DPP20013 MODUL- SESI 2 2021 2022(final)

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

• Therefore, became increasingly important even for the managers of a totally domestic
operations to also learn about international financial risk, especially those related to foreign
exchange rates and the credit risks related to trade payments.

The Multidomestic Company
(MDC) is an organization with multicounty affiliates, each of which formulates its own business strategy
based on perceived market differences.
The transactional firm – has subsidiaries that fulfill a variety of strategic roles typically performed by HQ.
The multinational firm – engages in FDI and owns or controls value adding activities in more than one
country.
The global firm – has integrated international subsidiaries controlled by headquarters.

3.2.1 Identify terms of MNEs in international business
Multinational Enterprise (MNE) – a firm with foreign direct investment, service or manufacturing, over
which it maintains effective control.
International firm – a firm engaged in trade activities but without an FDI component.
Small and Midsize International Enterprises (SMIE) – Most of these firms do not have FDI presence and do
not qualify as MNEs. However SMIEs contributes to International Business around the world.

3.2.2 Describe each of several types of MNEs

A large company with substantial resources that performs various business activities through a
network of subsidiaries and affiliates located in multiple countries.

a. Multidomestic firm

The multidomestic firm has multiple international subsidiaries independent of headquarters.
Multidomestic company is a company that has its branches in many different countries, in which
the company has the same purpose to market their products or services.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Each country has their own strategic management in marketing their products or services.
The business and marketing strategy of the company in each country different because each
country has their unique characteristics. The company should follow the regulations, rules or
law of the country where the company exists in how to do business in the country.

A multi-domestic strategy is a strategy by which companies try to achieve maximum local
responsiveness by customizing both their product offering and marketing strategy to attach
different national conditions. One of the nation's most popular hamburger chains is an example
of a multi-domestic strategy. The company researches each country’s local customs and foods
before creating its menu items and opening up a store.
For example:
i) The restaurant's stores in India do not sell any sandwiches made with beef, since the Indian
culture sees cows as sacred.

ii) United States has its own ethnics, its society habits, regulations, rules and much more. In which
those are different to the other country such as United Kingdom. So to reach the market
with the purpose to sell the products or services, in each country the company makes its
own strategy to make rapprochement.

For example, a popular food product like Fried Chicken is sold with different staple food in
different country. Such as, in China Fried Chicken is sold with adding Chinese‘s staple food like
mie or noodles, and in Indonesia, the Fried Chicken is sold with additional Indonesian staple
food like rice.

b. Multinational Firm

A multinational firm has facilities and other assets in at least one country other than its home
country. A multinational company generally has offices and/or factories in different countries and
a centralized head office where they coordinate global management.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

These companies, also known as international, stateless, or transnational organizations tend to
have budgets that exceed those of many small countries. Business enterprise with manufacturing,
sales, or service subsidiaries in one or more foreign countries, also known as a transnational or
international corporation. These corporations originated early in the 20th cent. and proliferated
after World War II. Typically, a multinational corporation develops new products in its native
country and manufactures them abroad, often in Third World nations, thus gaining trade
advantages and economies of labor and materials.

Almost all the largest multinational firms are American, Japanese, or West European. Such
corporations have had worldwide influence—over other business entities and even over
governments, many of which have imposed controls on them. During the last two decades of the
20th century many smaller corporations also became multinational, some of them in developing
nations. Proponents of such enterprises maintain that they create employment, create wealth,
and improve technology in countries that are in dire need of such development.

Critics, however, point to their inordinate political influence, their exploitation of developing
nations, and the loss of jobs that results in the corporations' home countries

c. Global firm

A Global Firm is a company which has multinational branches and headquarters in many of the countries.
It is also called as International Firm. It should be duly noted that it is different from a locally based
company selling its products globally or to other countries. Some of the known examples are Coke, Sony
and Microsoft etc. Global companies plan activities on a global basis. By operating in more than one
country benefits from savings or economies on activities such as R&D, marketing, operations and finance
are achieved which may not be available to domestic companies. A global company is a company that
does business in many different countries and attempts to standardize and integrate operations
worldwide in all functional areas. A global company is a company that has operations in different countries
around the world. Global companies are also known as transnational or multinational corporations. Global

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Industries such as aerospace, automobiles, telecommunications, metals, computers, chemicals, and
industrial equipment are examples of global industries, in which competition is on a regional or worldwide
scale. Most global industries are characterized by the existence of a handful of major players that compete
head on in multiple markets. Becoming a global company is an effective strategy for businesses
experiencing planning sales or encountering a domestic market that is saturated with competition.
Businesses of all sizes can take advantage of increasing their market share and bottom line by
moving into the global arena. Global companies have invested and are present in many countries.
They market their products through the use of the same coordinated image/brand in all markets.
Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost
management and efficiency.

d. Transnational firm

Transnational Corporation as define by globally integrated organization with entities in two or
more countries, decision making system permitting coherent policies and common strategy
through decision making center and entities are so linked by ownership so as to exercise influence
over others and share knowledge. Transnational companies are much more complex
organizations. They have invested in foreign operations, have a central corporate facility but give
decision-making, R&D and marketing powers to each individual foreign market. Transnational
company is a company who possesses a larger part of share or a major shareholder itself rather
than the people of country where they are operating in.

A transnational firm is a huge company that does business in several countries. Many
Transnational are much richer than entire countries in the less developed world. Such companies
can provide work and enrich a country's economy - or some say they can exploit the workers with low pay
and destroy the environment. A firm which owns or controls production facilities in more than one country
through direct foreign investment. Transnational are made possible by improved international
communications which provide rapid containerized transshipment and foreign travel, easy
communication of information, and international mobility of capital. Transnational can compare

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

costs at different locations, and can switch activities to different areas as appropriate. Although a
developing nation may benefit from the construction of a plant for a jobs and markets, it has been
argued that the price is a loss of local control. The term is generally synonymous with
multinational corporation, although a transnational corporation may operate in only two national
economies

Extending or operating across national boundaries. Transnational firms generally are
decentralized, with many bases in various countries where the corporation operates
(Nestle, Deutsche Post,Toyota).
A very well-known cola soft drink is one example of a transnational product. This company's
beverage recipe is kept secret and has not changed in many years. The product is sold in over 200
countries worldwide, and the company retains exactly the same beverage formulation in each
country. The bottle’s label may reflect the local language, but the logo and contents remain the
same.

