Chapter 03 - Differences in Culture

Differences in Culture

This chapter explores the role of culture in

international business: how differences in culture
across and within countries can affect the
practice of business.

Learning objectives

Know what is meant by the culture of

a society.

Identify the sources that lead to

differences in social culture.

Identify the business and economic

implications of differences in culture.

Understand how differences in social

culture influence values in the work
place.

Develop an appreciation for the

economic and business implications of
cultural change.

The discussion then addresses the major

questions of the chapter: What is culture? How
does it play itself out in social structures,
religious and ethical systems, language, and
education? The need for cross-cultural literacy
and an appreciation of the impact of culture on
competitive advantage are all addressed.
The opening case is explores Wal-Marts
international expansion efforts. The closing case,
examines the practice of guanxi and its
implications for doing business in China.

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OUTLINE OF CHAPTER 3: DIFFERENCES IN CULTURE

Opening Case: Wal-Marts Foreign Expansion
Introduction
What Is Culture?
Values and Norms
Culture, Society, and the Nation-State
The Determinants of Culture
Social Structure
Individuals and Groups
Social Stratification
Religious and Ethical Systems
Christianity
Islam
Hinduism
Buddhism
Confucianism
Country Focus: Islamic Capitalism in Turkey
Management Focus: McDonalds and Hindu Culture
Language
Spoken Language
Unspoken Language
Education
Culture and the Workplace
Cultural Change
Implications for Managers
Cross-Cultural Literacy
Culture and Competitive Advantage
Culture and Business Ethics
Management Focus: Cross-Cultural Illiteracy
Chapter Summary
Critical Thinking and Discussion Questions
Closing Case: DMG-Shanghai

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CLASSROOM DISCUSSION POINT

Ask students about what they might expect in the way of cultural differences if they were
to go to Saudi Arabia. What might they expect if they were to go to France, Brazil, or
South Korea?
Next, ask students what they think students from Saudi Arabia, France, South Korea, or
Brazil might expect from American culture. As students respond, jot their ideas on the
board and try to develop categories similar to the elements of culture discussed in the text.
Then, discuss why these elements of culture exist, and why they differ between countries.
Finally, ask students to consider what they mean for international companies.
If there are foreign students in the class, draw on their special expertise by asking what
differences they experiences when they first came to the United States.
OPENING CASE: Wal-Marts Foreign Expansion
Summary
The opening case explores the international expansion of Wal-Mart, the worlds largest
retailer. Wal-Mart began its international expansion in the early 1990s in an effort to
continue its growth. The company began with a joint venture in Mexico with local
retailer, Cifra. Initially, the company tried to implement strategies similar to those that had
proved so successful in the United States, however Wal-Mart quickly realized that to
succeed, it would have to adapt to local demands. The company hired local managers
who understood the Mexican culture and buying preferences, and changed its strategies
accordingly. Wal-Mart continued its international expansion by establishing operations in
Europe and South Korea, but in these markets, the company had less success. Not only
did Wal-Mart compete head-to-head with established retailers, but its product offerings did
not match the needs of consumers. Wal-Mart has had much greater success in China
where it has found some parallels between the shopping habits of Chinese and Americans.
Wal-Mart has also adapted its strategy to fit the local market and now not only allows
unions, but is also selling a product mix designed to meet the demands of China.
Discussion of the case can revolve around the following questions:
1. What did Wal-Mart learn from its experiences in Mexico? How, if at all, did Wal-Mart
apply those lessons to its expansion in Europe and China?
2. Why has Wal-Mart been so successful in China? How have similarities between
American shopping habits and Chinese shopping habits facilitated its success there?

