ManagingCultural Diversity in Global Business

RYLA Program at RITPresented by

Nat YogachandraJune 28, 2005

AMECO Petroleum

Partial list of companies/

brands owned by

foreign companies

What is the Nationality

What is the Nationality

Headquartered in Japan

Controlled by Renault (partly owned by the French government

In Mississippi, it’s a domestic car

What is the Nationality

What is the Nationality

Symbol of British Empire

Built by Germans - BMW

What is the Nationality

What is the Nationality

Swedish brand

Owned by Americans

What is the Nationality

Symbol of British Empire

Owned by Americans

Swedish brand

Subsidiary of General motors

Manufactured in Mexico

Owned by the Germans

PT Cruiser – More German or Mexican than American

A WORLDLY PLANE

Fischer (Austria)

InteriorAlenia (Italy)

Fuselage

Allied Signal (U.S.) Environmental Controls

Halla Heavy Industries (Korea)

Wing

Allied Signal (U.S.)

Customer Avionics

Honeywell (U.S.)

Avionics

Korean Aerospace (Korea)Nose

Israel Aircraft (Israel)Landing gear

BMW/Rollsroyce (Britain)

Engines

APIC (France)

Auxiliary power

ShinMaywa Industries (Japan) Horizontal Tail

One- half of McDonnell Douglas Corp,’s MD-95 was built overseas

1997 – McDonnell merged with Boeing and renamed to 717

Foreign Companies Have Control of

Nearly all the U.S. electronics industry Nearly all of the photo imaging industry Majority of the U.S. book/magazine publishing Almost half of the U.S. major motion picture studios One of the Big 3 auto manufacturers Majority of the U.S. tire manufacturers Large segment s of the U.S. food distribution

Toy Industry in the U.S.Labeled American-made, but racks, tiles and letter bags are made in China

American Icons

One after another …. Made in China

Timer – Made in Taiwan

Playing pieces and Dice – made in Britain

Rest made in America

Bath tub finger paints are made in China

But, bath tub tints – fizzy water color tablets are made in the U.S.A.

Swan Lake Barbie and Happy Birthday Barbie are made in Indonesia

The plastic Volvo that carries her and friends are made in China

Customer Services moving overseas

Customer services are moving to India, Philippines, China, Mexico, and Ireland.

GE customer services calls - answered by Indians from a small village closer to Mumbai in India (also Nike, AMEX, BA)

GE Capital saves up to $340 million a year by moving tasks to India

Toshiba – call center is in Istanbul

Average software engineer salary in U.S. = $75,000India = $10,000 …. China = $15,000 - $20,000

India Woos Medical Tourists

Private heart surgery in England is $50,000

The same cost applies to joint replacement, neurosurgery and cancer treatment

The Maharashtra State government is now working with British Medical Services

A clinic recently opened in Mumbai

Salary Structure

Country Cost per YearIndia $8,000Canada $36,000Ireland $28,000China $ 9,600Israel $25,000Philippines $ 7,000Eastern Europe $ 7,000Russia $ 7,000Mexico $ 7,000South Africa $18,000

India versus the World

IT Employee Cost per Year

Global Business

Capital raised in London in the Eurodollar market by a New York-based corporation may finance the acquisition of heavy machinery plant located in China

Global Business

A management team from a local firm in Rochester may take over a French-built automotive machinery plant in Indonesia

Global Business

A German is appointed President of a major American Corporation in Rochester, while an American is appointed head of a Swiss bank

Business Today Business are operated across

cultures today

Definition of success now travel beyond national boundaries

Business Today Growing importance of business

creates a demand for managers, who are: Sophisticated in international

management Skilled at working with people from

other countries Emphasize on cross cultural

management

Culture

Culture is a complex concept with many different definitions.

o Cultured is the learned and shared values, beliefs and behaviors of a group of interacting people

o It is NOT innate – we are not born with a culture

Culture has an influence on… Communications styles (Yes or No) Resolving conflicts How supervisors and subordinates are

perceived After work socialization Negotiation style Decision making

Managing our business…..

