed for kids, as well as for other athletic
and recreational uses, such as cricket, lacrosse,
tennis, volleyball, wrestling, walking and
outdoor activities. The Company's athletic
footwear products are designed primarily for
specific athletic use. Its products are also worn
for casual or leisure purposes. The Company
also sells sports apparel. The Company also
markets apparel with licensed college and
professional team and league logos.
The Company sells a range of performance
equipment and accessories under the NIKE
Brand name, including bags, socks, sport balls,
eyewear, timepieces, digital devices, bats,
gloves, protective equipment, golf clubs and
other equipment designed for sports activities.
They currently also make shoes, jerseys,
shorts, base layers etc. for a wide range of
sports including track & field, baseball,
ice hockey, tennis, Association football,
lacrosse, basket ball and cricket. Nike sells an
assortment of products, including shoes
and apparel for sports activities like association
football, basketball, running, combat sports,
tennis, American football, athletics, golf and
cross training for men, women, and children.
Nike also sells shoes for outdoor activities such
as tennis, golf, skate boarding, association
football, baseball, American football, cycling,
volleyball, wrestling, cheerleading, aquatic
activities, auto racing, and other athletic and
recreational uses.
Website www.nike.com

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Chapter-3 (Culture of the Home Country)
Nike, Inc. is an American multinational corporation. Nike appears atop the cultural pyramid and
has perched there longer than most companies could dream. Nike has come to interject itself into
the fabric of culture by defining what it means to be irreverent, athletic, and entirely 'with it.'
Consistently re-inventing its appeal, Nike works to gear its products toward the maintenance of
the athletic body. One statement of purpose declares the company exists "to enhance people's
lives through sport and fitness," while another imagines Nike engaged in "keeping the magic of
sport alive". Doing so would not be easy for a company like Nike without the influence of
American culture.
U.S. culture has been shaped by the cultures of Native Americans, Latin Americans, Africans
and Asians. The United States is sometimes described as a "melting pot" in which
different cultures have contributed their own distinct "flavors" to American culture.
Language
Many languages are used, or historically have been used in the United States. Over 500
languages are spoken at various levels by the people in the population. The most commonly used
language is English (specifically American English), which is the de facto national language of
the United States and the primary language used for legislation, regulations, executive orders,
treaties, federal court rulings, and all other official pronouncements. Nonetheless, laws require
documents such as ballots to be printed in multiple languages when there are large numbers of
non-English speakers in an area. American schools, public as well as private, require English
classes at every grade level, even in bilingual or dual-language learning. Semesters of English
composition are compulsory in virtually all U.S. colleges and universities to satisfy associate's
and bachelor's degree requirements.
There are also many languages indigenous to North America or to U.S. states or holdings in the
Pacific region. Languages brought to the country by colonists or immigrants from Europe, Asia,
or other parts of the world make up a large portion of the languages currently used; several
languages, including creoles and sign languages, have also developed in the United States.
Approximately 430 languages are spoken or signed by the population, of which 176 are
indigenous to the area. Fifty-two languages formerly spoken in the country's territory are
now extinct.
There is no official language at the U.S. federal level. However, 32 states of the United States, in
some cases as part of what has been called the English-only movement, have adopted legislation
granting official status to English. Out of 50 states, 30 have established English as the only
official language, while Hawaii recognizes both English and Hawaiian as official and Alaska has
made some 20 Native languages official, along with English. Moreover, English is one of the
official languages in each of the U.S. territories, including Puerto Rico (English and Spanish
official, although Spanish has been declared the territory's principal official language and the

