CROSS CULTURAL

MANAGEMENT

Chapter Outline

Concept of Culture
Elements of Culture
Determinants of Culture
level of culture
Cross cultural theories
Cross Cultural Communication
Culture Shock

Concept of
Culture

Culture is the configuration of learned behavior

and result of behavior whose component
elements are shared and transmitted among the
members of a particular society.
Culture is Relative that guide the behavior of people in a society /
community and that are passed on from one generation to the next.

Elements of
Culture

Culture has normative value. It prescribes

Dos and Donts which are binding on the
members of a society.
Culture is a group Phenomenon.
Cultural practices are passed on from
generation to generation

Elements of
culture

Language
Nationality
Sex
Education
Profession
Ethnic group
Religion
Social class

Corporate culture
Family
Values
Norms
Attitudes
folkways
Customs

 Example: Women in Indian Society wear

Kumkum/Sindur on their foreheads because their
parent told them to wear. The parents did the same
because their parents had done so.
Eating cows meat is viewed critically by Hindu
Society. While drinking liquor is common in the US,
the same is prohibited in Saudi Arabia and is a
punishable offence

Characteristics of
Culture

Culture is learned
Culture is unconscious
Culture is shared
Culture is integrated
Culture is Symbolic
Culture is a way of life
Culture is Dynamic
Culture is Relative
Culture is universal

Education
Political
philosophy

Language

Religion

Determinants
of Culture

Social
structure

level of culture
Dominant Culture

Sub Culture

Organizational

Occupational

pervasive and extends to the whole of a

country

practices of Punjabies are different from

those obtain in Karnataka.

TATA is different from that of INFOSYS while

that of INFOSIS is not the same as that of
WIPRO.
An Account for example speaks the same
financial language whether he or she is an
Indian or an American. So is the case with a
medical practitioner or an attorney.

Characteristics of
Organization
Culture

Centralized vs. decentralized decision making:

Safety vs. risk: in some so
Individual vs. group rewards
Informal vs formal procedures:
High vs. low organizational loyalty:
Cooperation vs. competition:
Short term vs. long term horizons
Stability vs. innovation

Cultural
Sensitivity

Knowing that cultural differences as well as

similarities exist, without assigning values (i.e.
better or worse, right or wrong) to those cultural
differences.

Cultural Sensitivity
Therefore, every international manager need to know about cultural differences among
nations in order to be able to:
Communicate effectively with customers, suppliers, business associates and
partners in other countries and foreign employees (expatriates).
Conduct negotiations and understand the nuances of the beginning postures of the
other parties into a negotiation.
Predict trends in social behavior likely to affect the firms foreign operations.
Understand the ethical standards and concepts of social responsibility in various
countries.
Build Foster relationships between union confederations and employee associations
require cultural empathy.
Understand local Government policies and influences it for business promotion.
Conduct efficient meetings in different countries and encourage employees
participation in management.
Understand how people interpret market research an other information.

MULTICULTURALISM

An American family on assignment in

Indonesia went to restaurant with their Pet
dog. The restaurant manager politely
greeted then at the door, took their dog and ,
30Minutes later-family was shocked
They had SERVED

IT TO THEM

The consumption of dog meat is associated

with their culture, where dog meat is
considered a festive dish usually reserved for
occasions such as weddings and Christmas.

Cross cultural theories

Cross cultural
Theories

Organizational culture varies one from another

based on 4 factors:
Organizational objectives and Goals.
Competitive Challenge
National variables and
Socio cultural variables like different religion,
language, education etc.

Cultural Diversity or Multi-Culturism

Hofstede Cultural
Dimension
Dutch Scientist, has analyzed
cultural dimension in IBM
Employees (1,16,000) in 70
countries and in 3 regions
like E. Africa, W .Africa and Saudi
Arabia.

Hofstede tried to eliminate the

impact of changing organizational
cultures and analyzed the influences
of different national cultures.

Hofstede provides a useful framework for

understanding the workforce diversity. His main
findings were:
Work related value are not universal
Underlying values continues when a multinational
company tries to impose the same norms on all its foreign
interests.
Local value determine how the headquarters regulations
are interpreted;

By implication, a multinational that tries to insist on

uniformity is n danger of creating morale problems and
inefficiencies.