Difference between a global, transnational, international and multinational company
International companies are importers and exporters, they have no investment outside of their
home country.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Global company Multidomestic company

Definition Producing a product the same way for It sees customers as being
Characteristics every market that it is sold in. unique. A multidomestic
company modifies a product to
Standardized products accommodate the wants/needs

of the market

Non-standardized products

Rationale Companies make the choice to become Companies make the choice to
multi-domestic or global based on a few become multi-domestic or
Investment
Competition factors. One such factor involves the global based on a few factors.
Strategic planning concept called "economies of scale” One such factor involves the
concept called "economies of

scale”

have invested and are present in many have investment in other
countries countries, but do not have
coordinated product offerings in

each country

Global company competes on an Company faces competition
international level from competitors in the

countries in which it sells its
good

Need to plan on an international scale Manage their subsidiaries as
distinct and separate entities.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Multidomestic company Transnational company

Definition It sees customers as being unique. A Transnational companies also
Characteristics multidomestic company modifies a sell their products in multiple

product to accommodate the countries across the globe.
wants/needs of the market

Non-standardized products Same product

Strategic planning Need to (RD) Not need (RD)
Investment .
have invested in foreign
Competition have investment in other countries, operations, have a central
but do not have coordinated corporate facility but give
decision-making, R&D and
product offerings in each country marketing powers to each
individual foreign market.

Company faces competition from No need because they are
competitors in the countries in market at all countries.
which it sells its good

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Global company Transnational company

Definition Producing a product the same Transnational companies also
way for every market that it is sell their products in multiple
countries across the globe.
sold in.

Characteristics Standardized products Same product

Strategic planning Need to plan on an Not need (RD)
international scale

Competition Global company competes on No need because they are
an international level market at all countries

The Growth of Service MNEs
There has been significant growth of MNEs in service areas, due to:

• Economic transformation – developed nations shifting into service economies
• Globalization and liberalization of regulatory systems – “open skies” agreements,

accounting standards, flexible store hours, etc.
• Communication advances – allow MNEs to coordinate knowledge-intensive operations

across borders.
• MNEs provide knowledge, capital, technology, expertise, global affiliations,

contributions to national productivity and exports, innovation, employment, and societal
change.

The negative attributes are:
• the MNE is perceived as a threat to national sovereignty

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

• have unfair advantages over local competition
• exploit government incentives at the expense of taxpayers
• limit knowledge transfer to developing nations
• exploit critical national and natural resources
• move on when their exploitation is finished

MNEs face the following constraints and advantages:
• Resource constraints.
• Knowledge, sophistication constraints.
• Sheltered environment constraints.
• Home government support.
• Flexibility

3.3 Compare Small and Medium-Sized International Enterprises (SMIEs) in international
business

3.3.1 Define Small and Medium-Sized International Enterprises (SMIEs)

Small and medium-sized enterprises (SMEs) are non-subsidiary, independent firms which
employ fewer than a given number of employees. This number varies across countries. The
most frequent upper limit designating an SMIE is 250 employees, as in the European Union.
However, some countries set the limit at 200 employees, while the United States considers
SMIEs to include firms with fewer than 500 employees.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Small firms are generally those with fewer than 50 employees, while micro-enterprises have at
most 10, or in some cases 5, workers. The SMIE is a “small to medium sized organization”,
SMIEs account for approximately 94% of all international firms. They often face serious
obstacles to internationalization.

SMIE Foreign Investment Profile and Internationalization Features

At present relatively small, but growing chance of expansion
SMIEs respond to incidental opportunity
Nature of FDI by SMIEs
Emphasis on developed markets
More likely to invest in developed markets
Selective Globalization
Tend to focus on one link in the supply chain and on a selected market strategy
Often adopt niche strategies
Rely more on cooperative strategies

3.3.2 Highlight constraints on Small and Medium-Sized International Enterprises (SMIEs)

The biggest constraints across countries are :
• The scale and transaction constraints in access to capital and finance
• Access to electricity
• Competition from informal enterprises.
• Lack of Knowledge
• Lack of Market Power
• Vulnerability to Intellectual Property Violations

However, constraints vary according to countries’ level of development as well as by region.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

QUESTIONS
1. Write any TWO types of Multinational Enterprises ( MNEs)
2. Explain the best organizational design for Toyota Company. Based on your answer give
the advantages and disadvantages to the company.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

CHAPTER 4

ENTRY AND EXPANSION

LEARNING OUTCOMES

CLO2: Explore mode of entry, strategies and cultural differences in international business
environment.

At the end of this chapter, you will be able to:

• Examine the international market-entry methods in international business
• Identify the equity-based modes of entry
• Indicate the non-equity and equity-based modes of entry

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

INTRODUCTION
Three basic decisions before entering foreign market
A firm expanding internationally must decide:
a) Which / where markets to enter
b) When to enter them and on what scale
c) How to enter them (the choice of entry mode)
While it may make sense for some firms to serve a market by exporting, other firms might set up
a wholly owned subsidiary, or utilize some other entry mode.
Which / Where to Enter Foreign Markets?
The advantages and disadvantages associated with each entry mode is determined by transport
costs and trade barriers, political, economic risks and firm strategy. The choice between different
foreign markets is based on an assessment of their long run profit potential. Typically, the most
favorable markets are those that are politically stable developed developing nations that have
free market systems, inflation rates, or private sector debt.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

How ever for the less desirable market are, Politically unstable developing nations that operate
with a mixed or command economy, Developing nations where speculative financial bubbles
have led to excess borrowing. Firms are more likely to be successful if they offer a product that
has not been widely available in a market and that satisfies an unmet need

