Understand the important role of culture and institutions in the global business environment.
Institutions: rules of the game which are assumed and understood by everyone in a certain environment.
Culture: way things are done in a particular place or by a particular people, and it’s their collective behaviors norms, their attitudes about business, about life, their values their beliefs of this particular place or people.
Culture is reflected in things such as food the arts other entertainment and history and language and other things like religion and, and values related to religious or other belief systems.
If you go into a business meeting or perhaps just a social setting, and do not respond to someone who extends their hands with a handshake it may be awkward, first of all, but it reflects a violation of the way that things get done, the assumed and just taken for granted way that, that we interact.
Understanding things much broader than handshakes are very important to conducting business in a global business environment.
We will delve into this deeper in the parts that will follow this module, and we’ll develop a deeper understanding of what culture means and give you some very specific examples of culture and its impact on business.
Different categorizations of cultures e.g. Western culture, Latin culture, different world regions, sub-regions, and other ways that stem from linguistic, historical, religious even ethnic ties, that go a long way back in history.
These categorizations are not the ultimate ways of looking at the world, and there are many ways of looking at and understanding them.
These include for example power distance, role of gender or masculinity versus femininity etc to help us understand and compare across countries.
Some societies are have democratic values, and institutions in place that reflect those values; others might value authority more, and consultation or collaboration may not be as highly valued.
Other dimensions: uncertainty avoidance – degree to which a society values risk and risk taking – which is important to business for things like entrepreneurship; higher savings rates and longer term orientation (versus consumption and short term gratification) shows up in the time horizons a culture adopts for business settings.
All these reflect values, religions, traditions and histories.
It’s about understanding the day-to-day life of people, customers, businesses and the complex integration of all these norms and values into society and business transactions.
Businesses need to be aware of the structure of society and the values they place on, on different lifestyles when they consider investing in new locations.
How people shop for their groceries and other essentials, how they drink and eat, the quantities and sizes they choose, how they commute, value placed on health etc
Example: in USA, a fast food restaurant would have a drive through, because most people would purchase and eat in their vehicle; in other places, the culture might prefer to enjoy a meal sitting down.
Culture can shift too such as over time, societies might decrease or increase the value they place on material things.