7
island's school system and government operate almost entirely in Spanish), Guam (English and
Chamorro), the U.S. Virgin Islands (English only), American Samoa (English and Samoan) and
the Northern Mariana Islands (English, Chamorro and Carolinian official).
Religion
Religion in the United States is characterized by a diversity of religious beliefs and practices.
Various religious faiths have flourished within the United States. A majority of Americans report
that religion plays a very important role in their lives, a proportion unique among developed
countries.
The majority of U.S. adults self-identify as Christians, while close to a quarter claims no
religious affiliation. According to a 2014 study by the Pew Research Center, 70.6% of the adult
population identified themselves as Christians, with 46.5% professing attendance at a variety of
churches that could be considered Protestant, and 20.8% professing Roman Catholic beliefs. The
same study says that other religions (including Judaism, Buddhism, Hinduism, and Islam)
collectively make up about 6% of the population. According to a 2012 survey by the Pew forum,
36% of U.S. adults state that they attend services nearly every week or more. According to a
2016 Gallup poll, Mississippi with 63% of its adult population described as very religious (say
that religion is important to them and attend religious services almost every week) is the most
religious state in the country, while New Hampshire with only 20% as very religious is the least
religious state.
Religion in the US according to Gallup, Inc. (2016)
Affiliation % of US population (in total 100%)
Christian 73.7
Protestant/Other Christian 48.9
Catholic 23.0
None/Atheist/Agnostic 18.2
Non-Christian faiths 5.4
No response given 2.6
Other non-Christian religion 2.5
Jewish 2.1
Mormon 1.8
Muslim 0.8
Education
Education in the United States is provided by public, private, and home schools.
State governments set overall educational standards, often mandate standardized tests for K–12
public school systems, and supervise, usually through a board of regents, state colleges and
universities. Funding comes from the state, local, and federal government.

8
Private schools are generally free to determine their own curriculum and staffing policies, with
voluntary accreditation available through independent regional accreditation authorities. About
87% of school-age children attend public schools, about 10% attend private schools, and roughly
3% are home-schooled.
Education is compulsory over an age range starting between five and eight and ending
somewhere between ages sixteen and eighteen, depending on the state. This requirement can be
satisfied in public schools, state-certified private schools, or an approved home school program.
In most schools, education is divided into three levels: elementary school, middle or junior high
school, and high school.
There are also a large number and wide variety of publicly and privately administered
institutions of higher education throughout the country.
The United States spends more per student on education than any other country. In 2014, the
Pearson/Economist Intelligence Unit rated US education as 14th best in the world, just behind
Russia. In 2015 the Program rated U.S. high school students #40 globally in Math and #24 in
Science and Reading. According to a report published by the U.S. News & World Report, of the
top ten colleges and universities in the world, eight are American.[11] (The other two
are Oxford and Cambridge, in the United Kingdom.)
Economic Philosophy
The economy of the United States is the world's largest national economy in nominal terms and
second largest according to purchasing power parity (PPP), representing 22% of nominal global
GDP and 17% of gross world product (GWP). The U.S. GDP was estimated to be $18.46 trillion
in 2016.[2] It has the worlds seventh-highest per capita GDP (nominal) and eleventh-highest per
capita GDP (PPP) as of 2016. The U.S. dollar is the currency most used in international
transactions and is the world's foremost reserve currency, backed by its science and
technology, its military, the full faith of the US government to reimburse its debts, its central role
in a range of international institutions since World War II and the petrodollar system. Several
countries use it as their official currency, and in many others it is the de facto currency. The
United States has a mixed economy and has maintained a stable overall GDP growth rate, a
moderate unemployment rate, and high levels of research and capital investment. Its largest
trading partners are are China, Canada, Mexico, Japan, Germany, South Korea, United
Kingdom, France, India and Taiwan.
The United States has one of the world’s largest and most influential financial markets. The New
York Stock Exchange is by far the world's largest stock exchange by market capitalization.
Foreign investments made in the US total almost $2.4 trillion, while American investments in
foreign countries total over $3.3 trillion. The economy of the U.S. leads in international ranking
on venture capital and Global Research and Development funding. Consumer spending
comprises 71% of the US economy in 2013. The United States has the largest consumer
market in the world, with household final consumption expenditure five times larger
than Japan's.

