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AUSTRALIAN COLLEGE OF BUSINESS AND TECHNOLOGY

INB2101D (Monday– Night Lecture)

Cultural Framework of Business (Mr. Chandana Kumara)

“As globalization continues to develop, will the division between Western and Eastern business practices decline in relevance, or, will they remain as powerful as ever?”

SANDUNI THARAKA KARIYAPPERUMA

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Table of content Part A 1. Introduction 1.1. Topic : “As globalization continues to develop, will the division between Western and Eastern business practices decline in relevance, or, will they remain as powerful as ever?” 1.2. What is globalization? 1.3. Western and Eastern Business Relationship Business 2. Early Globalization, 3. What are the reasons for globalization?

3.1. Positive impacts of globalization 3.2. Negative impacts of globalization 4. After Globalization, 4.1. Western and Eastern business practices 4.2. Different between Western and Eastern Countries 4.3. Different between Western and Eastern Human Recourse practices 4.4. What are the effects for Western and Eastern business practices? 5. Conclusion 6. References

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Introduction Globalization is reshaping our lives and driving us into uncharted region. As new innovations drive down the expense of worldwide correspondence and travel, we are progressively presented to the qualities and practices of different societies. As nations decrease hindrances to exchange and venture, globalization drives their commercial ventures to develop more aggressive on the off chance that they are to survive. What's more, as multinationals from cutting edge nations and developing markets search out clients, rivalry increases on a worldwide scale. These new substances of worldwide business are changing our societies and changing the way organizations work together. In this report we discussing about “As globalization continues to develop, will the division between Western and Eastern business practices decline in relevance, or, will they remain as powerful as ever? “Mainly we discuss about Western and Eastern business practices. Not only different about business practices we discuss about culture, relationships and etc. There are numerous contrasts between Eastern societies and Western societies, running from the sort of rationale that is utilized for self-expression to the feeling of time amid gatherings. Western societies utilize a straight sort of rationale, while Eastern societies have a winding kind of rationale for points of view and self-expression. Eastern societies are "we/us"–oriented and collectivistic, while Western societies are "I/me"–oriented and individualistic. Accordingly, collectivistic social orders esteem the objectives and accomplishment of gatherings over those of people, which are commonly more vital in individualistic social orders. For gatherings in Eastern societies, it is essential that representatives touch base before their bosses or anybody in upper administration. Eastern societies are less worried with time requirements, while Western societies think of it as critical to begin and end arrangements on time. One of the greatest slip-ups Western organizations can make is hurrying into an association with Eastern organizations.

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Topic:

“As globalization continues to develop, will the division between Western and Eastern business practices decline in relevance, or, will they remain as powerful as ever?”

What is Globalization?

Unfortunately "Globalization" has gotten to be one of the huge popular expressions of our time and this characterizes an issue. The issue is that numerous, if not most, experts on Globalization don't seem to have a basic knowledge of financial matters and are different in a view of the part and force of the country government. “Globalization is a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities.” (Nayef, 2006) In BBC News, article name as ‘Bitesize has changed’ write about globalization, ‘Globalization’ is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. Globalization has increased the production of goods and services. The biggest companies are no longer national firms but multinational corporations with subsidiaries in many countries.

Globalization has been taking place for hundreds of years, but has speeded up enormously over the last half-century. Globalization has resulted in:

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increased international trade

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a company operating in more than one country

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greater dependence on the global economy

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freer movement of capital, goods, and services

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recognition of companies such as McDonalds and Starbucks in LEDCs

Although globalization is probably helping to create more wealth in developing countries - it is not helping to close the gap between the world's poorest countries and the world’s richest.

(BBC, 2014)

Western and Eastern Business Relationship Western and Eastern Business relationship is mostly different. The fact is, BRIC culture will not engage in business until a strong personal relationship has been built. It takes months, if not years, to build these relationships. In China, for instance, it is assumed about half a dozen dinners, over many months, is about right to get to know each other. During these largely social experiences, conversation is about life, children, philosophy, the arts, and a host of other topics that have nothing to do with business (a few things that should be

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avoided include politics, and anything related to business). Only after a potential partner gets to know you, and trust you, will the door be opened to discuss business.

Relationships are so close in many Asian cultures that the distinction between “business” and “personal” becomes blurred. For instance, Indians are welcome to drop by the home of a potential partner to get to know them better, and it would be rude not to invite them to stay for dinner or even to spend the night if they have travelled far. This holds true in many countries across Asia and the Middle-East.

Eastern cultures, at least in comparison to Western norms, place higher value on strong relationships, saving face, and long term planning. Of course, ascribing the same attributes to all of the BRIC and all of Asia would be misguided. Keep in mind that the following is a list of core cultural traits that Easterners will generally value more highly than Westerners.