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3. Describe Wal-Marts efforts in Europe. In your opinion, why has Wal-Mart run into
roadblocks? How might the company change its strategy to better succeed?
Another Perspective: To explore Wal-Marts foreign operations in greater detail, go to the
companys web site at {http://www.walmart.com}.
LECTURE OUTLINE
This lecture outline follows the Power Point Presentation (PPT) provided along with this
instructors manual. The PPT slides include additional notes that can be viewed by clicking
on view, then on notes. The following provides a brief overview of each Power Point
slide along with teaching tips, and additional perspectives.
Slides 3-3-3-4 What is Culture?
Culture is a system of values and norms that are shared among a group of people and that
when taken together constitute a design for living.
Values are abstract ideas about what a society believes to be good, right, and desirable.
Norms are social rules and guidelines that prescribe the appropriate behavior in particular
situations. Business success requires cross-cultural literacy. Managers need an
understanding of the culture, or cultures, that prevail in the countries where they do
business.
The cost of doing business in a country is influenced by culture different cultures are
more or less supportive of the capitalist approach to production. Culture is dynamic.
Slide 3-5 Values and Norms
Values and norms are the basic components of culture. Norms can be further divided into
folkways and mores.
Values include attitudes towards concepts like freedom, honesty, loyalty, justice,
responsibility, and personal relations including marriage. Norms shape the actions of
people towards one another. Norms can be divided into folkways and mores.
Slide 3-7 Culture, Society and Nation State
While it is possible for a nation-state to have a uniform culture, this is not always the case.
Within a nation-state multiple cultures can exist, and cultures can also cut across national
borders.
Slide 3-8 The Determinants of Culture
Culture is an evolutionary product of a number of factors.
Political philosophy, economic philosophy, education, dominant language, social structure,
and dominant religion are all determinants of culture.

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Slide 3-9 Social Structure

The social structure of a country can be described along two major dimensions:
individualism vs. group, and degree of stratification into classes or castes.
Slides 3-11-3-13 Individuals and Groups
A focus on the individual and individual achievement is common in many Western
societies. An emphasis on individual achievement has positive and negative implications.
On the positive side, the dynamism of the United States economy owes much to people
like Sam Walton, Steve Jobs, and Bill Gates - people who took chances, tried new things,
succeeded, and encouraged others to do likewise. On the other hand, individualism can
lead to a lack of company loyalty and failure to gain company-specific knowledge,
competition between individuals in a company rather than team building, and limitation of
people's ability to develop a strong network of contacts within a firm.
In sharp contrast to the Western emphasis on the individual, in many Asian societies the
group is the primary unit of social organization.
While this emphasis on the group may discourage job switching between firms, encourage
lifetime employment systems, and lead to cooperation in solving business problems, it
tends to suppress individual creativity and initiative.
Slides 3-16-3-18 Social Stratification
All societies have some sort of stratification, where individuals in higher strata or castes
are likely to have a better education, standard of living, and work opportunities.
Social structure is linked to the ease with which an individual can move between strata.
Additionally, the social structure created by the strata levels and the social significances of
each strata level can have implications for the way business is conducted.
The significance of the social strata can have important implications for the management
and organization of businesses.
In cultures where there is a great deal of consciousness over the class of others, the way
individuals from different classes work together (i.e. management and labor) may be very
prescribed and strained in some cultures, or have almost no significance in others.
Slides 3-19,-3-20 Religious and Ethical Systems
Religion can be defined as a system of shared beliefs and rituals that are concerned with
the realm of the sacred.

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Ethical systems refer to a set of moral principles, or values, that are used to guide and
shape behavior. The ethical practices of individuals within a culture are often closely
intertwined with their religion.
Another Perspective: Duke University's Department of Religion sponsors a web site that
offers links to and brief descriptions of four of the most comprehensive sites for religion
on the Internet. These are excellent sites that provide a broad array of information to
augment the information about religion provided in the textbook. The site is available at
{http://www.duke.edu/religion/main/links.html}.
Slide 3-21 Christianity
Christianity, the largest religion, is common throughout Europe, the Americas, and other
countries settled by Europeans and has three major branches: Protestant, Roman Catholic,
and Eastern Orthodox.
The "Protestant work ethic" a focus on hard work, wealth creation, and frugality - is
considered the driving force of capitalism. In the workplace this work ethic translates into
a significant emphasis on quality and productivity.
Slide 3-22 Islam
Islam has the same underlying roots of Christianity (Christ is viewed as a prophet), and
suggests many of the same underlying societal mores. Islam, however, extends this to
more of an all-embracing way of life that governs one's being. Islam also prescribes many
more rules by which people should act and live.
In Islam people do not own property, but only act as stewards for God and thus must take
care of that with which they have been entrusted. They must use property in a righteous,
socially beneficial, and prudent manner; not exploit others for their own benefit; and they
have obligations to help the disadvantaged. Thus, while Islam is supportive of business,
the way business is practiced is strictly prescribed. For instance, no interest may be paid on
business loans.
Slide 3-23 Hinduism
Hinduism, practiced primarily on the Indian sub-continent, focuses on the importance of
achieving spiritual growth and development, which may require material and physical selfdenial.
Since Hindus are valued by their spiritual rather than material achievements, there is not
the same work ethic or focus on entrepreneurship found in some other religions.
Likewise, promotion and adding new responsibilities may not be the goal of an employee,