CultureSub-cultures:

Based on race, class or geographic location

United StatesJapanese youthAristocrats in BritainIndiaChina

Sub culture is NOT inferiorRegard all equally

Culture is like an Iceberg

ThoughtsReligious BeliefsTraditionsFundamental ValuesConfidence – BuildingViews of Life and Prejudices

Language, food , dress, manners and ext. appearance

Pattern of workDecision making paceSocial role and statusBody languageIndividual and group rolesDealing with conflicts

First Impressions

10% above surface

90 % below surface

Stereotypes

Journey of Self/Discovery

Visible Aspects

Invisible Aspects

Four Dimensions of Cultural Distance

Individualism and Collectivism

Power Distance High and Low Context Universalistic and

Particularistic

Individualism vs. Collectivism

More self-centered/emphasize on individual goals Prefer clarity in their communications-

effectively as opposed to a group Individual responsible for own actions

Name a few countries

Individualism

Individualism vs. Collectivism

More self-centered/emphasize on individual goals Prefer clarity in their communications-

effectively as opposed to a group Individual responsible for own actions

USA, Western Europe cultures

Individualism

Individualism vs. Collectivism

Have great emphasis on groups and think more in terms of “WE,” against “I”

Harmony and loyalty within the team Japan - The nail that sticks up gets

hammered down Employee loyalty is more important than

efficiency

Name a few countries

Collectivism

Individualism vs. Collectivism

Have great emphasis on groups and think more in terms of “WE,” against “I”

Harmony and loyalty within the team Japan - The nail that sticks up gets

hammered down Employee loyalty is more important than

efficiency – Arabs E.g.: Japan, China, ASEAN, Greece, Italy,

Mexico, Brazil, Middle Eastern

Collectivism

Power Distance

High Power Distance

Low Power Distance

Power High Power Distance

Hierarchy is important for success

“Expert Role’”- the boss is always correct and clearly has authority over subordinates

Subordinates rarely consider by passing the boss

China, Russia, Mexico, Hong Kong, India, Korea, Indonesia

Power Distance Low Power Distance

Hierarchy is less important

Employees expect to bypass the boss frequently in order to get their work done

Belief in flat, less hierarchical organizations with clear roles

USA, Germany, Netherlands, Denmark, Norway, Australia, New Zealand

Hierarchy in KoreaExtremely hierarchical and status-oriented

Each class has a set of prescribed rules that dictate behavior and protocol.

Follow the rules pertaining to their class

Parent to child

Male to female

Elder to youngster

Teacher to student

Boss to subordinate

Customer to vendor

Hierarchy in Korea

Chairman: hwoichang

President: sachang

Vice president: busachang

Executive director: jornmu

Managing director: sangmu

Director: eesah

Department manager: puchang

Deputy department manager: chachang

Section chief: kwachang

Deputy section chief: daerhee

Chief clerk/supervisor: kaychang

Businessmen

are sensitive to

titles

Korea: Goodbye to Confucius

A woman must obey her father before marriageObey her husband during her married lifeObey her eldest son after the death of her husband

- Confucius

High Context Culture

Emphasize non-verbal communications Verbal message will be less direct

(also emphasize on social relationships)

Arab countries, Southern Europe (Italy, Greece) and South America, Japan

Low Context Culture

Place more emphasis/more direct on the message

What you say is more important than how you say it.

Britain, America and Western

Rules and relationships

Laws are written for everyone and must be upheld by all

• Legal or illegal takes precedence over personalities involved in the situation.

• Rely on extensive contracts to conduct business

USA, Canada, Western Europe,

Universalistic Society

Rules and relationships • It makes a big difference if someone is a

friend or relative• Use much looser agreement and rely on

the strength of their personal relationship to maintain the commitment

• View detail contracts (e.g.) penalty clauses as a sign that they are not trusted and therefore no relationship

South Korea, China, Mexico, Russia, Indonesia

Particularistic Society

Cross-Cultural Judgment

Cross-culturally we use our own culture as a standard of measurement:

A Swiss executive waits more than an hour past the appointment time for his Spanish colleague to arrive and to sign a supply contract

In his impatience he concludes that Spaniards must be lazy and totally unconcerned about business

The Swiss executive has misevaluated his colleague by negatively comparing him to his own cultural standards for business punctuality

Implicitly, he has labeled his own culture’s behavior as good and the Spanish do not arrive on time and that is bad”)

