BACC 121

Course Learning Outcomes

At the end of the course, the Business

Administration Louisians are expected to:
1. Demonstrate their understanding of
the concepts of comparative
advantage and the gains from trade,
by applying the theories.
2. Demonstrate their understanding of
the determinants of the trade pattern
between countries and assess its
effects on the distribution of income
between and within these countries.
3. Understand the political economy of
trade policy and the economic

INTERNATIONAL effects of different trade policy

instruments.
BUSINESS 4. Recognise the role of international
trade institutions to domestic and
AND TRADE regional markets.
Understand the effects of
BACC 121 international trade on economic
development, international
politics/conflicts

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 For the only way in which a durable
peace can be created is by world-wide
restoration of economic activity and
international trade.
James Forrestal

MODULE FOUR
The Cultural Environment
OVERVIEW:

Culture involves the manner in which individuals imagine sense and do. It changes from one country,
industry and organization to the other. From a business point of view, it is helpful to consider of culture
as comprising of four different levels. These levels are of nation, business, industry and organization.
Every one of these levels of culture relates with and supports to develop the others. Although
globalization can denote that a number of features of culture have united across international frontiers
there are even now massive dissimilarities that can influence the methods to management and consumer
behavior.
LEARNING OBJECTIVES:
1. Define culture and identify the four characteristics of culture that companies doing business
abroad need to recognize.
2. Name several elements of culture.
3. Name and distinguish among the cultural dimensions proposed by Hofstede and Trompenaars.
4. Identify the primary and secondary sources that can be used to learn about foreign countries’
cultures.
5. Describe the cultural aspects of doing business in various countries, including East Asian
countries, Arab countries, and Latin America.
6. Explain why culture is important in global management and marketing.

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 MODULE OUTLINE:
I. Introduction. This chapter will discuss the cultural dimension of companies’ international
environment.
II. Defining Culture and Its Characteristics. Culture is “learned behavior; a way of life for one
group of people living in a single, related, and independent community.” There are four
characteristics of culture that are important:
• Culture is not inherited; it is learned.
• Culture is relatively static and not easily modified.
• It is a responsibility of the global firm to ascertain the level of importance of various
aspects of culture.
• Companies’ operations need to recognize and adjust to the cultural environment
existing in foreign markets served.
III. Elements of Culture. Culture affects numerous aspects of a society.
• Language. Verbal and non-verbal communication are two primary types of language.
Language is important to managers in their intra-company communications and when
providing access to local markets through advertising. One way to eliminate language gaffes
is to use backward translation. In this technique, a message is translated from English into
another language, then someone skilled in that foreign language translates it back into
English. This second translation is then compared to the original English version.
• The Importance of Language in Foreign Countries’ Cultures.
• Religion. Religion is a powerful cultural aspect that must be recognized as companies
manage their overseas operations. Different religions observe different holidays; weekends
and work hours vary according to different religions; companies marketing food products
overseas must be aware of religious differences.
• Values and Attitudes. Values are basic beliefs or philosophies that are pervasive in a
society. Attitudes are feelings or opinions.
• Manners and Customs. Manners and customs refer to the way a society does things that
prevail in foreign countries. Gift-giving is one aspect of manners and customs.

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 • Material Elements. Material culture in a society is often a direct result of technology. It is
best demonstrated by a country’s infrastructures: economic, social, financial, and
marketing.
• Aesthetics. Color, form, and music are the major components of aesthetics. Colors often
represent different things in different countries.
• Education. The level of education held by people in foreign countries is a major factor in
explaining economic growth. The level of education must be such that high-tech products
can be accepted because the market knows how to use them.
• Social Institutions. Social institutions refer to the way people relate to one another within
group settings in a society. Sociologists refer to groups that are important to individuals as
reference groups. Some countries have a high level of social stratification, which means that
the groups at the top of the social pyramid exert a great deal of control over others at lower
levels of the pyramid.
IV. Clustering Countries and Regions by Culture. There have been several attempts to group
countries and regions of the world according to their cultural dimensions and similarities:
• Hofstede’s Research. Hofstede pioneered research into cultures with a study focusing on
IBM employees in 64 countries. Hofstede’s findings led him to identify clusters of countries
and regions according to five cultural dimensions:
o Individualism vs. Collectivism: the worth of the individual versus the worth of the
groups of which that person is a member.
o Power Distance: egalitarianism (equity) versus authority.
o Masculine vs. Feminine: the extent to which a society values traditionally masculine
attributes (assertiveness and competitiveness) versus traditionally feminine ones
(modesty and caring for others).
o Uncertainty Avoidance: the extent to which societies tolerate risk or are risk averse.
o Time Orientation: the extent to which a society emphasizes short-run or long-run
time horizons.

