Exporting and Trading info

Case: John Higgins Leonard Prescott, vice president and general manager of Weaver-Yamazaki Pharmaceutical of Japan, believed that his executive assistant, John Higgins, was losing his effectiveness in representing the U.S. parent company because of his extraordinary identification with the Japanese culture. Weaver Pharmaceutical, with extensive international operations, was one of the largest U.S. drug firms. Its competitive position depended heavily on ^par^hjvnrl development (RfrT)). Sales activity in Japan had begun in the early 1930s through distributorship by Yamazaki Pharmaceutical, a major producer of drugs and chemicals in Japan. World War II disrupted sales, but Weaver resumed export sales to Japan in 1948 and captured a substantial market share. To prepare for increasingly keen competition from Japanese producers in the foreseeable future, Weaver decided to undertake local production of some of its product lines. In 1953 the company began preliminary negotiations with...

        International firms must evaluate their business practices to ensure they they take into account national norms for physical and behavioral characteristics. ? A given country may encompass very distinct societies. People may also have more in common with similar groups in foreign countries than with people from different groups in their own country. ? There are notable group differences in such physical variations as skin color, height, weight, and form of the body; color, abundance, distribution, balding, and graying of the hair; blood type; and resistance and susceptibility to certain diseases. Businesspeople must consider the effects that these variances and wishful stereotypes may have on their practices. M Societal culture includes norms of behavior based on attitudes, values, and beliefs. Businesspeople agree that there are national differences but disagree as to what these differences are. ? Group affiliations based on sex, family, age, caste,...

The Human and Cultural Environments Facing Business:Looking to the future Contact across cultures is becoming more widespread than ever before. Advances in transportation and communications, along with rising personal incomes, are allowing greater freedom of travel. Global. competition is growing, and thus many of the same international companies compete more against each other in many different parts of the world. These factors lead to a leveling of cultures. More-similar products are demanded and more-similar methods are used to produce them globally. Many small cultural groups are being absorbed into more-dominant national ones, and in recent years, many regional languages have become extinct. Some observers predict that if there is to be rapid educational and technological advancement, cultural change is inevitable.58 On the other hand, there is evidence of emerging subcultures within countries because of the influx of people from other countries. There are also religious sects...

Change Agent or Changed Agent? Between the extremes of polycentrism and ethnocentrism are hybrid business practices that are not exactly like the international company's home operations and not exactly like those of the typical host-country firm. These hybrids are the most common means of reconciling differences. When the host-country environment is substantially different, the international firm must decide whether to get people in the host country to accept something new (in which case the firm will be acting as a change agent), or to make changes in the firm itself Value System It is much easier to adapt to things that do not challenge our value system than to things that do. We can usually be flexible about whether we eat our salad before or after the main course, but we would probably think twice before exposing more of our bodies or paying bribes to government officials, actions that would require some moral adjustment if we do not do these things in our own cou...

Dangers of Ethnocentrism Ethnocentrism is the belief that one's own group is superior to others. The term is used in international business to describe the firm or individual who is so imbued with the belief that what worked at home should work abroad that environmental differences are ignored. Ethnocentrism may fall into three categories. In the first category, important variables are overlooked because a manager has become so accustomed to certain cause-effect relationships in home country that differences abroad are ignored. To combat this type of ethnocentrism, managers can refer to checklists of human variables in order to assure themselves that all the major factors are at least considered. In cases of the second type, a firm recognizes both the environmental differences and the problems of change but is focused on achieving home-country rather than foreign or worldwide objectives. This type of operation may result in diminished long-term competitive viability because (1...

Dangers of Polycentrism In organizations characterized by polycentrism control is decentralized so that "our man in Rio" is free to conduct business in what he thinks is "the Brazilian way." Taken to the extreme, a polycentric individual or organization is "overwhelmed by the differences, real and imaginary, great and small, between its many operating environments."52 Since most discussions of foreign business focus on uniquenesses encountered abroad and the attendant problems that the firms have experienced, it is understandable that many managers would develop a polycentric view. This is, however, an overly cautious response. In reality, it is uncertain whether companies' practices abroad are any more prone to failure than those at home. If a company's views are too polycentric, the company may shy away from certain areas or may avoid transferring intact home-country practices or resources that mav. in fact, work well abroad. For example, Am...

Fitting Needs to the Company Position Not all companies need to have the same degree of foreign cultural awareness. Nor must a particular company have a consistent degree of awareness during the course of its operations. Since companies usually increase foreign operations over a period of time, they may expand their knowledge of cultural factors in tandem with their expansion of foreign operations. (Refer to Fig. 3.3 for an illustration of relative needs.) The further a firm moves from domestic operations on any one of the four axes shown, the more effort needs to be placed on building awareness of cultural differences. Ordinarily, there is no need for a company to tackle multiple functional adjustments in multiple dissimilar countries simultaneously. For example, in a purely market-seeking operation, such as exporting from the home country, the company must be aware of cultural factors that may influence the marketing program. Consider advertising, which may be affected by the rea...