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Slide 3-24 Buddhism

Buddhists also stress spiritual growth and the afterlife, rather than achievement while in
this world. Buddhism, practiced mainly in Southeast Asia, does not support the caste
system, however, so individuals do have some mobility not found in Hinduism, and can
work with individuals from different classes.
Slide 3-25 Confucianism
Confucianism, practiced mainly in China, teaches the importance of attaining personal
salvation through right action. Unlike religions, Confucianism is not concerned with the
supernatural and has little to say about the concept of a supreme being or an afterlife. The
needs for high moral and ethical conduct and loyalty to others are central in Confucianism.
Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may
all lead to a lowering of the cost of doing business in Confucian societies.
Slide 3-27 Language
Language refers to the spoken and unspoken means of communication, and is one of the
defining characteristics of culture.
Slide 3-28 Spoken Language
While English is clearly the language of international business, knowing at least some of
the local language can greatly help when working in another country.
In some situations knowing even a bit of the local language can be critical for business
success. Such knowledge may be understood as a sign that the businessperson is willing
to learn from the local firm
Slide 3-29 Unspoken Language
Unspoken language refers to nonverbal communication such as facial expressions,
personal space, and hand gestures. Managers that fail to understand the nonverbal cues of
another culture may experience a breakdown in communication.
Slide 3-31 Education
Formal education is the medium through which individuals learn many of the language,
conceptual, and mathematical skills that are indispensable in a modern society.
Education is part of the social structure of a country, and is instrumental in shaping many
cultural values and norms. The knowledge base, training, and educational opportunities
available to a country's citizens can contribute to a competitive advantage in the
marketplace.

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Slides 3-32-3-35 Culture in the Workplace

Geert Hofstede conducted what is probably the most famous study about the connection
between culture and values in the workplace. Hofstede made a study of IBM employees
worldwide, and identified four dimensions to describe cultures: power distance,
individualism vs. collectivism, uncertainty avoidance, and masculinity vs. femininity.
Power distance focuses on how a society deals with the fact that people are unequal in
physical and intellectual capabilities. Individualism versus collectivism focuses on the
relationship between the individual and his or her fellows. Uncertainty avoidance
measures the extent to which different cultures socialize their members into accepting
ambiguous situations and tolerating ambiguity. Masculinity versus femininity looks at
the relationship between gender and work roles.
Hofstede later expanded his study to include a fifth dimension called Confucian
dynamism which captures attitudes toward time, persistence, ordering by status,
protection of face, respect for tradition, and reciprocation of gifts and favors.
Slide 3-37 Cultural Change
Culture is not a constant, but evolves over time. As countries become economically
stronger, cultural change is particularly common.
Slide 3-38 Implications for Managers
Managers need to be aware that societies differ because their cultures vary, and cultures
vary because of profound differences in social structure, religion, language, education,
economic philosophy, and political philosophy.
There are three important implications that flow from these differences:
1) The need to develop cross-cultural literacy
2) There is a connection between culture and national competitive advantage
3) There is a connection between culture and ethics in decision making
Slide 3-39 Cross-Cultural Literacy
Individuals and firms must develop cross-cultural literacy. International businesses that
are ill informed about the practices of another culture are unlikely to succeed in that
culture. One way to develop cross-cultural literacy is to regularly rotate and transfer
people internationally.
Managers need to be aware of ethnocentric behavior, or a belief in the superiority of
their own culture.
Another Perspective: To give students an opportunity to experience cultural differences
create a mock business meeting. Executive Planet maintains a web site,
{http://www.executiveplanet.com/index.php?title=Main_Page}, with guidelines for doing
business in different countries. The site allows visitors to explore relevant issues in a
variety of cultures.