Timing of Entry / When
With regard to the timing of entry, we say that entry is early when an international business
enters a foreign market before other foreign firms, and late when it enters after other
international businesses have already established themselves in the market
The advantages associated with entering a market early are called first mover advantages, and
include:
The ability to pre-empt rivals and capture demand by establishing a strong brand name

the ability to build up sales volume in that country and ride down the experience curve ahead of
rivals and gain a cost advantage over later entrants the ability to create switching costs that tie
customers into their products or services making it difficult for later entrants to win business
Disadvantages associated with entering a foreign market before other international businesses
are referred to as first mover disadvantages and include:

Pioneering costs (costs that an early entrant has to bear that a later entrant can avoid example :
educate customer).Pioneering costs arise when a business system in a foreign country is so
different from that in a firm’s home market that the enterprise has to devote considerable time,
effort and expense to learning the rules of the game, and include:
the costs of business failure if the firm, due to its ignorance of the foreign environment, makes
some major mistakes the costs of promoting and establishing a product offering, including the
cost of educating the customers

(HOW) Entry Modes Of International Business

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Entry modes are defined as the forms of capital participation in international enterprises.
They are modes in which company enter the intended host country through investment.
In terms of property rights, entry mode is the ownership structure of a foreign subsidiary.
Mode of entry an alternative routes or means available to a firm for transferring resources from
the home country to the host country.

Entry Modes Of International Business

1) Non Equity – Based Mode Of Entry
There are several options including:

a. Exporting

Most firms begin their involvement in overseas business by that is, selling some of their regular
production overseas. Multinational export and import activities are examined details as part of
international logistics. Exporting is the selling of products made in one’s own country for use or
resale in other countries. Exporting is the selling of products in overseas domestic markets.
Usually the business first experience with global business, a low cost, low risk way of
penetrating into global markets. Today exporting recognize as traditional and simple way of
entry mood.

Types of Exporting
1) Indirect exporting

Occurs when a third party handles the exporting before one or more manufactures. These third
party intermediaries take many forms. There are small independent operations such as export
management and export trading company, industry-wide exporters and specialized trading
units that represent large corporations or even entire countries and used third party to handle
the exporting)

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

2) Direct exporting
The company opt to do their own exporting. Where the seller of the goods contacts and
negotiates with a buyer in a foreign country undertakes the risk of delivery and receipt of
payment direct exporting requires time, patience, attention to detail and an organizational
commitment. Company where is confident and resources-full will use this type strategy. Direct
exporting using intermediaries located in foreign market. In doing so the exporter is becoming
more involved and committed to the new marketplace, adding investment, time and
management expertise. Handle with their own exporting.

Exporting Advantages:
• Easy implementation of strategy
• Less investment abroad which helps small firms also to enter international business.
• national markets to realize scale economies from global sales volume (Sony/TV,
Matsushita/VCR, Samsung/Chips)
• Little investment and is relatively free of risk.
• without committing a great amount of human or financial resources.
• If management does decide to export, it can choose between direct and indirect exporting.

Exporting Disadvantages: especially
• Susceptibility to trade barriers.
• Logistical difficulties.
• Less suitable for service products.
• Susceptibility to exchange-rate fluctuation.
• Not appropriate if other lower cost manufacturing locations exist.
• High transport costs can make exporting uneconomical
bulk products.

b. Turnkey Project
A turnkey or a turnkey project (also spelled turn-key) is a type of project that is constructed so
that it could be sold to any buyer as a completed product.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

This is contrasted with build to order, where the constructor builds an item to the buyer's exact
specifications, or when an incomplete product is sold with the assumption that the buyer would
complete it.

A turnkey project or contract as described by Duncan Wallace (1984), a contract where the
essential design emanates from, or is supplied by, the Contractor and not the owner, so that the
legal responsibility for the design, suitability and performance of the work after completion will
be made to rest with the contractor 'Turnkey' is treated as merely signifying the design
responsibility as the contractor's.

Management from one organization that generally design, construct and commission large
industrial and infrastructure related projects for their client.A turnkey agreement normally
includes the training of staff for the project.A link with management contract extends turnkey
arrangement for the establishment of plan facilities to include responsibilities for production,
training and operating during the post-construction stage of the project.Management from one
organization that generally design, construct and commission large industrial and infrastructure
related projects for their client.A turnkey agreement normally includes the training of staff for
the project

A link with management contract extends turnkey arrangement for the establishment of plan
facilities to include responsibilities for production, training and operating during the post-
construction stage of the project

Conclusion

Turnkey project is one of the complex based mode of entry that is project design and construct
by one organization or a company for their client.
It requires a specific management and agreement that involve the organization and their client.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

The company is responsible for the project until it handed over to the client.
Example : New Air Port Berlin ( Grmany), Gas Pipeline Russia- Turkey ( Italy)

Hong Kong Airport China ( USA)

c. Licensing

A licensing agreement is an arrangement whereby a licensor grants the rights to intangible
property to another entity (the licensee) for a specified time period, and in return, the licensor
receives a royalty fee from the licensee.Intangible property includes patents, inventions,
formulas, processes, designs, copyrights, and trademarks

Advantages
• The firm does not have to bear the development costs and risks associated with opening a
foreign market
• The firm avoids barriers to investment
• It allows a firm with intangible property that might have business applications, but which
doesn’t want to develop those applications itself, to capitalize on market opportunities

Disadvantages
• The firm doesn’t have the tight control over manufacturing, marketing, and strategy that is
required for realizing experience curve and location economies
• Licensing limits a firm’s ability to coordinate strategic moves across countries by using
profits earned in one country to support competitive attacks in another
• There is the potential for loss of property (or intangible) technology or property

One way of reducing this risk is through the use of cross-licensing agreements where a firm might
license intangible property to a foreign partner, but requests that the foreign partner license some
of its valuable know-how to the firm in addition to a royalty payment

d. Franchising

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Franchising is basically a specialized form of licensing in which the franchisor not only sells
intangible property to the franchisee, but also insists that the franchisee agree to abide by strict
rules as to how it does business

Advantages
The firm avoids many costs and risks of opening up a foreign market

Disadvantages

• Franchising may inhibit the firm's ability to take profits out of one country to support
competitive attacks in another

• The geographic distance of the firm from its foreign franchisees can make poor quality
difficult for the franchisor to detect

e. Management contracting

A management contract is an arrangement under which operational control of an enterprise is
vested by contract in a separate enterprise which performs the necessary managerial functions
in return for a fee.

