The Cultural Environment of the Global Market

THESIS DEFENSE PRESENTATION TEMPLATE

Lecturer:

Ilhamova Z.P

Learning objectives

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The concept of culture and its role in the global market.

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The main elements of culture and their impact on consumer behavior

Cultural values and Hofstede’s dimensions

Culture, management style, and business practice

Cultural differences, ethics, and social responsibility

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The concept of culture and its role in the global market

Culture — is a complex of values, beliefs, behavior norms, symbols, and ways of thinking that are learned by members of society, shared, and transmitted from generation to generation.

Culture determines how people think, how they make decisions, and how they act.

Cultural and cultural differences do not arise by chance.

There are main reasons and processes that shape them.As people’s environment changes, in order to survive and live more comfortably, they adapt through novelty (innovation).

A person learns culture in two ways:Socialization — learning behavior from childhood and learning manners, values, and rules from the family, school, and society.Acculturation — going to another country/society and adapting to a new culture.Besides this, people also “absorb” culture by imitating their peers (imitation, role model). For example, in clothing, how friends dress, you also try to dress similarly.In the end, based on such cultural knowledge, people make decisions such as what to buy (consumer decisions), how to work, how to manage (business decisions).

Around the world, even within one country, the form and functions of the family differ sharply. For example, nepotism (favoring relatives) is considered a problem in U.S. organizations, but in Chinese and Mexican firms it is often accepted as a normal management style.In China and Eastern countries, a mother mainly takes care of her child; she often sleeps together with small children at night, while the husband, exhausted after a daily 4-hour commute by train, tries to “catch up on sleep.” In an American family in California, both the father and the mother work — to provide cars, clothes, and support children studying in college. The way a son or daughter is treated also differs from country to country.

The religion of Islam is a good example: more than one billion people in the world have accepted Islam, yet large international companies often offend Muslims. For example, the French fashion house Chanel, without realizing it, embroidered Qur’anic verses onto several shirts in a summer collection. The designer said that they took this pattern from a book about the Taj Mahal in India and were unaware of its meaning. After a Muslim group considered this an insult to the Qur’an, Chanel was forced to destroy the shirts with that design and their photo negatives. Chanel did not want to offend Muslims, because an important part of their customers were Muslims. This example shows that if a marketer (in this case, the designer) is not sufficiently familiar with other religions, causing offense can be very easy.

Education is one of the most important social institutions, and it influences all aspects of culture—from economic development to consumer behavior. A country’s literacy is a strong factor for economic development. Many studies show a direct relationship between the level of literacy and the capacity for rapid economic growth. According to World Bank information, no country with literacy below 50 percent has been economically successful, but countries that invested in education have gained major economic benefits.

The time spent with family is being replaced by mass media (television, and increasingly the internet and mobile phones). American children attend school 180 days a year. Compare this with 251 days in China, 240 days in Japan, and 200 days in Germany. Chinese officials have begun to understand additional shortcomings of the school system—such as leading to narrow thinking. Similarly, Americans are increasingly complaining about the negative impact of mass media. Many criticize the declining level of the U.S. education system: in the United States, the share of people with higher education is lower than in 12 countries, including Russia, Japan, and France.

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The main elements of culture and their impact on consumer behavior

Cultural Values

Beneath the cultural diversity that exists among countries lie fundamental differences in cultural values; that is, the degree of importance assigned to different things and ideas varies. The most useful information for explaining how cultural values influence the different forms of business and market behavior is based on the fundamental (classic) research of Geert Hofstede.

He studied more than 90,000 people in 66 countries and found that the cultures of the analyzed countries differ according to four main dimensions. Later, he and hundreds of other researchers also demonstrated that many forms of business and consumer behavior are strongly associated with three of these four dimensions.

Individualism / Collectivism Index (IDV)

The Individualism/Collectivism Index expresses a person’s tendency toward behaviors that prioritize self-interest.In cultures where the IDV score is high, a “I” mentality prevails, and individual initiative and independence are encouraged and socially accepted.In cultures where individualism is low, a “we” mentality prevails, and individual interests are often subordinated to group interests.

Power Distance Index — PDI

The Power Distance Index measures a society’s tolerance for social inequality, that is, power imbalance between leaders and subordinates. Cultures with a high PDI are typically hierarchical; in such societies, power and social status are treated as sources of authority, and social roles, manipulation, and hereditary privilege are emphasized. In low-PDI cultures, equality is valued, and knowledge and respect are viewed as the legitimate sources of authority.Accordingly, in high-PDI societies, power is perceived as being concentrated in particular individuals and is accepted as more mandatory (coercive); as a result, general distrust toward “people outside one’s group” may be stronger. In such societies, the belief that those holding high positions are entitled to privileges is widespread. Low PDI scores, by contrast, reflect more egalitarian (equality-based) views.

