INTRODUCTION TO INTERNATIONAL BUSINESS

i

INTRODUCTION TO
INTERNATIONAL BUSINESS

MASIDAH BINTI MASRI
NORAIDA BINTI ISMAIL @ YUSOF

NOR HAZIMAH BINTI ISMAIL

POLITEKNIK KOTA BHARU

ii

Published and printed by:
Department of Commerce
Politeknik Kota Bharu
KM24 Kok Lanas, 16450 Ketereh
Kelantan.
www.pkb.edu.my
DPP 20013 INTRODUCTION TO INTERNATIONAL BUSINESS
© 2022 Politeknik Kota Bharu
Contents of this material are subject to change without notice. The companies, names and data
used herein are fictitious unless otherwise specified. No part of this material may be
reproduced or transmitted in any form by any means, electronic or mechanical, for any
purpose, without the written permission from Politeknik Kota Bharu.

MASIDAH BINTI MASRI
NORAIDA BINTI ISMAIL @ YUSOF
NOR HAZIMAH BINTI ISMAIL

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SYNOPSIS

The objective of this book is to provide source of information and knowledge especially for
students who enrolled for Diploma in Business Studies or any students who may require
information for any topic relevant to them.
This book entirely based on the Polytechnic MOHE syllabus for Diploma in Business Studies.
INTRODUCTION TO INTERNATIONAL BUSINESS provides an overview of how
international business is conducted by taking into consideration various mechanisms for
dealing with governments and the shifting political landscape, various business laws and
regulations, local customs and culture. This course satisfies the requirement to ensure that
students have a solid understanding in global operations.
We welcome any constructive suggestions and comments from lecturers and students. Such
feedback is given careful consideration and very helpful for future improvement.

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ABOUT THE AUTHORS

AUTHORS

MASIDAH BINTI MASRI
BSC INTERNATIONAL BUSINESS MANAGEMENT, UUM
MASTER’S IN TECHNICAL & VOCASIONAL EDUCATION, KUITTHO

NORAIDA BINTI ISMAIL @ YUSOF
BSC BUSINESS ADMINISTRATION (FINANCE), IOWA STATE UNIVERSITY

MASTER’S IN EDUCATION (TECHNICAL), UTM

NOR HAZIMAH BINTI ISMAIL
BSC BUSINESS ADMINISTRATION (HONS), UUM
MASTER’S IN EDUCATION (TECHNICAL), UTM

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TABLE OF CONTENT

SYNOPSIS iv
ABOUT THE AUTHORS v
TABLE OF CONTENTS vi

1.0 ENTRY AND EXPANSION 1

1.1 Basic Concepts and Definition 1

1.1.1 Non-Equity Modes of Entry 3

1.1.2 i. Exporting 4
ii. Turnkey Projects 5
iii. Licensing 6
iv. Franchising 7
v. Management Contract 8
vi. Contract Manufacturing 10
vii. Engineering, Procurement, Construction 11

and Commissioning (EPCC) 12
Equity-Based Modes of Entry
13
i. Wholly Owned Subsidiary 14
ii. Joint Ventures 15
iii. Strategic Alliances 16
1.2 Tutorial Exercise
21
2.0 THE CULTURE ENVIRONMENT 21
22
2.1 The Culture Nature 23
2.1.1 The Concept of Culture 27
2.1.2 The Elements of Culture 30
2.1.3 Overcoming Cultural Challenges 34
2.1.4 Culture Affects All Business Functions
2.1.5 Culture Differences for International Business 34
in 5 Continent Countries 41
40
2.2 Hofstede Cultural Dimension

2.3 Tutorial Exercise

2.4 Summarize of Hofstede’s Cultural Dimensions

REFERENCE

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1.0 ENTRY AND EXPANSION

1.1 Basic Concepts and Definition

Entering a foreign market is one of the strategic decisions a company must make. It
must be consistent with the business strategy and line of the company. First and foremost,
a firm needs to overcome the risk of foreignness in an unfamiliar environment. The new
environment could end up costing the company a lot of money.