1. Relationships are emphasized more than the “letter of the law” 2. Aspiration and intentions matter strongly, not just measurable performance 3. The good of the group outweighs the needs of the individual 4. Face-saving tact is absolute (I’ll post an article on this complex topic soon) 5. Long past history and achievement matters, often more than recent history 6. Rewards should be consistent with effort, not just results 7. Long-term thinking (years ahead, not just this year) versus short-term gains (Beckman, 2013)

Early Globalization When did globalization start? The answer to this question depends on how globalization is defined. De Vries (2010) distinguishes between “soft” and “hard” globalization. Flynn and Giráldez claim that “soft globalization” started “ when the Old World became directly connected with the Americas in 1571 via Manila.” “Hard globalization” is defined by O’Rourke and Williamson as “integration of markets across space”. for well-founded theoretical and empirical reasons; this definition is more popular among economists. Therefore, it is the one adopted here. Then, globalization started in the West by the first half

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of the eighteenth century when grain markets became increasingly integrated within Europe and between Europe and the US –see Dobado, García-Hiernaux and Guerrero (2012). Our econometric methodology, supplemented with substantial historical evidence, permits us to offer a new perspective on the globalization process that somewhat differs from one established in their pioneering works by O’Rourke and Williamson (1999, 2002a, 2002b and 2004) –see Figure 1. Thus, starting in the first half of the eighteenth century, globalization predated rather than followed the first instance of modern economic growth, the Industrial Revolution. This important finding might have been previously overlooked because intercontinental market integration was interrupted by the French Revolutionary and Napoleonic Wars (1792-1815) and their aftermath. When globalization regained momentum, it then coincided with –and was favored by- the spread of the Industrial Revolution throughout Europe and the US. We term the pre-1792 intra- and intercontinental integration of grain markets as “Early Globalization”. Latin American countries, with the possible partial exception of Chile due to its trade on wheat with Peru, did not join the “Early Globalization”.

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The dramatic expansion of foreign trade across the West in the Early Modern Era delivered significant, albeit limited, economic benefits. The direct impact of foreign trade (e.g. via specialization, expansion of internal markets, etc.) on economic growth has been recognized since long time ago by economists.

What are the reasons for globalization? Reasons for globalization There are several key factors which have influenced the process of globalization: 

Improvements in transportation - larger cargo ships mean that the cost of transporting goods between countries has decreased. Economies of scale mean the cost per item can reduce when operating on a larger scale. Transport improvements also mean that goods and people can travel more quickly.

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Freedom of trade - organizations like the World Trade Organization (WTO) promote free trade between countries, which help to remove barriers between countries

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Improvements of communications - the internet and mobile technology has allowed greater communication between people in different countries.

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Labor availability and skills - countries such as India have lower labor costs (about a third of that of the UK) and also high skill levels. Labor intensive industries such as clothing can take advantage of cheaper labor costs and reduced legal restrictions in LEDCs. (BBC, 2014)

Positive impacts of globalization Globalization is having a dramatic effect - for good or ill - on world economies and on people's lives. Some of the positive impacts are:

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

Inward investment by TNCs helps countries by providing new jobs and skills for local people.

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TNCs bring wealth and foreign currency to local economies when they buy local resources, products and services. The extra money created by this investment can be spent on education, health and infrastructure.

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The sharing of ideas, experiences and lifestyles of people and cultures. People can experience foods and other products not previously available in their countries.

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Globalization increases awareness of events in far-away parts of the world. For example, the UK was quickly made aware of the 2004 tsunami tidal wave and sent help rapidly in response.

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Globalization may help to make people more aware of global issues such as deforestation and global warming - and alert them to the need for sustainable development. (BBC, 2014)

Negative impacts of globalization Critics include groups such as environmentalists, anti-poverty campaigners and trade unionists. Some of the negative impacts include: 

Globalization operates mostly in the interests of the richest countries, which continue to dominate world trade at the expense of developing countries. The role of LEDCs in the world market is mostly to provide the North and West with cheap labor and raw materials.

Protestors in London

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

There are no guarantees that the wealth from inward investment will benefit the local community. Often, profits are sent back to the MEDC where the TNC is based. Transnational companies, with their massive economies of scale, may drive local companies out of business. If it becomes cheaper to operate in another country, the TNC might close down the factory and make local people redundant.

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An absence of strictly enforced international laws means that TNCs may operate in LEDCs in a way that would not be allowed in an MEDC. They may pollute the environment, run risks with safety or impose poor working conditions and low wages on local workers.

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Globalization is viewed by many as a threat to the world's cultural diversity. It is feared it might drown out local economies, traditions and languages and simply recast the whole world in the mould of the capitalist North and West. An example of this is that a Hollywood film is far more likely to be successful worldwide than one made in India or China, which also have thriving film industries.



