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International Business: The New Realities, 4e (Cavusgil) Chapter 3 The Cultural Environment of International Business 1) ________ refers to the values, beliefs, customs, arts, and other products of human thought and work that characterize the people of a given society. A) Ethnicity B) Heritage C) Culture D) Race Answer: C Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 2) Jordan is employed in an American investment firm and is currently working with some Japanese clients on a new project. He uses a lot of hand gestures during meetings which his clients find very distracting and rude. This has also led to many misunderstandings between Jordan and his Japanese clients in the recent past. Which of the following best describes such a situation? A) risk aversion B) organizational anarchy C) cross-cultural risk D) acculturation Answer: C Diff: 2: Moderate Skill: Application Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 3) Which of the following is true with regard to culture? A) It captures how the members of the society live. B) It is absolute. C) It does not define the collective behavior of each society. D) It is inherited. Answer: A Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work

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4) Culture is not ________. A) about beliefs and values of society B) relative C) a collective phenomenon D) inherited Answer: D Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 5) Socialization is defined as ________. A) the process of segregating people into different racial groups in a society B) the process of adjusting and adapting to a culture other than one's own C) the process of learning the rules and behavioral patterns appropriate to one's given society D) a situation or event in which a cultural misunderstanding puts some human value at stake Answer: C Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 6) Acculturation is defined as the process of ________. A) segregating ethnic minorities by distinct groups B) adjusting and adapting to a culture other than one's own C) learning the behavioral patterns and rules of one's own society D) forcing minority cultures to adopt the values of the dominant culture Answer: B Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work

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Phone Center (Scenario) The Technix Computer Corporation recently finished construction of a customer service phone center in New Delhi, India. Phone center agents will be responsible for answering technical questions from customers around the globe. Technix has hired 55 local computer experts as phone agents, and a training session is underway. Technical specialists and call center specialists from the United States have flown to India to train the new Indian employees. Hank Patelli, a senior manager of a Technix phone center in Michigan, will oversee the New Delhi phone center for six months until a local manager is hired and trained to replace him. 7) After the first training session, a number of the Michigan employees expressed frustration that the Indian employees lacked technical knowledge because none of them asked questions or offered answers. Which of the following would be the best way for Hank to handle the situation? A) Remind the American employees that the Indians may be showing respect by remaining silent. B) Order the Indian employees to interact more during the session. C) Host a traditional American barbeque so the American and Indian employees can get acquainted. D) Ignore the complaints of the American employees and continue the training sessions as planned. Answer: A Diff: 2: Moderate Skill: Application Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 8) Ashok, one of the Indian employees, asks Hank if the weekend training session could be rescheduled because it is a Hindu festival day. What will be the most likely outcome if Hank agrees to Ashok's request? A) Instances of absenteeism will become more pervasive among Indian employees. B) Hank will develop a relationship of trust and understanding with the Indian employees. C) Hank's decision will create divisiveness between the American and Indian employees leading to irreparable damages. D) Ashok will replace Hank as manager after six months when Hank returns to the United States. Answer: B Diff: 2: Moderate Skill: Application Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 9) Culture refers to the inherited attitudinal traits of an individual. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work

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10) Cultural values and attitudes can be transmitted through a variety of sources including parents, teachers, friends, government leaders, movies, television, and the Internet. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 11) Nonverbal communication belongs to the deep cultural makeup that we are unaware of. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 12) Religion belongs to the folk cultural makeup that we are aware of. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work 13) Businesses based in societies characterized by high uncertainty avoidance encourage managers to take risks and make quick decisions. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 3-1: Understand culture and cross-cultural risk AACSB: Analytical Thinking; Diverse and Multicultural Work

