BBA-IV Semester International Marketing

International Marketing
BBA 4th SEMESTER
IB Specialization
MODULE 2

International Marketing Environment

Contents : The Political, Legal and the Socio-cultural Environment, PESTEL Analysis, The
EPRG Model, Hofstede’s 6 Dimensions of Culture, High and Low Context Cultures, the concept
of SRC, The influence of Culture on consumption decisions, problems associated with Cross
Cultural differences.

Political Environment in International Business

The political environment means the political risk, the government’s relationship with a business,

and the type of government in the country. Conducting business internationally implies dealing

with different kinds of governments, levels of risk and relationships.

There are different types of political systems, such as one-party states, multi-party democracies,

dictatorships (military and non-military) and constitutional monarchies. Thus, an organisation

needs to take into account the following aspects while planning a business plan for the overseas

location:

● Political system of the business

● Approach of the government towards business, i.e. facilitating or restrictive

● Incentives and facilities offered by the government

● Legal restrictions for licensing requirements and reservations to a specific sector

like the private, public or small-scale sector

● Restrictions on importing capital goods, technical know-how and raw materials

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● Restrictions on exporting services and products

● Restrictions on distribution and pricing of goods

● Required procedural formalities in setting the business

Economic Environment in International Business

The economic environment refers to the factors contributing to the country’s attractiveness to

foreign businesses. It can differ from one nation to another. Better infrastructure, education,

healthcare, technology, etc., are also often associated with high levels of economic development.

The levels of economic activities combined with infrastructure, education, and the degree of

government control affect the facets of doing a business.

Usually, countries are divided into three main economic categories, i.e. more industrialised or

developed, less developed or third world, and the newly emerging or industrialising economies.

There are significant variations within each economic category. Overall, the more developed

countries are rich, the less developed are poor, and the newly industrialising are those moving

from poor to rich. These distinctions are made based on the Gross Domestic Product per capita

(GDP/capita).

A business needs to recognise the economic environment to operate in international markets

successfully. While analysing the economic environment, an organisation intending to work in a

particular business sector should consider the following aspects:

● Economic system to enter the business sector

● Stage and pace of economic growth

● Level of national GDP and per capita income

● Incidents of taxes, direct and indirect tax

● Available infrastructure facilities and the difficulties

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● Availability of components, raw materials and their cost

● Sources of financial resources and their costs

● Availability of workforce, managerial and technical workers, their salary and wage

structures

Technological Environment in International Business

The technological environment includes factors related to the machines and materials used in

manufacturing services and goods. As organisations do not have control over the external

environment, their success depends on how they will adapt to the external environment. A

significant aspect of the international business environment is the level and acceptance of

technological innovation in countries.

The last decade of the twentieth century saw significant advances in technology, and it is also

continuing in the twenty-first century. Technology often gives organisations a competitive

advantage. Hence, organisations compete to access the latest technology, and international

organisations transfer technology to be globally competitive.

Due to the internet, it is easier even for a small business plan to have a global presence, which

grows its exposure, market, and potential customer base. For political, economic and cultural

reasons, some countries are more accepting of technological innovations, while others are less

accepting. In analysing the technological environment, the organisations should consider the

following aspects:

● Level of technological developments in the country as a whole and specific

business sector

● Pace of technological changes and obsolescence

● Sources of technology
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● Facilities and restrictions for technology transfer

● Time taken for the absorption of technology

Socio Cultural Environment in International Business

The cultural environment is one of the crucial components of the international business

environment. It is the most difficult to understand as the cultural environment is unseen. It has

been described as a commonly held and shared body of general values and beliefs that determine

what is right for one group, according to Kluckhohn and Strodtbeck.

National culture is defined as the body of general values and beliefs shared by a nation. Beliefs

and values are usually formed by factors such as language, history, geographic location, religion,

education and government. Thus, organisations begin a cultural analysis by understanding these

factors. The well-known model is the one developed by Hofstede in 1980.