9
The US economy went through an economic downturn following the financial crisis of 2007–08,
with output as late as 2013 still below potential according to the Congressional Budget Office.
The economy, however, began to recover in the second half of 2009, and as of
2016, unemployment had declined from a high of 10% to 4.7%. In December 2014, public
debt was slightly more than 100% of GDP. Domestic financial assets totaled $131 trillion and
domestic financial liabilities totaled $106 trillion.
There are only two economic philosophies in America – trickle down and bottom up. Trickle
down means the rich get richer and pay less taxes. Supposedly they use their extra income to
invest in America.
Bottom up means giving all Americans what they need to be productive – universal and
affordable health coverage, good schools, and chance to attend college, job retraining, affordable
child care, and good public transportation to and from the job, for starters.
Social Structure
American society is stratified into social classes based on wealth, income, educational
attainment, occupation and social networks.
Most social scientists in the U.S. agree that society is stratified into social classes. Social class in
the United States is a controversial issue, having many competing definitions, models, and even
disagreements over its very existence. Many Americans recognize a simple three-tier model that
includes the upper class, the middle class, and the lower or working class. Some social scientists
have proposed more complex models that may include as many as a dozen class levels.
Meanwhile, some scholars deny the very existence of discrete social classes in American society.
In spite of debate, most social scientists do agree that in the U.S. people are hierarchically ranked
in a social class structure.
A team of sociologists recently posited that there are six social classes in America. In this model,
the upper class (3% of the population) is divided into upper-upper class (1% of the U.S.
population, earning hundreds of millions to billions per year) and the lower-upper class (2%,
earning millions per year). The middle class (40%) is divided into upper-middle class (14%,
earning $76,000 or more per year) and the lower-middle class (26%, earning $46,000 to $75,000
per year). The working class (30%) earns $19,000 to $45,000 per year. The lower class (27%) is
divided into working poor (13%, earning $9000 to 18,000 per year) and underclass (14%,
earning under $9000 per year). This model has gained traction as a tool for thinking about social
classes in America, but it does not fully account for variations in status based on non-economic
factors, such as education and occupational prestige. This critique is somewhat mitigated by the
fact that income is often closely aligned with other indicators of status; for example, those with
high incomes likely have substantial education, high status occupations, and powerful social
networks.

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A commonly used model for thinking about social classes in the U.S. attributes the following
general characteristics to each tier: the upper class has vast accumulated wealth and
significant control over corporations and political institutions, and their privilege is usually
inherited; the corporate elite consists of high-salaried stockholders, such as corporate CEOs, who
did not necessarily inherit privilege but have achieved high status through their careers; the
upper-middle class consists of highly educated salaried professionals whose occupations are held
in high esteem, such as lawyers, engineers, and professors; the middle class (the most vaguely
defined and largest social class) is generally thought to include people in mid-level managerial
positions or relatively low status professional positions, such as high school teachers and small
business owners; the working class generally refers to those without college degrees who do low
level service work, such as working as a sales clerk or housekeeper, and includes most people
whose incomes fall below the poverty line. In the above outline of social class, status clearly
depends not only on income, but also occupational prestige and educational attainment.
Political Philosophy
American political culture contains a number of core ideals and values. Not all Americans share
the same views, of course, but the vast majority subscribes to these general ideals, including
liberty, equality, democracy, individualism, unity and diversity.
Americans today tend to define liberty as the freedom for people to do what they want. We also
tend to believe liberty is essential to personal fulfillment and happiness. Nevertheless, liberty
must be restrained on some level in order to create a stable society. A widely accepted principle
of freedom is that we are free to do whatever we want as long as we do not impinge on other
people’s freedom.
A limited government is a government that places relatively few restrictions on its citizens’
freedom. There are some things that the government cannot do, such as limit freedom of speech
or impose a single religion on its citizens. A limited government usually has a constitution that
defines the limits of governmental power. In the United States, the Constitution outlines the
structure of government, whereas the Bill of Rights guarantees some of the citizens’ specific
liberties.
For many Americans, liberty includes economic liberty. People should be free to do as they see
fit in the economic sphere without government interference. Throughout most of the nineteenth
century, the American economy was based on laissez-faire capitalism, an economic system in
which the government plays almost no role in producing, distributing, or regulating the
production and distribution of goods. Today, people want some governmental intervention in the
economy, but most Americans want this intervention to be limited in scope.
Although no two people are truly equal, they are considered equal under the law. Some
Americans may be poorer than others, and some may have cultural backgrounds different from

11
the majority, but all Americans have the same fundamental rights. The term equality refers to a
number of ways people are treated the same.
Political equality means that everyone is treated in the same way in the political sphere. This
means, among other things, that everyone has the same status under the law (everyone is entitled
to legal representation, for example, and every citizen gets one vote) and that everyone gets
equal treatment under the law. Everybody must obey the laws, regardless of race, creed, religion,
gender, or sexual orientation, and in return, everyone enjoys the same rights.

