Culture,

Management
Style, and Business
Systems
Chapter 5
 TABLE OF CONTENTS

01 02 03
Global Management Style around Gender Bias in
Perspective the World International
Business

04 05
Business Ethics Synthesis: Relationship-Oriented
vs. Information-Oriented
Cultures
 GLOBAL
PERSPECTIVE
01
GLOBAL PERSPECTIVE
● involves observing a certain design with an
awareness and respect for people's cultural and
social differences, as well as ecological issues
affecting the planet's health, safety, and well-being,
and taking into account the impact of conducting
design business in a global market.
 IMPORTANCE OF
GLOBAL PERSPECTIVE
• Allow individuals to learn from others and
discover new ways to expand business or explore
new ideas and opportunities.
The Cultural Environment
of Global Markets
 The Cultural Environment of Global Markets

 Culture, including all its elements, profoundly affects

management style and overall business systems.
 Culture not only establishes the criteria for day-to-day
business behavior but also forms general patterns of
values and motivations. (Max Weber, 1930)
The Cultural Environment of Global Markets
 Our goal is to obtain knowledge of the management style-
that is, the business culture, management values, and
business methods and behaviors—existing in a country and
a willingness to accommodate the differences are
important to success in an international market.
ADAPTATION
 ADAPTATION
• the process of changing an existing product or
service so that it is suitable for different customers.
• Required Adaptation is the necessity for adapting
to cultural differences.
 GUIDE TO ADAPTATION
(1) Open tolerance
(2) Flexibility
(3) Humility
(4) Justice/Fairness
(5) Ability to adjust to varying tempos
 GUIDE TO ADAPTATION
(6) Curiosity/Interest
(7) Knowledge of the country
(8) Liking for others
(9) Ability to command respect
(10) Ability to integrate oneself into the
environment.
DEGREE OF ADAPTATION
 Effective adaptation is awareness of
one’s own culture and the recognition
that differences in others can cause
anxiety, frustration, and
misunderstanding of the host’s
intentions.
BUSINESS
CUSTOMS
Classifications of Business Customs:

CULTURAL CULTURAL
IMPERATIVES ELECTIVES

CULTURAL
EXCLUSIVES
CULTURAL IMPERATIVES
● are the business customs and
expectations that must be met and
conformed to or avoided if
relationships are to be successful.
CULTURAL ELECTIVES
● relate to areas of behavior or to
customs that cultural aliens may
wish to conform to or participate
in but that are not required.
CULTURAL EXCLUSIVES
● those customs or behavior patterns
reserved exclusively for the locals
and from which the foreigner is
barred.
 Classifications of Business Customs:

CULTURAL CULTURAL CULTURAL

IMPERATIVES ELECTIVES EXCLUSIVES

must be recognized adaptation is helpful an outsider must

and accommodated but not necessary not participate
 THE IMPACT OF
AMERICAN
CULTURE
ON MANAGEMENT STYLE
 Three reasons to focus briefly on American
culture and management style.
 First, it is important to be aware of the elements of
culture influencing decisions and behaviors.
 Second, it is useful to better understand your business
associates from the States.
 Third, understanding their bases will help everyone make
decisions about applying, adapting, or rejecting American
practice.
“Different people have to be
managed differently.”
—Peter Drucker
U.S. Cultural Concepts
of Cross-cultural
Evaluations
 U.S. Cultural Concepts Of
Cross-cultural Evaluations
• “Master of destiny” viewpoint.
• Independent enterprise as the instrument of social
action.
• Personnel selection and reward based on merit.
• Decisions based on objective analysis.
• Wide sharing in decision making.
• Never-ending quest for improvement.
• Competition produces efficiency.
 “Master of destiny” viewpoint
• People can substantially influence the future; they
are in control of their own destinies.
• Approaches to planning, control, supervision,
commitment, motivation, scheduling, and deadlines
are all influenced by the concept that individuals
can control their futures.
 Independent enterprise as the
instrument of social action.
• A corporation is recognized as an entity that has
rules and continuity of existence and is a separate
and vital social institution. This recognition can
result in strong feelings of obligation to serve the
company.
 Personnel selection and reward
based on merit
• The selection, promotion, motivation, or dismissal of
personnel by U.S. managers emphasizes the need to select
the best qualified persons for jobs, retaining them as long
as their performance meets standards of expectations, and
continuing the opportunity for upward mobility as long as
those standards are met.
 Decisions based on objective
analysis
• Managers strive to be scientific has a profound effect on
the U.S. manager’s attitudes toward objectivity in decision
making and accuracy of data.
• U.S. managers believe decisions must be supported and
based on accurate and relevant information.
Wide sharing in decision making
• Individuals in an organization require and, indeed,
need the responsibility of making decisions for their
continued development.
 Never-ending quest for
improvement
• Management concepts reflect the belief that change is
not only normal but also necessary, that nothing is
sacred or above improvement.
Competition produces efficiency
• Competition promotes better individual
performance and, consequently, better corporate
performance.
Management
Style around
the World
Zyieeee =)