Japanese as seen by others

They deafen you with silence Reality. True. Silence show respect for the

speaker. They often look glum

Reality. Happiness hides behind a straight face They say YES when they mean NO

Reality. They do not like to offend you by showing open disagreement or refusal

They never look you right in the eye Reality. They are taught that it is rude to stare

When they smile, they do not look sincere Reality. They often smile to make you feel

comfortable – one should be thankful

Appearance Vs Reality

Aspect Mexico United StatesWork/Leisure

Loyalty

Staffing

Competition

Time

Family

Personal Appearance

Status

Ethics

Works to live. Leisure considered essential for full life

Mostly loyal to superior (person than organization)

Family and friends are preferred due to trustworthiness. Promotions based on loyalty to superior

Lives to work. Leisure seen as reward for hard work

Mainly self-loyalty. Performance motivated by ambition

Relatives usually barred. No nepotism here. Promotions based on performance

Avoids personal competition. Favors harmony at work

Enjoys proving self in competitive situations

Relative concept. Deadlines flexible Literal imperative. Deadlines and commitments are firm

Family is the first priority. Children are celebrated and sheltered. Wife fulfills domestic role

Family is usually second to work. Children often minimally parented; are independent. Wife often fulfills dual roles

Dress and grooming are status symbols Appearance is secondary to performance

Title and position more important than money in eyes of society

Truth is tempered by need for diplomacy. Truth is a relative concept

Money is main status measure and is reward for achievement

Direct Yes/No answers given and expected. Truth seen as absolute value

Differences : American - Mexican

Differences: Germany - Asia The highest ranking or eldest person

usually enters the room first.

Generally, prefers 3rd party intro.

More physical space between each person Versus Asians, Americans or Europeans

Expect to plunge straight into matters without any jokes, humor, small talk or sharing photo of the kids

Tend to separate their private and professional lives (unlike Americans)

Nonconfrontational. Good strategy is not to “trash” the competition

Tasks First, Friendship later Hard negotiators. Discussion is likely to be

to the point

True in most Asian countries (Japan, Korea, Thailand) It’s always the senior person begin and lead the conversation

True in some NE Asian countries

Some physical space

Have tea, share jokes, talk about family and favorite sports before and after meetings

Spend lots of time getting to know each other and build trust during meetings and after meetings

Friendship First, Tasks Later

Hard negotiators. Have lots of patience

Sending advanced presentation materials help the Asians

Not deadly serious

Germany Asia

Other Cultural Aspects Importance of Face

Direct criticism Use a third party to convey

your message

Avoiding Eye Contact Touching the head of a Thai

secretary Yes and No Language of time

Delay means – not interested or low priority (West) Low-level officials elevate the prestige of their work

by taking long time to complete a work (East)

Eye Contact

In cultures, where power distance is high, the speakers will maintain close eye contact when delivering messages. Implies dominance and one’s personal position ( Spain, Greece and Arab countries)

Latino culture- staring means dissatisfaction and anger or romantic interest

Japanese non-verbal message Smile does not necessarily indicate agreement. It may

reflect sorrow or embarrassment for you or for them If a foreigner insists on request a yes or no answer, they

will usually smile Sighing means relief in Japanese culture Removing glasses or stretching ears indicates confusion Crossed arms means possible refusal, disagreement or

wonder If a Japanese sucks air through his teeth, it is a non verbal

sign that he has a problem Direct eye contact is impolite When a Japanese pat their head they are disappointed

or don’t understand Remaining silent means they are thinking or simply have

nothing to discuss. BUT, DO NOT put your cards on the table right away

Distance Between People

According to a study of space in communications across cultures

Conversation distances U.S. and European 18” to 30” Latin American/Caribbean 8” to 18” Saudi 9” to 10”

Leads to stereotypes….

TOUCHING

Greeting: European American men: shake hands with

little touching there-after Jamaican, Latino men, Caribbean:

Hugging, slapping backs, body contact. Sometimes grabbing the arm for a few seconds

European Americans feel that Latinos touch to a degree that is uncomfortable, threatening and oftentimes insulting to European Americans . May be perceived flirting or sexual harassment

TOUCHED BY an Alien

Canadian PM, Jean Chretian and President Mubarak

Crown Prince Abdullah and President Bush

May be YES or NO - Philippines

Filipino “yes” puzzles most foreigners.