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Chapter 4 (Culture of the Host Country)
Nike, world’s leading manufacturer of sports shoes and apparel, is one of the main firms
deploying global outsourcing. Nike started its venture in Vietnam in 1995 and its share in the
country’s Gross Domestic Product reached 5 percent by 1999. The five Nike factories in
Vietnam, owned by Korean and Taiwanese subcontractors, employed over 35,000 people,
predominantly young women, who left village farms to earn better wages.
From several countries Vietnam is the first Host Countries of NIKE. This is important o know
about the culture of Vietnam because the impact of the culture norms and value systems depends
on the products.
Language
The Vietnamese language which is spoken by the majority Viet population has regional accents
(Northern, Central, and Southern). All are generally understood by most Vietnamese speakers.
Vietnamese is a tonal language with six basic vowel tones. It is very different from English;
verbs do not change forms, articles are not used, nouns do not have plural endings, there are no
prefixes, suffixes, or infinitives and no distinction among pronouns. Honorific pronouns are used
to address people of different status or age. Vietnamese immigrants who had higher education in
Vietnam are more likely to be fluent in English.
Many of the country's 54 ethnic groups have their own distinct languages, though only a few of
the ethnic minority languages have their own script (Visiting Arts Vietnam Cultural Profile,
2006).
The official national language of Vietnam is Vietnamese Tiếng Việt, a tonal Mon-Khmer
language which is spoken by the majority of the population. In its early history, Vietnamese
writing used Chinese characters. In the 13th century, the Vietnamese developed their own set of
characters, referred to as Chir nom. Quốc ngữ became widely popular and brought literacy to the
Vietnamese masses during the French colonial period.
Vietnam's minority groups speak a variety of languages, including Tay, Moung, Cham, Khmer,
Chinese, Nung, and H’Mong. The Montagnard peoples of the Central Highland also speak a
number of distinct languages. A number of sign languages have developed in the cities.
The French language, a legacy of colonial rule, is spoken by many educated Vietnamese as a
second language, especially among the older generation and those educated in the former South
Vietnam, where it was a principal language in administration, education and commerce; Vietnam
remains a full member of the Francophonie, and education has revived some interest in the
language.

13
Religion
According to an
analysis by the Pew
Research Center, in
2010 about 45.3% of
the Vietnamese adhere
to indigenous religion,
16.4% to Buddhism,
8.2% to Christianity,
0.4% to other faiths,
and 29.6% of the
population isn't
religious.
Christianity was first introduced to Vietnam by Portuguese and Dutch traders in the 16th and
17th centuries, and was further propagated by French missionaries in the 19th and 20th centuries,
and to a lesser extent, by American Protestant missionaries during the Vietnam War, largely
among the Montagnards of South Vietnam.
The largest Protestant churches are the Evangelical Church of Vietnam and the Montagnard
Evangelical Church. Two-thirds of Vietnam's Protestants are reportedly members of ethnic
minorities. Although a small religious minority, Protestantism is claimed to be the
country's fastest growing religion, expanding at a rate of 600% in the previous decade.
The Vatican Church is officially banned, and only government-controlled Catholic organizations
are permitted. However, the Vatican has attempted to negotiate the opening of diplomatic
relations with Vietnam in recent years.
Several other minority faiths exist in Vietnam. A significant number of people are adherents
of Caodaism, an indigenous folk religion which has structured itself on the model of the Catholic
Church. Sunni and Cham Bani Islam are primarily practiced by the ethnic Cham minority,
though there are also a few ethnic Vietnamese adherents in the southwest. In total, there are
approximately 70,000 Muslims in Vietnam while around 50,000 Hindus and a small number
of Baha’is are also in evidence.
The Vietnamese government rejects allegations that it does not allow religious freedom. The
state's official position on religion is that all citizens are free to their belief, and that all religions
are equal before the law.
Education
Vietnam has an extensive state-controlled network of schools, colleges and universities, and a
growing number of privately run and partially privatized institutions. General education in
Vietnamese folk religion or not
religious population
73.2%
Buddhism 12.2%
Catholicism 6.8%
Caodaism 4.8%
Protestantism 1.5%
Hoahaoism 1.4%
Others 0.1%

