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Solution Manual for International Business: The Challenges of Globalization, 9th Edition

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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 1 preview imageInternational Business: TheChallenges of GlobalizationNinth EditionJohn J. WildKenneth L. WildInstructor'sResource ManualforInternational Business: TheChallenges of GlobalizationByJohnJ.Capela
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 2 preview image
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 3 preview imageCHAPTER1GLOBALIZATIONLEARNINGOBJECTIVES:1.1 Identify the types of companies active in international business.1.2 Explain globalization and how it affects markets and production.1.3 Detail the forces that drive globalization.1.4 Outline the debate aboutglobalization’s impact on jobs and wages.1.5 Summarize the debate about income inequality.1.6 Outline the debate about culture, sovereignty, and the environment.1.7 Identify how this course will help you develop skills for your career.CHAPTEROUTLINE:IntroductionKey Players in International BusinessMultinational CorporationsEntrepreneurs and Small BusinessesWhat Is Globalization?Globalization of MarketsReduces Marketing CostsCreates New Market OpportunitiesLevels Uneven Income StreamsLocal Buyers’ NeedsGlobal SustainabilityThree Markets, Three StrategiesGlobalization of ProductionAccess Lower-Cost WorkersAccess Technical ExpertiseAccess Production InputsForces Driving GlobalizationFalling Barriers to Trade and InvestmentWorld Trade OrganizationOther International OrganizationsRegional Trade AgreementsTrade and National OutputTechnological InnovationE-Mail and VideoconferencingThe InternetCompany Intranets and ExtranetsAdvancements in Transportation TechnologiesMeasuring GlobalizationDebate about Jobs and WagesAgainst GlobalizationEliminates Jobs in Developed Nations
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 4 preview imageCh 1: Globalization2Lowers Wages in Developed NationsExploits Workers in Developing NationsFor GlobalizationIncreases Wealth and Efficiency in All NationsGenerates Labor Market Flexibility in Developed NationsAdvances the Economies of Developing NationsSummary of the Jobs and Wages DebateDebate about Income InequalityInequality within NationsInequality between NationsGlobal InequalitySummary of the Income Inequality DebateDebate about Culture, Sovereignty and the EnvironmentGlobalization and CultureGlobalization and National SovereigntyGlobalization: Menace to Democracy?Globalization: Guardian of Democracy?Globalization and the EnvironmentDeveloping Skill for Your CareerThe Global Business EnvironmentThe Road Ahead for International BusinessBottom Line for BusinessA comprehensive set of specially designed PowerPoint slides is available for usewith Chapter 1. These slides and the lecture outline below form a completely integratedpackage that simplifies the teaching of this chapter’s material.Lecture OutlineI.INTRODUCTIONGlobalizationisreshapingourcultures,ourpolitical,legal,andeconomicsystems, and affecting our standards of living. It alters the global pattern of tradeand investment by expanding markets and multiplying production possibilities.II.KEY PLAYERS IN INTERNATIONAL BUSINESSLarge firms from developed nations once dominated, but firms from Brazil,China, and India now play a bigger role. Technological advancements allow smalland midsize companies to better compete.A.Multinational CorporationsAmultinational corporation (MNC)has direct investments abroad inmultiple countries. They generate significant jobs, investment, and taxrevenue for the regions and nations they enter.1.Profiling the largest multinationalsa.Some MNCs have more employees than small nations havecitizens (e.g., Walmart has 2.2 million employees globally).
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 5 preview imageCh 1: Globalization3b.If Walmart were a country, it would rank third behindNorway in terms of economic power (Figure 1.1).B.Entrepreneurs and Small Businesses1.They are increasingly active in international business by exportingearlier and growing faster with help from technology.2.Aborn global firmis a company that adopts a global perspectiveand engages in international business from or near its inception.3.Some small Internet companies reach customers solely through theWeb (e.g., Vellus Products, Weekend in Italy).III.WHAT IS GLOBALIZATION?Globalizationisthetrendtowardgreatereconomic,cultural,political,andtechnological interdependence among national institutions and economies. It ismarked by “denationalization,” which isnot“internationalization.”A.Globalization of Markets1.Convergence in buyer preferences in markets around the worlda.Reduces marketing costs bystandardizingactivitiesb.Creates market opportunities abroad if home is small orsaturatedc.Levels uneven income streams for global seasonal productsd.Companies must not overlook localbuyers’ needse.Need forglobal sustainability—development that meets theneeds of the present without compromising the ability offuture generations to meet their own needs.2.GlobalSustainability,ThreeMarkets,ThreeStrategies.Theworld’s 7 billion people live in three types of markets, yet allrequire companies to act in a sustainable manner:a.Developed marketsare solidly middle class and people canconsume almost any product desired. A firm may use thelatest technologies to develop sustainable products in asustainable manner.b.Emerging marketsare racing to catch up to rich nations andare overloading infrastructures. Resource constraints canforcecompaniestodevelopsustainableproductionmethods.c.Traditionalmarketshavemostlyruralpopulationsforwhom poverty and corruption prevail. Here, sustainabilitymeansteachingsafefarmingpractices,environmentalstewardship, and disease awareness.B.Globalization of Production1.Dispersal of production activities to locations that help a companyto minimize costs or maximize qualitya.Access lower-cost workers to cut overall production costsb.Access technical expertisec.Access production inputs unavailable or more costly athome
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 6 preview imageCh 1: Globalization4IV.FORCES DRIVING GLOBALIZATIONForces increase competition among nations by leveling the global businessplaying field.A.Falling Barriers to Trade and Investment1947 General Agreement on Tariffs and Trade (GATT)was designed topromote free trade by reducing tariffs and nontariff barriers. 1994 GATTrevision(1)reducedtariffsandloweredsubsidiesforagriculturalproducts; (2) defined and protected intellectual property rights; and (3)created the WTO.1.World Trade Organizationa.WorldTradeOrganization(WTO)istheinternationalorganization that enforces the rules of international trade.b.WTO goals: (1) to help the free flow of trade, (2) helpnegotiate the further opening of markets, and (3) settletrade disputes.c.WTO agreements are contracts committing members to fairand open trade policies. WTO dispute settlement system isthe spine of the global trading system.2.Other International Organizationsa.World Bank - The initial purpose of the World Bank(www.worldbank.org)wastofinanceEuropeanreconstructionfollowingtheSecondWorldWar.TheWorld Bank later shifted its focus to the general financialneeds of developing countries, and today it finances manyeconomicdevelopmentprojects(infrastructuredevelopment) inAfrica, South America, andSoutheastAsia.b.International Monetary Fund - is an agency created toregulate fixed exchange rates and to enforce the rules of theinternational monetary system. Among the purposes of theIMF (www.imf.org) are promoting international monetarycooperation, facilitating the expansion and balanced growthofinternationaltrade,avoidingcompetitiveexchangedevaluation, and making financial resources temporarilyavailable to members suffering from severe balance ofpayment problems.3.Regional Trade Agreementsa.Smallergroupsofnationsalsoareintegratingtheireconomies (e.g., NAFTA, European Union).4.Trade and National Outputa.Effect of the WTO and regional trade pacts is greater globaltrade and cross-border investing (Map 1.1).b.Trade growth has been faster than world output.c.Gross Domestic Product (GDP)is the value of all goodsand services produced by a domestic economy over a one-