In order to enter a foreign market, a company needs to justify the three basic
decisions:

• Where to enter
• When to enter, and
• How to enter

where to enter when to enter how to enter

1

i. Where to Enter

Where to enter determine the location of international expansion. The
company's long-term earnings potential will be realized with the right location.

Process of country evaluation & selection

Scan for alternatives

Choose and weight variables

Collect and analyza data for variables
Use tools to compare variables & narrow

alternatives
Make final country selection

ii. When to Enter

When to enter, is the next step for a firm after it has identified the desirable market.

First mover Late mover

• a firm enters a foreign market • a firm enters a foreign market
earlier than its competitors with existing/the same
product line.

2

iii. How to Enter

A firm needs to determine the appropriate mode of entry that suits their
business. Two categories of Modes of Entry are:

1) Non-Equity Modes of Entry
2) Equity-Based Modes of Entry

1.1.1 Non-Equity Modes of Entry

In a non-equity mode, exporting and contractual agreement are the two options
available to choose from.

Non-Equity Modes of Entry

Exporting Turnkey Licensing Franchising Management Contract Engineering,
Projects Contract Manufacturing procurement,
construction and
commissioning

(EPCC)

3

i. Exporting
Exporting enables an organization to increase its products or services into a

foreign market without having to make an investment in items such as infrastructure
within that market. There are two primary exporting modes - Direct Exports and
Indirect Exports.

Advantages of exporting
1. Minimize risk.
2. Lower cost and simpler to implement a strategy.
3. Less foreign investment, which encourages small businesses to expand

internationally.
Disadvantages of exporting
1. Logistical difficulties.
2. Less suitable for service products.
3. The cost of shipping and handling are high.

4

ii. Turnkey Projects
A turnkey, a turnkey project, or a turnkey operation (also spelled turnkey) is a

type of project that is built to be sold as finished good to any customer. A turnkey
business is one that that can be purchased without having to make any adjustments to
the operations or the goods offered for sale.

A turnkey project which means a contract under which a firm determines to fully
design, develop and supply a manufacturing facility and turn the project over to the

buyers when it is ready for payment operation. But in terms of real estate, the
definition may get changed.

5

Advantages of Turnkeys Projects
1. Can earn a return on knowledge asset.
2. An improved degree of buildability.
3. Concentrate company resources on its area of specialization.
Disadvantages of Turnkeys Projects
1. Financial risk. Cost over runs.
2. May face a competitor.
3. No long-term interest in the international country.

iii. Licensing

A licensing is an agreement whereby a firm (i.e., licensor) grants the intangible
property rights to other parties (i.e., licensee) for a specified period. In business,
licensing is a legal agreement whereby one firm, under certain terms and conditions,
leases its intellectual property (IP) to another company.

Intellectual property rights include trademarks, patents, brand names, or
technology, under defined conditions.

Example of Licensing Products
6

Advantages of Licensing
1. The company’s products will be manufactured and made available for sale in the

foreign country (or countries) where the product or service is licensed.
2. Low financial risks.
3. Low-cost way to assess market potential.

Disadvantages of Licensing
1. Limited market opportunities
2. Dependence of licensee
3. Possibility of creating future competitors

iv. Franchising
In a franchise agreement, the franchiser (the first party) gives the franchisee

(the second party) the right to use its business procedures, create and market a
service or product, or just use its brand.

In addition to receiving a one-time payment from the franchisor, the franchiser
also receives a share of the sales.

Franchising offers several benefits for both the franchisee and franchisor
7

Advantages of Franchising
1. Rapid expansion to foreign market.
2. Limited financial commitment.
3. Easy expansion capital.
Disadvantages of Franchising
1. Less control over managers.
2. Maintaining brand image and reputation may be challenging.
3. Franchisee cannot make all the decisions.

v. Management Contract
An administrative process to ensure all parties aware of their roles and

responsibilities under a contract, enabling efficient and effective contract
performance.