14
Vietnam is divided into five categories: kindergarten, elementary schools, middle schools, high
schools, and universities. A large number of public schools have been constructed across the
country to raise the national literacy rate, which stood at 90.3% in 2008.
A large number of Vietnam's most acclaimed universities are based in Hanoi and Ho Chi Minh
City. Facing serious crises, Vietnam's education system is under a holistic program of reform
launched by the government. Education is not free; therefore, some poor families may have
trouble paying tuition for their children without some form of public or private assistance.
Regardless, school enrollment is among the highest in the world, and the number of colleges and
universities increased dramatically in the 2000s, from 178 in 2000 to 299 in 2005.
Economic Philosophy
Historically an agricultural country, Vietnam’s economy was dependent on wet rice cultivating.
Upon consolidating power after the Vietnam War, the Government collectivized farms and
factories and employed millions in government services. Vietnam’s centralized economy
remained plagued with restrictions on economic trade for a decade. The country struggled under
the fetters of trade embargoes placed by the US and Europe after the War. However, the Sixth
Party Congress introduced some momentous economic reforms in 1986, which resulted in a
socialist-oriented economy.
Between 1990 and 1997, Vietnam achieved approximately 8% yearly GDP growth, and 7% GDP
growth between 2000 and 2005, becoming the world's second fastest progressing economy.
Agricultural dependency in the financial output had shrunk from 25% in 2000 to 20% in 2007.
Poverty level had also declined and Vietnam had succeeded in creating job opportunities for the
vast labor force. However, the economic slump in 2008-2009 made it difficult to continue with
the job generation endeavors. To stem high inflation, Vietnamese authorities increased the
benchmark interest rates. Hanoi is targeting at a growth rate of 7.5 to 8% till 2011-12.
Vietnam Economic Structure: Divisions into Sectors
Vietnam’s economic structure is classified into the following sectors:
Primary Sector: From 1994 to 2004, agriculture and forestry grew at a yearly rate of 4.1% and
contributed 21.8% to the GDP in 2004. The agricultural output declined but employment in this
sector remained comparatively higher. In 2005, 60% of the labor force was concentrated in
agriculture, forestry and fishing; although agricultural produce was responsible for merely 30%
of exports. The reduction of government monopoly on rice exports converted Vietnam into one
of the world’s largest rice exporter.
Secondary Sector: Since years, Japan has been aiding Vietnam to develop its auxiliary
industries. From 2008 till date, Japan has given approximately US$180 million as aid to finance
SMEs. The country has already built supporting industry zones in several places including the
Que Vo district and the Bac Ninh province. There is a high prospect of developing supporting

15
industries, such as garment, textile, leather, electronics, IT, automobile and engineering. Priority
is also being given to livestock and aquaculture industries. Latest technology and business
solutions are being employed to serve the increasing domestic and export demands.
Tertiary Sector: By 2010, the insurance sector was expected to account for 4.2% of the GDP
via increase of life and non-life insurance premiums to $2 billion and $562 million respectively.
This would be a result of the manufacture of innovative products and sale channels.
Social Structure
Vietnam is small country located in the eastern side of India. Vietnam was greatly influenced by
the traditional social stratification system that survived there for many centuries. The major
difference between the social division of people of Vietnam from other nations and societies was
the basis of social class system. Normally the social class system in other nations was dependent
on the basis of money, power, authority, inheritance and sometimes color with which one is born
too. But the scenario was entirely different when it comes to Vietnam social hierarchy.
The social classes were developed in Vietnam on the basis of education and then occupation one
held in Vietnam. Education for Vietnam people were an exquisite method for upward mobility.
This was an ardent way of achieving high social status. Undoubtedly the emperor and royal
family were at the top. But the next social classes were totally dependent on education,
knowledge and profession basis. The Vietnam social hierarchy is explained below in a
descending order model means starting with the uppermost status holder social class and moving
on further reciting all the subordinate classes in brief. Just have a quick look –
For centuries Vietnamese society was knit together by Confucian norms based on five
relationships: the subordination of subject to ruler, son to father, wife to husband, and younger
brother to elder brother, and the mutual respect between friends. These norms influenced the
evolution of Vietnam as a hierarchic, authoritarian society in which Confucian scholarship,
monarchical absolutism; filial piety, the subordinate role of women, and the family system were
regarded as integral to the natural order of the universe.
Vietnam's social hiererchy
Rulling
class
The Emperor Royal family
members
Scholar
Class
Working
class
Farmers Manual
workers
Artisans Laborers
Business/class
merchants