Uncertainty Avoidance Index �

The Uncertainty Avoidance Index measures how tolerant members of a society are of uncertainty and ambiguity. Cultures with a high UAI tend to be intolerant of ambiguity and are more likely to be skeptical toward new ideas and behaviors. In such cultures, levels of anxiety and stress are higher, and security and compliance with rules are considered important. As a result, people become strongly attached to historically “tested” patterns of behavior, and this turns into rigid norms that must not be violated. Therefore, in high-UAI societies, rules often function as the main instrument for avoiding risk and are closely associated with strong authority.

In low-UAI cultures, by contrast, anxiety and stress are lower, and tolerance for differences, disagreement, and willingness to take risks is stronger. Such societies prefer an empirical approach to knowledge and understanding, whereas high-UAI societies more often seek absolute truth.

Culture, management style, and business practice

By management style, we mean leaders’ approaches to:

• decision-making,
• relationships with employees,
• methods of control and motivation.

All of these elements are considered products of culture.

Therefore, for companies operating in international markets, failing to take cultural differences into account reduces managerial effectiveness.

Culture determines the decision-making mechanism within organizations. In international business practice, three main models exist:

Centralized Decision-Making

Centralized decision-making is a management model in which the organization’s key strategic and operational decisions are made by top management or owners. The participation of lower-level managers and employees in decision-making is limited.

This model is typically found in cultures where:

• power distance is high (High PDI),
• hierarchy and position are considered important,
• traditional or paternalistic management is dominant.

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In France, in large companies, important decisions are made only by top management, and the authority of middle managers is limited.

In Mexico, in many family and semi-traditional companies, the leader plays the role of the “father,” and all important decisions are under his authority.

Desentralizatsiyalashgan qaror qabul qilish modeli (Decentralized Decision-Making)

Decentralized decision-making is a model in which authority and responsibility are distributed across different levels of management within an organization, and lower- and middle-level managers can make decisions independently.

This model is more common in cultures where:

• individualism is high (High IDV),
• power distance is low (Low PDI),
• initiative and innovation are valued.

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USA: Branch managers independently make many decisions related to pricing, marketing, and employees.

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United Kingdom: Middle-level leaders can show initiative and may disagree with top management.

Kollektiv (konsensusga asoslangan) qaror qabul qilish modeli (Consensus-Based Decision-Making)

Collective decision-making is a model in which decisions are made on the basis of agreement within a group, committee, or community, and the views of all stakeholders are considered before a final decision is reached.

This model is widespread in:

• collectivistic cultures (Low IDV),
• high-context cultures,
• societies where social harmony and consensus are important.

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Japan: Decisions are reached step by step through the “ringi” system; discussion is long, but once a decision is made, implementation is very fast and thorough.

South Korea: Group opinion and the approval of elders are important.

Culture determines how people perceive, plan, and use time. This, in turn, directly affects international business—for example, the duration of meetings, the pace of negotiations, the speed of decision-making, and the level of trust in cooperation.

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American anthropologist Edward T. Hall classifies cultures into two main types based on how they perceive time:

Monochronic (M-time) cultures

Polychronic (P-time) cultures

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Monochronic Time System (M-time)

In monochronic cultures, time is regarded as a limited and valuable resource. Activities are carried out according to a strict schedule, and only one task is performed at a time.

This approach is typically characteristic of:

• low-context cultures,
• individualistic cultures,
• cultures that are plan- and results-oriented.

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Business rhythm and characteristics

• Meetings start and end at clearly scheduled times.
• Being late is seen as a sign of a lack of professionalism and respect.
• The principle “time is money” dominates.
• Negotiations are fast and goal-oriented.

USA: Business meetings follow a strict plan. Arriving late reduces trust.�Germany: Punctuality is considered a key value. Deviating from the plan is evaluated negatively.

Polychronic Time System (P-time)

In polychronic cultures, time is not strictly bounded; human relationships and ongoing processes take priority over schedules. Doing several tasks at the same time is common.

This approach is more typical of:

• high-context cultures,
• collectivistic cultures,
• cultures that are relationship-oriented.

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Business rhythm and characteristics

• It is normal for meetings to run long.
• Schedules are flexible and adaptable.
• Personal acquaintance and trust come first.

Arab countries: Personal relationships are strengthened before business. Trust is more important than the schedule.�Latin American countries: Meetings often start late or last longer; a “mañana” culture exists.

In international business, when representatives of M-time and P-time cultures meet, problems arise:

An American manager may evaluate an Arab partner as slow and irresponsible, while the Arab partner perceives the American as rude and impatient.

As emphasized in the materials, the key to success is adaptation: M-time managers should be patient in a P-time environment, and P-time representatives need to adapt to M-time requirements in the global market.

Cultural differences, ethics, and social responsibility

Business ethics is a set of moral principles that determines what is right and what is wrong in the activities of a company and its managers. However, in the international market these principles are not universal.

• In one country, high-value gifts may be evaluated as corruption (for example, in the USA).
• In other countries, giving a gift is accepted as a sign of trust and respect.

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