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Slide 3-340 Culture and Competitive Advantage

The connection between culture and competitive advantage is important because it
suggests which countries are likely to produce the most viable competitors, and it has
implications for the choice of countries in which to locate production facilities and do
business.
CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: Outline why the culture of a country influences the costs of doing business
in that country. Illustrate your answer with examples.
ANSWER 1: This question has be explored throughout the chapter, and since there can be
numerous reasons and examples of how culture influences the costs of doing business,
there is no single acceptable response to the question. Several are highlighted below, but
there could be numerous others. When there are simply different norms between how
individuals from different countries interact, the costs of doing business rise as people
grapple with unfamiliar ways of doing business. For example, while in the US people get
down to business first, and then get to know each other socially later, in many South
American countries it is important develop a good social relationship before trying to
discuss business issues. Different class structures and social mobility also raise the costs
of doing business, for if there are inhibitions against working with people from different
classes, then the efficiency with which information can flow may be limited and the cost of
running a business increased. A country's religion can also affect the costs of business, as
religious values can affect attitudes towards work, entrepreneurship, honesty, fairness, and
social responsibility. In Hindu societies where the pursuit of material well-being can be
viewed as making spiritual well being less likely, worker productivity may be lower than in
nations with other religious beliefs. Finally, a country's education system can have
important implications for the costs of business. In countries where workers receive
excellent training and are highly literate, the need for specific worker training programs
are decreased and the hiring of additional employees is facilitated.
QUESTION 2: Do you think that business practices in an Islamic country are likely to
differ from business practices in the United States? If so how?
ANSWER 2: The cultural differences between a Muslim country and the US will cause
business practices to differ dramatically. The public role women can take, appropriate
etiquette (including simple things like not passing objects with the left hand), holidays, and
wining and dining all differ from patterns in the US. But beyond these, the underlying
ideal and understanding of the role of business differs. Since Muslims are stewards of
property for God, rather than owners, they are more likely to use their resources carefully
and may be less likely to give up or sell something to a person who may not practice the
same stewardship. The importance of fairness to all parties in all relations means that
over-aggressiveness and self-interest may not be well received, and breaking an
agreement, even if technically/legally permissible, may be viewed as inappropriate and the
sign of a huge character flaw. Finally, the prohibitions on interest payments in some
Muslim countries means that the wording of the terms of an agreement must be careful so
that "fair profits" are not construed as being "interest payments."
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QUESTION 3: What are the implications for international business of differences in the
dominant or ethical system of a country?
ANSWER 3: Differences in the dominant religion of a country affect relationships,
attitudes toward business, and overall economic development. First, differences in religion
require inter-cultural sensitivity. This sensitivity requires things like simply knowing the
religious holidays, accepting that some unexpected things may happen "because of Allah's
will," or understanding how interpersonal relationships may be different between
"believers" and "non-believers." (Hence non-believers may be treated differently.) Second,
religious beliefs can significantly affect a countrys attitude toward business, work, and
entrepreneurship. In one country successfully beating a competitor may be considered a
great achievement while in another it may be thought of as showing a lack of compassion,
or disruptive to the society and persons involved, both attitudes that may be derived from
underlying religious beliefs. Likewise, hard work may be either rewarded positively or
viewed as something of secondary importance to spiritual peace and harmony. Third,
different dominant religions may affect the overall competitiveness and potential for
economic growth of a nation, and hence attractiveness of a country for international
business.
Basic, unarticulated assumptions about what has value, what is right and wrong, and what
constitutes good are embedded in our religions. Should rules or laws apply to all people
all the time (in the US, the answer here is probably yes); or should they change depending
on the circumstances of the particular situation (in Asia, the answer would be, of course)?
Religion plays a basic, influential role in our most fundamental values and the norms that
arise from them. So if an international business venture faces a different dominant religion
in its foreign market, managers there will have to make special efforts to understand what
is really underlying practice differences.
QUESTION 4: Choose two countries that appear to be culturally diverse. Compare the
culture of those countries and then indicate how cultural differences influence (a) the costs
of doing business in each country, (b) the likely future economic development of that
country, and (c) business practices.
ANSWER 4: Responses to this question will obviously vary based on the countries chosen
by students, and their knowledge of the countries. Hopefully, students can present some
information on the dimensions of culture including values, norms, social structure,
religion, language, and education of the countries and also describe the key differences and
similarities of the countries along these dimensions. Relating the differences between the
countries along these dimensions to differences in the costs of doing business, the potential
for economic development, and business practices would fully answer the question.
(While it may be more difficult for students to come up with really good examples relative
to business practices, the costs and prospects for economic development should be quite
feasible.)