16
Ruling Class
This was the top most social class in the Vietnam social hierarchy. This class incorporated:
 The Emperor – The emperor was supposed to rule the kingdom with the supreme ‘mandate of
heaven’ means by permission of mighty God. So, all were to abide by his decisions with a true
heart. The entire ruling task was handled by the emperor.
 Royal family members – The royal family members served as the emperor’s advisors.
Scholar Class
This class included scholars and scholar officials. A lot was emphasized on the education in the
Vietnam which ultimately became the basis of the Vietnam social hierarchy. These scholars were
employed through meticulous civil service exams demeanor in Chinese classical philosophy &
literature. These were also referred to as the ‘Mandarins’. Once an individual passed out
efficiently the triennial tests then he became a qualified scholar termed as degree holder. These
officials were entitled for getting appointed to the royal civil service which was considered the
most prominent prestigious road to wealth, power and high status.
Working Class
This was the middle class of the hierarchy. These people were involved with manual labor work
that was not considered high status symbol. This class was further divided in two categories as:
 Farmers – These were the peasants involved in farming work.
 Manual Workers– These people worked for farmers and other high social class people. It
formulated two more sub categories as below –
o Artisans
o Laborers
Business Class / Merchants
This class was usually looked down by the Vietnam people. This was sort of undesirable class
for them. The reason behind this thinking was that the Vietnam people considered business
transactions as dishonest transactions. The merchants formulated this social class which was at
the bottom of the Vietnam social hierarchy.
Vietnam's political culture has been determined by a number of factors of which communism is
but the latest. The country's political tradition is one of applying borrowed ideas to indigenous
conditions. In many ways, Marxism-Leninism simply represents a new language in which to
express old but consistent cultural orientations and inclinations. Vietnam's political processes,
therefore, incorporate as much from the national mythology as from the pragmatic concerns
engendered by current issues.

17
The major influences on Vietnamese political culture were of Chinese origin. Vietnam's political
institutions were forged by 1,000 years of Chinese rule. The ancient Chinese system, based on
Confucianism, established a political center surrounded by loyal subjects. The Confucians
stressed the importance of the village, endowing it with autonomy but clearly defining its
relationship to the center. Those who ruled did so with the "mandate of heaven." Although they
were not themselves considered divine, they ruled by divine right by reason of their virtue, which
was manifested in moral righteousness and compassion for the welfare of the people. A monarch
possessing these traits received the unconditional loyalty of his subjects. Selection of
bureaucratic officials was on the basis of civil service examinations rather than heredity, and
government institutions were viewed simply as conduits for the superior wisdom of the rulers.
In Vietnam, loyalty to a monarch was conditional upon his success in defending national
territory. A history of Chinese domination had sensitized the Vietnamese to the importance of
retaining their territorial integrity.
Vietnam's agrarian economy also contributed to its political culture. As an agricultural people,
the Vietnamese lacked an urban industrial proletariat to carry out their revolution. Leadership,
therefore, necessarily passed into the hands of scholar-official intellectuals and peasants.
Vietnam's political culture, in turn, has contributed to its comparative isolation from non-
communist states. This isolation is partially a result of the ideology that has created self- imposed
political barriers with the West, but it is also the result of the collective mentality of the nation's
leadership, which views itself as set apart from communist as well as noncommunist nations.
Communist ideology, particularly as manipulated by the Vietnamese leadership, has also helped
to shape Vietnam's political culture. The country's communist leaders have been adept at
stressing the continuity of Marxist-Leninist doctrine with Vietnamese history. The VCP
successfully identified communism with the historical goals of Vietnamese nationalism and
achieved leadership of Vietnam's independence struggle by accommodating the aspirations of a
number of ethnic, religious, and political groups. The party has presented the myths and realities
of the past in a manner that suggests that they led naturally to the present.
Vietnam's political culture represents, therefore, the steadfast survival of what is Vietnamese in
the face of a long history of outside influence; integration of historical political ideals with an
imported communist organizational model has created a communist identity that is no less
Vietnamese.

