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Welcome everyone to a course of International Business. So, in the last class, we had
started with the international business environment, and we learnt about the PESTEL
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So, PESTEL analysis is one important way of understanding the external environment,
where we talk about the political, economical, social, technological, legal, etcetera, the
different dimensions that impact any business environment ok. And we started with
culture, and what is culture, and what are the different components of culture, and how
culture affects a different business. In which one example so I had cited about how the
culture of Indians was a problem for a company like you know Kellogg’s to sell its you
know brand of corn flakes in the Indian market.
So, many a times the when very interesting another thing that I remembered about
culture is in India for example, when you are selling a car, Maruti started this concept of
providing you know priest who would be doing some rituals, puja (worship) and then
breaking a coconut in front of the car. So, this attracted many Hindu you know car
buyers, because they felt that a puja or a worshiping to the car is very necessary is an is
that very important thing because after all a car is linked with somebody’s life and death,
and even you know it can one can make accidents and all these things can happen.
So, if you do a ritual pooja a worship it by offering a coconut, flowers and all these
things, then the deity will be happy, the God will be happy, and then you will not suffer
from such kind of problems.
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So, of continuing from there, we will talk about the another concept which is called the
culture and the nation state. Now, when we talk about culture, we understood about the
role of people, awareness, and all these things. So, culture consists of people who share
attitudes values and beliefs. Cultures are dynamic in nature, it is not that it is a static
thing, it changes with time right. So, they evolve over time. So, there are you know
national cultures, dynamics of cultural formation, language and culture, religion culture,
there are four things that we will talk about on this point right.
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So, first when we talk about national cultures, so what it is saying? A nation is a useful
definition of society, because similarity among people is a cause and an effect of national
boundaries; the laws apply primarily along the national lines; language and values are
shared within the borders; and rites and symbols are shared along the national lines. So,
what happens is one when a firm wants to entered into a new country, it has to
understand the national culture.
Sometimes managers find country-by-country analysis is very difficult, because the
subcultures, or ethnic groups, races and classes exist within nations also. That means,
now suppose somebody wants to come to India, India is not one market right; India is
again divided into several states and many of these states have different cultures right.
So, all these things when you do not get understand well about India, then they say India
is a very tough market; although it is a very attractive market, but it is a very tough
market too because of the huge diversity in India ok.
So, similarities link groups from different countries. So, what is, what it says is the need
to focus on the relevant groups. For example, when scientists at Britain’s Cambridge
University and the United States MIT set up a joint venture to improve the impact of
teaching and research, the venture struggled, why not because of the differences in
national or even professional culture, but because of different organizational cultures. So,
the organizational culture at you know Cambridge university and MIT is so different that
because of this there was a clash right ok.
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What are the dynamics of cultural formation? So, cultural value systems are established
early in life. We all know when you know and it passes from parent to child, teacher to
pupil, leader to follower, etcetera, but it also changes with time right, because we say its
dynamic in nature through choice. It may occur as a reaction to social and economic
For example, when rural people chose to accept factory jobs that do not allow the sort of
work time social interaction which is a generally a phenomenon you find in the farm that
farm work over allow, so there came a change in their culture right.
So, when they accepted factory jobs, their earlier way of living when they used to
interact with their fellow members, there you know people in the village and you know
they spend time and talk and all, these things got effected. So, the kind of social culture
that changed ok.
Imposition – cultural imperialism, now this is imposed introduction from an alien culture
or it is imposed during you know from an alien culture by forced change in law. For
example the British rules in India. Still today we are following certain most of our you
know legal policies and guidelines have been made on basis of the British law right of
even our the way we drive, the way we you know the roads are made they are also
dependent or finally they are connected with the you know Britain or the British rules
So, this is because India was a colony to the British Empire. So, because of this cultural
imperialism or because of this colony or thing that happened, there is a cultural
imperialism. And we are we have imbibed lot of culture of the British’s some somethings
have been in a favour also, I am not denying that, but then that we have imbibed them,
and we are now following it right.
Contact with other cultures. So, cultural diffusion for example, contact among countries
bring change. So, when because of globalization and opening up of the world economy,
when we talk about when countries started moving from one place to the other, or the
companies moved from one place to the other, not obviously countries do not move the
companies move. So, what happens has happened is because this has created a different
diffusion in the culture right. This change results in mixing cultural elements which is
known as creolization.