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Another Perspective: The US CIA website is a good place for introductory-level

information (economic, demographic, climate, background) on countries. The site is
available at {http://www.cia.gov/cia/publications/factbook}.
QUESTION 5: Reread the Country Focus on Islamic Capitalism in Turkey. Then answer
the following questions:
a) Can you see anything in the value of Islam that is hostile to business?
b) What does the experience of the region around Kayseri teach us about the relationship
between Islam and business?
c) What are the implications of Islamic values towards business for the participation of a
country like Turkey in the global economy?
ANSWER 5:
a) Many students will probably focus on the comment by the sugar factory manager that
if you are not a good Muslim, dont pray five times a day and dont have a wife who
wears a headscarf, it can be difficult to do business here when they respond to this
question. Some may perceive this comment to be a gentle warning that only Muslims will
be successful in Turkey. Others however, will probably perceive this comment as a
reminder that companies coming into the region need to respect the local way of doing
things.
b) The area around Kayseri that has been growing rapidly is strongly influenced by Islam.
In addition to incorporating gestures like prayer rooms, some companies are also adhering
to the Islamic value of equal opportunities in business, and are now changing their
strategies to create new opportunities for other companies.
c) Some students might focus on the lack of competitiveness that is sometimes associated
with Islam. Others might note though, that at least for Turkey, this doe not seem to be an
issue. Many students will probably conclude that in this day and age of globalization and
interdependency, Muslims, like other distinct groups, must find a comfortable balance
between their beliefs and what is occurring around them.
QUESTION 6: Reread the case on McDonalds and Hindu Culture that answers ha
following questions
a) McDonalds has been reasonably successful in India, despite the countrys very different
food culture. Why?
b) Do you think that McDonalds could have and should have foreseen the problems it ran
into in India when using beef extract in its oil? What could it have done differently?

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ANSWER 6:
a) In response to the needs of the Indian market, McDonalds changed its menu to include
mutton and chicken products rather than the beef based products that are featured in its
regular menu. Most students will probably suggest that even with the changes, the
company remained true to its identity because it used names similar to traditional names to
describe the new products, and built its restaurants following the traditional American
style.
b) The lawsuit against McDonalds over the presence of beef extract in its French fries caught the
company off-guard. McDonalds quickly acknowledged its mistake, and settled the lawsuit. The
company also made a public apology and vowed to be more accurate in its food labeling in the
future. However, many students will probably argue that the company failed to adequately
reassure consumers in India, where angry Hindus protested in the streets. Students might suggest
that the company should have responded not only to the Indians located in the United States who
prompted the lawsuit, but also to the citizens of India, and other Hindu customers.

CLOSING CASE: DMG - Shanghai

The closing case explores guanxi, or the relationships and connections that are so
important in the Chinese business world. The notion of guanxi comes from the Confucian
philosophy of valuing social hierarchy and reciprocal obligations. Dan Mintz, founder of
DMG, one of Chinas fastest growing advertising agencies, credits guanxi for his success.
Mintz established connections with two Chinese who have access to high ranking
government officials. Through these guanxiwang, or connections, Mintz has been able to
get permission to shoot advertisements in locations that are usually closed to foreigners.
A discussion of the case can revolve around the following questions:
QUESTION 1: Why do you that it is so important to cultivate guanxi and guanxiwang in
China?
ANSWER 1: Guanxi literally means relationships, although in business settings in can
better be understood as connections. The concept of guanxi is deeply rooted in Chinese
culture and Confucianism. The Chinese will often cultivate a guanxiwang, or relationship
network, for help. In China, there is a tacit acknowledgement that if you have the right
guanxi, legal rules can be broken or bent. Mintz made connections with two Chinese men
who had access to high ranking government officials. Through these men, Mintz was able
to secure permission to film commercials in locations that are normally closed to outsiders.
QUESTION 2: What does the experience of DMG tell us about the way things work in
China? What would likely happen to a business that obeyed all of the rules and
regulations, rather than trying to find a way around them as Dan Mintz apparently does?
ANSWER 2: Personal power and relationships or connections (guanxi), rather than the
rule of law, have always been the key to getting things done in China. Most students will
probably agree that companies that play by the rules in China will probably find it difficult
to compete.

