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Cultural Differences and Global Business

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Consider the cultural differences inherent in global business as well as the geographic obstacles of home office and remote locations being in different countries.

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Please see response attached (also presented below), including one supporting article. I hope this helps. Best of luck!



This is an interesting topic! Let's take a closer look through discussion and example using Hofstede's cultural analysis.

1. Consider the cultural differences inherent in global business.

" Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." Prof. Geert Hofstede, Emeritus Professor, Maastricht University. http://www.geert-hofstede.com/
Cross cultural management and negotiation strategies need to consider cultural differences, such as language, business etiquette, work habits, relationship (employee and employee, employee and employer) and communication styles, business behaviors, appearance and dress, to name a few. Thus, effective managers need to focus on managing these cultural differences effectively and realize the impact of individual behaviors. It is possible, when armed with accurate cultural intelligence, for managers to successfully manage in different countries and different populations. There are practical means of managing cultural differences and negotiating across cultures. However, for those who work in international business, it is sometimes amazing how different people in other cultures behave. We tend to have a human instinct that 'deep inside' all people are the same - but they are not. Therefore, if we go into another country and make decisions based on how we operate in our own home country - the chances are we'll make some very bad decisions. http://www.geert-hofstede.com/
Among the most widely used approaches to studying differences in cultural values is that of Hofstede (1980), who found that cultural values influence a wide range of business and market behaviors.

Hofstede found that cultures vary along four basic dimensions:

1. Individualism/Collectivism - The degree to which the individual or the collective (in-groups) are the locus of responsibility and action. In individualist cultures, one's identity is in the person, i.e., people are "I -conscious." In collectivist cultures, identity is based on the social system that they belong to, thus, people are "we -conscious." Individualism/collectivism refers to how strongly people are motivated by their own self-interest. E.g. Countries and cultures that are highly individualist exhibit policies and practices that reflect and/or reinforce that individualism. The emphasis is on individual initiative, a viewpoint that seems consistent with international franchising, for example. This emphasis and the observation that individualist cultures are more attractive to international franchisers than collectivist cultures. Highly individualist cultures are more likely to develop and embrace a market economy, a balanced political structure, and the values required to sustain these systems, such as the emphasis on individual initiative, and the belief that the same value standards should apply to all. Alon and Kellerman (1999) proposed that collectivism in South East Asia has perpetuated collusion and corruption in government and business circles, which ultimately led to the economic crisis of 1997.

2. Power-distance - The extent to which the less powerful in society accept inequality in power and consider large social distances to be normal. In high power-distance cultures, hierarchical structures tend to develop and there is interdependence between members of the hierarchy. Strong dependency relationships develop between professor and student, boss and subordinate, master and learner (de Mooij, 1998). E.g. High power-distance nations develop structures that embed the principal-agent relationship in the culture. Individuals in high power-distance cultures are going to be relatively comfortable with the idea of relinquishing control of the business format to the franchisor. This cultural dimension is important to franchisors, for example, that ...

Solution Summary

This solution explains the cultural differences inherent in global business as well as the geographic obstacles of home office and remote locations being in different countries. Supplemented with an exceptionally informative article on remote working networks.