Hofstedes
framework for
Assessing culture

Hofstedes studies of the interactions between

national cultures and organizational cultures
demonstrated that there are national and regional
cultural groupings that affect the behaviors of
societies and organizations, and that are very
persistent across time

Dimensions of Hofstedes framework of

assessing culture:
Low and High Power Distance

Individual and collectivism

Masculinity v/s Femininity

Uncertainty avoidance
Long and short term orientation

Power Distance:
unequal power of distribution.
ItHigh
is thePower
distance
distance
between individuals at different
Low
levels
power
of distance
hierarchy.
Hofstede
types
of distance:
Countriesobserved
in whichtwo
people
blindly
obey the
1.orders
High power
of theirdistance
superior, employees
2.acknowledge
Low power distance
the bosss authority simply
by
respecting that individuals formal position
in
the hierarchy, and they seldom bypass the
chain of command

Countries which people (supervisors and

sub
ordinates) are apt to regard one another
equal in
power.

Results
Less Harmony and less cooperation
Centralized order
Autocratic Leadership
Taller Organization structure

More harmony and cooperation.

Decentralized structure
Democratic leadership
Flatter organization structure

Maxico, South Korea and India.

Austria, Esrael, USA, UK, Denmark

Power Distance:
unequal power of distribution.
High Power distance

Low power distance

Countries in which people blindly obey the

orders of their superior, employees
acknowledge the bosss authority simply
by
respecting that individuals formal position
in
the hierarchy, and they seldom bypass the
chain of command

Countries which people (supervisors and

sub
ordinates) are apt to regard one another
equal in
power.

Results
Less Harmony and less cooperation
Centralized order
Autocratic Leadership
Taller Organization structure

More harmony and cooperation.

Decentralized structure
Democratic leadership
Flatter organization structure

Maxico, South Korea and India.

Austria, Esrael, USA, UK, Denmark

Uncertainty Avoidance
High uncertainty avoidance

Low uncertainty avoidance

Countries with a high level of uncertainty

avoidance tend to have strict laws and
procedures to which people adhere
closely, and there is strong sense of
nationalism.
In a business context this value results in
formal rules and procedures designed to
provide more security and greater career
stability

In countries with lower levels of

uncertainty
avoidance nationalism is less pronounced,
and protests and other such activities are
tolerated. As a consequence, company
activities are less structured and less
formal.

so
Managers have propensity for low risk
decisions,
employees exhibit little aggressiveness
lifetime employment is common
Taller organization structure

Managers take more risk, and there is

high job mobility
Peoples have risk taking attitude and
high labour turnover.
Flatter organizational structure

Japan, Israel, Austria, Pakistan

India, USA, UK etc.

Individual and collectivism

Individual

collectivism

Interest of Self and Family

I consciousness
Independence of Individual from
organization.
Grater Individual Initiatives
Promotions are based on Merit and
performance

Interest of Group
We consciousness
Dependency on organization
Less Individual initiatives
Promotions are seniority based

USA, UK, Australia

Japan, Taiwan and Pakistan

Masculinity v/s Femininity

Traditionally, masculine values assertiveness, materialism, aggressiveness and a
lack of concern for others that prevail in society, femininity emphasizes feminine
values a concern for others, for relationships, nurturing, care for weak and for
quality of life. The degree of masculinity affects in the following characteristics way:
High Masculinity

Low Masculinity

Career is considered as most

important
Work needs take precedence
Individual decision-making is
emphasized
Achievement is given importance and
is defined in terms of money and
recognition

Importance is placed on cooperation

and friendly atmosphere.
Employee security gets precedence.
Group decision making is
emphasized
Achievement is defined in terms of
human contacts and living
environment

Countries with high masculinity India,

Japan,
USA, UK etc.

Countries with low masculinity Denmark,

Norway, Sweden etc.

Kluckhohn - Strodthbeck

This theory is based on the Patterns

of behavior and thinking in different
cultures. The researchers distinguish
and compare cultures based on the
following dimensions

1. What is the nature of people Good, evil or mixed

2. What is a persons relationship to nature Dominant, Harmony,
subjugation.
3. What is a persons relationship to Hierarchical, collectivist or
others?
Individualistic.
4. What is the modality of human activity? Doing, being or containing
5. What is the temporal focus of human activity? Future, present or
past.
6. What is the conception of Space? Private, public or mixed.

Halls and Halls

Halls and Halls in 1987 provided another basis for

cross cultural classification. They divided
the world into two cultures:
A) Low context Culture
B) High context Culture

 Members of high context

cultures depend heavily on the
external environment,
situation and non verbal behavior
in creating and interpreting
communication. Members
of this culture group learn to
interpret the covert clues when they
communicate so much
meaning is conveyed indirectly.
Examples Arabic, Chinese
and Japanese, where indirect style
of communication and
ability to understand the same is
highly valued.

In low context cultures like the

US, Sweden, and Britain, the
environment is les important,
and non-verbal behavior is often
ignored.
Therefore, communication has
to be explicit and clear.
A direct and blunt style is
valued and ambiguity is disliked in
managerial communication.