02
Management Styles around
the World
Ethical standards differ substantially across
cultures, as do rituals such as sales
interactions and negotiations. In most
countries, the foreign trader also is likely to
encounter a fairly high degree of
government involvement.
Example:
1. United States
- Individualism: The U.S. is known for its individualistic culture, and
this is often reflected in management styles. American managers
may focus on individual achievements, rewards, and personal career
development.

2. Japan
- Collectivism: Japan has a collectivist culture where group harmony
and consensus are highly valued. Japanese management tends to
focus on team collaboration and building strong interpersonal
relationships. Decision-making is often more consensus-driven.
 Discussion Question:

What do you think is the management style in the

Philippines?

a. Flexibility and Adaptability

b. Hierarchy and Respect
c. Strong Family Values
d. All of the above
 Answer: D. All of the Above
 Flexibility and Adaptability - Filipinos are known for their adaptability and resilience. This is
reflected in management practices, where flexibility is valued. Managers may need to adapt to
changing circumstances and be open to new ideas.

 Hierarchy and Respect - the Philippines has a hierarchical structure in organizations. Respect for
authority is important, and employees typically show deference to their superiors. It is common
for decisions to be made by top-level management, with input from lower levels in the
hierarchy.

 Strong Family Values - The Filipino culture places a high value on family, and this extends to the
workplace. Managers may adopt a familiar approach, creating a sense of belonging among
employees. In return, there is an expectation of loyalty and commitment.
- Therefore, it is important to note for Management Style Around
the World that individual companies and industries may vary in
their management practices, and globalization has also
influenced some organizations to adopt more standardized and
modern management approaches. As with any cultural
generalizations, there will be exceptions, and practices may
evolve over time.

—Note!
Authority and
Decision Making
Business size, ownership, public
accountability, and cultural values that
determine the prominence of status and
position (PDI) combine to influence the
authority structure of business.
 The Power Distance Index (PDI) measures how
much a society accepts unequal distribution of
power. High PDI indicates a greater acceptance of
hierarchy, while low PDI suggests a preference
for equality.
 Authority Patterns
1. Top-level management decision making is generally found in situations
in which family or close ownership gives absolute control to owners and
businesses are small enough to allow such centralized decision making.

Example:
● In some European businesses like those in France, only a few top leaders
tightly control decision-making.

● This alo applies to government-owned companies, where politicians, often

lacking management knowledge, make decisions for professional managers.
 Authority Patterns
2. Decentralized decision making allows executives at different
levels of management to exercise authority over their own functions.

Example:
 The company has several project teams, each assigned to
different aspects of product development or improvement.

 Team leaders or project managers within each team are

empowered to make decisions without having to seek
approval from upper management for every detail.
 Authority Patterns
3. Committee decision making is by group or consensus. Committees may
operate on a centralized or decentralized basis, but the concept of
committee management implies something quite different from the
individualized functioning of the top management and decentralized
decision-making arrangements just discussed.
Example:
● Vote and Decision - the committee may take a vote on the allocation
of funds to different projects. The decision-making process ensures
that each member has an opportunity to voice their support or
concerns.
Management Objectives and Aspirations
These cultural influences affect the attitude of managers
toward innovation, new products, and conducting business
with foreigners. To fully understand another’s management
style, one must appreciate an individual’s values, which are
usually reflected in the goals of the business organization
and in the practices that prevail within the company.
Security and Mobility
Personal security and job mobility relate
directly to basic human motivation and
therefore have widespread economic and
social implications. The word “security” is
somewhat ambiguous, and this very
ambiguity provides some clues to
managerial variation.
 Personal Life
A good personal and/or family life takes priority over profit,
security, or any other goal, especially among professionals all over the
globe these days, as recent research has investigated.