Management contracts involve not just selling a method of doing things (as with franchising or
licensing) but involves actually doing them.

A management contract can involve a wide range of functions, such as technical operation of a
production facility, management of personnel, accounting, marketing services and training.

Advantages:
• Management contracts are often formed where there is a lack of local skills to run a
project.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

• It is an alternative to foreign direct investment as it does not involve as high risk and can
yield higher returns for the company when foreign government actions restrict other entry
methods.

Disadvantages:
• Loss of control
• Time delays
• Loss of flexibility
• Loss of quality
• Compliance

f) Contract manufacturing.

Contract manufacturing is a process that establish a working agreement between two
companies. As part of the agreement, one company will custom produce parts or other
materials on behalf of their client.

Advantages:
• The client does not have to maintain manufacturing facilities, purchase raw materials, or
hire labour in order to produce the finished goods so less capital investment is required.
• Helps to achieve benefits of economies of scale.
• Helps to achieve location economies.

Disadvantages:
• Less management control.
• Potential security or confidentiality issues.
• Complexity.
• Potential quality issues

g. Engineering, procurement, construction and commissioning (EPCC)

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Engineering, Procurement, Construction and commissioning EPCC
Contracts are the most common form of contract used to undertake construction works by the
private sector on large-scale and complex infrastructure projects.
Under an EPCC contract a contractor is obliged to deliver a complete
acility to a developer who need only turn a key to start operating the facility,
hence EPCC contracts are sometimes called turnkey construction contracts.
In addition to delivering a complete facility, the contractor must deliver that
facility for a guaranteed price by a guaranteed date and it must perform to the specified level.
Failure to comply with any requirements will usually result in the contractor incurring monetary
liabilities. The EPCC group has a very wide range of portfolio covering the entire of the Life cycle
of Industrial Plants as a Turnkey Project executing agency in following fields:

The EPCC group has a very wide range of portfolio covering the entire gamut of the Life cycle
of Industrial Plants as a Turnkey Project executing agency in following fields:

Engineering Functions
Basic Engineering
Planning
Detail Engineering
Estimating request for Quote
Construction Engineering

Procurement Functions
Customised manufacturing
Procurement
Purchasing
Expediting
Receiving

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Invoicing
Logistics & Transport

Construction Function
Civil & structural construction
Mechanical erection
Electrical installation

Commissioning Functions
Testing & Commissioning
After-sales-service
Modernisation of Plants

Advantage of EPCC
Scope and the specifications of the plant

• Quality
• Project duration
• Cost is known at the start of the project
• Reduced stress for owner
• Easy work and growth of the company.
• Single point of contact for owner simplifies communications.
• Ready availability of post-commissioning services
• Ensures quality and reduces practical issues faced in other ways
• Owner protected against changing prices for materials, labor, etc.

4.12 Identify the equity based modes of entry
a. Wholly owned subsidiary
Definition:

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

A company that usually 100% of the shares are owned by another company known as the
“parent company”. A company may be wholly owned subsidiary through the acquisition or spin
off by parent company. Regular subsidiary holding company is 51 to 99% owned by the parent
company. Is a condition in which the parent company will use the subsidiary to operate in
foreign markets.

Example of Wholly Owned Subsidiary
In a wholly owned subsidiary, the parents company owns all the shares of the company.
No minority shareholders. Subsidiaries continue operating with the permission of the parent
company. A company can continue to operate a wholly owned subsidiary of the merge and
combine their operations for various reasons.

Advantages
• Financial

Include simpler reporting and more financial resources.Parent company can consolidate the
results of its wholly owned subsidiaries into one financial statement.Use the subsidiary’s
earning to grow the business or invest in other assets and businesses to generate a higher rate
of return.Two companies can integrate their financial and other information technology systems
to streamline business processes and reduce costs.

• Operational
The parent company usually maintains direct or indirect operational control over its wholly
owned subsidiaries.The parent and the subsidiary can also use their combined size to negotiate
better terms with suppliers

• Strategic
The speedy execution of strategic priorities

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E.g : A parent company could ask one of its foreign wholly owned subsidiaries to dedicate all of
its resources toward a new product launch .Synergies in marketing, research and development
and information technology mean cost efficiencies and long-term strategic positioning

Disadvantages
• Financial

The financial disadvantage is that an execution error or malfeasance at a subsidiary can
seriously affect the financial performance of the parent company.

• Operational
Disadvantages

• A concentration of risk and a loss of operational flexibility
E.G : if a company enters a foreign market through a wholly owned subsidiary, it has to rely
on the subsidiary to develop a distribution channel, recruit a sales force and establish a
customer base.

• Strategic
The strategic disadvantage is that cultural differences often lead to problems integrating a
subsidiary's people and processes into the parent company's system

Conclusion
A wholly owned subsidiary is a company completely owned by another company.
Advantages of using wholly owned subsidiaries include vertical integration of supply
chain,diversification,risk management and favorable tax treatment abroad
Disadvantages include the possibility of multiple taxation,lack of business focus,and conflicting
interest between subsidiaries and the parent company.

b. Joint Venture
Introduction

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Business agreement in which the parties agree to develop, for a finite time, a new entity and
new assets by contributing equity. They exercise control over the enterprise and consequently
share revenues, expenses and assets. There are five common objectives in a joint venture:
market entry, risk/reward sharing, technology sharing and joint product development, and
conforming to government regulations. The partners' strategic goals converge while their
competitive goals diverge. The partners' size, market power, and resources are small compared
to the Industry leaders. Partners are able to learn from one another while limiting access to
their own proprietary skills.

