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Business Cultures in the Western World

Chapter 3 Cross-cultural Management
by

Mariana Bustamante

on 18 April 2013

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Transcript of Business Cultures in the Western World

Business Cultures in the western world Europe "History has created a real Europe"

-Jean-Baptiste Doroselle The council of Europe *Promote fundamental values

*Foster co-operation

*Lay down benchmarks
for new applicants Unified culture? Many different cultures? European Clusters *Independent communities
*Own laws and hierarchies *Strict hierarchies
*Codified system of laws Latin Europe * Personal approach to managing and organizing

* Highly developed bureaucracy

* Many layers of hierarchy and many formalized procedures

*Reliance on family and personal relationships to bend the rules.

*Need of authority and strong rule Italy Two people running the company Manager & Leader France Leader alone at the top Nordic Europe Germanic Europe The Anglos Eastern Europe Heaven is... Where the cooks are French, the mechanics are German, the policemen are English, the lovers are Italian and everything is runned by the Swiss. Preserve the status of the position Sweden Boss Team leader
Boss Group facilitator
Boss Decision maker who delegates.

* Employees encouraged to express opinions freely

* Authority approach = question decisions, face up to leaders

* Emphasis on the job being done, not on the position

*Managers not seen as experts * No over-riding hierarchy

* No elaborate systems of control

*Large independent communities each with its own laws and governing bodies

*Self-sufficiency, fairness, egalitarism, democracy- heritage of the Vikings Lower power distance than other fellow Europeans

Preference to work in groups

Companies concerned with skills but in a broader and long-term context. (See for the occupational career of a candidate) Germany * Hierarchical positions are not easily separated from the persons occupying them

* Respectful formality

* Concerned with detailed codes and written rules (High uncertainty avoidance).

* Rely on experts

*Long-term perspective for strategic decisions. Russia Anglo-America Canada Latin America Argentina Before the Iron Curtain fell
* Highly autocratic

* Centralized organizations

* Many bureaucratic levels
Politics and businesses worked hand in hand

Nowadays...
* Shifting to less centralized control= increasing uncertainty

*Adapting to roles and responsibilities as in Western Europe is seen as a threat * Replacing features of Communist era

* Increasing individualism and social fragmentation

*Contrast between increasingly individual behaviour and low social responsibility on the one hand and the active networking used for survival on the other hand (criminal structures)

* Can Russia move towards democracy maintaining order in society?

* Is some part of Russia European? Blat -High Performance Oriented -High In- Group Collectivism
-Low in:
Performance Oriented
Uncertainty Avoidance
Future Orientation
Institutional Collectivism Trends to enact life as it comes, taking its unpredictability as parts of life People less driven by Individual goals Anglo Australians More Collaborative in business
Distrust of authority
More direct and critical than British counterparts Why do we need to learn about cultural differences and its impact on Business? Examples of cultural differences In Latin America there is legitimacy of using personal and professional connections for one's particular benefit. How it would be treated in other countries? A Brazilian Saying: For a friend, everything For strangers, nothing For enemies, the law Does this saying reflect your culture? Cultural clusters may help us to manage cultural differences Based on GLOBE Project and its 9 Cultural Dimensions, 10 Cultural Clusters were defined Summarize intercultural similarities and differences Is a helpful framework for managing the complexities of multicultural operations Practices, policies and procedures that work quite effectively in one culture may dramatically fail or produce counterproductive behavior in others Helps to determine limits and boundaries for moving human resources and products across societies Is a helpful tool to associate each cluster to a specific leadership attributes Cultural Clusters Why it is important this overview of the different cultural clusters? Operational and Managerial practices tend to reflect the social orientation in which they function Cultures with high Uncertainty Avoidance like Germanic and Nordic Europe have a tendency to: Other cultures with low Uncertainty Avoidance like Eastern Europe or Latin America have a tendency to: Being more informal
Rely in trust rather than contractual agreements
Less concerned with order and maintenance of records
Rely on informal interaction and norms rather than formalized policies, procedures and rules
Less calculating when taking risks What if a Merge operation between a German and a Colombian company takes place? What if one company establishes its organizational cultural procedures to the other? To avoid this situation: Cultural differences must be acknowledge Actions have to be taken to assess the potential problems after the Merge Implement actions in order to avoid majors conflicts between the former two organizations Formalize their interactions
Documenting agreements in legal contracts
Being orderly, keeping records
Formalize their policies and procedures
Establish and follow the rules
Take moderate calculated risk Father to Bill Gates Father to his son: Father to WB´s President How negotiations should be done - Son, I want you to marry a woman who I already chose. - Bill, I have the perfect husband for your daughter. - Mr President, I recommend you a young man for the position as vice president of this bank. - But father, I want to choose my wife. - My dear son, she is the daughter of Bill Gates. - Well, in that case I agree. - But my daughter is too young to marry. - Maybe, but this young man is the Vice President of the World Bank. - In that case ... Deal!
I will convince my daughter to accept the boy. - But I have many vice presidents, even more than are really necessary. - What happens if this young man is the son-in-law of Bill Gates? - In that case ...
consider him hired. Less power distance and lower uncertainty avoidance than Nordic and Germanic Europe Humane orientation

