Summary According to Hoeks (2014) where this video isuploaded from, the speaker Valerie Hoeks is presenting on understandingcultural differences when doing global business.
The video main pointsspecifically focused on the speaker’s personal and business experiences whilebeing in China. As such, as a European, the speaker was able to show thelisteners differences in doing business in China, Asia versus doing business inWestern countries, particularly in Europe. The video pointed out threemain cultural points to be made aware when dealing with Chinese and especiallyfor business. · “Guanxi” (??)- the importance of warm,long lasting relations of mutual trust based on Confucianism, with a thinkingof “Reciprocal Favors”.· Harmony-the video states this is “the preferenceof smooth running of a society or group”. This is similar to their Asianneighbors Japan, having the term “Nihon wa,” which means Japanese Peace andHarmony in the society.· Face Reputation-according to the video, this”determines position in the social network” in China, as it relates to one’sskills, connections, finances and so on.
The speaker also further explainedthat Face Reputation is so important in China because “making a mistake inpublic is one of the most difficult things in life”. Comparing the cultural differences betweenwestern cultures and China, from the above points relationship and connectionseem to be one of the major differences. For example, in the western hemispherewhen doing business, there is the tendency to focus on content, like in thecase of working out a contract, or when negotiating there is the focus on”winning the deal”. However, the Chinese would rather initially considergreatly “Guanxi” (??),Harmony and Face interaction before finalizing a deal. Discussion There is asimple definition of Global Business by http://www.yourdictionary.
com/global-business as “corporate or economic activitythat takes place across different countries”. Based on thewebsite http://www.global-strategy.net/what-is-global-strategy/, in order for acompany to be successful in global business, it has to pursue a global strategy”that covers three areas:global, multinational and international strategies”. The website clearly defines these three areasand their significance to global strategy as follows:· “Internationalstrategy: the organization’s objectives relate primarily to the homemarket.
However, we have some objectives with regard to overseas activity andtherefore need an international strategy. Importantly, the competitiveadvantage – important in strategy development – is developed mainly for the homemarket.· Multinationalstrategy: the organization is involved in a number of markets beyondits home country. But it needs distinctive strategies for each of these marketsbecause customer demand and, perhaps competition, are different in eachcountry. Importantly, competitive advantage is determined separately foreach country.· Globalstrategy: the organization treats the world as largely one marketand one source of supply with little local variation. Importantly, competitiveadvantage is developed largely on a global basis”.
Examplesof these three areas include, McDonalds having an international strategy ofseeking to gain competitive advantage in entering the Japanese market by goingup against the Japanese Moss Burger company, or Pepsi having a multinationalstrategy trying to enter the Jamaican market by creating distinctive Caribbeantastes for the islanders, or Apple having a global strategy where their IPhonesare enjoying a global competitive advantage with little or no local marketvariation. Hofstede on Cultural Dimensions andAwareness while pursuing a Global businessGeert Hofstededesigned a model based on his theory of cultural dimensions cross bordersbusiness and communication. The website, https://www.cleverism.
com/understanding-cultures-people-hofstede-dimensions/explains, “The dimensions collectively portray the impact of the cultureingrained in society on the values of the members of that society. They alsodescribe the relationship between these values and behavior, with the help of astructure based on factor analysis”. Here is a summary of the cultural dimensions presented bythis website:1. “PowerDistance: This dimension explains the extent to which members whoare less powerful in a society accept and also expect that the distribution ofpower takes place unequally.2. UncertaintyAvoidance: It is a dimension that describesthe extent to which people in society are not at ease with ambiguity anduncertainty.
3. Individualismvs. Collectivism: The focus of this dimension is onthe question regarding whether people have a preference for being left alone tolook after themselves or want to remain in a closely knitted network.4.
Masculinityvs. Femininity: Masculinity implies a society’spreference for assertiveness, heroism, achievement and material reward forattaining success. On the contrary, femininity represents a preference formodesty, cooperation, quality of life and caring for the weak.5. Long-Termvs. Short-Term Orientation: Long-term orientation describesthe inclination of a society toward searching for virtue. Short-termorientation pertains to those societies that are strongly inclined toward theestablishment of the absolute truth.6.
Indulgencevs. Restraint: This revolves around the degree towhich societies can exercise control over their impulses and desires”.Knowledge and understanding of thesecultural dimensions for a global business is of practical importance for thesenior management, investors, staff, and other stakeholders of the prospectiveinternational enterprise. Using the information of these cultural dimensionshelps to facilitate a smooth transition for everyone involved as it moves intodifferent markets and cultures. In conclusion, as the presenter showsexamples of the importance of understanding the differences between eastern andwestern cultural background in doing international business, it is the hopethat all who desire to engage in cross cultural business activities, would usethis video as a warning so as not fail due to cultural unawareness. ?Inaddition, if one learns to listen to and observe, before, during and after, thesociety in which we endeavor to do global business, then the challenges whichaccompanies such dealings can be reduced, and greater success for the globalenterprise can be achieved.
From this video and background research of HofstedeTheory of Cultural Awareness, it is evident that cultural differences do impactglobal businesses. If these global businesses can make use of Hofstede’scultural dimensions studies, then matters surrounding internationalcommunication, international marketing, international management andinternational negotiation can be solved.