18
Chapter 5 (Comparison between home country and host country
culture)
Cultural Determinant Home Country Host Country
Language USA has numerous languages
spoken at different levels and
English is the most commonly
used of them. It is the official
language for all legal, business
and official purpose. The
second most used language is
the Spanish, with many other
languages used at state level.
In Vietnam, the major portion
of population speaks in
Vietnamese language. Unlike
English, Vietnamese is a tonal
language regardless of usage
of forms of verbs, articles,
plural form, or infinitives. It
also has a variety of ethnic
languages spoken at mass
level. In reality, Vietnamese
people use merely the raw
form of English in comparison
to more structured form of
English spoken by the people
of USA.
Religion Various religious beliefs have
flourished in USA over time.
Christianity is the primary
religion of USA followed by a
close to quarter portion of the
population claiming no
affinity to any religion.
For Vietnam, the half of the
population follows indigenous
religious beliefs. And about 12
percent of the population
follows Buddhism.
Education System USA has well-built education
system, where education is
provided by public, private
and home schools.
IN USA, education is divided
into three levels: elementary
school, middle or junior high
school and high school. There
are also colleges and
universities for higher
education.
in USA has the most well-
structured education system
right now with 8 of the
world’s top 10 colleges and
universities.
In Vietnam, education is
provided by mostly by state-
controlled facilities and a
growing number of privatized
and partially privatized
institutions.
in Vietnam, general education
is divided into five categories:
elementary schools, junior
schools, middle schools, high
schools and universities.
Currently Vietnam is under
complete reformation of
education system facing some
serious crises.

19
Economic Structure The economy of USA is the
world’s largest national
economy in nominal terms and
second largest in terms of
purchasing power parity. The
US dollar is world’s most used
currency and is the foremost
reserved currency. Several
other countries also use US
dollar as their official
currency. The country has
world’s largest and most
influential financial market.
Vietnamese economy was
constrained with restriction for
economic trades by USA and
Europe for decades.
Depending mostly on
agriculture and forestry,
Vietnam is slowly expanding
their economy. Japan has been
aiding Vietnam for long time
to support it for its
development. Between 2000
and 2005, Vietnam had 7%
GDP growth, making its
economy world’s second
fastest progressing economy.
Social Structure
Basis for Social Class:
Wealth, Income, Education,
Occupation and Social
Network.
The Upper Class: Large
inherited Wealth, control over
corporations.
The Corporate Elite Class:
High Salaried Employee who
earned their status throughout
their career.
The Upper Middle Class:
High Salaried professionals
with high social esteem.
Middle Class: Mid level
managerial role players or
relatively low status
professionals.
The Working Class: Those
without College degrees,
doing low level service works.
 USA believes in
Economic Liberty
 Recently, USA people
want government
inversion in economy
but in limited scope.
 Political Equality:
Everyone is treated as
Basis for Social Class:
Inheritance, Education and
Occupation.
The Emperor: Through
Inheritance, the supreme
leader and rule maker
The Royal Family: Advisors
to the Emperor
The Scholar Class: Educated
personnel are responsible for
civil service works.
The Worker Class: Middle
Class People who are farmers,
or workers for farmers and
others high class people.
Merchants/Business Class:
The socially undesirable class
because of social belief that
business is dishonest means
for livelihood.
 Core Influence:
Mixture of Chinese
Confucian Rules and
Communism.
 Leadership is passed
down to only socially
intellectual people,
who enforce

20
equal regardless of any
demographic traits and
enjoy same rights.
predetermined rules,
set by the Emperor.
 Collective mentality of
the leader.
 Lack of interest among
general people to break
out of the social and
political chains.
 Generalized mixed
model of Communism
with Confucian
political ideals.