So, what is creolization? The mixing of the cultural elements right, so different you go to
some other country, you take your culture to that country, and learn something out there.
And when you come back you bring that culture to this your own home country. So,
these are some of the changes that happens. Example you see recently the females, the
ladies were given permission to drive cars in Saudi right; earlier it was very difficult
thing to even think of right.
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Language and culture – how language and culture are connected? A common language
within a country is a unifying force. A shared language between nation facilitates
international business correct, because it is the only it is the mode of communication.
Native English speaking countries account for a third of the world’s production. What do
you saying, native English speaking countries account for a third of the worlds
production. English is the international language of business. For example, Nokia from
Finland, and Philips from the Netherlands have adopted English as their operating
Why did India had an advantage in IT, because India has a large amount of number of
people we will speak you know English. And how did that come, because we were under
the colonial rule right under the British Empire. So, we had schools where English was
taught. And this continued in and became a part of our culture right.
Recent issue there was a recent issue, and in which the home minister talked about one
nation one language. Why the home minister, there has been discussion over it many
times. So, one nation, so there should be one language, but then there was lot of heated
arguments over it. For example, some people argued that in the south, for example, south
of India for example, Tamil is a language which is more older than Hindi, and could be.
So, such kind of arguments go on and this one nation one language concept was
criticized largely right
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So, this is how the world population is, and you see these are different major languages
being spoken in the world. So, nearly two-thirds speak one of these 12 languages as their
native language, Arabic, Spanish, Chinese, Hindi, Urdu, Bengali, English, Russian,
French, Japanese, German, Italian, Portuguese. Now, you can see easily that Chinese is
the highest, because obviously the population of china is the highest, but which is a the
local language Mandarin called in China right.
But if you look at the output based, English has the highest output because in most of the
business platforms and during business when businesses made, the growth or the output
is measured is through the most of the business is done through the English language,
using the English language. So, in terms of output, English has the maximum impact ok.
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So, this is one another diagram which tells you about the percentage of internet users,
and what language to the internet users use. And today you can understand that most of
the dealings are being done through the net right, through you may send a invoice right.
So, any such requirements that you send is mostly done on mail, for example. And the
language which is largely used is very easily you can see here it is 25.3 which is the
English right, then followed by Chinese, Spanish and it goes on right. So, the importance
of language is very high on the culture.
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Another important factor that affects the culture is the religion. Religion impacts almost
every business function, such as the sale of certain products. For example, you see
McDonalds serves neither beef not pork in India, because there is a large population of
Hindus who do not like who do not talk about beef, touch beef even and Muslims who
do not touch pork, and even Hindus also do not touch pork to my little knowledge, but I
know. They most of the Hindus are generally vegetarians, and whoever there is a large
chunk who are non-vegetarians also, but pork and beef are still avoided in India.
In predominantly, Muslim countries Friday is a day of worship and a non-work day right.
So, religion for example, when you see for example, now we are at this moment when I
am standing here, and we are we are having the Durga pooja right. We are having the
Navaratri the durga pooja coming. And there is because of this the large retailers like
Amazon, Flipkart and others have started you know their festive offers.
So, this has suddenly increase the business environment in India. So, lot of businesses
are happening on the you know through the through these retailers right. This is all
because of the religious impact right. Similarly, many of the movies get launched during
EID right. So, because that is a festive time begin
Centuries of profound religious influence continue to play a major role in shaping
cultural values and behavior ok. Many strong values are the result of a dominant religion
in that place. In recent years religious related violence has erupted in countries like India
So, all the time we cannot talk from a positive point of view, but because of you know
very strong fundamentalist behavior or very you know very obsessiveness, we also get
into violence and all these things that happens in countries so which is not good for a
business environment as a if you look from a business environment point of view.
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So, the major religions of the world are Hinduism, Christianity is the highest with 31.2
Islam 24.1, and there are other religions. So, these are the Buddhism is 6.9, and there are
other religions also. So, this is the first – this is the biggest, second, and third right.