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 7 preview imageCh 1: Globalization5year period.Gross national product (GNP)adds incomefrom international activities.B.Technological InnovationTechnology accelerates globalization by making it easier, faster, and lesscostly to move data, goods, and equipment around the world.1.E-mail and Videoconferencinga.Speed information flows and ease the tasks of coordinationand control, which are complicated by operating acrossborders.b.Drivinggrowthinvideoconferencingarelower-costbandwidth and equipment, and decreased travel for cost orsafety reasons.2.The Interneta.Helpsfirmssharpenforecasting,lowerinventories,improve communication with suppliers, and communicatequickly and cheaply with distant managersb.Reduces the cost of reaching an international customerbase, which is essential for the competitiveness of smallfirms3.Company Intranets and Extranetsa.Intranetsare private networks of company Web sites andother information sources that allow employee access toinformation from distant locations.b.Extranetsare computer networks that give distributors andsuppliers access to a company’s database so they can placeordersorrestockinventorieselectronicallyandautomatically.4.Advancements in transportation technologiesa.Make global shipping more efficient and dependable (e.g.,GPS)C.Measuring Globalization1.The KOF Swiss Economic Institute’s Globalization Index ranksnations on their economic, social, and political engagement.2.Richest nations are the most global, with many in Europe. TheUnited States is currently ranked 27th (see Table 1.1).3.The least global nations are found in Africa, East Asia, South Asia,LatinAmerica,andtheMiddleEast.Lowtechnologicalconnectivity slows global integration.V.DEBATE ABOUT JOBS AND WAGESA.Against Globalization1.Eliminatesjobsindevelopednationsasgood-payingmanufacturing jobs go abroad to developing countries. Low-pricedgoods are not worth lost jobs.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 8 preview imageCh 1: Globalization62.Lowers wages in developed nationsby causing worker dislocationthatgraduallylowerswages.Newjobsthatreplacelostmanufacturing jobs often pay less.3.Exploitsworkersindevelopingnationswhoworkcheaplyservicing western consumers.B.For Globalization1.Increases wealth and efficiency in all nationsbecause tradeopenness raises output. Firms grow more efficient and pass savingson to consumers.2.Generates labor market flexibility in developed nationsthat allowsan economy to rapidly deploy labor where demand is relativelyhigh.3.Advances the economies of developing nationsby injecting capitalthat creates higher-paying jobs, which expands the middle classand raises standards of living.C.Summary:Althoughglobalizationeliminatesjobsinsomeeconomicsectors, it creates jobs in other sectors. Gains in national economies areworth lost livelihoods that individuals may suffer.D.Globalization’s Impact on Labor, the Environment, and Markets1.Labor standardsa.Trade unions claim that firms continually move to nationswith low labor standards, which reduces labor’s bargainingpower and forces overall labor standards lower.b.But studies of developing nations’ export processing zonesinstead find evidence that contradicts such claims.2.Environmental protectiona.Globalizationopponentssayitcreatesa“racetothebottom”inenvironmentalconditionsandregulations:countries compete in reducing environmental protectionlaws.b.But evidence shows pollution-intensive U.S. firms tend toinvest in countries with stricter environmental standards.Also, closed economies historically are the worst polluters.3.Future marketsa.Protesters claim international firms pay locals the lowestpossible wage and export their goods back to the homecountry.b.Today, firms want to build local markets in developingnations,notsimplyexploitworkersandfomentlocalanimosity.VI.DEBATE ABOUT INCOME INEQUALITYA.Inequality within Nations1.Globalization critics claim that income disparity in rich nations isincreasing as firms move factory jobs to poor nations.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 9 preview imageCh 1: Globalization72.Evidence is mixed, but poor people in developing nations seem tobenefit from an open economy.B.Inequality between Nations1.Globalization opponents say it is widening the gap in averageincomes between rich and poor nations.2.Looking closely at the evidence, we see that open nations arebenefiting from trade whereas closed ones are not.C.Global Inequality1.Opponents of globalization say it is widening income inequalityamong all people of the world.2.Studies tend to agree that global inequality has fallen in recentdecades, though they disagree on the extent of the decline.D.Summary of the Income Inequality DebateVII.DEBATE ABOUT CULTURE, SOVEREIGNTY AND THE ENVIRONMENTA.Globalization and Culture1.Critics say globalization homogenizes our world and lets MNCsdestroy cultural diversity and wipe out small local businesses.2.Yet globalization allows nations to: (1) specialize and trade forgoods they do not produce, (2) import other peoples’ culturalgoods, and (3) still protect deeper moral and cultural norms.B.Globalization and National Sovereignty1.Globalization: Menace to Democracy?a.Supranationalinstitutionswithinternationalgoalsandappointedofficialsunderminenationalsovereigntyanddemocracy.b.Electedofficialsundercutdemocracyandlocalandregionalauthoritywith“international”agreementsoncitizens’ behalf.2.Globalization: Guardian of Democracy?a.Globalizationhashelpedspreaddemocracyworldwide(e.g., more democratic nations than ever).b.Some losses of sovereignty have had positive socialimpacts, as in human rights, workers’ rights, anddiscrimination.3.Globalization and the Environmenta.Most international firms today support reasonableenvironmental laws because (if for no other reason) theywant to expand future local markets for their goods andservices. They recognize that healthy future markets requirea sustainable approach to business expansion.VIII.DEVELOPING SKILLS FOR YOUR CAREERSkills required for a career in International Business include: critical thinking, anunderstanding of business ethics and social responsibility, communication andknowledge application and awareness.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 10 preview imageCh 1: Globalization8A.The Global Business Environment–What makes international businessspecial is that it occurs within a dynamic, integrated system that weavestogether four distinct elements:1.Globalizationistransformingoursocietiesandcommercialactivities.Italsoincreasescompetitioneverywhere,forcingcompanies to be vigilant.2.Eachnational business environmentconsists of unique cultural,political, legal, and economic characteristics. Companies must beattentive to nuances and adapt products and practices as needed.3.Theinternational business environmentinfluences how business isconducted so firms must closely monitor events.4.Context ofinternational business managementis defined by thecharacteristicsofthenationalandinternationalbusinessenvironments. Managers must abide by the prevailing rules in eachmarket in which it operates.B.The Road Ahead for International BusinessPart 1 (Chapter 1): GlobalizationPart 2 (Chapters 2–4): National Business EnvironmentsParts3and4(Chapters5–8and9–10):InternationalBusinessEnvironmentPart 5 (Chapters 11–16): International Business ManagementIX.BOTTOM LINE FOR BUSINESSA.Harnessing Globalization’s Benefits1.The most global nations tend to have the greatest equality, robustenvironmental protection, inclusive political systems, lowest levelsof corruption, healthiest lifestyles, and be where women haveachieved the most social, educational, and economic progress.2.The debate has opened a dialogue on how globalization can beharnessed to make its benefits exceed its costs.B.Intensified Competition1.Continuedglobalizationistakingcompaniesintopreviouslyisolated markets and increasing competitive pressures worldwide.2.As it gets easier and less costly to manage widely dispersedmarketing and production activities, new opportunities and threatsemerge.C.Wages and Jobs1.Low wages are not all that draws investment by multinationals. Alocation must offer low-cost, adequately skilled workers in anenvironmentwithacceptablelevelsofsocial,political,andeconomic stability.2.Labor mobility is increasing with globalization—depressing wagesin some job categories but developing new job opportunities inothers.D.The Policy Agenda