Trompennars
7d cultural dimension model

Research produced five cultural dimensions that are based on

relationship orientations and attitudes toward both time and the
environment

Individualism vs. collectivism

Universalism vs. particularism (rules)
Neutral vs. affective (emotion)
Specific vs. diffused involvement
Achievement vs. ascription (status)
Past, present and future orientation
Internal vs. external control (nature)

Universalism vs.
Particularism

Universalism - belief that ideas

and practices can be applied
everywhere in the world
without modification

Particularism - belief that

circumstances dictate how
ideas and practices should be
applied and something cannot
be done the same everywhere

Focus on formal rules and rely on

business contacts

Focus on relationships, working

things out to suit the parties

Individualism vs. Communitarianism

Individualism - people regard
themselves as individuals

Communitarianism - people
regard themselves as part of a
group

Rely on individuals to make

decisions

Seek consultation and mutual

consent before making decisions

Neutral vs. Emotional

Neutral - culture in which
emotions are held in check

Emotional - culture in which

emotions are expressed openly
and naturally

People try not to show their

feelings

People smile, talk loudly, greet

each other with enthusiasm

Specific vs. Diffuse

Specific - culture in which
individuals have a large public
space they readily
share with others and a small
private space they guard closely
and share with
only close friends and associates

Diffuse - culture in which both

public and private space are similar
in size and individuals guard their
public space carefully, because
entry into public space affords
entry into private space as well

People often are open and extroverted People often appear indirect and
introverted, and work and private life
often are closely linked

Work and private life are separate

Achievement vs. Ascription

Achievement - culture in which
people are accorded status
based on how well
they perform their functions

Ascription - culture in which

status is attributed based on
who or what a person is

For example, status may be

accorded on the basis of age,
gender, or
social connections

Time
Sequential approach to time
- people do one thing at a time,
keep appointments strictly, follow
plans to the letter

Synchronous approach people do more than one thing at a

time, appointments
are approximate

Environment
Inner-directed
People believe in controlling
environmental outcomes

Outer-directed
People believe in allowing
things to take their natural course

Cultural Patterns or Clusters

Defined groups of countries that are similar to each other in terms of the
five
dimensions and the orientations toward time and the environment

Andre Laurents
Laurent analyzed the values of
managers in nine European countries
and the US in 1983 and 1989
in China, Indonesia and Japan.

Laurent used four parameters

Perceptions of the organizations

Authority systems
Role formulation systems
Hierarchical systems

 This research treated management as a process by which

managers express their cultural values like how far manager
caries his / her status into the wider context outside the
workplace Therefore, the international manager needs cross
cultural competence to manage multiculturalism.
Cross cultural competence includes skills, awareness and
Knowledge. In order to be culturally competent, an individual
needs to:
1. Possess a strong personal identity
2. Have knowledge of and facility with the beliefs and values of
the culture;
3. display sensitivity to the effective process of the culture.
4. Communicate clearly in the language of the given culture
group.
5. Perform specially sanctioned behavior.
6. Maintain active social relations within the cultural group
7. Negotiate the institutional structures of that culture.

Why needed ?

1. In global businesses, activities such as leading, motivating, decision making,

problem solving, exchanging ideas and information depends on the ability of
proper
communication from one culture to another.
2. Mistakes in cross-cultural communication often go unnoticed by the
communicators, but these mistakes have the potentials to cause damage to
international relationships and negotiations.
3. Mistakes or misinterpretations of the subtle gestures of the hands, and face,
the use of silence, what is said or not said, and the intricacies of dealing with
age and status often provide PITFALLS for International Business.

Critical dimensions in
Intercultural
communication are:

1. Language and Culture

2. Difference between high and low context
cultures
3. The use of interpreters
4. non-verbal communication

Culture shock

Culture shock is a term used to describe the anxiety and

feelings (of surprise, disorientation, confusion, etc.) felt
when people have to operate within an entirely different
cultural or social environment, such as a foreign country.
It grows out of the difficulties in assimilating the new
culture, causing difficulty in knowing what is appropriate
and what is not.