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QUESTION 3: What are the ethical issues that might arise when drawing upon
guanxiwang to get things done in China? What does this suggest about the limits of using
guanxiwang for a Western business committed to high ethical standards?
ANSWER 3: Guanxiwang refers to the relationship network that many Chinese companies
rely on. Because reciprocal obligations are key to the process, some students may suggest
that companies could get into trouble if they are asked to return a favor to a network
partner that involves unethical actions. Other students may note that in China, it is not
what you know that is important, it is who you know. These students may point out that
since success depends on others, firms doing business in China are not in complete control
of their own destinya situation that could result in ethical standards being comprised.
INTEGRATING iGLOBES
There are several iGLOBE video clips that can be integrated with the material presented
in this chapter. In particular, you might consider the following:
Title: Google In China Raises Censorship Issues
Background Video: Google Agrees to Censor Searches in China
The video posted on iGlobe is the discussion portion of a 2-part video series. Due to
permissions requirements, McGraw-Hill can only post the discussion portion of this series.
To view the background video, use the link below.
http://pbs-newshour.onstreammedia.com/cgi-bin/visearch?user=pbsnewshour&template=template.html&query=google+china&keywords=google+china&cate
gory=blank
Abstract: This video analyzes Googles decision to censor its search engine in China in
exchange for access to the second largest Internet market in the world.
Key Concepts: political economy, foreign direct investment, globalization, global
economy, technological change, human rights
Notes: Google, the company with the mission to make the worlds information
universally accessible has come under fire with its re-launch of Google-China. It seems
that the lure of the second largest Internet user base in the world proved to be strong
enough to get the worlds biggest media company to comprise its ideals. Google, the
Internet search engine, has been the target of strong criticism after its recent decision to
censor its search engine in China in exchange for access to Chinas 100 million Internet
users. Until now, Google has relied on an objective mathematical formula to determine the
rankings of information results. Now however, the search engine is voluntarily filtering
out information that has not received the stamp of approval from the Chinese government.
Human rights activists see Google actions as a sell-out and have been very vocal in their
condemnation of the company.

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According to Googles critics, by agreeing to self-censorship the company is effectively

perpetuating Chinas repressive regime. They note for example, that any Google site in
the world except for Chinas will bring up 1.7 million results when searching for
Tiananmen Square, but Google China brings up just 13,000 results, all of which ignore
the horrific events of 1989. Further angering critics is the fact that Googles censorship of
its search engine is being conducted in-house, not by the Chinese. Those who oppose
Googles agreement to self-censor worry that the company will not be transparent about
its actions, and that furthermore, Googles decision effectively legitimizes censorship.
Google defends its actions in China arguing that it is only complying with Chinese laws.
Indeed, Google co-founder and co-president Sergey Brinn claims that the company has
not made any trade-offs, rather, the company has simply added some filtering mechanisms
to its Chinese search engine. According to Google, the new filtering mechanisms will
actually facilitate the search process for users by blocking sites that have already been
censored by the government. In addition, Google maintains that it will alert users to fact
that sites have been blocked. According to Google, the companys mission has not
changed, it still strives to be the leader in the information environment.
Discussion Questions:
1. Why did Google make the decision to block politically sensitive sites in China? Could
the company have gotten access to the Chinese market without agreeing to selfcensorship? How, if at all, will Googles decision to self-censor affect its position in other
markets?
2. Google has been the target of intense criticism regarding the transparency of its actions
and whether users will realize the extent to which information is being blocked. What is
Googles responsibility to the Chinese population? By agreeing to block politically
sensitive information, is the company actually perpetuating Chinas repressive regime?
3. Critics have argued that Googles decision to capitulate to the Chinese governments
request for censorship sets a dangerous precedent. Do you agree? Why or why not?
Could Google, together with other companies, force the government to change its ways?
4. Google claims that it has not bowed to the Chinese governments request for
censorship. Instead, the company argues that its new filtering mechanisms are simply a
means of improving the experience for users of its search engine. Do you agree with this
claim? Why or why not?