The model by Hofstede proposes four dimensions of cultural values, which are as follows:

● Individualism – It is the degree to which a nation encourages and values individual

decision making and action

● Uncertainty avoidance – It is the degree to which a nation is willing to deal with

and accept uncertainty

● Power distance – It is the degree to which a nation sanctions and accepts

differences in power

● Masculinity – It is the degree of the gender gap in a society

Hofstede’s model of cultural values has been extensively used as it provides data for a wide array

of countries. Many managers and academics found this model helpful in exploring management

approaches appropriate in different cultures.

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For example, in a country that is high on individualism, one expects individual tasks, goals and

individual reward systems to be effective, while the reverse would be the case in a country that is

low on individualism. While analysing cultural factors, the organisation should consider the

following aspects:

● Approaches to society towards business in specific and general areas

● Influence of cultural, social, and religious factors on the acceptability of the

product

● Lifestyle of people and the products used by them

● Level of acceptance and resistance to change

● Demand for a specific product for a specific occasion

● Values attached to particular products, i.e. possessive or the functional value of

products

● Consumption pattern of the buyers

Competitive Environment

The competitive environment differs from country to country. The political, economic, and

cultural environmental factors help determine the degree and type of competition that exists in a

country. The most likely sources of competition can be well understood for a domestic

organisation, but it isn’t the case when an organisation moves to compete in a new environment.

Competition can come from various sources, such as it can come from the private or public

sector, large or small organisations, domestic or global organisations and traditional or new

competitors.

Benefits of the International Business Environment

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● It unites and brings countries together, making the world a big global village

● It increases employment opportunities as it results in the exchange of information,

ideas, capital across borders and services

● There is equal growth in wealth, availability of goods and services and price

stability

● It brings a new environment of development, alliance, affluence, stability,

modernisation, and technology across the globe

PESTEL Analysis:
PESTEL analysis is an important and widely used tool that helps show the big picture of a firm’s
external environment, particularly as related to foreign markets. PESTEL is an acronym for the
political, economic, sociocultural, technological, environmental, and legal contexts in which a
firm operates. A PESTEL analysis helps managers gain a better understanding of the
opportunities and threats they face; consequently, the analysis aids in building a better vision of
the future business landscape and how the firm might compete profitably. This useful tool
analyzes for market growth or decline and, therefore, the position, potential, and direction for a
business. When a firm is considering entry into new markets, these factors are of considerable
importance. Moreover, PESTEL analysis provides insight into the status of key market flatteners,
both in terms of their present state and future trends.

PESTEL Analysis

1. Political

o How stable is the political environment in the prospective country?

o What are the local taxation policies? How do these affect your business?

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o Is the government involved in trading agreements, such as the European Union (EU), the North
American Free Trade Agreement (NAFTA), or the Association of Southeast Asian Nations
(ASEAN)?

o What are the country’s foreign-trade regulations?

o What are the country’s social-welfare policies?

2. Economic

o What are the current and forecast interest rates?

o What is the current level of inflation in the prospective country? What is it forecast to be? How
does this affect the possible growth of your market?

o What are local employment levels per capita, and how are they changing?

o What are the long-term prospects for the country’s economy, gross domestic product (GDP)
per capita, and other economic factors?

o What are the current exchange rates between critical markets, and how will they affect
production and distribution of your goods?

3. Sociocultural

o What are the local lifestyle trends?

o What are the country’s current demographics, and how are they changing?

o What is the level and distribution of education and income?

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o What are the dominant local religions, and what influence do they have on consumer attitudes
and opinions?

o What is the level of consumerism, and what are the popular attitudes toward it?

o What pending legislation could affect corporate social policies (e.g., domestic-partner benefits
or maternity and paternity leave)?

o What are the attitudes toward work and leisure?

4. Technological

o To what level do the local government and industry fund research, and are those levels
changing?

o What is the local government’s and industry’s level of interest and focus on technology?

o How mature is the technology?

o What is the status of intellectual property issues in the local environment?

o Are potentially disruptive technologies in adjacent industries creeping in at the edges of the
focal industry?