RECONCILIATION OF INTERNATIONAL DIFFERENCES Cultural Awareness Where cultural differences exist, businesspeople must decide whether and to _ what extent they should adapt home-country practices to the foreign environment. But before making that decision, managers must be aware of what the differences are. As we discussed early in the chapter, this is not an easy task. There is much disagreement about the differences, and no foolproof method exists for building greater cultural awareness. In any situation, some people are more prone to say the right thing at the right time while others unintentionally offend. Most people are more aware of differences in things that they have learned consciously, such as table manners, than in things that they have learned subconsciously, such as methods of approaching problem solving. Nevertheless, there is general agreement that awareness and sensitivity can be improved. In this chapter we have presented a framework of human cultural factors tha...

Ethics and Etiquette Behavior that is considered normal in our native culture may be unacceptable in another society. Practices that are accepted in one place may be considered immoral in another. An advertisement showing a man and woman in close contact is acceptable in a Western country but must be changed in many . Asian countries to fit a moral context in which even holding hands in public is taboo. U.S. motion picture exports illustrate different moral conceptions based on different attitudes toward punishment for crimes, body exposure, sexual explicitness, and violence. (~ Questions of etiquette surround the practice of gift giving. If a Western businessperson visiting a counterpart in the Far East fails to bring a small but thoughtful gift, that official not only may consider it a breach of etiquette, but also may conclude that the foreign businessperson is not very interested in the meeting. Likewise, some foreign managers, unaware that invitations into private homes are not...

Language  Linguists have found that even very primitive societies have complex languages that reflect the environment in which people live. Because 1 of varying environments, it is often difficult to translate directly from one 1 language to another. For example, people living in the temperate zone of the Northern Hemisphere customarily use the term summer to refer to the months of June, July, and August, whereas people in tropical zones may use the term to denote their dry season, which varies substantially in time of year from one country to another. Some concepts simply do not translate. For instance, in Spanish there is no word to refer to everyone who works in a business organization. Instead, there is one word, emvleados. which refers to white-collar workers, and another word,jibreros, which refers to laborers. This distinction reflects the substantial class difference between the groups. Another interesting difference between English and Spanish, which undoubted...

Self-Reliance Superior-Subordinate Relationships In some countries an autocratic style  of management is preferred; in others a consultative style prevails. Studies on , what is known as power-distance show that in Austria, Israel, New Zealand, and the Scandinavian countries the consultative style is strongly preferred, but in Malaysia, Mexico, Panama, Guatemala, and Venezuela the .autocratic style is favored. There is a significant correlation between national preferences for autocratic leadership and the incidence of autocratic political leadership.29 Clearly, it may be easier for organizations to initiate worker-participation methods in some countries than in others. Trust Although trust is difficult to measure, various studies indicate that national groups differ in the degree to which individuals trust others.30 The greater the people's trust, the greater their eagerness and ability to establish rapport with others. Where trust is high, both managers and subordinate...

Importance of Occupation In every society, certain occupations are perceived to bring greater economic, social, or prestige rewards than others. This perception will determine to a great extent the numbers and qualifications of people who will seek employment in a given occupation as individuals compete for high-reward jobs. Although overall patterns are universal (e.g., professionals are ranked ahead of street cleaners), there are some indications of national differences. For instance, physicians tend to be ranked higher than university professors in the United States, probably because of the importance people in the United States .attach to financial rewards. The rank is reversed in Japan, probably because of the importance, the Japanese attach to education and clean occupations.26 The reluctance of educated people to dirty their hands or associate directly with operative workers has sometimes made it difficult to find lower-level managers in Latin America. To generalize, in the ...

Importance of Work People work for a number of reasons. Most people in industrial societies could satisfy their basic needs for food, clothing, and shelter by working fewer hours than they do. What motivates them to work more? The reasons for working and the relative importance of work among human activities may be explained largely by the interrelationship of the cultural and economic environment of the country in which one lives. The differences in motivation help to explain management styles, product demand, and levels of economic development. Protestant Ethic  Max Weber, a German sociologist, observed near the turn of the century that the predominantly Protestant countries were the most economically developed. Weber attributed this fact to the attitude toward work held by most of the inhabitants of those countries, an attitude he labeled the Protestant ethic. According to Weber, the Protestant ethic was an outgrowth of the Reformation, when work was viewed as a means of...