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INTEGRATING VIDEOS
There are also several longer video clips that can be integrated with the material presented
in this chapter. In particular, you might consider the following:
Title 12: Dominos Pizza in Mexico
Summary: Dominos began its international expansion in 1983. By 2005, the company had
3,000 stores outside the U.S. located in more than 50 different countries. Dominos
success lies in part to its product, pizza seems to be universally accepted, and to its
commitment to consistency, the company wants every store to be the same regardless of
its location. Still, Dominos has had to make some adjustments to meet the needs of each
market. Pizza topping and ingredients reflect local tastes and customs for instance.
Delivery methods must also be adapted to individual market conditions. So, for example,
in Japan pizzas are delivered via scooter by people who are very familiar with the
neighborhood. Similarly, promotional materials must fit with the market. In Belgium,
menus are printed in three different languages. Yet, through all of the adjustments to the
marketing mix, the company is committed to its core principles.
To ensure that the companys core principles are emphasized, Dominos is very particular
when selecting franchisees. The company only considers people who are capable of
operating a business within corporate guidelines. To facilitate this process, Dominos also
provides strong support to its franchisees. In Mexico for example, the company makes a
store visit every 45 days, provides all marketing materials, and provides training
Discussion Questions:
1. Dominos has become a successful international company. Compare and contrast its
strategy with that of another well-known international fast food operation, McDonalds.
What similarities do you see? Are they any significant differences between the two
companies? What has led to the success of Dominos?
2. Franchising has played a major role in Dominos rapid expansion into foreign markets.
Consider the companys franchising strategy. How does Dominos ensure that its
corporate values and strategies are adopted by the franchise operations?
3. Reflect on the fact that while pizza appears to be universally accepted, Dominos has
had to make some adjustments to its marketing mix. Discuss the different components in
the marketing mix and how the company has responded to local needs. What does your
response indicate about the standardization versus globalization debate?
4. Consider the changes Dominos made to its Mexican operation in the late 1990s.
Discuss Dominos efforts there, the economic risk the company was facing, and the
strategies it used. Is Dominos current strategy viable in the long-term? Why or why not?

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Chapter 03 - Differences in Culture

globalEDGE Exercise Questions

Use the globalEDGE site {http://globalEDGE.msu.edu/} to complete the following
exercises:
Exercise 1
You are preparing for a business trip to Brazil where you will need to interact extensively
with local professionals. Therefore, you should consider collecting information regarding
local culture and business habits prior to your departure. A colleague from Latin America
recommends you visit the Centre for Intercultural Learning and read through the
country insights provided for Brazil. Prepare a short description of the most striking
cultural characteristics that may effect business interactions in this country.
Exercise 2
Typically, cultural factors drive the differences in business etiquette encountered during
international business travel. In fact, Asian cultures exhibit significant differences in
business etiquette when compared to Western cultures. For example, in Thailand it is
considered offensive to show the sole of the shoe or foot to another. Prior to leaving for
your first business trip to Asia, a colleague informed you that a guide called Business
Etiquette Around the World may help you during your trip. Using the globalEDGE
website, find five tips regarding business etiquette of the Asian country of your choice
Answers to Exercise Questions
Exercise 1
The data can be accessed by searching for the term Centre for Intercultural Learning at
{http://globaledge.msu.edu/ResourceDesk/}. The Centre for Intercultural Learning is the
only source in this search. Go to the Country Insights link on the left side of this
resources webpage. This resource is found under the globalEDGE category Reference:
Culture. Be sure to check the Resource Desk only checkbox of the search function on
the globalEDGE website.
Search Phrase: Centre for Intercultural Learning
Resource Name: Centre for Intercultural Learning (Canada Foreign Affairs)
Website: {http://www.dfait-maeci.gc.ca/cfsi-icse/cil-cai/}
globalEDGE Category: Reference: Culture

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Chapter 03 - Differences in Culture

Exercise 2
The data can be accessed by searching for the term Business Etiquette Around the
World at {http://globaledge.msu.edu/ResourceDesk/}. The Guide to Business Etiquette
in Asia is a source found near the bottom of this resources website. You can also select
the region of Asia from the map located at the top of the website. This resource is found
under the globalEDGE category Reference: Culture. Be sure to check the Resource
Desk only checkbox of the search function on the globalEDGE website.
Search Phrase: Business Etiquette Around the World
globalEDGE Category: Reference: Culture
Resource Name: Business Etiquette Around the World
Website: {http://www.cyborlink.com/}

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