In exchange for payment, a contractor working under a management contract
provides managerial expertise to run a hotel, resort, hospital, airport, or other
institution. In contrast to licensing or franchising, management contracts require both
the actual running of a facility and specialized knowledge.

8

Managing contracts is an overlooked form of management. Managers constantly have
conversations and encounter issues with their staff members, and some of these naturally

involve compensation.

Advantages of Management Contract
1. Improved constructability.
2. Often less expensive as no franchise is required.
3. Concentrate company resources on its area of specialization.

Disadvantages of Management Contract
1. Potential returns limited by contract expertise
2. It has limitation of contract time periods
3. Conflicting interest

9

vi. Contract Manufacturing
Contract manufacturing is when a manufacturer contracts with another

business to produce certain parts or goods over a predetermined timeframe.

Overview of Contract Manufacturing
Advantages of Contract Manufacturing
1. Cost reduction.
2. Increased technology insight.
3. Concentrate company efforts on other value chain links.
Disadvantages of Contract Manufacturing
1. Loss of control.
2. Reduce learning potential.
3. Cost management difficulties.

10

vii. Engineering, Procurement, Construction and Commissioning (EPCC)
Engineering, procurement, construction, and commissioning (EPCC) contracts

are the most common form of contract used to carry out construction works utilized
by the private sector on large-scale and complicated infrastructure projects. The
EPCM contractor may or may not undertake actual site work.

Advantages o EPCC
1. Price and project duration certainty prior to construction.
2. Efficiency.
3. Reduced stress for owner.
Disadvantages of EPCC
1. Firm acquired many costs and risks of opening new market.
2. Difficulty in issuing variation order.
3. Problem with bad report from the suppliers.

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1.1.2 Equity-Based Modes of Entry

The equity modes of entry into a foreign market include direct investments in
facilities abroad as well as joint ventures with businesses in the same sector that have
a presence in the target market.

A joint venture enables the investing company to benefit from its resident
partner's experience of governmental legislation, corporate culture, and consumer
marketing while a direct investment gives the investing company more direct
influence over the operations.

Wholly Owned
Subsidiary

Equity_Based
Modes of Entry

Joint Strategic
Venture Alliance

Equity-based modes of entry

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i. Wholly Owned Subsidiary

A wholly owned subsidiary is a corporation owning 100% of its shares held by
another corporation, the parent company. Although it has senior management in place
to oversee daily operations, the parent firm alone has made all group-level strategic
choices.

Advantages of Wholly Owned Subsidiary
1. Simpler reporting mechanisms. Wholly owned subsidiary statements can be

consolidated by the parent company into one financial statement.
2. Timely strategic decision-making. Strategic initiatives can be quickly carried out

in this business model.
3. Strategic partnership between the parent and subsidiary operations through vertical

integration, thereby making them more competitive.

Disadvantages of Wholly Owned Subsidiary
1. If the acquired company has a different management style, managing the

subsidiary may be challenging.
2. Bear full cost and risk.
3. Additional legal and financial work.

13

ii. Joint Ventures
A joint venture is a partnership between two or more people that aims to grow

one business or project for profit while splitting the associated risks. The joint
venture's participants must consist of at least two different natural persons or entities.

Advantages of Joint Ventures
1. Obtain quick access to the networks, market share, and knowledge of local partners.
2. Development costs and risks are shared equally.
3. Smaller investment.
Disadvantages of Joint Ventures
1. The danger of granting partners technology control.
2. Political risk exposure is high.
3. Management structure and division of responsibilities can be very complex.

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iii. Strategic Alliances
A strategic alliance is an agreement between two businesses to work together

on a project that will benefit both parties while maintaining their individual
freedom.

Compared to a joint venture, which involves two companies pooling their
resources to form a new company, the arrangement is simpler and less legally
binding.

Advantages of Strategic Alliances
1. Overcome barriers to entry.
2. Enhances reputation with finance providers.
3. Allowing each partner to concentrate on activities that best match her capabilities.