The key issues to consider in a joint venture are
 Ownership
 Control
 Agreement
 Pricing
 Technology
 Local firm capabilities and resources
 Government intentions

Potential problems include:

 Conflict over asymmetric new investments
 Mistrust over proprietary knowledge
 Performance ambiguity - how to split the pie
 Lack of parent firm support
 Cultural clashes
 If, how, and when to terminate the relationship

Joint ventures have conflicting pressures to cooperate and complete.

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The joint venture attempts to develop shared resources, but each firm wants to develop and
protect its own proprietary resources.
The joint venture is controlled through negotiations and coordination processes, while each
firm would like to have hierarchical control.
Nokia + Windows = Nokia Lumia Phone
Sony + Ericssion = Sony Ericssion Phone
HP + Compact = HP Compact Laptop

Conclusion
As a Conclusion, a business agreement between two or more companies to work together to
achieve specific goals and to promote common interests. Unlike a merger or acquisition, a
strategic partnership is no need to be fixed and it allows companies to preserve the benefits of
belonging. Partnership allows consolidation of resources. This is a huge advantage when the
two parties offer a product / service. This would give the maximum profit. Before starting a joint
venture, make sure your are clear about what you want from the relationship. Make you are
clear about your joint venture partners. Unless you are all in agreement regarding the
anticipated outcome, you will be pulling in different directions and the joint venture will suffer.

c. Strategic Alliances
Introduction

A strategic alliance is an agreement between two or more parties to pursue a set of agreed
upon objectives needed while remaining independent organizations. This form of cooperation
lies between mergers and acquisitions and organic growth. Partners may provide the strategic
alliance with resources such as products, distribution channels, manufacturing capability,
project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance
is a cooperation or collaboration which aims for a synergy where each partner hopes that the
benefits from the alliance will be greater than those from individual efforts. The alliance often

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

involves technology transfer (access to knowledge and expertise), economic
specialization,shared expenses and shared risk.

Advantages :

• Technological Advancements
Changes in traditional competitive advantage, the rising costs and risks of research and
development, shorter product lifecycles.

• Convergence Of Technology
Based on the creation of new industries based on the growth of technology and mergers
between companies to develop new sectors.

• Market Globaization
Growth of global marketplace and competitors thereof. The global market also covers the
direction of foreign investment patterns.

• Sharing of costs and risks, particularly preferred by Western companies.

• Learning knowledge and skills which is preferred by Asian firms as it allows access to
technology.

• Transform existing operations of the business, with the aim being to improve weak
sectors of the business.

• It allows for an attacking and defensive strategy, as a business could use the alliances to
attack new market sectors whilst developing a protective cover in other markets.

Disadvantages

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

• Certain internal functions suffer as a result of not being unable to contribute to the
development of their functions as the business decides to use the approach adopted by
alliance companies.

• The risk of opening up the entire business 'core competencies' to alliance partners who
are essentially still competitors. Cultural differences which could affect the aim of the
alliance.

Managing Strategic Alliances

We can say that strategic alliances with competitors may generate a cosy relationship, it is still
based on two competitors in the same market place sharing information.

The first thing which needs to be identified is the core competencies does your business have
that is attracting your competitors into forming a strategic alliance, be aware of them and
ensure that you are protecting them.

Try to go for strategic alliance partnerships with companies from complimentary markets. This
will lead to a greater mutual trust and sharing of resources and information.

Conclusion
Strategic alliances can work for the benefit of a business to reduce development costs and
speed up development timescales. They do however, require careful planning and monitoring,
to ensure the business does not give too much away.

In industry today it is not the case of several companies competing against one another,
moreover we can state that it is becoming the case of one set of networked companies
(companies with strategic alliances with one another) versus another set of networked
companies.
. QUESTION

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

1. Nur Cemerlang Sdn Bhd plans to expand its textile products to Chinese market. As
the manager of the company, Identify three basic decisions before entering into
foreign markets.

2. Discuss THREE (3) modes of entry in International Business. (15 marks)
3. Discuss THREE (5) advantages of Franchising
4. Discuss THREE (5) disadvantages of wholly own susidiaries

CHAPTER 5

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

THE CULTURE ENVIRONMENT

LEARNING OUTCOMES
 At the end of this chapter, you will be able to:
 Discuss the foundation concepts of culture in international business
 Clarify the overcoming cultural challenges
 Clarify the culture affects all business functions
 Interpret the culture differences for International Business
 Clarify Hofstede Culture Dimension in international Business

5.0 Discuss the foundation Concept of Culture in International Business

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

5.1 The learned share and enduring orientation pattern in a society. People demonstrate their
culture through value, customs, behaviour and other elements in human life between races and
nations. People from various parts of the world differ physically ( skins, appearance, language
)the way one think, beliefs and how do things Anthropologist view culture : as elements in
human life such as spiritual, material, intellectual & emotional features of society/social group.
The greater the differences in culture, the wider the cultural gap. Example: Business negotiation
between Malaysians are easier than negotiation between Malaysian and French.

5.1.1 Definition of culture
Culture: most anthropologist view culture as the sum total of the beliefs, rules, techniques,
institutions and artifacts that characterize human populations. Society is composed of people and
their culture. Anthropologists often use the terms interchangeably or combine them into one
word sociocultural. Business people are interested with both social and cultural. The culture
features includes:

• Culture is learned not innate
• The various aspects of culture are interrelated
• Culture is shared
• Culture defines the boundaries of different groups

How do international business people learn to live with other cultures?
To realize that there are cultures different from their own. They must go on to learn the
characteristics of those cultures so that they may adapt to them.

