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					     Cultural Impact on Global
           Management
Today almost 20% of world output is produced and
consumed in global markets…



Within 30 years it is estimated to be at least 80%
     What is Culture?
•the collective programming of the mind that distinguishes
the members of one group or category of people from
another group or category of people.

•the mind refers to the head, hand and heart
(thinking,feeling,acting)

•Comprises the shared values, understandings,
assumptions, and goals
•gives people a sense of who they are, of belonging,
and of how they should behave
                   Characteristics of Culture:
    Learned:
•   culture not inherited, not biologically based
•   Acquired by sharing learning through friends, family,
    religion, education, society
    Shared:
•   people as members of a group or organization all share the
    culture
•   not specific for an individual as that is personality
    Transgenerational:
•   cumulative as it is passed on from one generation to
    another often with slight changes as culture itself is not
    static
    Symbolic:
•   Culture is based on the human capacity to symbolize or
  Why Important for a Manager to understand
                    Culture?
• Cultural savvy: a working knowledge of the
  cultural variables affecting management decisions
• Cultural sensitivity: an awareness and an honest
  caring about another individual’s culture
• Manage on a “contingency basis”
• Company reports: lack of cultural sensitivity cost
  business money and opportunities
   – Black and Mendehall found up to 40% of expatriate manager leave
     their assignments early because of poor performance or poor
     adjustment to local environment
   – Half that remain are considered only marginally effective
   – Found cross cultural differences are the cause of failed
     negotiations resulting in losses to over $2 billion US a year
America’s AT&T and Italy’s Olivetti

 One top AT&T executive believes that most of the
 problems in the venture stemmed from cultural
 differences. “ I don’t think we or Olivetti spent enough
 time understanding behavior patterns,” says Robert
 Kayner, AT&T group executive. “ We knew the culture
 was different, but we never really gave it much thought”.
 AT&T executives are the first to admit , now, that the
 greatest challenges of putting a venture together is that
 partners frequently see the world in a very different way
 and potentially divisive ways
Skillful Global Managers Understand the
Significance of the Following Statements:
Japanese culture promotes a sense of group
identity.Japanese ambiguity is an unconscious
cultural process that often leads foreigners to draw
false conclusions based on Japanese appearances.

 When doing business in Indonesia, shaking
 hands with either gender is acceptable, but using
 the left hand for taking food or giving gifts is
 unacceptable.
In an era of mergers, acquisitions and
consolidations many of these ventures fail within
five years, not because they were ill conceived,
but rather the cultures of organizations were not
successfully integrated.


Estimates are that interpersonal who go
abroad without cross-cultural preparation have
a failure rate much higher than those who had
the benefit of such training.
  How is culture formed?

Collective Programming of the Mind
The culture of the group or category of people
becomes evident in two ways.

1. Internal:transforming values into behavior

2. External: through symbols heroes and rituals.
   (See diagram)
                                Culture
The Onion Diagram : Manifestations of Culture a different levels of depth.

                                 Symbols

                                  Heroes


                                  Rituals

                                 Values
                                  Values
Values:

•An enduring belief that a specific mode of
conduct or end state of existence is
personally and socially preferable to another
•What is important to us.
•Each of us hold numerous values
(achievement, security) with varying degrees
of importance
•A particular value may be very important to
one person but unimportant to another
•Values are invisible until they become evident in
behavior- Tradition seen in respect for elders
•Values are the mental programs for how we
behave (Our hard wiring for behavior)
Examples of Values: Why?

• wisdom, equality
•equity, prosperity
• independence, imagination
 •beauty, responsibility
•courage, loyalty
• achievement, social status
            Priorities of Cultural Values
   Table 4-1
   Priorities of Cultural Values: United States, Japan,
   and Arab Countries
   United States                          Japan                                  Arab Countries
   1.    Freedom                         1.    Belonging                       1.    Family security
   2.    Independence                    2.    Group harmony                   2.    Family harmony
   3.    Self-reliance                   3.    Collectiveness                  3.    Parental guidance
   4.    Equality                        4.    Age/seniority                   4.    Age
   5.    Individualism                   5.    Group consensus                 5.    Authority
   6.    Competition                     6.    Cooperation                     6.    Compromise
   7.    Efficiency                      7.    Quality                         7.    Devotion
   8.    Time                            8.    Patience                        8.    Patience
   9.    Directness                      9.    Indirectness                    9.    Indirectness
   10.   Openness                        10.   Go-between                      10.   Hospitality

    Note: “1” represents the most important cultural value, “10” the least.
Adapted from Table 4-1: Priorities of Cultural Values: United States, Japan, and Arab Countries
                             Values in Culture
Table 4-2
U.S.Values and Possible Alternatives
U.S. Cultural Values                Alternative Values           Examples of
Management                                                       Function Affected
Individuals can influence           Life follows a preordained     Planning and scheduling
the future (when there is           course, and, human action is
a will there is a way).             determined by the will of God.
Individuals should be               Ideals are to be pursued     Goal setting and career
realistic in their                  regardless of what is        development
aspirations.                        “reasonable.”
We must work hard to        Hard work is not the only            Motivation and reward
accomplish our              prerequisite for success.            system
objectives (Puritan ethic). Wisdom luck, and time
                            also are required.