A YES could mean

Just that or it could also mean May be” or I do not know or If it will please you

Filipinos generally say what other person wants to hear

May be YES or NO - Indonesia

Impolite to say NO in Indonesia

YES means sometimes “I mean NO”

May be YES or NO - Mexico

Mexicans avoid saying “NO”

“May be” or “We will see” may actually mean ‘NO”

May be YES or NO

When a Saudi says “yes’ itusually means “possibly”

May be YES or NO - India

The word “NO” has harsh implications

Evasive refusals are more common, and are considered more polite

May be YES or NO - China

The closest a traditional Chinese businessperson ever gets to saying

“NO” would be “It would be difficult.”

May be YES or NO – Hong Kong

“YES” does not necessarily mean

“I agree with you.”

A closer meaning would be “I heard you”

Working with Numbers Si (four) Sounds like “death” in Chinese

Avoid using 4 in contracts- brings bad luck in China, Japan, Korea and Asia

Lin (Six) Represents luck. It also stands for six spirits of nature- wind, mountain, river, lightning, moon and sun

Seven is lucky number in Japan and Western World Ba (eight) – Sound like fa- wealthy- and is accepted for all

occasions – Hong Kong, Japan and other Pacific countries Ju (nine)- stands for longevity. In ancient times, only

Chinese emperors were allowed to use number 9. The forbidden city in China was designed with 9,999 rooms

46789

9

What color (or is it colour)

Gift Giving- Business Gift giving is an art in Japan. Integral part of the culture

Observe proper etiquette. Do not open directly upon receiving Use the most auspicious colors for wrapping

Germans do not give or expect expensive gifts Not a major part of German business etiquette. Anything with

your company logo is safe. Perfume and other clothing considered too personal

French likes good taste in business gifts Avoid gifts with your company logo. Do not include your business

card with your gift. Bring flowers or fine chocolates or liqueur to the host and present them before, not after the party

Gift giving in China is a sensitive issue

Importance of Gift-Giving

High Priority Japan

Medium Priority Pacific Rim countries

South Korea, Taiwan, Hong Kong, China, Thailand, Malaysia, The Philippines, Indonesia, and Singapore

Low Priority United States Canada Australia Europe

Managers Working for Multi-national Companies Should

An ability to get along well with people An awareness of cultural differences Open-mindedness Tolerance of foreign culture Adaptability to new cultures, ideas and

challenges An ability to adjust quickly to new conditions An interest in facts and not blind assumptions An ability to learn foreign language

Test your cultural knowledge

In some South American countries, it is considered normal and acceptable to show up for a social appointment:

ten to fifteen minutes early ten to fifteen minutes late fifteen minutes to an hour late one to two hours late

Test your cultural knowledge

In some South American countries, it is considered normal and acceptable to show up for a social appointment:

ten to fifteen minutes early ten to fifteen minutes late fifteen minutes to an hour late one to two hours late

When eating in India, it is appropriate to:

take food with your right hand and eat with your left

take food with your left hand and eat with your right

take food and eat it with your left hand

take food and eat it with your right hand

Test your cultural knowledge

When eating in India, it is appropriate to:

take food with your right hand and eat with your left

take food with your left hand and eat with your right

take food and eat it with your left hand

take food and eat it with your right hand

Test your cultural knowledge

One wedding gift that should not be given to a Chinese couple would be:

a jade bowl a clock a basket of oranges shifts embroidered with dragon patterns

4

Test your cultural knowledge

One wedding gift that should not be given to a Chinese couple would be:

a jade bowl a clock a basket of oranges shifts embroidered with dragon patterns

4

Test your cultural knowledge

If you wanted to give a necktie or scarf to a Latin American, it is best to avoid the color:

red purple green black

Test your cultural knowledge

If you wanted to give a necktie or scarf to a Latin American, it is best to avoid the color:

red purple green black

Test your cultural knowledge

When doing business in Japan, never: $ a. touch someone $ b. leave your chopsticks in the rice $ c. take people to pricier restaurants than they took you $ d. all of the above

Source: Hoggard International

Test your cultural knowledge

When doing business in Japan, never: $ a. touch someone $ b. leave your chopsticks in the rice $ c. take people to pricier restaurants than they took you $ d. all of the above

