UNIT II

Comparative Environmental FrameworkCultural Awareness, identification and dynamics of culture, strategies for dealing with cultural differences economics description of countries political and legal environment

Cultural factors affecting IB operations

Culture refers to learned norms based on the values, attitudes, and beliefs of a group. Culture is sometimes an elusive topic to study because people belong to different groups with different cultures groups based on nationality, ethnicity, religion, gender, work organization, profession, age, political party membership, and income level. International business involves people from different cultures.

Cultural factors affecting IB operations

OPERATING ENVIRONMENT ------------------------------PHYSICAL AND SOCIAL FACTORS Cultural awareness Identification and dynamics of cultures Behavioral practices affecting business Strategies for dealing with cultural differences Political policies and legal practices cultural factors economic forces Geographic influences ------------------------------COMPETITIVE FACTORS

OPERATIONS -----------------------OBJECTIVES -------------------STRATEGY -----------------------MEANS

Cultural factors affecting IB operations

Cultural Diversity: by bringing people of diverse backgrounds and experience, companies often gain a deeper knowledge about products and services and ways in which to produce and deliver them. At companies like PepsiCo and IBM, executives report that much of their recent growth has been a result of greater workforce diversity. Cultural Collision: it occurs when divergent cultures come in contract. In IB, the major problems of cultural collision arise under two conditions. 1) when a company implements practices that are less effective than intended 2) when a companys employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors.

Cultural Awareness
Most cultural variables are universal. Every society, for example, has its own daily routines and rules, codes of social relations, language, and the show of emotions, and even concepts of luck. The forms of these variables, however, differ from culture to culture, and even within given cultures. Every culture, for instance features some form of dance, but types of dances vary among cultures, and in every culture, there are some nondancers. study and understanding of all these are derived as culture awareness

Identification and dynamics of culture

Culture is transmitted in various ways from parent to child, teacher to pupil, social leader to follower, peer to peer. Change is the root element in observing of dynamics of culture.
Sources of change: both individual and collective values and customs, however, may evolve over time. Examining this evolution may tell us something about the process by which a cultural comes to accept (or reject) certain business practices, and this knowledge could be of use to internal companies that would like to introduce changes into a culture. The important thing here is change, which may result from either choice or imposition

Identification and dynamics of culture

by choice: it may occur as a reaction to social and economic situations that present people with new alternatives. When, for example, rural people choose to accept factory jobs, they change some basic customs notably, by working regular hours that dont allow the sort of work-time social interactions that farmwork allowed. b) change by imposition, sometimes called cultural imperialism, such as forced change in law by occupying country which, over time, becomes part of the subject culture.
a) Change

Strategies for dealing with cultural differences

Strategies for dealing with culture differences are : 1. Value systems 2. Cost-benefit analysis of change 3. Resistance to too much change 4. Participation 5. Reward sharing 6. Opinion leadership 7. Timing 8. Learning abroad (For more details refer p.83-84 of the prescribed text book)

Economics description of countries

Economics description of countries are based on the factors such as 1) Natural resources 2) Infrastructure development 3) Human resources and lowered rates of population growth, but recent attention has turned to the development of labour-intensive economic activity and the enhancement of human capital. 4) Agricultural productivity Economic description of countries are basically study on political and legal environment of a nation

Political and legal environment

POLITICAL ENVIRONMENT The political environment of the company includes national and international political factors which can affect its operations. These factors are called political as they principally emanate from the actions of governments which can be at a local or foreign level. This category also includes the methods of thinking, and beliefs of all natures which can influence the behaviour of governments and citizens opposing the company without them emanating directly from a government (example: nationalism).

Political and legal environment

POLITICAL ENVIRONMENT For the company, the analysis of this political environment is important, as it principally consists of managing the risk that government actions do not influence international operations in a negative way and influence management in a more or less strong way.

Political and legal environment

POLITICAL ENVIRONMENT To favour the international activities of their companies, states can act on an international level in two ways: 1. taking part in a process of economic integration : the states join together more and more regularly through trade agreements allied to an abolition of customs laws to enable total economic integration ; 2. support institutions with regulations relating to international business.

Political and legal environment

LEGAL ENVIRONMENT The study of the legal environment of business begins with an overview of the nature of law and the legal system of a particular country. Composed of law from several sources, the legal environment is influenced by the needs and demands of the business community, consumers and government. In the legal environment of business, law refers to a code of conduct that defines the behavioral boundaries for business activity.

Overview of business legal environment

(SOURCE: The Legal Environment of Business
Frances L. Edwards) By Roger E. Meiners, Al H. Ringleb,
All aspects of legal environment including business organization

Top management

Product and transportation

Contracts Environmental Law Product Liability International Law

Marketing and sales

Contracts Antitrust Law Consumer Protection Business Torts International Law

Research and development

Business Torts (wrongs) Product Liability Environmental Law Intellectual Property Contracts

Finance and Accounting

Contracts Securities Regulation International Law Credit Regulation

Personnel
Contracts Labor Law Employment Discrimination Immigration Law

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