According to:
 David McClelland, the culture of some countries stressed the
virtue of a good personal life as far more important than profit
or achievement.
 Meanwhile, according to Max Weber, at least part of the
standard of living that Americans enjoy in the United States
can be attributed to the hard-working Protestant ethic from
which we derive much of their business heritage.
 Affiliation and Social Acceptance
In some countries, acceptance by neighbors and fellow workers
appears to be a predominant goal within business. The Asian outlook is
reflected in the group decision making so important in Japan, and the
Japanese place high importance on fitting in with their group.

Group identification is so strong in Japan that when a worker is

asked what he does for a living, he generally answers by telling you he
works for Sumitomo or Mitsubishi or Matsushita, rather than that he is
a chauffeur, an engineer, or a chemist.
 Communication Styles
Communication style refers to the way individuals
express themselves and convey information to
others. It encompasses various elements such as
verbal and non-verbal cues, tone, language, and
overall approach to interpersonal communication.
 Face-to-Face Communication
No language readily translates into another because
the meanings of words differ widely among languages

Although language is the basic communication tool

of marketers trading in foreign lands, managers,
particularly from the United States, often fail to develop
even a basic understanding of just one other language,
much less master the linguistic nuances that reveal
unspoken attitudes and information.
Communication Styles

Face-to-Face Communication
Example:
1. United States:
• In the U.S., face-to-face communication is often
direct, explicit, and open.
1. Japan
• Japanese communication tends to be more
indirect and implicit.
1. France
• French communication is characterized by
politeness and formality.
 Discussion Question:

How do Filipinos communicate Face to Face?

a. Warmth and Hospitality

b. Indirect Communication
c. Respect for Authority
d. Group Orientation
 Answer

All of the Above

Communication Styles

Face-to-Face Communication

• Warmth and Hospitality

• Indirect Communication
• Respect for Authority
• Group Orientation
Internet
Communications
The message on a business-to-business
website is an extension of the company and
should be as sensitive to business customs as any
other company representative would be. Once a
message is posted, it can be read anywhere, at
any time.

As a consequence, the opportunity to convey

an unintended message is infinite.
 Formality and Tempo

Understanding and adapting to these variations in formality and

tempo are essential for effective cross-cultural management.

Successful leaders recognize and respect the cultural nuances

that influence communication and decision-making in diverse
business environments.
 P-Time versus M-Time

Polychronic Time Monochronic

is more dominant in Time
These Western cultures tend
high-context cultures, to concentrate on one thing
where the completion at a time. It is used in a
of a human linear way, and it is
transaction is experienced as almost
tangible, in that one saves
emphasized more
time, wastes time, bides
than holding to time, spends time, and loses
schedules. time.
 Example:

P-Time
Two Latin colleagues conversing would likely opt to be late for their next
appointments rather than abruptly terminate the conversation before it
came to a natural conclusion.

M-Time
The American desire to get straight to the point and get down to business
is a manifestation of an M-time culture, as are other indications of
directness.
Based on our culture here in the Philippines,
Do we manifest P-Time or M-Time?
Negotiations
Emphasis
Business negotiations are perhaps the most fundamental
commercial rituals.

All the just discussed differences in business customs and

culture come into play more frequently and more
obviously in the negotiating process than in any other
aspect of business.
 Share of thoughts:
(this is from the book How to Win Friends and Influence People by
Dale Carnegie.)

 According to the book, when negotiating with someone, you should

offer the other parties what they really need. Tell them the benefits
they will receive upon accepting your offer. It doesn’t mean that you
need to lie to get their "yes." It means that you should state the facts
that your offer will really provide them with those benefits.