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14) In a short essay, explain some of the obstacles that international firms often face when dealing with employees, customers, and business partners from other cultures. Answer: Today, firms conduct business in environments characterized by unfamiliar languages, as well as unique beliefs, norms, and behaviors. Managers need to be able to reconcile these differences to create profitable ventures. Managers not only need to develop empathy and tolerance toward cultural differences but also must acquire a sufficient degree of factual knowledge about the beliefs and values of foreign counterparts. Cross-cultural proficiency is paramount in many managerial tasks, including: managing employees, developing products and services, communicating and interacting with foreign business partners, and negotiating and structuring international business ventures. Let's consider specific examples of how cross-cultural differences may complicate company activities. ∙ Pay-for-performance system. In some countries, merit is not the main basis for promoting employees. In China and Japan, a person's age is the most important determinant. But how do such workers perform when Western firms evaluate them using performance-based measures? ∙ Lifetime employment. In some Asian countries, firms are very protective of their employees who may work for the same company all their lives. The expectations that arise from such devoted relationships can complicate dealings with outside firms. Western managers may struggle to motivate employees who expect they will always have the same job. ∙ Union-management relationships. In Germany, union bosses hold the same status as top-level managers and are allowed to sit on corporate boards. Many European firms have a business culture in which workers are relatively equal to managers. This approach can reduce the flexibility of company operations because it makes it harder to lay off workers. ∙ Developing products and services. Cultural differences necessitate adapting marketing activities to suit the specific needs of target markets. ∙ Providing services. Firms that engage in services such as lodging and retailing substantially interact with customers, implying greater cultural interaction and the potential for cognitive and communication gaps. Imagine a Western lawyer who tries to establish a law office in China. How about a Western restaurant chain operating in Russia. Both firms will encounter substantial cultural challenges. Differences in language and national character have the same effect as trade barriers. ∙ Organizational structure. Some companies prefer to delegate authority to country managers, which results in a decentralized organizational structure. Other firms have centralized structures, in which power is concentrated at regional or corporate headquarters. Firms may be bureaucratic or entrepreneurial. How do you deal with a bureaucratic partner or manage distantly located, decentralized subsidiaries? ∙ Teamwork. Cooperating with partners and host-country nationals to achieve common organizational goals is critical to business success. But what should managers do if foreign and domestic nationals don't get along? The Chinese home appliance manufacturer Haier (www.haier.com) delayed acquiring overseas firms because management felt it lacked the ability to manage foreign nationals and integrate differing cultural systems. Diff: 3: Hard Skill: Concept Objective: 3-1; 3-4: Understand culture and cross-cultural risk, Appreciate culture's effect in international business AACSB: Analytical Thinking; Diverse and Multicultural Work 5 Copyright © 2017 Pearson Education, Inc.

15) In a short essay, explain why international business managers should engage in critical incident analysis to avoid the self-reference criterion. Describe why an examination of values and attitudes toward culture is important in this analysis. Answer: International business managers should avoid cultural bias. Problems arise when managers simply assume that foreigners think and behave just like the folks back home. Such ethnocentric assumptions lead to poor business strategies in both planning and execution. Managers new to international business can find the behavior of a foreigner odd and perhaps improper. For example, it is easy to be offended when a foreigner does not appreciate our food, history, entertainment, or everyday traditions. In this way, cultural bias can be a significant barrier to successful interpersonal communication. A person's own culture conditions how he or she reacts to different values, behavior, or systems, so most people unconsciously assume that people in other countries experience the world as they do. They view their own culture as the norm; everything else may seem strange. This is known as the self-reference criterion-the tendency to view other cultures through the lens of our own culture. Understanding the self-reference criterion is a critical first step to avoiding cultural bias and ethnocentric mistakes. Critical incident analysis is a very useful technique that managers use to analyze awkward situations in cross-cultural encounters. The technique encourages a more effective approach to cultural differences by helping managers become more objective and develop empathy for other points of view. An examination of values and attitudes toward culture is important in this analysis. Values represent a person's judgments about what is good or bad, acceptable or unacceptable, important or unimportant, and normal or abnormal. Our values guide the development of our attitudes and preferences. Attitudes are similar to opinions but are often unconsciously held and may not have a rational basis. Prejudices are rigidly held attitudes, usually unfavorable and usually aimed at particular groups of people. Typical values in North America, northern Europe, and Japan include hard work, punctuality, and the acquisition of wealth. People from such countries may misjudge those from developing economies who may not embrace such values. Diff: 3: Hard Skill: Synthesis Objective: 3-1, 3-6: Understand culture and cross-cultural risk, Understand managerial implications of culture AACSB: Analytical Thinking 16) With regard to the iceberg concept of culture, ________ is the most deeply embedded. A) conversational patterns B) cooking C) courtship practices D) literature Answer: A Diff: 2: Moderate Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work