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 11 preview imageCh 1: Globalization91.Rich nations could open their markets, slash agricultural subsidies,and increase development aid. Poor nations could improve theirinvestment climates and improve social protection for the poor.2.Rich nations could offer workers their wage insurance, subsidizedhealth insurance if out of work, and improve education. Richnationscouldhelpenforcelaborstandards,helpclarifyenvironmentalagreements,andresearchtheenvironmentalimplications of trade agreements.Quick Study QuestionsQuick Study 11.Q:What is the value of goods and services that all nations of the world exportevery year?A: Goods worth $16.2 trillion and services worth 4.7 trillion.2.Q:Abusinessthathasdirectinvestmentsintheformofmarketingormanufacturing subsidiaries abroad in multiple countries is called a what?A: A business that has direct investments abroad in multiple countries is amultinational corporation (MNC).3.Q:A born global firm engages in international business from or near its inceptionand does what else?A: A born global firm also adopts a global perspective.Quick Study 21.Q:Globalization causes the institutions and economies of nations to becomewhat?A: Globalization causes institutions and economies of nations to become moreinterdependent.2.Q:What benefits might a company obtain from the globalization of markets?A: Globalization of markets refers to convergence in buyer preferences in marketsaround the world. Potential benefits for companies include: (1) reduced marketingcosts by standardizing activities, (2) market opportunities abroad if home marketis small or saturated, and (3) levels an income stream by letting international salesoffset domestic sales for a company selling a global seasonal product.3.Q:Sustainability is development that meets present needs without compromisingwhat?A: Sustainability is development that meets present needs without compromisingthe ability of future generations to meet their own needs.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 12 preview imageCh 1: Globalization10Quick Study 31.Q:What global organizations have helped expand globalization?A: The 1947 GATT lowered trade barriers and made it cheaper and easier to shipgoods across borders. In 1988 world merchandise trade was 20 times larger thanin 1947; average tariffs dropped from 40 percent to 5 percent. A 1994 GATTrevision created the WTO, which has the power to enforce international traderules. Goals of the WTO are: (1) to help the free flow of trade, (2) help negotiatefurther opening of markets, and (3) settle trade disputes. WTO agreements arecontracts committing members to fair and open trade policies. The WTO disputesettlement system is the spine of the global trading system. The World Bank andthe International Monetary Fund have also helped expand globalization.2.Q:What technological innovations are helping to propel globalization?A: E-mail and videoconferencing speed information flows and ease the tasks ofcoordination and control. Firms use the Web to sharpen forecasting, lowerinventories, and improve communication with suppliers, and to communicate withdistant managers quickly, cheaply, and efficiently. The Web also reduces the costof reaching international customers—important for the competitiveness of smallfirms. Company intranets allow employees to access information from distantlocations to share best practices. Extranets give distributors and suppliers accesstoacompany’sdatabasesotheycanplaceordersorrestockinventorieselectronically and automatically. Transportation advancements are facilitatingglobalization by making shipping more efficient and dependable.3.Q:What nations rank high in terms of globalization?A: Netherlands, Ireland and Belgium are examples of a nations that rank high interms of globalization.Quick Study 41.Q:In the debate over jobs and wages, opponents of globalization say that it doeswhat?A: Opponents state that globalization eliminates jobs in developed nations,exploits workers in developing countries, and lowers wages in developed nations.2.Q:In the debate over jobs and wages, supporters of globalization say that it doeswhat?A:Supportersstatethatglobalizationgenerateslabormarketflexibilityindeveloped nations and advances the economies of developing nations.Quick Study 51.Q:Evidencesuggeststhatglobalizationcan helpdevelopingnationsboostincomes for their poorest citizens in what part of the debate over inequality?A: Inequality within nations
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 13 preview imageCh 1: Globalization112.Q:Inthedebateoverinequalitybetweennations,evidencesuggeststhatdeveloping nations that are open to trade and investment do what?A:Evidencessuggeststhatdevelopingnationsthatareopentotradeandinvestment grow faster than rich nations.3.Q:Regarding the debate over global inequality, experts tend to agree on what?A: Experts tend to agree that inequality has fallen in recent decades.Quick Study 61.Q:People opposed to globalization say that it does what to national cultures?A: People opposed to globalization say that it homogenizes national cultures.2.Q:Regarding national sovereignty, opponents of globalization say that it doeswhat?A: Opponents say that globalization helps supranational organizations gain power,may force nations to violate the rights of local and state governments, andundercuts the democratic process and individual liberty.3.Q:With regard to the physical environment, what do globalization supportersargue?A: Supporters argue that companies have invested in nations that were enactingstricterenvironmentalrules;thatfewU.S.firmsinvesttoobtainlow-costresources and then export finished goods to the United States; that firms care forthe environment abroad to nurture future local markets for their goods andservices.Quick Study 71.Q:It helps to think about international business as four elements that occurwithin a what?A: It is helpful to view international business as occurring within an integratedglobal systemconsisting of four main elements: (1)Globalizationis a potent forcetransformingoursocietiesandcommercialactivities.(2)Separatenationalbusinessenvironments,includingcultureandsystemsofpolitics,law,andeconomics. (3) Theinternational business environment, which is where theactions of consumers, workers, companies, financial institutions, and governmentsfrom different nations converge. (4)International business managementwhichinvolves all the duties of management in a domestic setting, but which arecomplicated by a multitude of differences.2.Q:How does managing an international firm differ from managing a purelydomestic business?