E.T. Hall, a famous anthropologist, claims this can be accomplished by:
• Spend a lifetime in a country
• Undergo an extensive, highly sophisticated training program that covers the main
characteristics of a culture, including the language. Idiom: An expression whose symbolic
meaning differs from its literal meaning; you can’t understand it simply by knowing what
the individual words mean. Examples:
Australia: “The tall poppy gets cut down” (importance of not being showy or pretentious

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

World Culture(Religion)

5.1.2 Clarify the elements of culture: (Cultural differences across countries)

a. Aesthetics
aesthetics is culture’s sense of beauty and good taste and is expressed in its art, drama, music,
forklore and dance
Refers to imagery that represents certain expression & symbolism of certain colors. Some
cultures have strong historical background in the arts like music, painting, dance, drama &
architecture.
It is important when business consider to do business in other culture. The selection of
appropriate colors, music, painting can increase firm’s success. (eg. Green is a favourable color
to Islam, black color of mourning in US, Europe, Mexico. White for Japan, & Asia)
The number ‘7’ signifies good luck in US, but opposite in Singapore, Ghana and Kenya
In Japan, the number 4 is unlucky, we have to make sure that there are more or less than 4 in a
package of goods.

b. Religion

Refer to specific set of beliefs & practices regarding the spiritual. Includes beliefs in the existence
of the creation and govern the world. Ritual, prayer other spiritual exercises are part of religious
practice. Understanding religions help to understand how it affects business practice. Muslims
make up majority of the population in nearly 40 countries all over the world (North West Africa,
Middle East, China, Malaysia, Indonesia) Islam views human as a collective entity & the wealthy
& successful people obliged to help the disadvantage. Business that involved exploit attention of
others are not welcomed in Islamic countries. Hinduism practices in India. They believe that a
moral force in a society requires the acceptance of certain responsibilities known as Dharma.
Historically Hinduism supported India’s caste system. Modern days has generated hard working
entrepreneurs that contribute to the economic growth

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

c. Language

All languages are complex and reflective of international environment. Translating one language
into another. Silent Languages likes color associations, sense of appropriate distance, time, and
body language. Personal communication is refer to how people in other cultures communicate
(their thoughts, feelings, knowledge & information through speech, actions,
writing).Understanding spoken language helps to know how people think & act the way they do.
Body language is important in order to avoid sending unintended / embarrassing messages.
(Gestures, facial expression, physical greetings, eye contact, personal space)
An attempt to communicate with people in different culture is known as inter-cultural
communication. It may have an effect on discussion. (Example. A Malaysian and an Italian had to
communicate an important matter, but neither person speak English, and no one understand
each other). Example Mañana is visitors to Latin American are puzzled by the term Mañana. The
literal translation is “tomorrow” but it really means “in the near future”.

d. Manners & customs

Refer to appropriate methods of behaving, speaking & dressing in culture.
Korea : poor manners to lift a rice bowl close to one’s mouth when eating rice, but common
practice in China & Japan.
Customs: habits / ways of behaving in specific circumstances, passed down from generations.
Differ from manners in that they define appropriate habits/ behavior in specific situation (sharing
food during Islamic holy month of Ramadan is a customs among Muslims)

Attitudes toward time:

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

The attitudes toward time cultural characteristics may present more adaptation problems for
Americans overseas than does any other. Time is important in the US.
Americans be prompt: if an appointment is made to see a group Germans at 12 noon, we can be
sure they will be there. To get the same response from Brazilians, we must say ‘noon English hour’.
If not, the Brazilian may show up anytime between noon and 2 o’clock.
Directness: American directness and drive are interpreted by many foreigners as rude. Americans
want to get to the point in a discussion and the attitude irritates others
Deadlines: western emphasis on speed and deadlines. In Far Eastern countries such as Japan,
American may be asked how long he or she plans to stay at the first meeting. negotiations are
purposely not finalized until a few hours before the Americans departure. The Japanese know
they can wring extra concessions from the foreigner because of their haste to finish and return
home on schedule.

Values
Refers to ideas, beliefs, & customs which people are emotionally attached to such as honesty,
freedom and responsibility. Affect people’s work ethics & desire for material possessions. Values
in one culture distinct from another. Example: Low-context cultures: meetings follow a precise,
well-planned agenda, High context culture: time spend deciding whether there is thrust bet.
Participants before focusing on the business at hand Singapore: people value hard work &
material success, Greece, values leisure & modest lifestyle

Attitudes toward achievement and work
In developing countries, a change has occurred as more consumer goods have become available,
the demonstration effect (seeing others with these goods)cause workers to realize that they can
have greater prestige and pleasure by owning more goods. Their attitude towards work changes
because they now want what money can buy. In Industrialized nations, after peaking at 43.3 hours
per week in 1994, US weekly average for production workers had dropped to 42.6 hours by 1996.

e. Social Organizations

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Positive or negative evaluations, feelings, tendency individuals hold in mind towards
objects/ concepts learns from role models like parents, teachers, peers, & religious leaders and
group. These differences can cause problems interpreting what the other person is doing. Some
simple examples:
In the US, a firm, short handshake indicates self-confidence and (heterosexual) masculinity. A limp
handshake by a man can be interpreted (usually wrongly) as a sign of homosexuality or wispiness.
But in most parts of Africa, a limp handshake is the correct way to do it. Furthermore, it is common
in Africa for the handshake to last several minutes, while in the US a handshake that is even a few
seconds too long is interpreted as familiarity, warmth and possibly sexual attraction.

Family Relationships

Refer to the extent of relationships in a family. A family is the primary unit of society.
Children are socialized into human society & into a culture’s beliefs, attitudes, values & behavior
through the family. Issues related to cultural groups are family structure (nuclear family or
extended family) rights and responsibilities of the family members, authority in the home, values
placed on having children.

Cultural change
Culture evolves over time. Globalization & economic development, has some impact on cultural
elements in a society. (Example: economic progress accompanied by a shift in values away from
collectivism toward individualism) Malaysia has shifted to career-oriented. As a result society has
become more individualistic & limited time to socialize.

Differences in Cultures
Increasingly, managers must deal with multiple ethnic groups with very different cultures.
Globalization people likely to work with Japanese, French, Chinese, German and all sorts of other
nationalities. It is important to recognize that people from different cultures have are different in

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

a variety of ways, including different ways of looking at things, different ways of dressing and ways
of expressing personality/goodness.

