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Hofstedes 5 dimensions of culture

Research into the staff of a multinational enterprise operating in 40 countries was


conducted by Dutch scholar and management consultant Geert Hofstede in the
1970s. He developed a five-dimensional model from his research, arguing that the
culture of various countries around the world can be compared and analysed along
five dimensions.
1. Power distance the degree to which a society accepts or rejects the
unequal distribution of power in organisations and the institutions of society.
2. Uncertainty avoidance the degree to which a society tolerates risk and
situational uncertainties.
3. Individualismcollectivism the degree to which a society emphasises
individual accomplishment and self-interests, versus collective
accomplishments and the good of groups.
4. Masculinityfemininity the degree to which a society values assertiveness
and material success, versus feelings and concern for relationships.
5. Time orientation the degree to which a society emphasises short-term
considerations versus greater concern for the future.
Hofstedes model provides a framework that can be used to help understand the
management implications of differences in national cultures. For example:
workers from high power distance countries (such as Singapore), can
generally be expected to show great respect to seniors and those in authority
employment practices that increase job security are likely to be favoured in
countries with uncertainty avoidance cultures
in highly individualistic societies (such as the United States), group loyalty may
be comparatively lower
Workplaces in more masculine societies (such as Japan), will more likely
display more rigid gender stereotypes.







Forms of International Business
International business strategies can be classified as being market entry strategies or direct
investment strategies.
Market entry strategies involve the sale of goods or services to international
markets but do not require expensive capital investments. Common market entry
strategies include:
global sourcing of international manufacturing materials or services for local
use
exporting locally produced goods and services to international markets
importing foreign products to sell in the domestic market
Licensing and franchising agreements to make or sell another companys
products in international markets, or use their business model.
Direct investment strategies in international markets require major capital
investments but create rights of ownership and greater control over the operations in
foreign countries. Examples of direct investment strategies include:
joint ventures where an organisation establishes operations in another
country via joint ownership with local partners
Wholly owned subsidiaries where a local operation is completely owned
and controlled by an international organisation.