 To relate to our topic, despite having different cultures, if both

parties get the benefits they want, we can eliminate the risk of
cultural missteps.
Marketing Orientation

Marketing orientation, also known as market

orientation, refers to a business approach that
focuses on understanding and meeting the needs
of customers.
 Example:

United States:
Often highly developed with a strong emphasis on understanding
customer needs and wants. Customer feedback and market research play
a crucial role in shaping business strategies.

Japan:
Companies often prioritize product quality and long-term customer
relationships. There may be an emphasis on understanding customer
preferences but with a focus on product excellence.
Discussion Question:

What is the Marketing Orientation in the

Philippines?

a. Customer-Centric Approach
b. Social and Digital Media Influence
c. Adaptability to Diverse Markets
 Answer:

Social and Digital Media Influence

The Philippines has a significant presence on social media

platforms, and digital marketing plays a crucial role.
Businesses leverage online platforms to engage with
customers, gather feedback, and tailor marketing strategies
based on digital trends.
Gender Bias in International
Business &
Business Ethics
Kitttt =(

03
Gender Bias in International
Business
Gender bias against women +
myths harbored by male
managers makes U.S.
multinational companies hesitant
to offer women international
assignments.
Gender Bias in International Business

Cross-Mentoring System
a program done by women in high-
ranking positions in different firms, helping
women climb the executive ladder in their own
company.
Business Ethics
Kittt =(

04
 Business Ethics
Ethical standards are not always clear/defined.

The meaning of the word CORRUPTION varies around the

world.
 Marxist countries: profits are form of corruption.

 Southeast Asian countries: during the 1997-98 financial crisis,

many government leaders decried currency speculation as the
worst kind of corruption.
CRITICISM OF MATTE
AND BARBIE

 Sales of Barbie declined worldwide after

the global standardization.

 Parents and government did react.

 Mattel’s strategy boosted the sales of its

competitors.
 The Western Focus on Bribery
During the 1970s, for U.S. companies engaged in
international markets, bribery became a national issue with public
disclosure of political payoffs to foreign recipients by U.S. firms.

The decision to pay a bribe creates a major conflict

between what is ethical and proper and what appears to be
profitable and sometimes necessary for business.
 Transparency International (TI)
A global civil society organization that monitors
and publicizes corporate and political corruption in
international development.

Publishes an annual Corruption Perceptions

Index, a comparative listing of corruption worldwide.
Bribery: Variations
on a Theme
Aiane =(
Some cultures seem to be more open about
taking bribes, whereas others, like the
United States, are publicly contemptuous of
such practices.
  Bribery and Extortion.

 ubrication and Subornation.

Agent’s Fees
 Bribery and Extortion
Bribery
Voluntarily offered payment by someone seeking unlawful
advantage.

Extortion
If payments are extracted under duress by someone in authority
from a person seeking only what he or she is lawfully entitled to
 Lubrication and Subornation
Lubrication
- involves a relatively small sum of cash, a gift, or a service given to a low-
ranking official in a country where such offerings are not prohibited by
law.

Subornation
- generally involves giving large sums of money—frequently not
properly accounted for—designed to entice an official to commit an
illegal act on behalf of the one offering the bribe.
Agent's Fee
When a businessperson is uncertain of a
country’s rules and regulations, an agent
may be hired to represent the company
in that country.
Ethical and Socially
Responsible
Decisions
Aiane =)
Ethical Decisions
(1) Employment practices and policies,
(2) consumer protection,
(3) environmental protection
(4) political payments and involvement in
political affairs of the country, and
(5) basic human rights and fundamental
freedoms.
 Three ethical principles also provide a framework to
help the marketer distinguish between right and wrong

 Utilitarian ethics

 Rights of the parties

 Justice or fairness
Initiatives
Campaigns that seek to improve an
organization’s work environment, company
culture or overall business strategy. Some
company initiatives can involve external
projects, like community service or nonprofit
fundraising campaigns.
Culture’s Influence
on Strategic
Thinking
Aiane =)
 Culture’s Influence on Strategic Thinking