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17) ________ belongs to the folk cultural makeup that we are aware of. A) Fine arts B) Methods of problem solving C) Nonverbal communications D) Diet Answer: D Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 18) ________ are ways of behaving and conducting oneself in public and business situations A) Manners and customs B) Creative expressions C) Values and attitudes D) Symbolic productions Answer: A Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 19) Which of the following situations illustrate a polychronic perspective? A) When a North American talks to a Latin American, he or she may unconsciously back up to maintain personal space. B) In Islamic countries close interaction between men and women is not encouraged in public places. C) Latin Americans have a flexible perception of time and may not arrive exactly at the predetermined time for appointments. D) People in young countries like Australia, Canada, and the United States are relatively focused on schedules, punctuality, and time as a resource. Answer: C Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work

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20) Values in a culture ________. A) represent the symbolic, material, and creative productions unique to a society B) are rigidly held attitudes, usually unfavorable and usually aimed at particular groups of people C) represent a person's judgments about what is good or bad, acceptable or unacceptable, important or unimportant, and normal or abnormal D) are similar to opinions but are often unconsciously held and may not have a rational basis Answer: C Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 21) Prejudices in a culture ________. A) represent the symbolic, material, and creative productions unique to a society B) are rigidly held attitudes, usually unfavorable, and usually aimed at particular groups of people C) guide the development of our attitudes and preferences D) represent a person's judgment about what is important and what is not Answer: B Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 22) In polychronic cultures, ________. A) members are easily distracted and are inclined to do many tasks at once B) people view time as linear and punctuality as a virtue C) managers make commitments, set deadlines, and adhere to a strict schedule of meetings and activities D) managers and investors are impatient and want quick returns Answer: A Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 23) The culture of which of the following countries has a close conversational distance? A) Russia B) Sweden C) Brazil D) United States Answer: C Diff: 2: Moderate Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 8 Copyright © 2017 Pearson Education, Inc.

24) The purpose of material productions in a society is to ________. A) enable people to cope with their environments B) help unite people C) distinguish the dominant culture from minority cultures D) segregate people based on race and ethnicity Answer: A Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 25) ________ are letters, figures, colors, or other characters that communicate a meaning. A) Rituals B) Symbols C) Norms D) Customs Answer: B Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Written and Oral Communication; Analytical Thinking; Diverse and Multicultural Work 26) In cultures with a monochronic view of time, people view time as linear, managers make commitments, set deadlines, and adhere to a strict schedule of meetings and activities. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work 27) Company logos, trademarks, national flags, and historical monuments are considered symbolic productions. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work

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28) How is culture like an iceberg? In a short essay, explain the relationship between the iceberg theory and international business relationships. Answer: Anthropologists use the iceberg metaphor to call attention to the many dimensions of culture-some obvious and some not so obvious. Above the surface, certain characteristics are visible, but below, unseen to the observer, is a massive base of assumptions, attitudes, and values that strongly influence decision making, relationships, conflict, and other dimensions of international business. We are usually unaware of the nine-tenths of our cultural makeup that exists below the surface. In fact, we are often not aware of our own culture unless we come in contact with another one. In cross-border business, we step into different cultural environments characterized by unfamiliar languages, and unique value systems, beliefs, and behaviors. We encounter customers and business partners who display differing lifestyles, norms, consumption behavior, shopping, and use patterns. These differences influence all dimensions of international business. Understanding cultural differences is necessary in the creation and maintenance of international business relationships. Diff: 3: Hard Skill: Concept Objective: 3-2: Learn the dimensions of culture AACSB: Analytical Thinking; Diverse and Multicultural Work

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29) How do cultural perceptions of time relate to international business? In a short essay, provide examples of contrasting cultural time perceptions. Answer: Time has a strong influence on business. It affects people's expectations about planning, scheduling, profit flows, and promptness in arriving for work and meetings. Japanese managers tend to prepare strategic plans for long periods, such as a decade. The planning horizon for Western companies is much shorter, typically a few years. Some societies are more oriented to the past, others to the present, and still others to the future. People in past-oriented cultures believe plans should be evaluated in terms of their fit with established traditions, customs, and wisdom. Innovation and change do not occur very often and are justified to the extent they fit with past experience. Europeans are relatively past-oriented, and prefer to conserve traditional ways to doing things. Young countries like Australia, Canada, and the United States are relatively focused on the present. They tend to have a monochronic orientation to time-a rigid orientation in which people are focused on sch...