Phases of Culture Shock

The "Honeymoon Phase" - During this period the differences
between the old and new culture are seen in a romantic light, wonderful
and new.
"Negotiation Phase" - After a few days, weeks, or months, minor
differences between the old and new culture are resolved.
The "Everything is OK" phase - Again, after a few days, weeks, or
months, one grows accustomed to the new culture's differences and
develops routines. By this point, one no longer reacts to the new culture
positively or negatively, because it no longer feels like a new culture. One
becomes concerned with basic living again, as one was in their original
culture.
Reverse Culture Shock - Returning to one's home culture after

Sign of Culture
Shock:

Irritability
Fluctuating appetite
Moodiness
Disrupted sleep
Homesickness
Spending time alone
Avoiding the locals
Reading all day

Boredom
low energy
Confusion
Anxiety
Negativity
Alienation
Depression
Physical illness
Depression

OCTAPACE

The most important aspect of organizational culture are the values it

practices. Eight values may be examined to develop the profile of an
organizational culture that is called OCTAPACE.
OPENNESS
CONFRONTATION
TRUST
AUTHENTICITY
PROACTIVELY
AUTONOMY
COLLABORATION
EXPERIMENTING.

a) Openness - the comparative openness in the system should

influence the design of HRS. Organizations can be classified in
continuum from completely open to completely close. No orgn
may be on the two extremes of the continuum. However, they
will tend to be towards one or the other end. The degree of
openness of the orgn will be an imp factor in determining the
nature of the various dimensions of HRD being designed, as
well as the way in which these dimensions should be
introduced. orgn which are fairly open may start with several
confronting designs of HRS .
b) Confrontation - this term is used in relation to problem putting
the front rather than the back to escaping the problems. A better
term would be confrontation exploration that implies facing a
problem and working jointly with other concerned to find its
solution. If an organization encourages people to recognize a
problem, bring it to people concerned, explore with them to
under it and search possible ways of dealing with it.

c) Trust - which introducing the HRD in an orgnization trust in another

factor which should be considered along with openness. If the
level of trust is low, the various dimensions of HRS are likely to be
seen with suspicion and therefore the credibility of the system may
go down. in such a case the system if introduced
may become
a vital and cease to perform the main functions for which it meant.
d)

Authenticity- is the value underlying trust. It is the willingness of a

person to acknowledge the feelings he /she has, and accept
imself / herself as well as other who relate to him/her as persons.
Authenticity is reflected in the narrowest gap between the stated
vales and the actual behavior. This value is important for the
development of a culture of mutuality.

e) Proactive - can be contrasted with the term react. It in the later

action is in response to an act from some source, while in the
former the action is taken independently of act form the other
source. Proaction means anticipating issues in advancing to take
advantage of this undertaking conflict or responding to needs of the

f)
Autonomy - nothing but willingness to use power without fear
and
helping other to do same. It multiplies power in system and the basis is
collaboration.
g)

Collaboration - involves working together during one another

strengths for a common cause. Individuals instead of solving
their
problems by themselves share their concerns with one another ands prepare
strategies working out plan of actions and implement them together.
h)

Experimenting - as a value emphasizes the importance given to

Innovating and trying out new ways of dealing with problems
in the
organization.
A profile of an organization. on these aspects may help to decide what
elements of HRS should be introduced in what sequences in the organization.

Flag

UAE
United Arab Emirates

Dressing

Food Culture

Food Culture
No No

Pork
Muslims are prohibited from eating pork so it is not included in Arab
menus. There are substitutes for the same.
Alcohol
Alcohol is generally only served in hotel restaurants and bars.
Exceptions are some clubs (e.g. golf clubs) and associations.

Doing Business in
the UAE

Working
Practice

Companies
Structure

Business
Practices

Working
Relation

Social
Customs

Working
Practice

Saturday Wednesday (Traditional Working Week)

Meetings should be scheduled advanced with extra

time allocation
Attitude to time is comparatively relaxed

Structure & Hierarchy of

Companies

Strong vertical Hierarchy

Age Money & Family Determining factors of Personal

Status
Status is important & must be recognized
Titles : Shaikh Chief, Ustadh Professor

Working
Relation

Prefer to do Business in Person

Prefer to do Business with those who they know

Family & Friends come before anything else

Business
Practice

Customary greeting is As-salam alikum with reply Wa alaikum assalam

Initial business meeting Way to become acquainted with your
counterparts
Business Cards are common but not essential. If intended ensure
English and Arabic printed information.

Social Custom

Gifts
Sign of Generosity

Dining
Sign of respect
starts eating last
Host pays for it

Left Hand
Do not use or offer
item with your left
hand

Shoes
Follow the lead of your
host

Business
Etiquette

Dos

Expect a one-on-one meeting to only

include yourself and the other person.
Address Emirati counterpart with
appropriate titles
Assume that the person who asks the
Dress Conservatively
most questions in meetings holds the
most Responsibility.
Accept Invitation to a meal or

social events

Dont

Politeness and courtesy

DONT ask about a persons wife or

daughters.
Dont speak Loud and with laughter

Tips for effective

communication

Be clear and concise

Speak more slowly
Reinforce your message
Make presentations effective
Double-check understanding
Be open-minded

