Business customs are bound to be altered in all countries. It is axiomatic in anthropology that when two cultures meet, there is a blending rather than an elimination of one or the other. We would therefore expect business practices to become more standard because of the necessity of dealing in the same ways. This would take much time.
10. Interview some foreign students to determine the types of cultural shock they encountered
when they first came to your country. Individual project. 11. Differentiate between:
Private ownership and family ownership.
Decentralized and committee decision making.
―Private ownership‖ means ownership by private investors and not government ownership.
―Family ownership‖ refers to a business dynasty controlled by one or a few families. ―Decentralized decision making‖ means subordinates have the authority to make certain decisions, with top management making the most important decisions.
―Committee decision making‖ means emphasis is placed on group participation, with endorsement of a decision by a group.
12. In which ways does the size of a customer’s business affect his business behavior?
The large organizations of the different countries have a professionalized management which is much the same from country to country. In medium-sized businesses, the management is likely to be in direct contact with the workers and customer. The
management of the smaller firms is likely to be closely tied to the customs and attitudes of the country. Management is directly responsible for the supervision of employees and comes into direct contact with the customers. 13. Compare three decision-making authority patterns in international business.
The top management decision making is the centralized decision making whereby only the people at the top make the decisions. The reason for this is management’s distrust of the ability of the subordinates.
The decentralized decision making is the system whereby executives at various levels of the business hierarchy are given rather complete decision making authority over their own functions.
The committee decision-making places great emphasis on group participation, group harmony, and group decision making.
14. Explore the various ways in which business customs can affect the structure of competition.
The customs would affect the structure of competition mainly by determining whether or not there is competition in that country. If the industries are government controlled, then there is obviously no competition. There may be different policies on how competition may occur in different countries. Some countries might have a rigid competition requirement, whereas another could have a quite loose competition requirement.
15. Why is it important that the business executive be alert to the significance of business
customs?
The business executive must be very sensitive to the cultural variations; he must be alert and prepared to adapt when necessary; he must realize that he is not a native and will always be treated as an outsider. If he does not follow these points, he will be excluded from doing business or will lose out in doing business in different countries. 16. Suggest some cautions that an individual from a high-context culture should take when
dealing with someone from a low-context culture. Do the same for low- to high-context situations.
An individual from a high-context culture operating in a low-context culture should be careful about:
a. assuming that he has communicated when he has not. b. leaving out major elements of communication.
c. depending too much on the spoken word and not enough on writing. d. becoming frustrated by lack of feedback in interpersonal communication. An individual from a low-context culture operating in a high-context culture should be careful about:
a. communicating messages he did not intend.
b. becoming frustrated from the imprecision of his counterpart’s communication. c. expending too much on reports and letters. d. missing important communication cues.
17. Political payoffs are a problem; how would you react if you faced the prospect of paying a
bribe? If you knew that by not paying you would not be able to complete a $10 million contract?
The response to this question is obviously, one deals with an individual’s own code of ethics. In discussing the question, it should be stressed that paying the bribe or any other illegal act is not permissible by most company rules. Further, to do so would violate U.S. law as well as a law in many host countries. 18. Differentiate among the following:
Subornation
Lubrication Extortion Bribery
Subornation generally involves large sums of money, frequently not properly accounted for, which are designed to entice an official to commit an illegal act of magnitude on behalf of the one paying the bribe.
Lubrication, on the other hand, involves a relatively small sum of cash, gift, or service made to a low-ranking official in a country where such offerings are not prohibited by
law; the purpose of such a gift being to facilitate or expedite a normal, lawful performance of a duty by an official.
Extortion is payment extracted under duress by someone in authority from a person seeking only what one is lawfully entitled to.
Bribery is money voluntarily offered by someone seeking unlawful advantage. Lubrication payments are a request for a person to do a job more rapidly or more
efficiently, whereas subornation is a request for officials to turn their heads, not do their job, or to break the law. An example of extortion would be a Finance Minister of a
country demanding heavy payments under the threat that millions of dollars of investment would be confiscated.
19. Distinguish between P-time and M-time.
Edward Hall defines two kinds of time systems in the world – monochronic and polychronic time. M-time (monochronic) typifies most North Americans, Swiss,
Germans, and Scandinavians. In these Western cultures, they tend to concentrate on one thing at a time. They divide time into small units and are concerned with promptness. M-time is used in a linear way and it is experienced as being almost tangible in that we save time, waste time, bide time, spend time and lose time. Most low context cultures operate on M-time.