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 14 preview imageCh 1: Globalization12A: International firms encounter unfamiliar societies. International managers mustscan the globe for opportunities and threats. International firms may need to adaptpractices or products to local conditions.Ethical ChallengeYou are the CEO of a major U.S. apparel company that contracts work to garmentmanufacturers abroad. Employees of the contractors report 20-hour workdays, pay lowerthan the minimum wage, overcrowded living conditions, physically abusive supervisors,and confiscation of their passports. Contractors and government officials say local laborlawsareadheredtoandenforced,thoughabusesappearwidespread.Yousendinspectors to the factories abroad but they uncover no labor violations. A labor-advocacygroup claims that supervisors coached workers to lie to your inspectors about conditionsand threatened workers with time in makeshift jails without food if they talked.1-5.Should you implement a monitoring system to learn the truth about what ishappening?A: The implementation of a monitoring system is important. A keener sense ofbusiness ethics and social responsibilityare critical to the success of MNC. Theseconcepts serve as the guiding principles that influence the way individuals andorganizations behave within society. The issues of personal ethical responsibilityand reasoning should impact how managers make ethical decisions under specificcircumstances and how they fared.1-6.Do you help the factory improve conditions, withdraw your business, or simply donothing?A: The answer depends on the overall outlook of the market and opportunitiesthat it presents. If the long term opportunities are good, it is important to note thebusiness does have a social responsibility with regard to topics such as humanrights, fair trade, and sustainable development.1-7.How might your actions affect your relations with the factory owner and yourability to do business in the country?A: It’s extremely important that your company be thorough and transparentthroughout the monitoring process. The monitoring process could seem moreimpartial by contracting an independent organization to conduct the investigation,rather than employ someone with whom the company might be suspected ashaving social or political connections. You could also have the report made publicto all parties simultaneously to eliminate the perception of the report beingadjusted. To implement and maintain rapid, sustainable improvements: monitorand verify codes of conduct regarding labor practices, disseminate information toworkers explaining their rights, appeal to government agencies on effective waysto raise labor standards, explain how their reputationas being “good guys” in thelabor standards arena can create a useful marketing tool and opportunities for
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 15 preview imageCh 1: Globalization13firms and countries by differentiating themselves when competing in the apparelexport market.Teaming UpResearch Project. Imagine that you and several of your classmates own a company thatmanufactures cheap sunglasses. To lower production costs, you choose to move yourfactory from your developed country to a more cost-effective nation.1-8.What elements of the national business environment might influence your decisionwhere to move production? Are there obstacles to overcome in the internationalbusiness environment?A: The first factor is based on the need potential. For example, if a companyproduces air conditioners, it will obviously look at countries with warm climates.You would then address the Financial and Economic Forces, the analyst shouldlook at factors such as trends in inflation rates, exchange rates and interest rates.Credit availability, paying habits of customers and Return of Investment forsimilar investments are other factors to be considered. You would then proceed tolook at Political and Legal Forces, The analyst should look at elements such as:market entry barriers, profit remittance barriers and other barriers such as politicalinstability, tax laws, safety standards, price controls, etc., and finally followed bylooking at the Sociocultural and Competitive Forces.1-9.What aspects of the globalization of production and marketing will you expectwill benefit your company after the move?A: This project gets students to begin pondering the types of elements that mustbe considered when selecting a country for investment. At a minimum, students’responses should consider: (1) the presence of investment barriers in the country;(2) resources needed to carry out production, as well as their availability and cost;(3) availability of modern telecommunications to facilitate communication withthe home office; and (4) how the expansion might be financed.Practicing International Management CaseMTV Goes Global with a Local Beat1-16.Q:Some people outside the United States say teens exposed to large doses of U.S.youth culture on MTV will identify less with their own societies and teens indevelopingcountrieswillwantWesterngoodstheycannotafford.MTV’sresponse: “It’s just fun, it’s only TV,” says one executive. What do you think? AretheredangersinbroadcastingU.S.-styleprogramsandadstodevelopingcountries?A: The debate over the impact of U.S. programming beamed to other developedand developing cultures will likely never cease. The U.S. television programTheSimpsons, which depicts a rather unflattering U.S. family, is seen in more than 90countries. Such a program is unlikely to encourage young people outside the
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 16 preview imageCh 1: Globalization14United States to grow up to be like Homer Simpson. Generally, this program andothers, such asModern Family, theThe Ellen Degeneres Show, andBig BangTheory, are watched around the world for a glimpse into the humorous or darkeraspects of U.S. culture. On the other hand, local programming can lose out to theU.S. programming if it is not as entertaining.In regard todesires among young people for more “Western” goods, thisis a sensitive issue involving elements of economic development and materialism.It could be argued that it is not ethical to show U.S. programs that depict wealthylifestyles in developing countries because they promote discontent in thosemarkets and promote materialism. However, there are wealthy and poor people inevery nation and, following this line of reasoning, one could argue that suchprograms should not be aired in the U.S. market either—incidentally, somegroups do make this argument.1-17.Q:Digital compression technology made it possible for MTV to program over aglobal network. Can you think of other technological innovations that have helpedcompanies to think globally and act locally?A: Internet retailers such as Amazon make online books in English availableglobally. However, Amazon also has online service to accommodate those inFrench- and Spanish-speaking countries. This is a localized approach. The Frenchversion of Amazon can further localize its selections by offering books tailored tospecific Francophone regions such as Africa and Canada, not just France. Clearly,Amazon can continue to localize by selecting other languages where significantnumbers of readers are.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 17 preview imageCHAPTER2CROSS-CULTURALBUSINESSLEARNINGOBJECTIVES:2.1Explain culture and the need for cultural knowledge.2.2 Summarize the cultural importance of values and behavior.2.3 Describe the roles of social structure and education in culture.2.4 Outline how the major world religions can influence business.2.5 Explain the importance of personal communication to international business.2.6 Describe how firms and culture interact in the global workplace.CHAPTEROUTLINE:IntroductionWhat Is Culture?National CultureSubculturesPhysical EnvironmentNeed for Cultural KnowledgeAvoiding EthnocentricityDeveloping Cultural LiteracyValues and BehaviorValuesAttitudesAestheticsAppropriate BehaviorMannersCustomsFolk or Popular CustomsThe Business Customs of Gift GivingSocial Structure and EducationSocial Group AssociationsFamilyGenderSocial StatusSocial MobilityCaste SystemClass SystemEducationThe “Brain Drain” PhenomenonReligionChristianityIslamHinduismBuddhism