5. Environmental

o What are the local environmental issues?

o Are there any pending ecological or environmental issues relevant to your industry?

o How do the activities of international activist groups (e.g., Greenpeace, Earth First!, and
People for the Ethical Treatment of Animals [PETA]) affect your business?
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o Are there environmental-protection laws?

o What are the regulations regarding waste disposal and energy consumption?

6. Legal

o What are the local government’s regulations regarding monopolies and private property?

o Does intellectual property have legal protections?

o Are there relevant consumer laws?

o What is the status of employment, health and safety, and product safety laws?

Many of the PESTEL factors are interrelated. For instance, the legal environment is often related
to the political environment, where laws and regulations can only change when they’re consistent
with the political will.

PESTEL and Globalization:

Over the past decade, new markets have been opened to foreign competitors, whole industries
have been deregulated, and state-run enterprises have been privatized. So, globalization has
become a fact of life in almost every industry.3 This entails much more than companies simply
exporting products to another country. Some industries that aren’t normally considered global do,
in fact, have strictly domestic players. But these companies often compete alongside firms with
operations in multiple countries; in many cases, both sets of firms are doing equally well. In
contrast, in a truly global industry, the core product is standardized, the marketing approach is
relatively uniform, and competitive strategies are integrated in different international markets.4
In these industries, competitive advantage clearly belongs to the firms that can compete globally.

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A number of factors reveal whether an industry has globalized or is in the process of globalizing.
The sidebar below groups globalization factors into four categories: markets, costs, governments,
and competition. These dimensions correspond well to Thomas Friedman’s flatteners (as
described in his book The World Is Flat), though they are not exhaustive.

EPRG Framework:
The most challenging task a company may face while entering the international market is the
degree of standardization or customization in its operations. The question of standardization or
adaptation or customization will be affecting all business operations and marketing mix
decisions. However, in the era of globalization, where consumers have access to all the products
and services and have their own taste and preferences, scope of customization has increased.
Whether a company chooses standardization or customization of its operations depends upon its
attitude towards different cultures and environments.

The attitude towards standardization or customization can be explained with the EPRG
Framework of international marketing. EPRG framework is based upon four approaches of a
company towards international marketing.

E stands for Ethnocentric

P stands for Polycentric

R stands for Regiocentric

G stands for Geocentric

Ethnocentric Approach: Ethnocentric approach or home country orientation is the approach

where a company simply markets its product or services internationally in the same manner as
they do domestically. Companies believe that consumer’s needs and market conditions are more
or less homogeneous in international markets. Companies prefer an ethnocentric approach in
order to avoid the expense of developing new marketing techniques to serve foreign consumers.
All functions are planned and carried out from home base only with little or almost no difference
in product formulation or specifications.

Polycentric Approach: In Polycentric approach, companies go for customization for each

foreign market. They will customize the products according to each country depending upon the
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consumers taste or preferences or cultural or any legal or political factors i.e. depending upon
their local marketing conditions and then enter into that market. Companies customize the
marketing mix to meet the specific needs of each foreign market.

Regiocentric Approach: In a regiocentric approach, company’s target a group of countries

having similar market characteristics, and then enter into the market. Once the company is
established in various markets, attempts are made to form market clusters based on geographical
and psychic proximity. The production and distribution of products are made to serve the whole
region with an effective economy of operation, close control and coordination.

Geocentric Approach: In geocentric approach, the company identifies the needs of consumers
worldwide and then enters into the market with standard products with standardized marketing
mix for all the markets it serves. Companies have to identify the similarities in consumption
patterns that can be targeted. The companies coordinate their distribution network to distribute
their products in various regional and national markets by establishing manufacturing and
processing facilities around the world.

What is the Hofstede’s Cultural Dimensions Theory?

Hofstede’s Cultural Dimensions Theory is a framework used to understand the differences in
culture across countries and the ways that business is done across different cultures. In other
words, the framework is used to distinguish between different national cultures, the dimensions
of culture, their impact on etiquette and to facilitate communication in areas ranging from
business to diplomacy.

Hofstede’s Cultural Dimensions Theory was created in 1980 by Dutch management researcher
Geert Hofstede who carried out an extensive survey during the 1960s and 1970s, investigating
variations in values within different sectors of IBM, a global computer manufacturing company.