Doing Business in Latin America

Few people rush into business

Men and women congregate into separate
groups at social functions
Latin Americans stand more closely to
each other than North Americans when in
conversation
Men may embrace

(Cont.)
Guests are expected to arrive late, with
exception of American guests
Little concern about deadlines
Machismo - expectation that businessmen
will display forcefulness, self-confidence,
leadership with flourish
Fatalism

Doing
Business in
East Asia
Japan, Korea, China
Meetings devoted to pleasantries; serving
tea, engaging in chitchat
Seniors and elders command respect
Consciously use slow down techniques as
bargaining ploys
Business cards should be bilingual

Doing
Business in
Russia

Protocol-conscious
Do business only with highest ranking executives
Appear stiff and dull
More expressive in private than in public
Hard to draw up contracts due to language
barriers
Have little advertising experience

Doing Business
in the
Middle East

Prefer to act through trusted third parties

Personal honor given high premium
Fatalism
Emotionally expressive
Intense eye contact
Guests should avoid discussing politics, religion,
hosts family and personal professions

DOING BUSINESS IN
GERMANY

Differences between Indian Culture & Western Culture

Basis

Indian Culture

Western Culture

Belief in Faith & Strong believers

Luck

Believe in hard work & efforts

Belief in Spiritualism Strong believers

Believe in Materialism

Public Appearance

No body exposures. Fashionable clothes the in

thing
Considered obscene.

Care of Old People

Sons are expected to Old parents are not cared for.

take care of their
Parents.

Respect for Women

No religious ceremony is
held
without
wife.
Women given respect in
traditional sense

Relegated to Old Homes

Women looked as objects of
pleasure. Women are free
in every aspect

Business Culture - India

Showing hospitality is part of the negotiation
process. Often meetings start by offering
tea/coffee and snacks. It is courteous to
accept the offer.
Relationships and feelings play a larger role in decisions
in India. In general, Indians tend to take larger risks with
a person whose intentions they trust. Thus, one's
credibility and trustworthiness are critical in negotiating a
deal.

Business Culture - India

Indians are 'polychronic' people, i.e., they tend to deal with
more than one task at the same time. So be prepared for
some distractions/ disturbances during the meeting, e.g., a
secretary walking in to get some papers signed, or the
conversation sometimes digressing into unrelated topics.
One must appreciate that such behavior/occurrences do not
show a lack of interest or attention.
Indians are inductive in their approach to understanding things. In the
Indian psyche, reality can be understood only in its overall context.
Knowing the personal, social and historical contexts [of people, events,
ideas, etc.] are a precondition to comprehending them accurately.
Therefore, one should be prepared for questions and enquiries, which
may not seem to be directly related to the subject. To people coming
from more deductive cultures, this behavior often appears to indicate a
lack of focus and digression.

Business Culture - India

PowerPoint presentations are generally accepted to
start the discussion. It is necessary, however, to
send a more detailed proposal in advance. Often,
the details of the proposal are vetted by some
middle-level executive, who will then brief the
superior about them.
In general, Indians are cautious in accepting a new idea or
proposal. Openness to a new idea depends not only on its quality,
but also on its source and endorsement. That is, information about
who else has implemented it or who has proposed it has a major
influence on the decision about a new idea. In making a proposal,
you must include such details accordingly.

Business Culture - India

Indians usually do not express their disagreements
openly and directly; doing so would be considered
discourteous. Instead, when differences arise, they
may circumvent them by statements such as 'we will
discuss this later' or 'I will have to check with others
about this.
Bargaining for the price or additional concessions is normal in
India. Indian negotiators expect and value flexibility in negotiation.
Therefore, sometimes a straightforward offer may be perceived as
a rigid stand. It is always advisable to build some buffers in one's
initial offer, which allow for bargaining later.

Business Culture - India

Do not insist on commitment in the first meeting. Making a

decision, in Indian organizations, is often a long-drawn out
process. This is not only because of the bureaucratic nature of
many Indian organizations, but also because a decision may have
to be ratified by people who may not be present at the negotiating
table.

Gifts
Box of Sweets
Chocolates
Bouquet of Flowers
Household Items
Liquor, but . . . .