 Adapted from Table 4-2: U.S. Values and Possible Alternatives
                             Values in Culture
Table 4-2
U.S.Values and Possible Alternatives
U.S. Cultural Values                Alternative Values            Examples of
Management                                                        Function Affected
A primary obligation of an Individual employees have a Loyalty, commitment, and
employee is to the         primary obligation to their motivation
organization.              family and friends.
Employees can be                    The removal of an             Promotion
removed if they do not              employee from a position
perform well.                       involves a great loss of
                                    prestige and will rarely be
                                    done.

Company information                 Withholding information to    Organization,
should be available to              gain or maintain power is     communication, and
anyone who needs it                 acceptable.                   managerial style
within the organization.

 Adapted from Table 4-2: U.S. Values and Possible Alternatives
                             Values in Culture
Table 4-2
U.S.Values and Possible Alternatives
U.S. Cultural Values                Alternative Values           Examples of
Management                                                       Function Affected
Competition stimulates              Competition leads to       Career development and
high performance.                   unbalances and disharmony. marketing
What works is important.. Symbols and the process                Communication, planning,
                          are more important than                and quality control.
                          the end point.




 Adapted from Table 4-2: U.S. Values and Possible Alternatives
                                Culture
The Onion Diagram : Manifestations of Culture a different levels of depth.

                                 Symbols

                                  Heroes


                                  Rituals

                                 Values
                                  Values
Rituals:
  •keeping the individual bond with the
  norms of the collectivity(group).

 •manifest in ways of greetings, paying
 respect, social and religious ceremonies.



Thailand   Pee/Nong
           Wai Khru Ceremony
USA        4th of July (Independence Day)
                                Culture
The Onion Diagram : Manifestations of Culture a different levels of depth.

                                 Symbols

                                  Heroes


                                  Rituals

                                 Values
                                  Values
Heroes:
•are persons dead or alive, imaginary or real
who possess characteristics that are highly
prized in a culture and thus serve as role
models for behavior

America- George Washington-                   the first President
of USA/commander of revolutionary forces to defeat Britain
Thailand- King Rama 5
(พระบาทสมเด็จพระจุลจอมเกล้าเจ้าอยู่หัว)
Toh Phrom Ma Rangsee
(สมเด็จพระพุฒาจารย์ (โต พรหมรํสี)
                                Culture
The Onion Diagram : Manifestations of Culture a different levels of depth.

                                 Symbols

                                  Heroes


                                  Rituals

                                 Values
                                  Values
 Symbols:

 •these consist of words, gestures, pictures
 and objects language flags.

Islamic countries “May God be willing”
Israel flag        Star of David (in god we trust)
Thai Flag          red-white-blue represents
                   nation-religion-king
                                Culture
The Onion Diagram : Manifestations of Culture a different levels of depth.

                                 Symbols

                                  Heroes


                                  Rituals

                                 Values
                                  Values
  Practices:

•symbols and heroes and rituals are
subsumed under the term “practices”


•they are visible to an outside observer but
their explicit cultural meanings are invisible and
lie precisely and only in the way these practices
are interpreted by insiders.
      How Culture Affects Managerial
               Approaches
  Centralized                Decentralized
Decision Making     VS.         Decision
                                 Making
In some societies, top managers make
all important organizational decisions. In
others, these decisions are diffused
throughout the enterprise, and middle-
and lower-level managers actively
participate in, and make, key decisions.
      How Culture Affects Managerial
               Approaches
     Safety          VS.          Risk


In some societies, organizational
decision makers are risk averse and
have great difficulty with conditions of
uncertainty. In others, risk taking is
encouraged, and decision making
under uncertainty is common.
       How Culture Affects Managerial
                Approaches
    Individual                    Group
                     VS.
     Rewards                     Rewards

In some countries, personnel who do
outstanding work are given individual
rewards in the form of bonuses and
commissions. In others, cultural norms
require group rewards, and individual
rewards are frowned on.
      How Culture Affects Managerial
               Approaches
    Informal                     Formal
                    VS.
   Procedures                 Procedures

In some societies, much is accomplished
through informal means. In others, formal
procedures are set forth and followed
rigidly.
       How Culture Affects Managerial
                Approaches
High Organizational         Low Organizational
      Loyalty        VS.          Loyalty

In some societies, people identify very
strongly with their organization or
employer. In others, people identify with
their occupational group, such as
engineer or mechanic.
      How Culture Affects Managerial
               Approaches
   Cooperation       VS.      Competition


Some societies encourage cooperation
between their people. Others encourage
competition between their people.
       How Culture Affects Managerial
                Approaches
    Short-term                  Long-term
     Horizons        VS.         horizons

Some cultures focus most heavily on
short-term horizons, such as short-range
goals of profit and efficiency. Others are
more interested in long-range goals, such
as market share and technologic
development.
       How Culture Affects Managerial
                Approaches
     Stability                  Innovation
                     VS.


The culture of some countries
encourages stability and resistance to
change. The culture of others puts high
value on innovation and change.
         Negotiation Video-Values
American Negotiator      Japanese Negotiator
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