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 18 preview imageCh 2: Cross-Cultural Business2ConfucianismJudaismShintoPersonal CommunicationSpoken and Written LanguageImplications for ManagersLanguage BlundersLingua FrancaBody LanguageCulture in the Global WorkplacePerception of TimeView of WorkMaterial CultureCultural ChangeWhen Companies Change CulturesWhen Culture Changes CompaniesStudying Culture in the WorkplaceKluckhohn-Strodtbeck FrameworkCase: Dimensions of Japanese CultureHofstede FrameworkBottom Line for BusinessA comprehensive set of specially designed PowerPoint slides is available for usewith Chapter 2. These slides and the lecture outline below form a completely integratedpackage that simplifies the teaching of this chapter’s material.Lecture OutlineI.INTRODUCTIONThis chapter describes culturein the context of international business, explainshow culture affects international business practices and competitiveness, andpresents two methods of classifying cultures.II.WHAT IS CULTURE?Cultureis the set of values, beliefs, rules, and institutions held by a specific groupof people. Main components include:aesthetics,valuesandattitudes,mannersandcustoms,social structure,religion,personal communication,education, andphysicalandmaterial environments.A.National culture1.Nation-states support and promote the concept of a national cultureby building museums and monuments to preserve the legacies ofimportant events and people.2.Nation-states intervene to helppreservetheir national cultures.3.Companies get involved in supporting culture, in part, for thepublic relations benefit.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 19 preview imageCh 2: Cross-Cultural Business3B.Subcultures1.Asubcultureis a group of people who share a unique way of lifewithin a larger, dominant culture. It can differ from the dominantculture in language, race, lifestyle, values, attitudes, and so on.2.Companiesmustbe mindful of subcultures when formulatingbusiness strategies (e.g., China has 50 ethnic groups).3.Decisions regarding product design, packaging, and advertisingmust consider distinct cultures.4.Subcultures also can extend beyond national borders.C.Physical Environment—These heavily influence a culture’s developmentand pace of change.1.Topography: all physical features that characterize the surface of ageographic region. Cultures isolated by impassable mountains orlarge bodies of water are less exposed to the cultural traits of othersand change slowly. Topography impacts product needs.2.Topography impacts personal communication (e.g., mountains andthe Gobi Desert consume two-thirds of China).3.Climateaffectswherepeoplesettleanddirectssystemsofdistribution (e.g., Australian desert, jungles, and coastal areas).4.Climate plays a large role in lifestyle, clothing, and work habits,such as organizing production schedules for idled machines.D.Need for Cultural Knowledge1.Avoiding Ethnocentricitya.Ethnocentricity is the belief that one’s own ethnic group orculture is superior to that of others. It causes people to viewother culture in terms of their own and overlook beneficialaspects of other cultures.b.Ethnocentricity canunderminebusinesscanunderminebusinessprojectswhenemployeesareinsensitivetocultural nuances.2.Developing Cultural Literacya.Managers working directly in international business shoulddevelopculturalliteracy—detailedknowledgeaboutaculture that enables a person to function effectively withinit.b.Cultural literacy brings a company closer to customer needsand improves competitiveness.III.VALUES AND BEHAVIORA.Values are ideas, beliefs and customs to which people are emotionallyattached. They affect work ethic and desire for material possession. Somecultures value leisure while others value hard work.B.Attitudes1.Attitudesarepositiveornegativeevaluations,feelings,andtendencies that individuals harbor toward objects or concepts.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 20 preview imageCh 2: Cross-Cultural Business4Learned from role models and formed within a cultural context.More flexible than values.C.Aesthetics1.Aestheticsis what a culture considers to be in “good taste” in thearts,theimageryevokedbycertainexpressions,andthesymbolism of colors.2.Appropriate colors for advertising, product packaging, and evenwork uniforms can enhance success (e.g., Green in Islam).3.Blunderscanresultfromselectinginappropriatecolorsandsymbols for advertising, product packaging, and architecture.4.Music is deeply cultural and must be considered in promotions.5.It is also an important consideration in marketing over the Internet.D.Appropriate Behavior—it is important to understand manners and customsto avoid mistakes abroad. In depth knowledge improves the abilities ofmanagers.1.Mannersare appropriate ways of behaving, speaking, and dressingin a culture (e.g., conducting business during meals in the UnitedStates). Another current example: Jack Ma founded Alibaba(www.alibaba.com) as a way for suppliers and buyers to increaseefficiency by cutting through layers of intermediaries and tradingcompanies. But he realized early that his Chinese clients neededtraining in business etiquette to cross the cultural divide and dobusiness with people from Western cultures. Therefore, Alibabaoffers seminars on business manners that instruct clients to spendmore time chitchatting with clients and conversing more casually.2.Customsare habits or ways of behaving in specific circumstancesthat are passed down through generations in a culture. Customsdefine appropriate habits or behaviors in specific situations.a.Folkcustomsarebehaviors,datingbackgenerations,practiced within a homogeneous group of people (e.g.,dragon boat festival in China).b.Apopular customis behavior practiced by a heterogeneousgroup or by several groups (e.g., blue jeans, “burgers ’nfries”).c.The business custom of gift giving–slthough giving tokengifts to business and government associates is customary,the proper type of gift varies. Cultures differ in their legalandethicalrulesregardingbribery.TheU.S.ForeignCorrupt Practices Act prohibits companies from givinglarge gifts to win business favors, applies to U.S. firmsoperating at home and abroad.IV.SOCIAL STRUCTURE AND EDUCATIONSocial structureembodies a culture’s fundamental organization, including groupsand institutions, social positions and relationships, and resource distribution.A.Social Group Associations
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 21 preview imageCh 2: Cross-Cultural Business5Asocial groupis a collection of two or more people who identify andinteract with one another. Contribute to identity and self-image.1.Familya.Nuclear familyconsists of immediate relatives, includingparents, brothers, and sisters. Prevails in Australia, Canada,United States, and in Europe.b.Extended familyincludes grandparents, aunts and uncles,cousins, and relatives through marriage. More important inAsia, Middle East, North Africa, and Latin America.2.Gendera.Genderrefers to socially learned traits associated with, andexpected of, men or women. Sociologists regard gender asa category—people who share some status.b.Countries vary regarding gender equality at work.B.Social Status1.Social stratificationis the process of ranking people into sociallayers according to family heritage, income, and occupation.2.Top layer: royalty, government officials, and business leaders.Middlelayer:scientists,medicaldoctors,andotherswithauniversity education. Bottom layer: manual and clerical workerswith vocational training or secondary-school educations.3.Rankings can and do change over time.C.Social Mobility1.Social mobilityis the ease with which individuals can move up ordown a culture’s “social ladder.”2.Caste system: people are born into a social ranking, with noopportunity for social mobility.3.Classsystem:personalabilityandactionsdecidestatusandmobility. Highly class-conscious cultures can offer less mobilitybut experience more class conflict.D.EducationEducation passes on traditions, customs, and values. Cultures educateyoung people through schooling, parenting, religious teachings, and groupmemberships. Families and other groups provide informal instructionabout customs and how to socialize with others.1.Education Levela.Excellent basic education attracts high-wage industries thatinvest in training and increase productivity. Skilled, well-educatedworkforce attractshigh-paying jobs;a poorlyeducated one attracts low-paying jobs.