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Now, what is the influence of behavior behavioral factors on countries’ business
practices? This is of most importance to us. So, first is social stratification. Now, what do
we talk about social stratification? So, what do you say, what is this? It is a kind of social
differentiation whereby members of the society are grouped into socioeconomic strata,
based upon their gender, occupation and income, wealth and social status, or derived
So, social ranking is determined by an individual’s achievements and qualifications; an
individual’s affiliation or with membership in, certain groups right. So, for example, you
see group affiliations can be ascribed group membership include based on gender,
family, age, caste, ethnic, social racial or national origin.
Example, you see some of the places female foeticide is very high right, in some
countries especially in some pockets of India also the female feticide is very high. Why,
because people want a male child right. And this has been such a, you know I can easily
say bad thing that has had a very adverse effect on the India Indian you know condition.
So, this is because people believe that male is a superior gender right.
So, similarly there are other things like caste, I would say one of the most the worst thing
that India is going through is caste based violence or caste based differences right. Caste
itself is not bad, but caste based differences is obviously, bad and I can speak bluntly on
that right. Acquired group memberships include those based on religion, political
affiliation, and professional and other association.
So, maybe somebody is a member of let say somebody some saints bhakth you know or
a follower of some saint, and somebody follows some other saint, or somebody follows
some political leadership somebody follows somebody else right. So, these are also kind
of affiliations that happen.
Educational level and social connections are also important. Even today people talk
about I am from let us say the IIT, so I would say my affiliation with IIT is very strong
and especially IIT Roorkee, so maybe with other IITs also I would feel a stronger you
know connection right.
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Work motivation – the motivation to work it differs across cultures. Research shows that
research shows that the desire for material wealth is a prime motivation to work. So,
what did you saying? The desire for material wealth is a prime motivation. It promotes
economic development; people are more eager to work when the rewards for success are
So, one thing that comes when we talk about work motivation, then the term which is
important closely related is the muscularity-femininity index. So, high masculinity score,
for example, countries like Japan and Austria have a high masculinity score. What does
it mean? They prefer to live to work. So, they live to work. So, work is very important
for them. Then for some others who work to live, they work to live right. So, when it
comes to the first case high masculinity ego oriented and material success is very
In this other case when they live to work which is more in a high feminine case, it is
relationship oriented society. And here quality of life and people are important example
Sweden, Norway and Denmark. And you can see if you talk about the quality of life in
these countries, they stand at a very high position.
Similarly, on terms of productivity and leisure trade off, Japanese spend more time on
work than workers in any other developed country. Even there is to their discredit there
is a term called Karoshi which they means that the Japanese sometimes use to do you
know harm themselves by overworking.
So, they harm themselves by over working, and that is why now the government in you
know Japan, the most of the industries in Japan they ensure that that people leave their
offices on right time right. And for you will be surprised to know, they even use drones
to track whether people have left offices or not. So, this is the kind of culture right
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One important theory when we talk about you know culture and all, comes to is the most
Maslow’s hierarchy theory. So, what it is says people tend feel lower level needs before
moving to higher. So, this is the lower level. So, generally people move like this right.
So, slowly one step at the then the next and next it goes on so, but the ranking of this
needs differs across cultures right.
For example, in one culture, you can see here if you see the if you look at the width you
know of 3 here and 3 there is different. 3 has a larger wide width here in this case, and
less here; 5 is less width wide here and more here right. So, it depends on the kind of
country. The people in one country many regard given higher order need as more
important that is more wider than people in another country
So, you can see this in the developed and the developing nations. So the developed
nations they would go for the physiological needs are already met. So, it is not a very
important. But in a country like you know developing nation like Bangladesh, Pakistan
and all, so where the physiological needs are very important, and then they go across the
So, physiological, then security, then social affiliations, esteem, and then for selfactualization.
It is very difficult to meet so self-actualization in a developing nation
because most of the people are still struggling for a square meal right.
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Risk taking behavior. So, this differs across cultures that reflect this attitude. For
example, uncertainty avoidance, handling uncertainty. How do I handle uncertainty?
Gillette entered market like Denmark and United Kingdom which rate low on
uncertainty avoidance before they ventured into Belgium and Portugal which rate it high
right. So, how much uncertainty how much people try to avoid uncertainty measuring on
basis of this countries companies tend to enter into newer markets.