Topics of Conversation

Families
Tradition
Foreign Countries
Cricket
Politics & Religion

Poverty

Personal Matters
Military Spending

Doing Business in India

If there ever was an example of what a

heterogeneous society looks like, it is India.
The differences between people due to
region, religion, language and caste make it
very difficult for anyone to impart general
observations on the country. Behavior,
etiquette and approach are all modified
depending on whom you are addressing and

Hierarchy
One of the most significant cultural influences on Indian
culture is that of hierarchy. You will see this manifest in many
ways when doing business in India. For example, only the
owner or the most superior person of a company will make
business decisions. Even if you are dealing with a manager,
they will always go to the boss for a final decision.
You may often find that, as a sign of respect, subordinates stand up
when the boss enters a room. If you are unsure whether to rise or
not, err on the side of caution and do so.
Women in business, especially in senior positions, executives, are a
relatively new development. If you are a woman doing business in
India, you will normally find people respectful and courteous, but not
very comfortable in working with you for business deals. You may
have to make extra efforts to get them to discuss business with you.

Meeting and Greeting

Handshakes are exchanged on meeting. Indians themselves use
the namaste. This is where the palms are brought together at chest
level with a slight bow of the head. However as a foreigner doing
business in India you would not be expected to use it.
When addressing an Indian try and use the appropriate
formal title, whether it is Professor, Doctor, Mr, Mrs followed by the
family name.
Names speak volumes about
example, a Singh will usually (but
-jee ( as in Banerjee) is a sign
names such as Abdul will be used

an Indians background. For

not always) be a Sikh. The suffix
of a high caste. Arabic sounding
by Muslims.

When doing business in India, business cards should be

exchanged at the first meeting. English is the language of
business so there is no need to translate your cards. Be sure to
receive and give with your right hand. Make sure the card is put
away respectfully and not simply pushed into a trouser pocket.

Building Trust
Doing business in India involves building
relationships and establishing trust. It is
vital that a good relationship is founded
on two foundations.
1) on a business level, i.e. demonstrating strong
business
acumen,
professionalism
and
qualifications and
2) at a personal level, i.e. relating to your
partner and exhibiting the positive traits of
trustworthiness and honour.

Meetings and Negotiations

Punctuality for meetings is expected, although being 10
minutes late will not have disastrous consequences.
Flexibility is part of life!
When entering a meeting room you must always
approach and greet the most senior figure first. Never
get down to business. Meetings should always commence
with some conversation good topics of conversation
include cricket, politics and film.
If your doing business in India involves negotiations,
always bear in mind that they can be slow. If trust has
not yet been established then concentrate efforts on building
a rapport.
Indians do not base business decisions solely on
statistics, empirical data and flashy PowerPoint
presentations. They use intuition, feeling and faith to guide
them. Always exercise patience, show good character and
never exhibit frustration or anger.

Language

Different states in India each have different

official languages. Central government only
recognizes Hindi as the official language of India.
However, when doing business in India, English is
the language of international commerce.

Foreign Investment
Most sectors follow the automatic approval route
FDI caps:
Telecom up to 74 percent,
Mining 74 percent,
Private sector banking 49 percent,
Insurance 26 percent.
(The government is seeking to increase the FDI caps further)

FDI up to 51 percent in priority capital and intermediary goods sectors.

Non resident Indians and overseas corporate bodies allowed 100
percent equity in key areas.

The Characteristic of
South Koreans

Meeting Etiquette

Donts

Introduce yourself to your partner

Use someones real name.
Write on someones business card
Insult or criticize in front of others
Show annoyed expression when you are in
negotiations

Table Manners

Dont

Point chopsticks
Pierce food with chopsticks
Pick up food with hands
Accept the first offer of second helping
Place chopsticks parallel across your rice bowl
when youre finished eating

Gift Giving
ETIQUETtE

Dos
Wrap gift in red or yellow paper
Use both hands when offering a gift

Donts
Wrap gifts in green, white or black paper
Sign a card in red ink
Opened the gift when received

Dress
Etiquette

Dos
Men should wear dark color, conservative
business suits with white shirts
Women should dress conservatively and wear
light color

Donts
Man shouldnt wearing jewelry other than a
watch or wedding ring

Japanese company structure

VS
American company structure

Key concepts to understand

Japanese Business system

-Salary goes higher as you get older

- Once you are hired by the company, you will work for it
until you retire
- You are assigned various kinds of jobs in different
departments within the company

Salary

Japan
You get higher salary
as you get older
Salary you get now is not
always related to your
current performance

US
Your salary is based
on your current
performance

Difference of salary you get and salary

based on your performance
1000000
900000
800000
700000

Salary you get

600000
Salary base on your
performance

500000
400000
300000
200000
100000
22

30

40

50

60

Findings

You need to stay in the company until you retire

to get the salary that you haven not received

Company system
Japan
Cross functional
Workers are assigned
various jobs within a
US
company
Your career is developed
Vertical functional
within a company
Workers are promoted
within a department
Ex)A marketing senior
manager is promoted to a
HR Vice president
Your career is developed
within a market