(See: Table 2.1 Illiteracy Rates of Selected Countries)b.Newly industrialized economies in Asia owe much of theireconomic development to solid education systems.2.The “Brain Drain”Phenomenona.Brain drain: departure of highly educated people from oneprofession, geographic region, or nation to another.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 22 preview imageCh 2: Cross-Cultural Business6b.Reversebraindrain:professionalsreturntotheirhomelands.V.RELIGIONHumanvaluesoftenderivefromreligiousbeliefs.Differentreligionstakedifferentviewsofwork,savings,andmaterialgoods.Beliefsinfluencecompetitiveness, economic development, and business strategies.A.Christianity1.Founded in Palestine 2,000 years ago among Jews who believedthat Jesus of Nazareth was the messiah. With 2 billion followers, itis the world’s single largest religion.2.More than 300 denominations but most are Roman Catholic,Protestant, or Eastern Orthodox.3.Roman Catholics are to refrain from placing materialism aboveGod and people. Protestants believe that salvation comes fromfaith in God and that hard work gives glory to God.4.Christian organizations sometimes get involved in social causesthat affect business policy (e.g., Walt Disney Company, Ryanair,Hyundai).B.Islam1.Founded by Muhammad in 600 A.D. in Mecca, Saudi Arabia—theholy city of Islam.World’s second largest religion with 1.3 billionadherents. WordIslammeans “submission to Allah” andMuslimmeans “one who submits to Allah.”2.Religion strongly affects the goods and services acceptable toMuslim consumers (e.g., alcohol, pork, interest on loans).C.Hinduism1.Founded 4,000 years ago in present-day India, where more than 90percent of its nearly 900 million adherents live.2.Some say it is a way of life rather than a religion. Caste system isintegral to the Hindu faith. Believe in reincarnation—rebirth of thehuman soul at the time of death. Do not eat or willfully harm livingcreatures as they may be reincarnated human souls.3.Cows considered sacred animals so eating beef is not allowed (e.g.,McDonald’s replaces beef with lamb).D.Buddhism1.Founded 2,600 years ago in India by a Hindu prince namedSiddhartha Gautama. About 380 million followers, mostly in Asia:China, Tibet, Korea, Japan, Vietnam, and Thailand.2.Promotes a life centered on spiritual rather than worldly matters.Buddhistsseeknirvana(escapefromreincarnation)throughcharity, modesty, compassion for others, restraint from violence,and general self-control.E.Confucianism1.Founded 2,500 years ago by exiled politician and philosopherConfucius. China is home to most of the 225 million followers.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 23 preview imageCh 2: Cross-Cultural Business72.Confucian thought ingrained in the cultures of Japan, South Korea,andnationswithlargenumbersofethnicChinese,includingSingapore.3.South Korean business practice reflects Confucian thought in itsrigid organizational structure and reverence for authority (e.g.,Korean-style management in overseas subsidiaries).4.For centuries, people despised merchants because earning moneyviolated Confucian beliefs. Many Chinese moved to Indonesia,Malaysia, Singapore, and Thailand to do business.F.Judaism1.Founded more than 3,000 years ago and 18 million followers. Wasthe first religion to teach belief in one God. Orthodox (“fullyobservant”) Jews make up 12 percent of Israel and constitute anincreasingly important economic segment.2.Important observances are Rosh Hashanah (the Jewish New Year),Yom Kippur (the Day of Atonement), Passover (the Exodus fromEgypt), and Hanukkah (a victory over the Syrians).3.Employers must be aware of Jewish holidays. Because Sabbathlasts from sundown on Friday to sundown on Saturday, workschedules might need adjustment.4.Marketers must take into account foods banned among observantJews (e.g., pork and shellfish prohibited, meat stored and servedseparately from milk) and “kosher” foods.G.Shinto1.Means “way of the gods” and arose as the native religion of theJapanese. Teaches sincere and ethical behavior, loyalty and respecttoward others, and enjoyment of life. Shinto claims about 4 millionstrict adherents in Japan.2.Shinto beliefs are reflected in the workplace through lifetimeemployment (although this is waning today) and the traditionaltrust extended between firms and customers.3.Japanese competitiveness in world markets has benefited fromloyalworkforces,lowemployeeturnover,andgoodlabor–management cooperation.VII.PERSONAL COMMUNICATIONEveryculturehasacommunicationsystemtoconveythoughts,feelings,knowledge, and information through speech, writing, and actions. A culture’sspoken and body language can help explain people’s thoughts and behaviors.A.Spoken and Written Language1.Linguistically different segments of a population are oftenculturally, socially, and politically distinct. The importance ofunderstanding local languages is becoming increasingly apparenton the Internet. Roughly one-half to two-thirds of all web pages arein English, but around three-fourths of all Internet users arenonnative English speakers.Language proficiency is also crucial in
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 24 preview imageCh 2: Cross-Cultural Business8production facilities where non-native managers are supervisinglocal employees. Finally, it is important to marketers because theyprize insights into the interests, values, attitudes, and habits ofteenagers to better target their promotions.2.Companies have made language blunders in their internationalbusiness dealings.3.Alingua francais a third or “link” language that is understood bytwo parties who speak different languages.4.Somelanguagesaredyingout,whereassomelanguagesaregrowing, including Mandarin, Spanish, and English.B.Body Language1.Communicated through unspoken cues, including hand gestures,facialexpressions,physicalgreetings,eyecontact,andthemanipulation of personal space.2.Communicatesinformationandfeelingsanddiffersamongcultures. Most is subtle and takes time to interpret.3.Proximity is an element of body language; standing too close mayinvade personal space and appear aggressive.VIII.CULTURE IN THE GLOBAL WORKPLACEA.Perceptions of Time1.Latin American,Indian and Mediterranean cultures are casual abouttime; people in Japan and the United States arrive promptly formeeting and keep tight schedules.2.Americans strive toward workplace efficiency and may leave workearly if their work is done because they value individual results.Japanese look busy even when business is slow to demonstratededication—an attitude grounded in cohesion, loyalty and harmonyB.View of Work1.Some cultures have a strong work ethic, others stress a balancedpace in work and leisure (e.g., “Work to live, or live to work”)2.Many European nations are trying to foster an entrepreneurialspirit to achieve the job growth realized in the United States.C.Material Culture—includes all technology a culture uses to manufacturegoods and provide services, and can measure a culture’stechnologicaladvancement.1.A firm enters a market under one of two conditions: (1) demandfor its products has developed, or (2) the market is capable ofsupporting its production operations.2.Changes in material culture can change other aspects of culture.3.Many nations display uneven levels of material culture acrossgeography, markets, and industries.D.Cultural Change1.Cultural traitis anything that represents a culture’s way of lifeincluding gestures, material objects, traditions, and concepts.