Culture influences managers’ thinking about business

strategy
The British-American “individualistic”
The “communitarian” form of capitalism in Japan
and Germany
The Chinese emphasis on guanxi (one’s network of
personal connections)a
Synthesis: Relationship-
Oriented vs. Information-
Oriented Cultures
05
Dimensions of Culture: A Synthesis
The Political
Environment:
A CRITICAL
CONCERN
Chapter 6
 TABLE OF CONTENTS
Global Perspective

01 02 03
The Sovereignty of Stability of Government Political Risks of
Nations Policies Global Business

04 05 06
Lessening Political Government
Assessing Political Vulnerability Encouragement
Vulnerability
 GLOBAL
PERSPECTIVE
ANGEE =)
 Global Perspective

THE UNHEALTHY MIX OF

POLITICS AND TRADE

One of the most undeniable and crucial

realities of international business is that
both host and home governments are
integral partners.
THE SOVEREIGNTY
OF NATIONS
ANGEE =)

01
 Global Perspective

THE SOVEREIGNTY OF
NATIONS

Sovereignty - refers to both the

powers exercised by a state in
relation to other countries and
supreme powers exercised over its
own members.
 Global Perspective

THE SOVEREIGNTY OF NATIONS

Sovereign state - is an independent and free from all
external control.
1. Enjoys full legal equality with other states
2. Governs its own territory
3. Select its own political, economic, and social
systems
4. Has the power to enter into agreements with
other nations
Stability of Government
Policies

02
 Global Perspective

Stability of Government
Policies

The ideal political climate for a

multinational firm is a stable, friendly
government.
 Forms of Government

• Monarchy (Dictatorship)
A political system based upon the undivided sovereignty or
rule of a single person.

The term applies to states in which supreme authority is

vested in the monarch, an individual ruler who functions
as the head of state and who achieves his or her position
through heredity.
 Forms of Government

• Aristocracy (Oligarchy)
A form of government where a small group of elites rule.

Aristocrats, or the ruling elites, tend to enjoy both social

and economic prestige as well as political power. They
usually have a specific honorary title, such as Duke,
Duchess, Baron, Baroness, etc.
 Forms of Government

• Democracy
A system of government by the whole population or all the
eligible members of a state, typically through elected
representatives.

Democracy is often said to mean 'rule by the people'. An

example of this is any system of government in which
people vote their elected representatives into parliament.
Political Parties

An astute international marketer must

understand all aspects of the political
landscape.
 Targeted Fear
and/orAnimosity
Marketers should not be confused with
nationalism. This pride can take an anti-
foreign business bias, where minor
harassment and controls of foreign
investment are supported, if not applauded.
Trade Disputes

a disagreement between countries about

the products they trade with each other.
POLITICAL RISK OF
GLOBAL BUSINESS

03
 Political Risks of Global
Business
Confiscation - the seizing of company’s assets without
payment.

Expropriation - the government seizes an investment but

makes some reimbursement for the assets.

Domestication - moving of an existing business to a new

state.
 ECONOMIC RISKS

Exchange Controls
- government-imposed limitations on purchase and/or
sale of currencies.

Local-Content Laws
- country require’s a portion of any product sold within
the country to have local content.
 ECONOMIC RISKS

Price Controls
- government regulation establishing a maximum price to
be charged for specified goods and services.

Labor Problems
- difficulties faced by wage-earners and employers who
began to cut wages for various reasons.
Political and Social
Activists (PSAs)
people who works to bring about political
or social changes by campaigning in
public or working for an organization.
Stability of Government
Policies

01
Political Risks
of Global
BUSINESS
Continuation
 POLITICAL
RISK
May also result from events outside of government controlssuch as war,
revolution, terrorism, labor strikes, and extortion.