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 • Trompenaars’s Cultural Dimensions. Building on the work of Hofstede, Fons Trompenaars
added a number of cultural variables to the theory:
o Universalism vs. Particularism refers to the importance of rules versus relationships
in a society.
o Neutral vs. Emotional involves the extent to which persons within a society
emotionally express themselves.
o Specific vs. Diffuse refers to the compartmentalization of roles.
o Achievement vs. Ascription refers to how rewards in a society are handed out.
• The GLOBE Project. The Global Leadership and Organizational Behavior Effectiveness
(GLOBE) project involved surveying thousands of business executives from 61 countries
about nine cultural dimensions.
• GLOBE Constructs and Corresponding Questionnaire Items. Some of these items are
based on Hofstede’s work, while others were added to obtain a more comprehensive and
richer portrait of the cultural dimension of doing business.
• GLOBE Results on Nine Constructs for Six Regional Groupings.
• Gannon’s Cultural Metaphors. M. Gannon believes that it is extremely difficult for
executives to learn much about cultures through “do’s” and “don’ts.” He suggests that it
would be more productive to gauge a specific culture by using an image—metaphor—that
depicts how people in a specific culture think and behave.
V. Sources of Cultural Information. Companies considering conducting business overseas, and
those already doing business abroad, have a number of sources they can access to learn more
about the culture of foreign countries.
• Primary sources include employees, executives, training programs, and consulting firms.
• Various secondary sources are also helpful (e.g., The U.S. Department of Commerce Country
Commercial Guide).
VI. Cultural Dimensions of Conducting Business in Individual Countries. Although it is more
important to have an overall flexible and open attitude about foreign cultures, individual countries
have specific business customs that are worth learning.
• Cultural Dimensions of Doing Business in Japan

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 • Cultural Dimensions of Doing Business in Korea
• Cultural Dimensions of Doing Business in China
• Cultural Dimensions of Doing Business in Arab Countries
• Cultural Dimensions of Doing Business in Latin America
VII. The Importance of Culture for Managing and Marketing in Overseas Markets. When
managing people and resources in a foreign country, close attention to host-countries’ cultures is
critical.
• Management Styles. U.S. companies have management styles that frequently conflict with the
management styles preferred in other cultures.
• Product Development and Management. When developing new products, management styles
must be considered along with many other aspects of marketing strategies. Products that are
wildly successful in home-country markets may need to be modified for an international
market. There are many examples of American brands that have not been successful in foreign
markets because their names were not culturally acceptable.
• Advertising Campaigns. Like brands, advertising campaigns must be carefully tailored to local
cultures.
• Communication. Communication is a key function in business, and culture has an impact on
communication styles. The use of jargon is usually inappropriate, as it greatly increases the risk
of misunderstanding.

Building International Business and Trade Skills

Engage Explore and Explain Activity

Reflection Paper
Think of some foreign products that are marketed in the Philippines. Have the foreign manufacturers
used marketing that is sensitive to Philippine culture? Provide some specific examples.

Elaborate and Evaluation Activity

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 Indicate what reference groups are most important to you. How important are these reference groups
when conducting activities in foreign countries especially when you travel? Why?

V. References

A. Gaspar Julian E., Kolari, James W., Hise, Richard T., Introduction to global Business 2 nd edition–
International Edition. Canada: South-Western Cengage Learning.

B. Journals

C. Electronic Sources

Prepared by:

Prof. Glory I. De La Pena MBA, RME

Department Head EHM

Dr. Leilani I. De Guzman

Faculty EHM

Mr. Karlo Dacanay

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means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. 7
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. 8