Disadvantages of Strategic Alliances
1. Competitors get low-cost route to technology and market.
2. Risk of choosing the wrong partner.
3. Dealing with divers or conflicting operating practices.

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1.2 TUTORIAL EXERCISE

A) CHOOSE THE BEST ANSWER FOR QUESTIONS BELOW

1. A firm considering foreign expansion must make three basic decisions. Which of the
following is not one of those three?
A. Are product lines wide and deep enough with sufficient inventories?
B. When should the foreign markets be entered?
C. Which entry mode should be used?
D. Which countries to enter?

2. Which of the following is not considered one of the first-mover advantages?
A. Create switching costs that would tie customers to their products or services.
B. Pre-empt rivals and capture demand by establishing strong brand name.
C. Build sales volume and ride down the experience curve ahead of rivals.
D. Be established before rules and regulations change so firm can be exempt from the
changes.

3. Which is the most traditional and well-established form of operating in foreign markets?
A. Licensing
B. Franchising
C. Exporting
D. Joint venture

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4. Which of the following is NOT a non-equity-based mode of entry into foreign markets?
A. Strategic Alliances
B. Management Contract
C. Contract Manufacturing
D. Exporting

5. Many service firms favour a combination of franchising and subsidiaries to control the
franchises within particular countries or regions because ________________.
A. The competitive advantage of many service firms is based on management know-
how.
B. They recognize the importance of local responsiveness.
C. They gain significant tax advantages to do so.
D. These businesses cannot use inventory management to manage prices and demand.

6. Which of the following is not one of the advantages of joint ventures?
A. Sharing market development costs and risks with local partner.
B. They do not require a significant amount of headquarters involvement.
C. Local marketing and production of expertise from local partner.
D. Better understanding of the host country.

7. Entering a foreign market is one of the strategic decisions a firm must make, and it must fit
with the firm’s strategy and nature of business.
A. True
B. False

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8. Direct exporting is the firm do not work with foreign customers or markets with the
opportunity to develop a relationship.
A. True
B. False

9. Licensing refers to a contractual agreement in which the licensor does not grant access to its
patents, trade secrets, or technology for a fee paid by the licensee.
A. True
B. False

10. An advantage of wholly owned subsidiary is to reduce the risk of losing control over
technological competence.
A. True
B. False

B) WRITE THE MOST SUITABLE MODES OF ENTRY FOR EACH
STATEMENT/SITUATION.

1. A ____________________ is a delivery method in which a single entity—a
contractor—works with a project owner under a single contract to complete all stages
of a project from detail engineering through construction.

2. Businesses often decide to enter ____________ because they believe that a combination
of resources with other businesses will lead to better growth and profitability than
whether the business can achieve operations on its own.

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3. ______________________ includes negotiating the terms and conditions in contracts
ensuring compliance with the terms and conditions, as well as documenting and
agreeing on any changes or amendments that may arise during its implementation or
execution.

4. _________ is a process that establishes a working agreement between two companies
for components or goods from another company. As part of the agreement, one
company will custom produce parts or other materials on behalf of its clients.

5. A _____________________ is a method of distributing products or services involving
a franchisor, who establishes the brand’s trademark or trade name and a business
system, and franchisee, who pays a royalty and often an initial fee for the right to do
business under the franchisor’s name and system.

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ANSWERS
A
1. A
2. A
3. C
4. A
5. A
6. B
7. A
8. B
9. B
10. A

B
1. Turnkey project
2. Joint ventures
3. Contract management
4. Contract manufacturing
5. franchising

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2.0 THE CULTURE ENVIRONMENT

2.1The Culture Nature

Culture is a group of people who have a common set of beliefs, values, and objectives
that they have inherited from previous generations.

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2.1.1 The Concept of Culture
Culture is the way of life of people, including their attitudes, values, beliefs,

arts, sciences, modes of perception, and habits of thought and activity. Business
decisions are heavily impacted by cultural differences between nations.