P-time is more dominant in high context cultures where the completion of a human
transaction is emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence of many things and by ―a great involvement with people.‖ P-time allows for relationships to build and context to be absorbed that are a part of high-context cultures. In Japan there is a mix between P-time and M-time. For
appointments, Japan is very M-time but for all other interaction, they are more P-time. The American desire to ―get straight to the point,‖ to ―get down to business‖ and other indications of directness are all manifestations of M-time cultures. While the P-time system gives rise to looser time schedules, deeper involvement with individuals and a ―wait and see what develops‖ attitude. For example, two Latins conversing would likely opt to be late for their next appointments rather than abruptly terminate the conversation before it came to a natural conclusion.
20. Discuss how a P-time person reacts differently from an M-time person in keeping an
appointment.
When business people from M-time and P-time meet, adjustments on both sides need to be made for a harmonious relationship. P-time is characterized by a much ―looser‖ notion of what is ―on time‖ or ―late.‖ Interruptions are routine, delays to be expected. It is not so much putting things off until ―manana‖ but the concept that human activities are not expected to proceed like clockwork.
One study comparing perceptions of punctuality in the U.S. and Brazil found that
Brazilian timepieces were less reliable and public clocks less available than it was in the United States. Researchers also found that Brazilians more often described themselves as late arrivers, allowed greater flexibility in defining early and late, were less concerned
about being late, and were more likely to blame external factors for their lateness than were Americans.
Often clarity can be gained by specifying tactfully, for example, whether a meeting is to be on ―Mexican time‖ or ―American time.‖ An American who has been working
successfully with the Saudis for many years says he has learned to take plenty of things to do when he travels. Others schedule appointments in their offices so they can work until their P-time friend arrives.
21. What is meant by ―laws are the markers of past behavior that society has deemed unethical or
socially irresponsible?‖
It means that to be ethical does not mean just abiding by the law. Most laws reflect societies’ concern that some type of behavior is not proper and that people do not
voluntarily refrain from the offensive behavior, thus, laws are passed. In many countries, the law may help define the borders of minimum ethical or social responsibility, but the law is only the floor above which one’s social and personal morality is tested. Ethical business conduct should normally exist at a level well above the minimum required by law. 22. What are the three ethical principles that provide a framework to help distinguish between
right and wrong? Explain.
There are three ethical principles that provide a framework to help the marketer distinguish between right and wrong, determine what ought to be done, and properly justify his or her actions. They are: - - -
Utilitarian ethics, i.e., does the action optimize the common good or benefits of all constituencies?
Rights of the parties, i.e., does the action respect the rights of the individuals involved?
Justice or fairness, i.e., does the action respect the canons of justice or fairness to all parties involved?
Answers to these questions can help the marketer ascertain the degree to which decisions are beneficial or harmful, right or wrong, or whether the consequences of actions are ethical or socially responsible.
23. Visit Transparency International Web page and check to see how the CPI Index for countries
listed in Exhibit 5-2 has changed. Searching TI’s databank, explain why the changes have occurred. The site is found at:
Chapter 6The Political Environment: A Critical Issue
Discussion Questions
1.
Define: Sovereignty
Confiscation
Nationalism Expropriation PSAs Domestication
2. Why would a country rather domesticate than expropriate?
17. Expropriation creates problems with other governments and can cause potential investors to shy away from investments in their country. Further, if a country domesticates, they are able to achieve almost all, if not all, the advantages of expropriation without the negative aspects associated with such a drastic move.
3. ―A crucial fact when doing business in a foreign country is that permission to conduct
business is controlled by the government of the host country.‖ Comment.
It is extremely critical for a company to examine, evaluate, and comprehend the present and future policies of the government in a foreign country. To do this, the type of
government and the types of political parties and their basic philosophies toward foreign business must be studied in depth. The level of economic development and the
accompanying political policies are directly correlated with the attitude of the government toward foreign business. This attitude may or may not change with changes in
government, political parties, economic conditions, etc. Also, the importance of products to the country is a deciding factor in restricting or encouraging foreign business.
4. What are the main factors to consider in assessing the dominant political climate within a
country?
a. Current form of government.
b. Current political party systems.
c. Stability and permanency of government policy.
d. Risks or encouragements of foreign business resulting from political activity.
5. Why is working knowledge of party philosophy so important in a political assessment of a
market? Discuss.
A working knowledge of party philosophies is necessary if there is a possibility that a change in government policy toward foreign business could result from a change in government or political parties. 6. How can a change in the political party in Power affect an investor? Discuss and give
examples.
Particularly important to the marketer is knowledge of the philosophies of all major political parties within a country, since any one of them might become dominant and alter prevailing attitudes. In those countries where there are two strong political parties that typically succeed one another in control of the government; it is important to know the direction each party is likely to take. In Great Britain, for example, the Labour Party traditionally has tended to be more restrictive regarding foreign trade than the Conservative Party. The Labour Party, when in control, has limited imports, whereas the Conservative Party has tended to liberalize foreign trade when it is in power. A foreign firm in Britain can expect to seesaw between the liberal trade policies of the