Can adversely affect all the aspects of inernational business from the right to
export or import goods to rhe right to own or operate a business.
 Violence,
Terrorism,
and War
Jaireh Manuel
 Violence, Terrorism, and War

violence is another related risk for multinational

companies to consider in assessing the political
vulnerability of their activities. Oftentimes,
peaceful protests turn violent, as we have seen in recent
years in many nations, including
the United States, Russia, Egypt, and most recently Hong
Kong
 Violence, Terrorism, and War
Multinationals are targeted to embarrass a government and its
relationship with firms, to generate funds by kidnapping executives
to finance terrorist
goals, to use as pawns in political or social disputes not specifically
directed at them, and to
inflict terror within a country, as did the events of September 11,
2001.
September 11 has raised the cost of doing business domestically and
 Violence, Terrorism, and War
Multinationals are targeted to embarrass a government
and its relationship with firms, to generate funds by
kidnapping executives to finance terrorist
goals, to use as pawns in political or social disputes not
specifically directed at them, and to
inflict terror within a country, as did the events of
September 11, 2001.
Cyberterrorism
and Cybercrime
Jaireh Manuel
 Cyberterrorism and Cybercrime
the Internet provides a vehicle for terrorist and criminal
attacks by for_x0002_eign and domestic antagonists
wishing to inflict damage on a company with little
chance
of being caught. One problem in tracing cyberterrorists
and criminals is that it is hard to
determine if a cyberattack has been launched by a rogue
state, a terrorist, or a hacker as a
prank.
 CYBERCRIME CYBERTERRORIS
Common forms of cybercrime
hacking: shutting down or misusing websites or M
computer networks; spreading hate and inciting
terrorism; distributing child pornography;
grooming: making sexual advances to minors Speaking of craters, many of them were named after artists or
authors who made significant contributions to their
As businesses store more of their and their respective fields. Mercury takes a little more than 58 days to
customers' data online, they are becoming complete its rotation, so try to imagine how long days must
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radiation is so high, Mercury has sadly been considered to be
with online criminals increases cybersecurity non-habitable for humans
costs, which may ultimately trickle down to
consumers in the form of higher prices.
Assessing Political
Vulnerability
Big numbers catch your audience’s attention

04
Lessening Political
Vulnerability
Big numbers catch your audience’s attention

05
 Lessening Political Vulnerability
Although a company cannot directly control or alter
the political
environment of the country within which it operates, a
specific business venture can take
measures to lessen its degree of susceptibility to
politically induced risks.47 Indeed, one study
has shown some multinational firms actually may see
opportunities in financial and political
crises
 Joint Ventures
Typically less susceptible to political harassment, joint
ventures can be with locals or other
third-country multinational companies; in both cases, a
company’s financial exposure is limited. A joint venture
with locals helps minimize anti-MNC feelings, and a
joint venture with
another MNC adds the additional bargaining power of a
third country.
 Expanding the Investment Base

Including several investors (including politically

connected ones) and banks in financing
an investment in the host country is another strategy.50
This approach has the advantage of
engaging the power of the banks and/or investors
whenever any kind of government takeover
or harassment is threatened.
 Expanding the Investment Base
This strategy becomes especially powerful if the banks have
made loans to the host country; if the government threatens
expropriation or other types of takeover, the financing bank
has substantial power with the government. Of course, such an
approach to mitigating risk also may test the ethical and/or
legal limits of conflicts of interest, particularly in some
countries. Legal advice will be crucial.
 Licensing/Franchising
A strategy that some firms find eliminates almost all risks is to
license technology for a
fee. Licensing can be effective in situations in which the
technology is unique and the risk
is high. Of course, there is some risk assumed because the
licensee can refuse to pay the
required fees while continuing to use the technology. A similar
approach is franchising—
Starbucks and MacDonald’s are prominent examples.
 Planned Domestication

This method is not the preferred business practice, but the

alternative of government-initiated domestication can be as
disastrous as confiscation. As a reasonable response to the
potential of
domestication, planned domestication can be profitable and
operationally expedient for the
foreign investor. Planned domestication is, in essence, a
gradual process of participating
with nationals in all phases of company operations.
 Government
Encouragement
Big numbers catch your audience’s attention

06
 Government Encouragement
The most important reason to encourage foreign
investment is to accelerate the
develop_x0002_ment of an economy. An
increasing number of countries are encouraging
foreign investment
with specific guidelines aimed toward economic
goals.
 JANUARY FEBRUARY MARCH APRIL MAY JUNE

PHASE 1

Task 1

Task 2

PHASE 2

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JANUARY FEBRUARY MARCH APRIL

PHASE 1

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