Significance of Culture

A company that conducts business worldwide encounters a wide range of
varied cultural settings, which have a substantial impact on those decisions.
Managers operating internationally need to appreciate the differences among
cultural behaviors of their business partners and consumers across various
countries.

Characteristics of Culture

Culture is learned, shared, and transmitted from one generation to the next.
Culture can be passed from parents to children, by social organizations, special
interest groups, the government, schools, and churches. Culture is
multidimensional and is made up of several interconnected common components.

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2.1.2 THE ELEMENTS OF CULTURE
Aesthetics
Religion

Technology & Material Culture
Language

Social Organization
Manners & Customs

i. Aesthetics
Each culture makes a strong statement about taste through the arts,

particularly through the symbolism of colours, forms, numbers, theatre, dance,
cosmetics, and music. For instance, since the word "four" in Chinese implies
"death," it is best to avoid using the number 4.

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ii. Religion
Defines the ideas of life, which are then represented in the standards and

dispositions of communities and people. Different religious groups respond
differently to international marketing activities. Example, when Mc Donald’s
was planning to enter India, one political party stated that it would oppose the
marketing of beef products in the country.

Religions with the largest followers in the world are:

iii.Technology & Material Culture
Refer to the surroundings of a culture which largely influence its

development and speed of change. It also refers to the outcome of technology
and has a direct bearing on the way in which a society organises its economic
activity. Example, developed countries have advanced technologies, better
facilities and advanced economies compare to others.

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Technology Material Culture

iv. Education

Can be divided into verbal and nonverbal communication. Unspoken signs
like hand gestures, facial expressions, eye contact, etc. are examples of non-
verbal/body language. Language plays a large role in business operations.
Price, delivery dates, shipping options, and payment are all up to negotiation
between a buyer and a seller.

There may be misunderstandings if one or both parties do not speak the
other's language well, which could result in late or nonpayment.

Different languages in communication
25

v. Social Organization

Influence how people interact with one another. The family unit, which
in Western Industrialized countries consists of parents and children (nuclear
family), in several cultures, is extended to include grandparents and other
relatives (extended family).

In such religions, family ties and a commitment to them play a significant
role in human resource management.

vi. Manners and Customs
Manners: The elements of appropriateness ways of behaving, speaking, and
dressing.
Customs: An established pattern of behavior within a society.
Manners and customs are ways of behaving and conducting oneself in

public and business situations.
Informal cultures – egalitarian, in which people are equal and work
together cooperatively.
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Formal cultures – status, hierarchy, power, and respect are very important.
Varying customs - eating habits, mealtimes, work hours and holidays,
drinking, appropriate behaviour at social gathering (handshaking, bowing,
kissing), gift giving (complex), and role of women.
International managers must be familiar with the traditions and
conventions of the culture they are dealing with. Companies must adapt their
goods and services to the regional traditions and customs.

2.1.3 Overcoming Cultural Challenges

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i. Cultural Risk

Different expectations, misunderstandings and miscommunication
between buyer and seller. Writing styles and word choice have an impact on
how each side reads a text, how they respond to it, and whether they comprehend
it or not.

Cultural miscommunication can occur in few settings, mostly due to
several reasons such as:

• Different values - affects cross-cultural communication and
international business across the board through different attitudes,
reaction, and expectations.

• Different types of communication styles – can be either direct such
as getting straight into business discussion during first meeting or
indirect such as only after a shared meal.

• Different concepts of time – differences of what is usual, polite and
what is not proper especially when dealing with time.

• Different use of physical space – affects how they interact with other
people.

Cultural risk in international Business
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ii. Cultural Awareness
Creating cultural awareness involves conducting workshop and

familiarization sessions both in one’s own country and in the related country
abroad to create an awareness of each other’s cultural practices.