Another factor is trust. So, the trust is the degree of the you know the faith among
people. High trust will lower the cost of doing business obviously. So, if I have a trust, I
do not have to spend time and waste my money on understanding whether the thing
would happen, and I would not try to give unnecessary buffer inventory because I know
that the inventory would reach me in time, and I have a trust in that my vendor. So, I do
not have to keep extra inventory with me in.
One extreme in countries such as Norway, Sweden, and Finland more than 60 percent of
the respondents in the World Value Survey thing that people can be trusted. And in the
other extreme in countries such as Columbia, Brazil, Ecuador and Peru, less than 10
percent think that this is the case. If this is the condition just imagine doing business in
such countries is easier right, and doing business in these countries would be difficult
right, because this is a lack of trust.
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Investing for the future. In some cultures people give more emphasis on the future than
the present. Now, this is interesting because it helps companies to motivate the workers
for delayed compensation programs right. So, they would not try since the future is more
important their old is security is more important for them, so the companies can delay the
Another important factor that effects culture is the attitude determinism. What it says?
Attitudes of self-determination. Now, what does it mean? In countries that rate high on
determinism people do less planning for contingency and they believe every event in life
is inevitable and pre determined. So, whatever is going to happen whatever is happening
with me, it is already pre determined. So, I am not doing anything. So, since I am not
doing anything, why should I be spending too much of energy.
In India, for example, it is a very popular belief that whatever is happening to us is
because of some past deeds right, and it is already well-defined, well-written. So, I
cannot change anything right. So, they may be reluctant, for example, everything has
good and bad. This also has a good side to it. We can not only criticize, because when
you believe something is going to happen, you would like to make your future life
because there is a belief of you know next life in India
So, people tend to make good try to do good activities, so that their deeds are good, and
they have a better birth and a better life in the next life. So, this kind of thoughts can be
positive also. They may be reluctant for example, to buy insurance or fire fighting
products, because they believe if I have to die, I will die, why should I be buying this
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Another point is the information and task processing. When I am talking about this,
cultures handle information in different ways ok. Consumers perceptual cues for
example, what is this, it allows our brain to perceive the size of objects and the distance
from us. Consumer cues could include a variety of visual, written, or spoken messages
that affect the consumers buying pattern right.
For example, you see organic has become a common term used on product packaging,
and in ads to cue health conscious consumers that a brands food products are natural or
unprocessed. For when you I have seen in India, for example, and in the most of the
developed countries today where there is a fear of fertilizers and all effect on health. So,
companies tend to write the word or use the word organic if it is an organically
developed product, so that the buyer is ready to pay a premium just because it is an
organic product right.
Obtaining information, there are two sides two ways low context case and a high context
case right, high context case. So, what is the low context case? When you obtain
information and it is direct in nature, it is a low context case; where you obtain
information and it includes other related information other connecting points also, then it
says it is a high context.
Let me give an example here. A low context culture is one in which things are fully
spelled out, directly it is spelled out right. Things are made explicit, and there is
considerable dependence on what is actually said or written right. This is a low context.
A high context culture is one in which the communicators assume a great deal of
commonality of knowledge and views, so that less is spelled out. So, you speak less and
it is understood more, and much more is implicit it is understood and communicated in
direct ways. In a low context culture, more responsibility is placed on the listener to keep
up their knowledge base and remain unplugged into informal networks.
Now, you see interaction between high and low context people can be problematic.
Example, you see Japanese can find the westerners to be offensively blunt they are so
direct right. So, they feel offensive because for the Japanese they are a high context
culture, the westerners are a low context culture. Westerners can find the Japanese to be
secretive, and they are not sharing their information right, but that is not actually what
they are doing that is the kind of culture they are born in right
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Now, moving on from information processing, every culture has its own systems of
ordering and classifying information. For instance in US telephone directories entries
appears in alphabetical order by last family name, but in Iceland they are organized by
the first given names. So, these are differences how the information is processed. You
must have seen how the language is in Arab, Arabic culture is written right to left right,
from we move right to left. And generally when we write in other languages it is from
the left towards the right.
Monochronic so versus polychronic cultures. What is this? Monochronic cultures like to
do just one thing at a time. Let me finish with one customer, my work, then I will talk to
another customer or let me finish one work, then I will move into another work. They
value a certain orderliness and sense of there being an appropriate time and place for
everything. So, they feel in a monochronic culture, everything is a specific time and
place. Example interactions between types can be problematic.