Recruiting and Promotion Decision makers

Japan

US

HR department

Each department

They have the function

of recruiting and
promoting of allover the
company

There are recruiters but each

department often has recruiting
functions too
Managers of each department
usually has promotion functions

Skills required

Japan
General skills is required
in a company
Workers try to get overall
skills that is necessary to
fulfill various jobs in a
company

US
Special skills that is
required for a job in
the market
Workers try to get
special skills that is
necessary to fulfill a
specific job

Commitment

Japan: Lifelong (

Once you are hired to the

company, basically you will
work for the company until
you retire
Exception)Workers are
sometimes sent to an
another company that has
relation with his/her
company but mainly it is for
making stronger connection
between companies

US: Short term

You change companies
or jobs and proceed
within the market
Average Americans have
6-8 different jobs and 3-4
different occupations

Japan:
Good points/ Bad points
Good
You are able to see overall company,
which helps you to be a manager who
is fully understanding the company
Insider CEOs care more about
company future or reputation than
their own reputation or benefit
Strong company culture and strong
loyalty is developed
-employees are thought to be assets
rather than cost
You can save the cost for workers
who quit jobs

Bad
It is not easy to leave a company
which you find you do not fit
You might be assigned to a
department that you do not desire
Not getting people who has
experience in a different market
makes companies more difficult
to get new wind
It is not easy to fire low productive
workers

US:
Good points/ Bad points
Good
Flexible-you are able to change
companies, jobs as you desire

You can fire low productive

workers easily
Getting new workers who has
experience of a different market or
jobs brings new wind to a
company

Bad
It is not easy to share company
culture with new workers
It is expensive to advertise a job
opening, recruit and train a new
worker
Outsider CEOs care more about their
own reputation or benefit than
company reputation of future

Companies lay-off employees easily,

employees quits easily
-low trust

Business cultureChina vs US

Presentation Outline
Foundation of US ethics- basic discussion
Comparison of Business culture-China vs US
Strategies and Managerial Implications

Cultural
Foundation of
American
Ethics
Foundation based on Judeo-Christian and
Western socio-theological principles
intrinsic underlying truth
a sovereign moral authority--God
God declines right or wrong
Natural law -- inalienable rights
life, liberty and pursuit of happiness

American ethics (continued)

Limits on individual freedom are either
(1) voluntary
(2) lawfully imposed
Results -- individualism and contract
Individuals right to choice is consistent with
market economy
The functioning of a free market economy
can be described as nexus of contracts
A business contract - spells out details of
relationships and is enforced by law if
violated

Comparison
of Business
Culture:
China vs US
Business culture - time-tested and conventional
practices
China and US have a different business culture
-- result of different history and practices

Notion of Harmony
China
Everything is in
harmony
Change is viewed
as disruptive
Reason -- too many
people

US
Efficiency and
effectiveness
End result
logical reasoning on
facts
change to get
desired results

Importance of Relationship
China
4 important social
groups: relatives,
schoolmates,
personal friends,
and the indirect
relationship from the
3
Importance of
guanxi
(connection)

US
constitutions
guarantee the rights
a short history to
inherit traditions
stress on
individualism for
personal
achievement

Relationship (continued)
Agricultural state
(small community
mentality)
privacy is not highly
valued
individualism is not
singled out
rule of man over
rule of law

Relatively few
norms
melting pot
Increased tolerance
on
diversity
separate personal
and business
relationship
friendship can be
formed and

Subtlety and Explicitness

China
US
Build on subtlety
Frank and open
Language based on
abstraction of ideas
Reduce
confrontation
Outspoken --not
norm
(read the tea leaves- observe body,

Subtlety and Explicitness (continued)

Courtesy
(righteousness,
ethics and honor)virtues
Saving face
Do not say no
easily
Hint to get help
Self-control makes
people appear shy

Communication Style
China
US
Silence for reflection uncomfortable with
gaps of silence
Not to exaggerate
(implications on
Some American feel
marketing a product)
ok to exaggerate
fluency and gift of
gab--admirable

Communication-continued

Non-linear thinking
pragmatic thinking
rare physical contact
no eye contact
Yes means I am
listening (not I
accept)

Linear thinking
pragmatic and look
for innovation
normal touching
eye contact is
important (implying I
have no harm)
Hi- means friendly

Negotiation
China

US
contract is the end
in itself
Americans think
Chinese use
banquet as the way
to get upper hand
discuss openly costs
and benefits

Rule of Banquet
China
Much attention to
eating and drinking
Private rooms in
restaurant
round table with
chopsticks
Seats assigned
Do not stretch arm
for food

US
using club members

Taboos
China
Concerns with
numbers (symbol for
luck)
Success factors:
fate, luck, fengshui,good deeds
and knowledge