Reading about and talking about other cultures would undoubtedly help
with developing cultural awareness, but the opinions expressed must be
carefully considered as they may reflect unjustified stereotypes, be directed only
at a specific subgroup of people, or refer to circumstances that have since
undergone significant changes.

iii.Cultural Compatible Resources Deployment
Involves having local, native onsite person manage the onshore client

relationship or even having a culturally compatible offshore workforce.
Firstly, it needs to be ascertained whether the cultural barrier is addressed

internally within the organization, and secondly, how much of a cost advantage
is provided by the compatible offshore workforce location.

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2.1.4 Culture Affects All Business Functions

Marketing

Human Resources

Production

Accounting and Finance
Preferred Leadership
Styles

i. Marketing

A marketer must have to study about the local culture in-depth before
offering a product to them. Every marketing promotion has done to promote
the product i.e., communicating product feature to the customers and influence
customers to buy it.

Example, Toyota went to great lengths to integrate cultural differences
and motivations into their communications, with their six-version TV ad for the
Camry in United States.

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Impact of Culture on Marketing Strategies

ii. Human Resources
HR impacts company culture and plays a key role in helping to ensure an

organization’s culture stays relevant. Corporate culture is not a fixed state – it
evolves with changing demographics, workplace norms, industry forces and
other factors.

Organizational culture is reflected across multiple levels of the business.
This may affect certain HR policies or necessitate the development of policies
that help a business avoid recurrent problems. Example: if you start a business
in a technology-rich location with lots of recent engineering graduates, you’ll
have better luck finding employees if you’re involved technology.

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iii. Production

Competitive cultures hinder overall productivity because competition
between individuals drives individual performance at the expense of team
performance. Teams with good teaming skills accomplish far more together
than the sum of their individual efforts would allow.

Behavior patterns are most strongly influenced by the leaders of the
organization. The words and actions of the quality control and production
managers reflect the values and beliefs of senior management.

iv. Accounting and Finance

Many countries place great emphasis on their own accounting and finance
standards, because of the societal values and norms on which these standards
have been designed.

Example: accounting and finance theory are part of the personality and
hence part of the culture. If the individuals are Muslims, their personalities are
Islamic, and their culture is Islamic. Therefore, their accounting and finance
theory are Islamic.

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From the foregoing, one can conveniently say that accounting theory and
practices is a product of individuals who are influenced by their beliefs.

v. Preferred Leadership Styles
Leadership styles change depending on where in the world your

workplace is. In most situations today, a good leader needs to be able to manage
across culture. This means listening to what people are saying and
understanding it, reading between the lines, rather than simply reacting.

Leaders today require a high degree of emotional intelligence, both in
interpreting what others really mean and in deciding how best to be effective
themselves within different cultures.

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2.1.5 Culture differences for International Business in 5 continent countries
a. Asia - China
b. America – United State of America
c. Europe - France
d. Africa - Nigeria
e. Australia - Australia

2.2 HOFSTEDE CULTURAL DIMENSION

Dimensions of culture

Geert Hofstede, a Danish psychologist, is the pioneer in culture studies in business
and organization. In his studies, he interviewed thousands of IBM employees in 50
countries during his employment and subsequently developed a cultural model which he
claims summarizes the different cultures.

Hofstede’s study is especially significant to managers in determining different cultural
characteristics involved in international business settings. His model contains five
dimensions of culture.

5 Dimensions of culture
34

i. Individualism - Collectivism:
The extent to which people look after themselves and immediate family only.
• High individualism countries: wealthier, protestant work ethic, greater
individual initiative, promotions based on market value (e.g., U.S., Canada,
Sweden).
• High collectivism countries: poorer, less support of Protestant work ethic,
less individual initiative, promotions based on seniority (e.g., Indonesia,
Pakistan).

Individualism vs Collectivism

35

ii. Power Distance:
The extent to which less powerful members accept that power is distributed

unequally.
• High power distance countries: people blindly obey superiors, centralized,
tall structures (e.g., Mexico, South Korea, India).
• Low power distance countries: flatter, decentralized structures, smaller
ratio of supervisor to employee (e.g., Austria, Finland, Ireland).