German businessmen you look at this example cannot understand why the person why a
person is meeting in the meeting he when he is a in a meeting he is so interruptible by
phone calls. Suppose, there is a German and an Indian talking to each other on a business
deal and the Indian is getting the number of phone calls so the German is not able to
understand why even this man is attending these phone calls.
For him it is like he is a monochronic from a monochronic culture and the Indian is from
a polychronic culture where he is habitual to doing multiple tasks at the same time right.
So, is it meant to insult him? He is thinking right. When do they get down to business
that is what the German is thinking. But actually the Indian is not meaning is not trying
to insult or do anything wrong, it is a part of his culture right.
Another part of culture is idealism versus pragmatism. Some cultures prefer to establish
overall principles before they try to resolve small issues and approach labelled as
idealism. So, an ideal situation, we say it is something called idealism. Cultures in which
people focus on more details that that on abstract principles are said to be pragmatism
means more practical right. So, some in some cultures, they are more idealistic in nature;
some cultures are more practical right.
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While when we come to communications and the last one of the elements connected to
culture. Cross border communications do not always translate as intended, this is very
very important. So, there is a danger side to it, spoken and written language for example,
you see now empleados means white-collar workers, obreros means laborers. So, these
are some terms which are so different from each other and we I would not have known
until and unless I would have read it.
Silent languages – for example, in most western countries, black is associated with death.
So, in India also if you go to a marriage, generally we avoid wearing colours of black
and all right in a auspicious occasion right. So, we wear white which we think is purity.
In parts of Asia white has same connotation, so but in interestingly in India for example,
when man dies the wife tends to wear in the older days especially used to wear a white
saree that is that shows that she is a widow right.
Distance, the customary distance for business discussion is 5 to 8 feet in the United
States and lesser in India. So, we sit close by. Time and punctuality, Japanese business
people arrive early for business appointments, now that is the way their culture is. Now,
an indication of yes with a sideways movement by the head is done by a Turk or a Greek.
So, if he has to say yes, he will sideways make movements. But by an Indian if you see,
the Indian would make it up and down to say yes right.
And prestige, how you connect, so these are the things which are a part of the
communication the verbal and nonverbal communication we talk about.
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Now, this I have bought some interesting example to talk about some brand failures
because of poor communication. You see, a very hilarious examples. Coca cola ventured
into China and its brand the Coca Cola was translated in Chinese as bite the wax tadpole.
Similarly, Colgate launched cue a brand in France which resemble the name of a adult
magazine, so they had backlash. Gerber marketed baby food in Africa in Ethiopia
basically with a child’s you know photo without knowing its meaning.
Now, what does it mean in Ethiopia? The photos are given to say that whatever is inside
that is what is shown in the label, so that means, you can understand how bad it looks
that that means, something like a when the child’s photo is there outside, it is also there
Mercedes entered the Chinese market with Bensi a brand meaning rush to die. So, this is
something some brands there are many many more examples, but these are something
which tells you about how brands failed right, and because in different the
communication a meant differently and in different places they have a different meaning
(Refer Slide Time: 30:21)
So, this is another example you can go through. I had also shown it in my earlier slide.
(Refer Slide Time: 30:24)
So, company and management orientations with cultural differences. So, in terms of
cultural differences, there are three basically things we talk about polycentrism, ethno
and geo. Now, poly is belief that the business units in different countries should act like
local companies right.
So, what it is saying the belief that the business units in different countries should act
like local companies. What is ethno saying convection that one’s own culture is superior
to that of other countries. So, my culture is better than others cultures. So, by doing this
you are ignoring many important factors. Believes home country objective should
prevail, thinks change is very easy, but it is not true right.
And what is geocentrism saying? Requires companies to balance knowledge of their own
organizational cultures with both home and the host country, capabilities and constraints.
This is a preferred approach and in encourages innovation and improve the likelihood of
success. So, these are the three types of orientations in terms of the cultural differences.
So, this is all we have today. So, thank you very for your patient hearing. So, we have
understood today how culture affects the business environment that is what we discussed
So, thank you very much. Have a pleasant day.