Source: Hoggard International

Test your cultural knowledge

In Japan, loudly slurping your soup is considered to be: $ a. rude and obnoxious $ b. a sign that you like the soup $ c. okay at home but not in public $ d. something that only foreigners do

Source: Hoggard International

Test your cultural knowledge

In Japan, loudly slurping your soup is considered to be: $ a. rude and obnoxious $ b. a sign that you like the soup $ c. okay at home but not in public $ d. something that only foreigners do

Source: Hoggard International

Test your cultural knowledge

Test your cultural knowledge

As an American teacher you have the opportunity to study for a year at one of the better Japanese universities. Today one of the professors has treated a subject which you had already studied. You are sure that he was wrong in some crucial part of the matter. You feel the obligation to do something about your point of view.

How do you approach this matter?

You try to gather signatures from those fellow students who agree with your opinion on the problem.

You go to the dean and talk to him about the low performance of the professor.

You go to the professor to apologize for your interference and show your interest in the subject.

Test your cultural knowledge

As an American teacher you have the opportunity to study for a year at one of the better Japanese universities. Today one of the professors has treated a subject which you had already studied. You are sure that he was wrong in some crucial part of the matter. You feel the obligation to do something about your point of view.

How do you approach this matter?

You try to gather signatures from those fellow students who agree with your opinion on the problem.

You go to the dean and talk to him about the low performance of the professor.

You go to the professor to apologize for your interference and show your interest in the subject.

Test your cultural knowledge

The statement "In order to have efficient work relationships, it is often necessary to bypass the hierarchical line" would be agreeable to managers in which country?A) SwedenB) OmanC) JapanD) Venezuela

Test your cultural knowledge

The statement "In order to have efficient work relationships, it is often necessary to bypass the hierarchical line" would be agreeable to managers in which country?A) SwedenB) OmanC) JapanD) Venezuela

Test your cultural knowledge

In which country is meaning communicated more by clear, direct words than by body language?A) EnglandB) MexicoC) ChinaD) France

Test your cultural knowledge

In which country is meaning communicated more by clear, direct words than by body language?A) EnglandB) MexicoC) ChinaD) France

Test your cultural knowledge “My company has had an excellent relationship with a

supplier from Japan for two years. I have been assigned to replace John who was the supplier's contact with our company. The supplier's representative now says that his boss wants to re-negotiate our contract although it has five years to run. What do you advise me?”

A) Your company broke the contract.B) By changing the person whom the Japanese had a trusting relationship, they believe that the contract itself has to be looked at as if it were new.C) The Japanese don't keep their promises.D) The contract is in English and the Japanese do not understand it.

Test your cultural knowledge “My company has had an excellent relationship with a

supplier from Japan for two years. I have been assigned to replace John who was the supplier's contact with our company. The supplier's representative now says that his boss wants to re-negotiate our contract although it has five years to run. What do you advise me?”

A) Your company broke the contract.B) By changing the person whom the Japanese had a trusting relationship, they believe that the contract itself has to be looked at as if it were new.C) The Japanese don't keep their promises.D) The contract is in English and the Japanese do not understand it.

Summary….. Take time to understand and appreciate other

cultures Cultivate a culture of respect and value

human dignity Take time to understand and appreciate your

own culture Doing homework is critical to selling your

services in a market Recognize the importance of dealing with

cultural differences and the possible consequences of taking no action – understand the music behind the words

Establishing credibility Respect

Thank You

Is forbidden to steal hotel towels please. If you are not person to do such thing is please not to

read this note

Tokyo

10

Istanbul

To call room service, please open the door and call

room service

9

Mexico City

Broken English spoken perfectly

8

To move the elevator cabin, push button for wishing floor. If the cabin should enter more persons, each one should press a number of wishing floor. Driving is then going alphabetically by national order

Belgrade

7

If you wish breakfast, lift the telephone and our waitress

will arrive. This will be enough to bring up your food

Israeli

6

Visitors are expected to complain at the office

between the hours of 9 am and 11am daily

Athens

5

We are pleased to announce that the manager has personally passed all the water served here

Acapulco

4

Vienna

In case of fire, do your utmost

to alarm the porter

3

Cools and heats. If you want thecondition of cool in your room,

please control yourself

Tokyo

2

You are invited to take advantage of the chambermaid

a city in Japan

1

Thank You