Small vs Large Power Distance
36

iii.Uncertainty Avoidance:
The extent to which people feel threatened by ambiguous situations; create

beliefs/institutions to avoid such situations.
• High uncertainty avoidance countries: high need for security, strong belief
in experts and their knowledge, structure organizational activities, more
written rules, less managerial risk taking (e.g., Germany, Japan, Spain).
• Low uncertainty avoidance countries: people more willing to accept risks
of the unknown, less structured organizational activities, fewer written rules,
more managerial risk taking, higher employee turnover, more ambitious
employees (e.g., Denmark and Great Britain)

High or Low Uncertainty Avoidance

37

iv. Masculinity vs. Femininity:
A cultural characteristic in which the dominant social values are success,

money, and things.
• High masculine countries: stress earnings, recognition, advancement,
challenge, wealth; high job stress (e.g., Germanic countries).
• High feminine countries: emphasize caring for others and quality of life;
cooperation, friendly atmosphere., employment security, group decision
making; low job stress (e.g., Norway).

Masculinity vs Femininity

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v. Long-Term vs. Short-Term Orientation:
This dimension helps to distinguish the difference in thinking between Eastern

and Western societies.
• Long Term Orientation (LTO): Companies are likely willing to defer
returns on investments from the overseas market for a longer period in
exchange for establishing a strong foothold and brand loyalty (e.g., Toyota,
Japan)
• Short Term Orientation (STO): Results must be achieved within a short
time span (e.g., General Motors, US)

Long-Term vs. Short-Term Orientation

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2.4 Summarize of Hofstede’s Cultural Dimensions
40

2.3 TUTORIAL QUESTIONS

Multiple Choice Questions. Choose the correct answer.
1. The set of shared beliefs, behaviours and attitudes associated with a large group of people

is called ______________.

A. Religion.
B. Culture.
C. social framework.
D. Myth.
2. Which of the following statements is true of culture?
A. Culture includes only conscious, and not unconscious values.
B. Culture is innate in nature.
C. All facets of culture are interrelated.
D. The earlier the cultural responses are learned, the easier they are to change.
3. Which of the following is NOT one of Hofstede’s dimensions?
A. Masculinity – Femininity.
B. Individualism – Collectivism.
C. Wealth – Poverty.
D. Long Term - Short Term Orientation.
4. Which of the following is a dominant characteristic of a society with high power-distance?
A. Societies regulate behaviour with very few rules.
B. Status is not given much importance.
C. People are integrated into strong, cohesive in-groups.
D. Inequality is expected by all.

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5. Which of the following is a dominant characteristic of a society with high uncertainty
avoidance?

A. People show greater diversity in opinions and behaviour.
B. People are more contemplative and tolerant of unorthodox ideas.
C. People are highly innovative and entrepreneurial.
D. People typically show more emotions during social interactions.

6. According to Hofstede, a society with long-term orientation emphasizes ____________.

A. respect for tradition.
B. thrift and perseverance.
C. protection of one’s public image.
D. fulfilment of social obligations.

True/False Questions. Tick ( √ ) the correct answer. True False

No. Statement
1. Hofstede’s measures and technology are increasingly

criticized for Western cultural bias.
2. Success and achievement are dominant values in

feminine cultures.
3. People typically show less emotion during interactions

and are more contemplative in cultures with high
uncertainty avoidance.
4. Long-term orientation emphasizes respect for tradition,
fulfilling social obligations, and protecting one’s public
image.

Essay Questions.
1. What are the elements of culture?
2. Describe the Hofstede’s Cultural Dimensions

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ANSWERS

Multiple Choice Questions.

1. B
2. C
3. C
4. D
5. D
6. B

True/False Questions.

1. True
2. False
3. False
4. False

Essay Questions.

1. The elements of culture are:

- Aesthetics - Religion
- Material Culture - Language
- Social Organization - Manners and custom

2. Hofstede’s Cultural Dimensions.

- Individualism vs Collectivism
- Power Distance
- Uncertainty Avoidance
- Masculinity vs Femininity
- Long-term vs Short-term Orientation

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