Industry may begin to thrive in LEDCs at the expense of jobs in manufacturing in the UK and other MEDCs, especially in textiles.

Anti-globalization campaigners sometimes try to draw people's attention to these points by demonstrating against the World Trade Organization. The World Trade Organization is an inter-government organization that promotes the free flow of trade around the world. (BBC, 2014)

Later Globalization

Western and Eastern business practices Nevertheless the contrasts between US, Canadian and European business values, goals and rehearses, and in spite of European traded on an open market organizations having sought after to a greater extent a partner than an American-style shareholder introduction, one can absolutely see similitudes between this aggregate "West" and Asia in admiration of board

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administration, administration standards, bookkeeping and budgetary techniques, and advertising, operations and human asset methodologies. Both Asia and the West have a solid suspicion of the combination/multi-industry model of business association, an admiration for the hypothesis and routine of good administration, a developing familiarity with the significance of marking and showcasing, and an attention on transient proficiency and results – once in a while to the detriment of longer-term viability. Of course, as with Western business, one cannot legitimately talk about ‘Asian businesses as uniformity. There are huge differences between Japanese beliefs and models of business – with their focus on large, networked private sector organizations stressing organic growth, lower and short-term financial return expectations – and other ‘Asian’ styles. The contrasts with Chinese styles are particularly stark. Chinese private sector businesses are mostly family-owned rather than publicly traded, and Chinese state-owned enterprises are most often bureaucratic models that Max Weber would have recognized from his work in 19th century Europe. While these state organizations are undergoing massive changes as they move out beyond Chinese borders, they are still lacking in the flexibility and agility so needed in free market competition, as well as in some of the risk management and marketing skills so pronounced in the West. A further contrast in Asia lies with Indian businesses, which, despite obstructive government bureaucracies, have shown themselves to be entrepreneurial not only in small- and mediumsized enterprises, but also in large organizations like Aditya Birla Group, Infosys, Tata, Wipro and so on. Indian styles of management have levered much from the West, all the while remaining uniquely Indian and entrepreneurial – for one thing, making extensive use of branding and marketing. While they have still much to learn in respect of employee engagement and financial management, these Indian organizations are increasingly impressive competitors on the world stage. We do not have the space to discuss the success of the Korean chaebols, or Singaporean and Hong Kong family entrepreneurship, or the rise of the Indonesian networked businesses. But the point is that there is no single ‘Asian’ model. (Middleton, 2012)

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Different between Western and Eastern Countries Creativity What difference do you see between how Eastern and Western cultures channel their creativity? Western cultures tend to be individualistic. When Westerners approach problem solving, they attempt to make the solution unique and ground breaking. But social norms in East Asian cultures encourage harmony and not making waves. As a result, there’s more attention to making a solution useful — easy to implement, easy for other people to accept and to understand. There’s a lot of evidence for these cultural differences. Countries like Japan have done very well by making incremental quality improvements on existing technologies. In the West, there’s more emphasis on developing completely new technologies. Of course there are many exceptions. (Kahn, 2011) Culture The visual artist and designer based in Germany Yang Liu, created a series of graphs that explains the differences between Eastern and Western Culture. Based on her own experience, she tries, through minimalist visualizations, to transmit, in the simplest of ways, his feelings against the gap that exists between these two cultures. Blue – Western Culture Red – Eastern Culture

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(Liu, 2015)

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Different between Western and Eastern Human Recourse practices Most human resource management theories, practices and writing start in the Western nations. However, globalization and cross-cultural collaboration gradually highlights the differences in national cultures, and it is clear that Eastern and Western countries have different approaches, perspectives, norms and practices. Comparison of human resource practices in Eastern countries such as China and Japan and Western countries such as the United States and United Kingdom, therefore, reveals that they differ knowingly in terms of organizational structure, motivational programs, communication and conflict resolution. Organizational Structure Organizational structure, leadership styles and people-management philosophies differ in Eastern and Western countries because of the varying value systems. In Eastern countries, there is a strict adherence to organizational hierarchy, and the leadership style is mostly autocratic; in Western countries, organizations have flatter structures and leaders tend to be more democratic. However, because countries in the Far East such as China and Korea and the Middle East have collectivist cultures where the group takes precedence over individuals, employees are usually ideally organized into workplace teams. Motivation Programs Western and Eastern countries differ in their views on motivation; whereas Western countries tend to place greater emphasis on individual rewards and compensation packages and personal career development, Eastern countries value collective rewards and steady progression. In the Western context, individual workers stand out when they exercise personal initiative and are duly rewarded through competitive remuneration and opportunities for growth. Conversely, in the Eastern countries, ...