US
Hard work

Strategies of
Resolving Conflict

Avoiding
Forcing
Education and persuasion
Infiltration
Accommodation
Negotiation and compromise
Collaboration and problem solving

International Manners

Africa Present the card with right hand

Asia Offer the card with both hand and accept in the same way (China, Japan,
South Korea, India)
Australia & New Zeeland- Not so Important for them
Europe -Power breakfasts are become more popular (in France, Switzerland,
England)
Middle East & Gulf Countries -Present Card with right hand with respect
Canada & USA It is acceptable to make a cold call ( calling a person without making
an
introduction or appointment
Africa Be prepared for a large no. of people
Asia Decide before hand what tech. information they are willing to share and be
sure everyone on your team knows
Australia & New Zeeland- To the point, specific and punctual
Europe Class conscious good manners are critical and ignorance is no excuse for
bad manners
Middle East & Gulf Countries- Maintain Royalty and detail discussion, prefer local
language or English
Canada & USA Meeting begin and end as scheduled. There is very little small talk at
meetings

Topics to Avoid:

Africa Refer to people as Africans not Blacks

Asia Both men and women should avoid Going Negative in their clothing
choices.
Australia & New Zeeland-Over Introduction
Europe Never try to make a cold call to get an appointment, they dont like
to make business on phone/ call
Middle East & Gulf Countries- Other religion discussion, Political discussion
Canada & USA Unnecessary discussion and killing the time.

Gestures to Avoid:

Africa In rural areas, avoid strong eye contact

Asia Avoid Eye contact and touching the body
Australia & New Zeeland- Red eyes
Europe Hate shaking leg with dirty shoes and dirty dress
Middle East & Gulf CountriesDo not walk in front of an Arab while he is praying and
never step on a prayer met. Dont hurry at the diner /
lunch party, eat separately women and men at home.
Canada & USA Standing too close to a north American
may be perceived as an invasion of ones personal space

Corporate Gifts /
Greetings

Africa A light warm handshake is acceptable form of greeting when anyone

meet and anyone leave
Asia Bow down to each other
Australia & New Zeeland- During parties, host will introduce to the other
guests, do not expect gifts from foreigners doing business with them
Europe Shake hands with a firm grip when any one meet and anyone
depart
Middle East & Gulf Countries- Gift should be presented publicly to the
group after a deal is closed. In addition to hand shake , they may touch
other arms & shoulder, and embrace when they are so close
Canada & USA Hand shake is a full hand grip

Meetings and presentations

Africa Be prepared for a large no. of people
Asia Decide before hand what tech. information they are willing to share
and be sure everyone on your team knows
Australia & New Zeeland- To the point, specific and punctual
Europe Class conscious good manners are critical and ignorance is no
excuse for bad manners

Middle East & Gulf Countries- Maintain Royalty and detail discussion,
prefer local language or English
Canada & USA Meeting begin and end as scheduled. There is very little
small talk at meetings

Doing business in China

1. The focus of reform in China is primarily on the state owned enterprises (SOE).
2. The managers are official, not entrepreneurs, there is no real incentives for them.
3. Business meetings typically start with pleasantries such as tea and general
conversation about the guests trip to the country, local accommodations, and family.
4. The Chinese host will give the appropriate indication for when a meeting is to begin
and when the meeting is over.
5. Once the Chinese decide who and what is best, they tend to stick with these
decisions. Although slow in formulating a plan of action, once they get started, they
make fairly good progress.
6. In negotiations, reciprocity is important. If the Chinese give concessions, they expect
some in return.
7. Because negotiating can involve a loss of face, it is common to find Chinese carrying
out the whole process through intermediaries.
8. During negotiations, it is important not to show excessive emotion of any kind.
Anger or frustration is viewed as antisocial and unseemly (indecent).
9. Negotiations should be viewed with a long-term perspective. Those who will do
best are the ones who realize they are investing in a long-term relationship.

Doing business in India

1. It is important to be on time for meetings.
2. Personal questions should not be asked unless the other individual is a
friend or close associate.
3. Titles are important, so people who are doctors or professors should be
addressed accordingly.
4. Public displays of affection are considered to be inappropriate, so one
should refrain from backslapping or touching others.
5. Beckoning is done with the palm turned down; pointing often is done with the
chin.
6. When eating or accepting things, use the right hand because the left is
considered to be unclean.
7. The namaste gesture can be used to greet people; it also is used to convey
other
messages, including a signal that one has had enough food.
8. Bargaining for goods and services is common; this contrasts with Western
traditions, where bargaining might be considered rude or abrasive.

Thank You