Family-based Groups In some societies, especially Mediterranean and Latin American countries, the family constitutes the most important group membership. An individual is accepted largely on the basis of the social status or respectability of his or her family rather than on the basis of individual achievement. Because family ties are so strong, there also may be a compulsion to cooperate closely within the family unit but to be distrustful of links involving others. Within Greek businesses, for example, workers in family restaurants cooperate and mobilize their efforts to attain success much more effectively than workers in large organizations where people are from many different families.16 Barriers to employment on the basis of age or sex are undergoing substantial changes in many parts of the world. Thus statistical and attitudinal studies even a few years old may be unreliable. One of the changes has involved the growing number of women and men in the United States employed in...

Age-based Groups Age involves some curious variations. Many cultures assume that age and wisdom are correlated, and these countries usually have a seniority-based system of advancement. Until the 1980s in the United States, retirement at age 60 or 65 was mandatory in most companies, and relative youthfulness has been a professional advantage. This esteem for youthfulness does not, however, carry over to the U.S. political realm, where there are relatively high minimum-age requirements for many posts as well as no mandatory retirement age. Maslow's theory is helpful for differentiating the reward preferences of employees in different countries. In very poor countries, most workers may be so deprived that a firm can motivate them simply by providing enough food and shelter. Elsewhere, other needs will have to be addressed to motivate workers. Observers have noted that people from different countries attach different importance to various needs and even rank differently some of th...

Group Affiliations All countries' populations are commonly subdivided into groups, and individuals belong to more than one group. Affiliations determined by birth are known as ascribed group memberships; these include differentiations based on sex, family, age, caste, and ethnic, racial, or national origin. Among acquired group memberships (those not determined by birth) are religion, political affiliation, and professional and other associations. The type of membership often reflects individuals' place in the social-stratification system (the class or status position) as well. Every society has stratification, such as valuing people in managerial and technical positions more than production workers. Competence versus Group Affiliation  In some societies, such as in the United States, peoples' acceptance for jobs and promotions is based primarily on performance capabilities. This does not mean, of course, that there is no discrimination against people in the United ...

BEHAVIORAL ATTRIBUTES Culture consists of specific learned norms based on attitudes, values, and  beliefs, which exist in every society. Visitors remark on differences; experts write about them; and people managing affairs across countries find that results cannot be fully explained by economic models. Great controversy surrounds these differences because there is an acknowledged problem of measuring variances. Culture cannot be isolated easily from such factors as economic and political conditions and institutions. An opinion survey, for example, may reflect a short-term response to temporary economic conditions rather than the basic values and beliefs that will have longer-term effects on how business can be managed. Different cultures may share values, but may order them differently if it becomes necessary to trade off the achievement of one for another. This is illustrated by a question posed to groups of Asian and U.S. businessmen: "If you were on a sinking ship with yo...

PHYSICAL ATTRIBUTES Variation  Although each country comprises people whose physical attributes vary   widely, there are usually some dominant characteristics. The variations are due largely to genetics and become less noticeable as people migrate and intermarry. Even in the absence of mixing with other groups, gene frequency (and thus physical characteristics) may change over a period of time because of natural selection as humans adapt to the changing physical environment. There is also some evidence that the cultural environment, including the social norms and responses, may affect physical attributes, such as infant stress later affecting adult height.7 International businesspeople must grasp the sometimes subtle differences that may influence the conduct of business. For example, the susceptibility in a given population to certain diseases may affect the market for pharmaceutical products. But neither the market for automobiles nor the accounting practices of pharmac...

TYPES OF VARIABLES There are too many human variables and too many different types of business functions for us to have an exhaustive cause-effect discussion in one chapter. Depending on how we classify physical and behavioral variables and the busi ness activities that they might influence, we can easily arrive at thousands of direct relationships.6 This chapter concentrates on just a few of the variables that have been found to influence business practices substantially. While within this and subsequent chapters we can describe a few of the effects that these variables may have on the process of management, we must let the reader anticipate the full range of possible adjustments. The latter part of the chapter highlights alternative approaches for determining and dealing with differences that exist in foreign countries as well as the changes that may occur in international firms themselves as they come in contact with new human environments.

The Nation-State as Proxy of Society There is no universally satisfactory definition of a society, but in international business, the concept of the nation-state provides a workable shorthand, smce basic similarity among people is both a cause and an effect of national boundaries. The laws governing business operations apply primarily along national lines. This does not mean that everyone in a country is alike, nor does it suggest that each country is unique in all respects. There are, however, certain physical, demographic, and behavioral norms characteristic of each country that may affect a firm's methods of conducting business in that country. In using the nation-state as a point of reference, it is important to re-   member that much greater variation exists within some countries than within others: Geographic and economic barriers in some countries may confine people's movements from one region to another, thus limiting their interac- tions. In addition...