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 25 preview imageCh 2: Cross-Cultural Business92.Cultural diffusionis the process whereby cultural traits spreadfrom one culture to another. Globalization and technology areincreasing the pace of cultural diffusion and change.3.Culturecanforcecompaniestoadjustbusinesspoliciesandpractices, such as using situational management.4.Rapid cultural diffusion and increased human interaction acrossborders cause cultures to converge. Convergence is taking place insome market segments for some products.E.When Companies Change Culture1.Cultural Imperialism is the replacement of one culture’s traditions,folk heroes, and artifacts with substitutes from another.IX.STUDYING CULTURE IN THE WORKPLACEPeople in different cultures respond differently in similar business situations. Twoways to classify cultures based on characteristics such as values, attitudes, andsocial structure.A.Kluckhohn–Strodtbeck FrameworkTheKluckhohn–StrodtbeckFrameworkcomparesculturesalongsixdimensions, asking the following questions:1.Do people believe that their environment controls them, that theycontrol the environment, or that they are part of nature?2.Do people focus on past events, on the present, or on the futureimplications of their actions?3.Are people easily controlled and not to be trusted, or can they betrusted to act freely and responsibly?4.Dopeopledesireaccomplishmentsinlife,carefreelives,orspiritual and contemplative lives?5.Do people believe that individuals or groups are responsible foreach person’s welfare?6.Do people prefer to conduct most activities in private or in public?a.Dimensions of Japanese Culture:i.Japanesebelieveinadelicatebalancebetweenpeople and environment that must be maintained.ii.Japanese culture emphasizes the future.iii.Japanese culture treats people as quite trustworthy.iv.Japaneseareaccomplishmentorientedforemployers and work units.v.Japanesecultureemphasizesindividualresponsibility to the group and group responsibilityto the individual.vi.The culture of Japan tends to be public.B.Hofstede FrameworkTheHofstede Frameworkgrew from a study of more than 110,000 peopleworking in IBM subsidiaries by Dutch psychologist Geert Hofstede. Hedeveloped five dimensions for examining cultures. (See Table 2.2National Scores on The Hofstede Dimensions)
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 26 preview imageCh 2: Cross-Cultural Business101.Individualism versus Collectivism: Identifies the extent to which aculture emphasizes the individual versus the group.a.Individualist cultures value hard work, entrepreneurial risktaking, and freedom to focus on personal goals.b.Collectivist cultures feel a strong association to groups,including family and work units. The goal is to maintaingroup harmony and work toward collective rather thanpersonal goals.2.Power Distance: Identifies the degree to which a culture acceptssocial inequality among its people.a.Largepowerdistanceischaracterizedbyinequalitybetweensuperiorsandsubordinates.Organizationsarehierarchical, with power derived from prestige, force, andinheritance.b.Small power distance means equality, with prestige andrewards equally shared between superiors and subordinates.Power derives from hard work and is considered morelegitimate.3.Uncertainty Avoidance: Identifies the extent to which a cultureavoids uncertainty and ambiguity.a.Cultures with large uncertainty avoidance value security,place faith in strong systems of rules and procedures, haveloweremployeeturnover,formalrulesforemployeebehavior, and more difficulty implementing change.b.Lowuncertaintyavoidanceculturesaremoreopentochange and new ideas.4.Masculinity versus Femininity: Identifies the extent to which aculture emphasizes masculinity versus femininity.a.Culturesscoringhigharecharacterizedbypersonalassertiveness, accumulation of wealth, and entrepreneurialdrive.b.Cultures scoring low have relaxed lifestyles, with more of aconcern for others than material gain.5.Long-Term Orientation: Indicates a society’s time perspective andan attitude of overcoming obstacles with time. It attempts tocapture the differences between Eastern and Western cultures.a.Cultures scoring high (strong long-term orientation) valuerespect for tradition, thrift, perseverance, and a sense ofpersonal shame.b.Culturesscoringlowarecharacterizedbyindividualstability and reputation, fulfilling social obligations, andreciprocation of greetings and gifts.6.Indulgence versus restraint:This dimension captures the extent towhich a society allows free expression.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 27 preview imageCh 2: Cross-Cultural Business11a.An indulgent society (one scoring high on this dimension)allows people to rather freely satisfy human needs relatedto enjoying life and having fun.b.A restrained society uses varying degrees of social normsto suppress the free satisfaction of such needs. Indulgentsocietiestendtovalueindividualhappiness,leisure,freedom, and personal control.XBOTTOM LINE FOR BUSINESSIn this chapter we discussed many of the cultural differences among nations thataffect international business. We saw how problems can erupt from culturalmisunderstandings and learned how companies can improve their performancewith cultural literacy. Localizing business policies and practices can promotesuccess. Understanding a people’s values, beliefs, rules, and institutions makesmanagers more effective at their jobs.Quick Study QuestionsQuick Study 11.Q:How might a subculture differ from the dominant culture?A:A subculturecan differ from the dominant culture in language, race, lifestyle,values, attitudes or other characteristics.2.Q:Whatdo we call the belief that one man’s culture is superior to that ofothers?A:Ethnocentricityis the belief that one’s own ethnic group or culture is superiorto that of others.3.Q:What do we call detailed knowledge about a culture that enables a person towork happily within it?A: Cultural literacy is the detailed knowledge about a culture that enables aperson to work happily within it.Quick Study 21.Q:What are examples of values?A: Ideas, beliefs, and customs to which people are emotionally attached to arecalled values.2.Q:What type of custom might a conservative group oppose in a culture?A: Authorities in a strict religious district of Indonesia’sACEH province bannedMuslim women from wearing tight clothing, short skirts and blue jeans.3.Q:The law that restricts the gift giving by U.S. firms at home and abroad iscalled?A: The U.S. Foreign Corrupt Practices Act prohibits companies from giving large
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 28 preview imageCh 2: Cross-Cultural Business12gifts to government officials, in order to win business favors.Quick Study 31.Q:Social structure embodies a culture’s fundamental organization,includingwhat?A:Social structureembodies a culture’s fundamental organizations; including itsgroups and institutions, its system of social positions and their relationships, andthe process by which its resources are distributed.2.Q:A person and his or her immediate relatives including parents and siblings, iscalled what?A: A nuclear family consists of a person’s immediate relatives, including parents,brothers and sisters.3.Q:The departure of highly educated people from one profession, region, ornation to another is called what?A:The “brain drain” phenomenon refers to the departure of highly educatedpeople from one profession, geographic region, or nation to another.Quick Study 41.Q:Which denomination of Christianity has a“work ethic”named after it?A: Protestants believe that salvation comes from faith in God and that hard workgives glory to God—a tenet which is widely known as the “Protestant WorkEthic.”2.Q:India is home to more than 90 percent of the adherents of which religion?A: Hinduism formed around 4,000 years ago in present day India, where morethan 90 percent of Hinduism’s 900 million adherents live.3.Q:The Dalai Lama is the spiritual and political head of what religion?A: The Dalai Lama is the spiritual and political head of the Buddhist culture.Quick Study 51.Q:Every culture has a communication system that it uses to convey what?A: People in every culture have a communication system to convey thoughts,feelings, knowledge, and information through speech, writing, and actions.2.Q:A special language understood by two parties who speak different nativelanguages is called what?A: Alingua francais a link language that is understood by two parties who speakdifferent native languages. English is thelingua francaof global business, highereducation, diplomacy, science, popular music, entertainment, and internationaltravel. More than 70 nations give a special status to English (including India,