21
Chapter 6 (Techniques to cope up with cultural differences)
Cultural differences can create cross-cultural problems. So it is the duty of both the managers
and the employees of a multinational organization to adopt some techniques to cope up with this
differences which will further help them to overcome the obstacles of cross-cultural differences.
 Acknowledge and admit the existence of difference between cultures. Differences in
perceptions, interpretations and evaluations of social situations and people who create
them and act with them, all these things are shaped by the culture. These differences than
have to be understood.
Recognition of a culture of a partner is considered to be the first condition of mutual
understanding and good cooperation in business.
 Encourage leaders to prepare and present a cultural profile of their people.
 Accept cultural differences without any judgment. It is not possible to claim that a certain
culture is more perfect, “better” than another culture.
 Learn about how your values, attitudes, behaviors and communication style may be
perceived by another culture, e.g. they may interpret humor as not taking things seriously.
Seek feedback from the people you work with or from a friendly party in the other
culture.
 Identify if their management style is more typically masculine or feminine―assertive and
competitive or modest and caring respectively this will affect the style of negotiation and
the type of relationship.
 Identify their need for structure and certainty as this may vary and affect the level of
control, definition, risk taking and governance.
 Understand if they have a short-term or long-term view as this will affect the way and the
speed at which projects are assessed, justified and decisions made. Asian cultures take a
much longer view than many Western cultures, e.g. the period over which a project is
justified.
 Refrain from using culturally biased competencies in leadership development models.
Keep in mind that initiative and risk-taking have very different boundaries across
different cultures.
Finally,
 Agree on a common working approach that balances the differences. Find common
solution, mutual understanding and simplification of the complicated and demanding
process of behaving in different cultural conditions.
Or,
 Minimize the differences, attempt to socialize all employees into behavior patterns of
dominant culture.

22
Or,
 Train managers and employees to recognize cultural differences and use those differences
to create advantages for the organization.
Develop your empathy skills and show people of other culture that you are making every
effort to see and feel things as they do. Think of yourself as a "translator" of your own
culture and protocols. Making a small change such as greeting people in their own
language or showing knowledge of their culture and its customs will be seen positively.

23
Chapter-7 (Conclusion)
Nike is now one of the top companies in the world. Their business is running all over the world.
As they are doing business in many countries they must maintain many things for developing
their business. Different people from different countries use different languages. Culture,
Religions, education, political environment may vary home country to host country. When Nike
comes from their home country to host country to do their business they need to understand the
language, culture and political atmosphere of that country because business strategy depends on
the country’s language, culture and many other things. In this report, we have provided some
approaches that will help to cope up with cultural differences. From this study, we will
recommend that Nike should have more concentration on country’s cultural differences. It can
create privileges for the members for bonding the relationship between the customer and the
company.

24
References
1. www.nike.com
2. https://www.boundless.com/sociology/textbooks/boundless-sociology-
textbook/stratification-inequality-and-social-class-in-the-u-s-9/the-class-structure-in-
the-u-s-75/class-structure-in-the-u-s-442-10206/
3. http://economistsview.typepad.com/economistsview/2007/11/there-are-only-.html
4. http://www.sparknotes.com/us-government-and-politics/american-
government/american-political-culture/section3.rhtml
5. https://idesli.wordpress.com/2013/05/02/the-importance-of-culture-in-international-
business/
6. www.crossculturalmgt.com
7. www.orientpacific.com
8. "Managing Cross-Cultural Diversity- A Challenge for Present and Future
Organizations", By Subash C. Kundu.
9. "Cross Cultural Differences and Their Implications for Managing International
Projects", By F. T. Anbari (The George Washington University), E. V. Khilkhanova
(Eastern-Siberian State Academy of Culture and Arts), M. V. Romanova (State
University of Management), S. A. Umpleby (The George Washington University).
10. http://www.datamation.com/career/article.php/3831671/10-Steps-for-Dealing-with-
Different-Cultures.htm
11. http://www.amanet.org/training/articles/managing-cultural-diversity.aspx

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