Cultural Differences in Entrepreneurship in each countries, It is said that when someone starts
a new business…
in Hong Kong, the whole family works ceaselessly to make it a success.
in the United States, friends put up their money for the entrepreneur.
in Turkey, friends will ask the entrepreneur to hire their sons and nephews.
in India, the administrative system will impose a staggering amount of red tape.

5.1.3 Clarify the overcoming Culture Challenges

a. Cross Culture Risk
A situation or event where a cultural miscommunication puts some human value at stake. Culture
risk may effect business failure because of misunderstanding about decision between other
countries (culture). The critical part of culture may effect to high risk if both party not really
understand other language, believe, attitude. It arises in environment characterized by unfamiliar
languages and unique, value systems, beliefs, and behavior.

Cross – Cultural Risk: Managerial Guidelines
Guideline 1:
Acquire factual and interpretive knowledge about the other culture, try to speak the language
Guideline 2: Avoid Culture Bias
Guideline 3: Tolerance for ambiguity, Perceptiveness, Valuing personal relationships
Flexibility and adaptability

b. Cultural Awareness

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Cultural Awareness is the foundation of communication and it involves the ability of standing back
from ourselves and becoming aware of our cultural values, beliefs and perceptions. Why do we
do things in that way? How do we see the world? Why do we react in that particular way?

Cultural awareness becomes central when we have to interact with people from other cultures.
People see, interpret and evaluate things in a different ways. What is considered an appropriate
behaviour in one culture is frequently inappropriate in another one. Misunderstandings arise
when I use my meanings to make sense of your reality.

As an Italian it is almost automatic to perceive US Americans as people who always work, talk
about business over lunch and drink their coffee running in the street instead of enjoying it in a
bar. What does it mean? Italians are lazy and American hyperactive? No, it means that the
meaning that people give to certain activities, like having lunch or dinner could be different
according to certain cultures. In Italy, where relationships are highly valued, lunch, dinner or the
simple pauses for coffee have a social connotation: people get together to talk and relax, and to
get to know each other better. In the USA, where time is money, lunches can be part of closing a
deal where people discuss the outcomes and sign a contract over coffee.

Misinterpretations occur primarily when we lack awareness of our own behavioral rules and
project them on others. In absence of better knowledge we tend to assume, instead of finding
out what a behaviour means to the person involved, e.g. a straight look into your face is regarded
as disrespectful in Japan.

Becoming aware of our cultural dynamics is a difficult task because culture is not conscious to us.
Since we are born we have learned to see and do things at an unconscious level. Our experiences,
our values and our cultural background lead us to see and do things in a certain way. Sometimes
we have to step outside of our cultural boundaries in order to realize the impact that our culture
has on our behavior. It is very helpful to gather feedback from foreign colleagues on our behavior
to get more clarity on our cultural traits.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Projected similarities could lead to misinterpretation as well. When we assume that people are
similar to us, we might incur the risk that they are not. If we project similarities where there are
not, we might act inappropriately. It is safer to assume differences until similarity is proven

c. Cultural Compatible
This involves having a local person manage the client relationship from onshore boundaries.

Here are some tips to overcome the problems of cultural differences and make your offshore
outsourcing project a success.

To completely understand the culture of a foreign country, you need to first keep aside your
judgments and prejudices. Only then can you attempt to accept the offerings of the other.

Remember that the responsibility of transcending the cultural differences lies with both the
service provider and the outsourcing client. Apart from expecting your provider to understand
and work according to your work culture, also make an attempt to respect their cultures.

d. Resources Deployment
Apart from making an effort to understand one another's cultures, the outsourcing partners
should also show the understanding in their behavior. It is important to put knowledge into
practice and further employ it in work proceedings.

Maneet Puri is the managing director of LeXolution IT Services, a professional IT outsourcing
company based in India that offers seamless and cost competitive KPO services to its clients. His
company has significant expertise in offering internet market research, virtual assistance and web
mining and processing services.

5.1.4 Clarify the Culture affects all business function

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

a. Marketing
b. Human Resources
c. Production
d. Accounting And Finance
e. Preferred Leadership styles

Cultural risks occur as the result of different expectations, misunderstandings and
miscommunications between a buyer and the seller. Example: A seller wants to make a large sale
to meet a quarterly quota. The buyer wants to be polite and may be saying “yes,” acknowledging
the seller’s explanation of the features and benefits of the product. The seller asks for the
potential buyer’s standard shipping instructions, which are then promptly provided. The seller
enters the “order,” and the shipment is made. But the buyer has never placed a proper order and
therefore rejects the shipment.

A request for a quotation arrives that is misinterpreted to be a purchase order. A lack of
communication resulting from language problems results in a shipment being made that has not
been ordered.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

A buyer promises to pay promptly when the goods are delivered. What the seller fails to realize
is promptly will be after the month-long holiday in the buyer’s country during which the goods
may be shipped but will not be picked up by the company until after the holiday. Thus payment
is delayed, and demurrage costs may accumulate.

A seller, by not doing extensive marketing research, exports a product for distribution only to find
out that for religious and cultural reasons it will not be purchased and therefore is rendered
worthless.

Risk is an inherent part of all business transactions. There is risk of slow or non-payment in
domestic transactions that arise primarily from the unwillingness or inability of a buyer to pay a
seller when payment is due.

When international transactions take place, more risks are added because of the laws, regulations
and politics of the buyers’ and sellers’ countries as well as possible third countries. The financial
condition of a buyer’s country may cause delayed or blocked payments. Changes in the relative
value of buyers’ and sellers’ currencies pose risks. The number of documents required in many
cross- border transactions opens the possibility of missing documents or discrepancies in the
forms to be filed, leading to slow or blocked payment.

There are many misunderstandings that can occur in business transactions negotiated among
countries in distant time zones, with different languages, varying cultural practices and dissimilar
ethical values. Any or all of these can contribute to payments not being received when due.