Institutional Collectivism Do not try to manage uncertainty by issuing regulations and declarations. Rely more on negotiations which people negotiate what has to be done More individualistic and more ambitious/aggressive than their other europeans -Trend to be high goal oriented. -Rewards based on merit and achievement of goals take precedent over family ties -Low In-Group Collectivism Adopted Protestant ethic Impersonal organizations with clearly hierarchy are predominant Pragmatical approach to rules and negotiation, helps to deal uncertainties Strong and shared commitment among company's employee This commitment makes easier to delegate and decentralize More aware of Society as a whole Thank you for your attention Because the Professor said so ... Because is on the main book of the lecture And so on ... Business world is becoming increasingly global BEING GLOBAL IS NOT JUST WHERE YOU DO BUSINESS, BUT ALSO HOW YOU DO IT As economics borders come down, cultural barriers most likely will provide us challenges and opportunities in business and last but not least ... Leadership Styles and Cultural Clusters Draw a House In the GLOBE study 6 different Global Leaderships style were found: Charismatic / Value Based leadership Team oriented Leadership Participative Leadership Humane - Oriented Autonomous Self-Protective Charismatic / Value Based leadership has the ability to inspire, motivate and expect high performance outcomes from others. Team Oriented leadership were found to be with high status and influential in: Latin America and Eastern Europe But low scored in the Germanic Europe countries This result is related to the In-Group Collectivism values While Participative Oriented leadership is Performance Orientation Power distance Tend to be influential in: Germanic Europe, Nordic Europe and Anglo But low scored in Eastern Europe Humane Leadership style were high scored by the Anglos But low scored in Latin Europe and in Scandinavian countries Autonomous leadership style is considered to be Independent and Individualistic This leadership style is highly score in Eastern european countries and in the Germanic cluster And not be well considered in Latin Europe and Latin America Humane Leadership is characterized by being supportive and considerate This style were found to have a high status and be influential in all cultures, but especially in Anglo, Latin America and Nordic Europe The Self-Protective leader ensures the safety and security of the group members Power distance Performance Orientation This style were high scored in Eastern Europe societies And low scored by the Nordic, Germanic and Anglo clusters Selecting employees
* Select employees that will fit into the group- interpersonal skills and personality Latin Europe * One to one interviews French * Use of references
* Job- hopping British * Equal concern with skills but in a much broader long-term context Germanic cultures Gender Egalitarism

In-group Collectivism Performance Orientation

Uncertainty avoidance

Future orientation Uncertainty Avoidance
Future Oriented In-group Collectivism Performance Orientation
Uncertainty Avoidance
Future Oriented
Assertive Human Oriented
Institutional Collectivism
In-group Collectivism Mid-score in other dimensions
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