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 29 preview imageCh 2: Cross-Cultural Business13Nigeria, and Singapore) and roughly one-quarter of the world’s population isfluent or competent in it.3.Q:An interesting fact about body language is what?A: Body language is important because it reflects cultural communication stylesthrough unspoken movements. It communicates through hand gestures, facialexpressions, physical greetings, eye contact, and the manipulation of personalspace. Like spoken language, it communicates both information and feelings anddiffersgreatlyfromoneculturetoanother.Italians,forexample,animateconversations with lively hand gestures and other body motions. Japanese andKoreans, although more reserved, communicate just as much information throughtheir own body languages; a look of the eye can carry as much or more meaningas two flailing arms.Quick Study 61.Q:People living in different cultures often have different views regarding theirwhat?A: They have differing beliefs and behaviors that can affect activities in theworkplace. Such as, different perceptions of time, view of work and change.2.Q:What is an example of cultural imperialism?A: Fears of cultural imperialism still drive some French to oppose the products ofthe Walt Disney company and its Disneyland Paris theme park.3.Q:The Kluckhohn-Strodtbeck framework does investigate whether people dowhat?A:TheKluckhohn-StrodtbeckFrameworkcomparesculturesalongsixdimensions, asking the following questions:1.Do people believe that their environment controls them, that they control theenvironment, or that they are part of nature?2.Do people focus on past events, on the present, or on the future implicationsof their actions?3.Are people easily controlled and not to be trusted, or can they be trusted to actfreely and responsibly?4.Do people desire accomplishments in life, carefree lives, or spiritual andcontemplative lives?5.Do people believe that individuals or groups are responsible for each person’swelfare?6.Do people prefer to conduct most activities in private or in public?4.Q:In the Hofstede framework,the term “power distance” refers to what?A:It describes the degree of inequality between a culture’s people in differentoccupations.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 30 preview imageCh 2: Cross-Cultural Business14Ethical ChallengeYou are the vice president of operations for a U.S.-based software firm that is exploringbuilding a software design operation in India. Typically when international firms enterthe Indian market, they quickly learn how a caste system can affect business activities.Although officially banned, the caste system still dictates everyday life for many people inIndia. You are confident regarding the likelihood of business success there, but you havestrong misgivings about the caste system.2-4Do you think it will be possible to import and uphold a U.S. management style inIndia despite lingering effects of the caste system?A.Acaste systemisa system of social stratification in which people are borninto a social ranking, orcaste,with no opportunity for social mobility. India isthe classic example of a caste culture. Although the Indian constitutionofficially bans discrimination by caste,its influence persists. Little socialinteraction occurs between castes, and marrying out of one’s caste is taboo.Opportunities for work and advancement are defined within the system, andcertain occupations are reserved for the members of each caste. For example,a member of a lower caste cannot supervisesomeone of a higher castebecause personal clashes would be inevitable.The caste system forcesWestern companies to make some difficult decisions when entering the Indianmarketplace. They must decidewhether to adapt to local human resourcepolicies in India or to import their own from the home country. Asglobalization penetrates deeper into Indian culture, both the nation’s socialsystem and international companies will face challenges.2-5How do you think your company’s stakeholders would feelabout your companysimply adjusting to local management practices?A: Students must understand that understanding cultural differences is crucial todeveloping strong relationships. The question in this vignette poses a realdilemma for international companies operating in India. Local managementpractices can be very different from the company’s practices in its homecountry. The response by most companies is to implement the home countrypoliciesbuttoadaptthemtothelocalmarket.Thisisprobablybestaccomplished by placing as head of the Indian operation an Indian-bornemployeethathasworkedforthecompany inthehomecountry whounderstands the corporate culture. This manager would know what policiescan or cannot be implemented in the Indian subsidiary.Teaming UpTwo groups of four students will debate the benefits and drawbacks of individualistversus collectivist cultures. After the first student from each side has spoken, the secondwill questionthe opponent’s arguments, looking for holes and inconsistencies. The thirdstudent will attempt to answer these arguments. The fourth student will present asummary of each side’s arguments. Finally, the class will vote on which tem has offeredthe more compelling argument.
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Solution Manual for International Business: The Challenges of Globalization, 9th Edition - Page 31 preview imageCh 2: Cross-Cultural Business15A: Students may want to use the content of this chapter as a guide to create the questionsthey will ask the interviewee. Students should include in their report a full account of thecultural elements their interview uncovers. Student teams may also enjoy comparing theirfindings to look for similarities and differences among companies.Practicing International Management CaseA Tale of Two Cultures2-14.Q:If you worked for an international firm doing business in Asia, is thereanything you would suggest to ease the tensions these cultures are experiencing?Be specific.A: This question presents students with an ethical dilemma. Some students willsay that their company is in business to earn a profit and that Asian consumers arenot being forced to buy Western goods—they make a conscious decision whenthey make a purchase. Other students will feel a sense of responsibility to thosesocieties in which they market their products. These students will want to suggestways to lessen tensions in those societies. Some possibilities for this includedoing charity work to help people suffering economic difficulties, financiallysupporting and giving employees time off to do volunteer work for cultural fairsand festivals, and making counselors available in the company to help employeeswith their troubles.2.Q:Social ills in any country are normally born from a multitude of factors. Whatrole if any, do you think globalization is having in higher reported rates ofdivorce, crime, and drug abuse in Asia?A: Many students will agree that the forces of globalization are exposing peoplein all countries to new ways of thinking and behaving. However, many social illsare not a direct result of globalization, but of other forces causing social change.Drug use is certainly not a new problem in most countries—opium has been usedacross Asia for centuries. Also, many women in Asian cultures are no longerfinancially dependent on their spouses because of the growing employment ofwomen in the workforce. Thus when marital problems arise, divorce can be aviable option unlike in the past. This is not a Western phenomenon being spreadby globalization, but one tied to economic development and industrializationmore generally.3.Q:Broadlydefined,Asiacomprisesmorethan60percentoftheworld’spopulation—a population that practices Buddhism, Confucianism, Hinduism,Islam, and numerous other religions. Do you think it is possible to carry on avalid discussion of “Asian” values?Explain?A:Clearly,thereareimportantandsignificantdifferencesbetweenAsiansocieties. But some values tend to be Pan-Asian, including the extended familyconcept—in contrast to the nuclear family concept in Western cultures. Also,respect for community elders is deeply ingrained throughout Asia—unlike theWestern emphasis on youth and vitality (most pronounced in the United States).Thus, certain cultural elements can be discussed as “Asian” just as we identifycertain concepts and behaviors as “Western.” But the validity of generalizing
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