Notes

Managing Across Cultures 1/12/17

• National cultures don’t really exist because there are differences across countries
• Why the BRIC+?

• Lots of turmoil in the BRIC countries but lots of opportunities
• All have huge and similar problems for international business
• Wealth inequality in SA is highest of all countries we will look at

• Importance of understanding global business today

• Far more complex and nuanced than the politicians acknowledge
• Multiple perspectives on global business/trade

• Firms, competitors, investors
• Consumers
• Workers
• National interests—geo political, economic, security

• Introduction to National Culture

• What is a culture? A naïve perspective

• How would you characterize your home culture

• There are observable aspects, and non-observable aspects
• Want to dig below observables to really understand

• Culture-a multi level construct

• Observable

• Social institutions, behavior patterns, rules, stories, myths, lang, rituals, ceremonies

• Unobservable

• Values, norms, beliefs, assumptions

• Culture is the pattern or configuration of these two levels—holistic construct

• Although it can be broken down into dimensions or attributes, it is most meaningful as a whole

• What is culture?

• Shared common understanding of your environment
• Holistic vs. particularistic view
• Learned—derived from:

• History
• Institutions
• People

• Multi faceted/multi level

• Visible in artifacts
• Reflected in values, attitudes, and behaviors

• Contradictions

• All cultures are filled with contradictions

• Frameworks

• Hofstede

• 4, 5, 6, 7 dimensions
• Earliest and probably most flawed
• Individuality vs collectivism

• Relation of individual to group

• Masculinity and femininity

• Consequence of being male and female

• Uncertainty avoidance

• Dealing with the unknown

• Power distance
• Time orientation

• Short vs long term

• Indulgence vs restraint

• Immediate vs deferred gratification

• Pragmatic vs normative

• Desire to explain as much as possible, truth, personal stability, social conventions, traditions, small propensity to save and focus on achieving quick results vs situational

• Globe

• 9 dimensions

• Performance orientation
• Future orientation
• Gender egalitarianism
• Assertiveness
• Power distance
• Individualism-collectivism

• Societal (in group)
• Organizational

• Humane orientation
• Uncertainty avoidance

• Tompenaars

• 7 dimensions

• Hall

• 3 dimensions

• All theories/frameworks are flawed

• Methodology—social invention
• Problem of national boundaries and “nationality”

• Objectivity vs stereotypes
• Context

• Frameworks as tools
• Other Perspectives and Issues

• Focus and time

• Monochromic v polychromic

• Relationships vs transactional: people (social) vs. tasks (instrumental)

• Guanxi—efficiency (China)

• Personal space

• Degree of comfort sharing space

• Getting in your face
• Line jumping

• Context

• High/low degree to which background/context is important to the message

• Contradictions

• Every culture is full of them

• Consequences of Culture

• What are the implications of culture:

• On managing people
• On managing organizations
• On relations with suppliers
• On creating and branding products
• On selling products and services
• On competing

• Russia

• Very isolated—few warm weather ports
• Population highly concentrated on the European side
• Borders Europe, Asia, and the Middle East

• Russian Gov

• Russian Federatoin—“Democratic” but in name only, 3 branches

• President and Prime Minister rotate

• Putin and Medvedev

• Two legislative branches—Duma and Federal Council
• Judiciary (Weak)

• Important to understand from a business standpoint
• Intellectual property enforcement is weak

• Sham democracy—most people vote for the party in power

• Russian Economy

• 8.1% growth (2008) but has tailed off and now is in negatives
• Inflation is decreasing (9% to 6% in 2016)
• Rich in resources

• Trade surplus

• Oligarchy: corruption, cronyism, mafia
• Low rate of FDI, restrictions
• Desire to build high tech sectors
• Weak banking systems

• Small banks are honest but under funded
• Large banks are corrupt and over extended

• Now (2012( a member of WTO (antagonistic relationship with former Soviet Republics and the west)

• Russian Geo Political Issues

• EU—desires membership, resents membership of former East Bloc countries

• Oil and natural gas as leverage

• NATO

• Antagonistic towards NATO

• Consider the original mission of protection from USSR and East Bloc

• Russians living in former parts of USSR

• Re establishing the USSR/Imperial Russia
• Georgia, Ukraine, Baltic states, Armenia/Azerbaijan

• Fear of Islamic fundamentalists---Chechnya, former Soviet Asian republics
• Russian suspicion and inferiority

• Geography and Resources

• Largest land mass, 3rd in arable land
• 1 in natural gas and arms exports
• 2 in oil production
• 3 in electricity consumption and CO2 pollution
• 4 in uranium production

• Demographics

• Population: 142.5 million (9th largest)
• 160 ethnic groups, 80% Russian, Tatars and Ukrainians
• Languages: Russian, Ukrainian, other
• Religion: Christian (Russian Orthodox), Islam, Buddhism and Judaism
• Life expectancy: 73 (women), 59 (men)

• Due to alcohol

• Workforce

• Highly educated but skills don’t match the market                

• Russian Culture and Biz Environment

• Old/new split (post communist era)

• Old

• Hierarchial
• Fatalism/pessimism/cynicsm
• Corruption/suspicion
• Romanticism
• Toughness/aggressiveness

• New

• Open
• Relaxed
• Motivated
• Pro west

• Core values: family, stability, honor, loyalty, patience, endurance, support
• Punctuality and patience are required
• Formality and professionalism initially
• Emotional

• Temper
• Compromise is a sign of weakness

• Corruption and lack of ethics
• Centralized—top down decision making
• Preference for Russian
• Drinking

• Contemporary Russian Business Environment

• Antiquated industry
• Low rates of entrepreneurship
• Mismatch of labor market to demand
• Poor infrastructure

• Low internet and broadband penetration
• Landline phones unreliable and expensive
• Poor transportation system

• Conclusions

• Patience in doing business in a new country is critical

• Bureaucracy
• Corruption

• Planning

• Toto, I have a feeling we’re not in Kansas anymore
• Research
• Build connections
• Adapt

• Everything will take longer and cost more than expected