5.1.5 Interpret the culture differences for international business in others countries

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

a. China
Greetings: People shake hands when meeting, often with slight bows. Age and rank are clearly
noted and respected in China. People introduce themselves in line with this, that is, the most
senior individuals are greeted first. Because the Chinese value the group over the individual, full
names are written with family name first. The Chinese also might initially introduce themselves
this way. People also tend to introduce themselves with their full titles and company name and
you should follow suit.

Schedules: Punctuality is appreciated and respected in business. Arriving early for a dinner,
however, is considered a sign of hunger and is therefore rude. Show up about five minutes
before a meeting or meal is scheduled to begin.

Meetings: Chinese culture is reserved compared with other cultures around the world. As such,
the Chinese may come off as standoffish in professional gatherings. Meetings are kept civil and
respectful in a formal way — and they stick to business. Chinese meetings are highly structured,
so interrupting is considered rude. Because Chinese are hyper aware of seniority and rank,
seating should be arranged with this in mind.

Meals: The Chinese are very hospitable and lavish when hosting guests, including in business. It
is not uncommon to throw banquets for guests (a gesture that should be returned at some
point) and for business associates to argue over who will pick up a check. There will likely be
frequent toasts during meals. The protocol: clink your glass below the rim of someone of a
higher rank. Do not serve your own drink, but make sure to keep the glasses of those next to
you full. Because dishes are usually served on a lazy Susan, you should serve yourself from the
dish directly in front of you. Slurping soup and burping at the table are acceptable, so don’t be
put off. People leave food on their plate to show they are satisfied. It is also common practice
for Chinese hosts to stay until the guest of honor leaves.
b. United States

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

Greetings: People introduce themselves by name and with a firm handshake to everyone
present. Business culture in the US is generally mindful of the separation between professional
and private life. While pleasantries and a brief exchange asking how someone is doing are
common, conversation quickly moves to business. Similarly, Americans are very conscious about
personal space and tend to give more than in European or Latin countries. Close-talking is
generally uncomfortable in American professional settings.

Schedules: Whether on phone calls, to meals or dinner, promptness is expected. Many people in
the US consider being on time as actually being late in business settings, so be sure to arrive
early. That said, expect a straggler or two. Business dinners generally follow the conclusion of
the workday and tend to start as late as 19:00.

Meetings: In most business settings, Americans schedule meeting times and stick to them.
Conversation is usually kept on-topic and sticks to business, with light conversation before or
after a meeting wraps. While it varies by industry, Americans tend to dress conservatively,
although many workplaces in the US have adopted business casual dress policies.

Meals: Americans are open to scheduling and doing business at any meal, including breakfast.
But people watch the clock, including during business lunches, which are typically kept to one-
hour’ time. Don’t be put off by your host checking his or her watch at regular intervals, but
answering calls or checking phones during a meal is impolite. Wait until everyone is served
before eating. Americans are known to be big eaters, so feel free to take seconds if offered.
Keep in mind that smoking is unpopular indoors the US, not to mention illegal in most settings
where a business meal would take place. To be safe (and avoid potential judgment) wait until
the meal has concluded to smoke outside. Follow the host’s lead when it comes to ordering
alcohol. (Getty)

Discuss the culture Differences for each county

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

a.EUROPE –FRANCE

b. AFRICA- NIGERIA
c. AUSTRALIA
5.2 Clarify Hofstede Cultural Dimensions in International Business

Hofstede identified: Four independent dimensions of national culture. Hofstede’s Typology of
National Culture Individualism versus collectivism. Refers to whether a person’s primary function
is as an individual or as a member of a group.

a. Individualism vs Collectivism
An Individualism is societies, each person emphasizes his or her own self-interest; competition for
resources is the norm; and individuals who compete best are rewarded. Examples: Australia, Britain,
Canada, and the U.S.

In collectivist societies, ties among individuals are important; business is conducted in a group
context; life is a fundamentally cooperative experience; and conformity and compromise help
maintain harmony. Examples: China, Panama, Japan, and South Korea.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

b. Power distance describes how a society deals with inequalities in power that exist among
people.
High power distance societies exhibit big gaps between the weak and powerful. In firms, top
management tends to be autocratic, giving little autonomy to lower-level employees. Examples:
Guatemala, Malaysia, Philippines, and several Middle Eastern countries.
Low-power distance societies have small gaps between the weak and the powerful. Firms tend
toward flat organizational structures, with relatively equal relations between managers and
workers. For example, Scandinavian countries have instituted various systems to ensure
socioeconomic equality.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

c. Uncertainty Avoidance
Uncertainty avoidance refers to the extent to which people can tolerate risk and uncertainty in
their lives.
High uncertainty avoidance societies create institutions to minimize risk and ensure security.
Firms emphasize stable careers and regulate worker actions. Decisions are made slowly. Examples
are Belgium, France, and Japan. In low uncertainty avoidance societies, managers are relatively
entrepreneurial and comfortable with risk. Firms make decisions quickly. People are comfortable
changing jobs. Examples are Ireland, Jamaica, and the U.S.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

d. Masculinity versus femininity refers to a society’s orientation based on traditional male and

female values.

Masculine cultures value competitiveness, ambition, assertiveness, and the accumulation of
wealth. Both men and women are assertive, focused on career and earning money. Examples are
Australia and Japan.

Feminine cultures emphasize nurturing roles, interdependence among people, and caring for less
fortunate people—for both men and women. Examples are Scandinavian countries, where
welfare systems are highly developed and education is subsidized.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

e. Long-term versus short-term orientation describes the degree to which people and
organizations defer gratification to achieve long-term success.
Long-term orientation emphasizes the long view in planning and living, focusing on years and
decades. Examples are traditional Asian cultures, such as China, Japan, and Singapore, which base
these values on the teachings of the Chinese philosopher Confucius (500 BCE), who espoused
long-term orientation, discipline, hard work, education, and emotional maturity.
Short-term orientation is typical in the United States and most other Western countries.
QUESTION

1. Apply Japanese’s culture based on Hofstede’s FOUR (4) dimensions framework.

DPP20013 –INTRODUCTION OF INTERNATIONAL BUSINESS

2. Describe any FIVE elements of culture influence decision in International business.

THE END