The study comprised over 100,000 employees from 50 countries across three regions.

Hofstede’s Cultural Dimensions Theory

Hofstede identified six categories that define culture:

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1. Power Distance Index

2. Collectivism vs. Individualism
3. Uncertainty Avoidance Index
4. Femininity vs. Masculinity
5. Short-Term vs. Long-Term Orientation
6. Restraint vs. Indulgence

Power Distance Index

The power distance index considers the extent to which inequality and power are tolerated.

● A high-power distance index indicates that a culture accepts inequity and power
differences, encourages bureaucracy, and shows high respect for rank and authority.
● A low power distance index indicates that a culture encourages flat organizational
structures that feature decentralized decision-making responsibility, a participative
management style, and emphasis on power distribution.

For example, in countries with high power distance, parents may expect children to obey without
questioning their authority. Conversely in countries with low power distance there tends to be
more equality between parents and children, with parents more likely to accept children arguing
or challenging their authority.

Individualism vs. Collectivism

The individualism vs. collectivism dimension considers the degree to which societies are
integrated into groups and their perceived obligations and dependence on groups.

● In individualistic societies, the emphasis lies on personal achievement and rights,

prioritizing the needs of oneself and one’s immediate family.
● Collectivism indicates that there is a greater importance placed on the goals and
well-being of the group. A person’s self-image in this category is defined as “We” and
individuals from collectivist backgrounds often prioritize relationships and loyalty more
prominently than those in individualistic cultures.

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Uncertainty Avoidance Index

This dimension considers how unknown situations, uncertainty, and unexpected events are dealt
with.

● A high uncertainty avoidance index indicates a low tolerance for uncertainty, ambiguity,
and risk-taking. The unknown is minimized through strict rules, regulations, etc. Both the
institutions and the individuals in these societies strive to reduce uncertainty by
employing vigorous rules, regulations, and similar measures.
● A low uncertainty avoidance index indicates a high tolerance for uncertainty and
ambiguity. The unknown is more openly accepted, and there are lax rules, regulations,
etc. Individuals and cultures with low uncertainty avoidance embrace and feel at ease in
situations lacking structure or in fluctuating environments.

Masculinity vs. Femininity

The masculinity vs. femininity dimension is often referred to as gender role differentiation and
examines the extent to which a society values traditional masculine and feminine roles.

● Masculinity includes the following characteristics: distinct gender roles, an appreciation

of assertiveness, courage, strength, and competition.
● Femininity includes characteristics such as fluid gender roles, modest, nurturing, and
concerned with the quality of life.

A high femininity score suggests that traditional feminine gender roles hold significant value
within that society and for example, a country with a high rating would probably offer improved
maternity benefits and more accessible childcare services.

On the other hand, a country with a lower femininity score is likely to highlight increased female
representation in leadership roles and a higher prevalence of female entrepreneurship.

Long-Term Orientation vs. Short-Term Orientation

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The long-term orientation vs. short-term orientation dimension considers the extent to which
society views its time horizon.

● Societies that emphasize long-term orientation prioritize future outcomes, postponing

immediate success for achievements over the long term. In these cultures, values like
persistence, endurance, frugality, savings, sustained growth and adaptability take centre
stage.
● Short-term orientation shows focus on the near future, involve delivering short-term
success or gratification, and place a stronger emphasis on the present than the future.
Short-term orientation emphasizes quick results and respect for tradition.

Indulgence vs. Restraint

The indulgence vs. restraint dimension considers the extent and tendency for a society to fulfill
its desires. In other words, this dimension revolves around how societies can control their
impulses and desires.

● Indulgence indicates that society allows relatively free gratification related to enjoying
life and having fun.
● Restraint indicates that society suppresses gratification of needs and regulates it through
social norms.

In a society characterized by high indulgence, you may see individuals allocating more funds to
luxuries and relishing greater freedom in their leisure pursuits. Conversely, within a restrained
society, the inclination leans towards thrift, savings, and practical necessities.

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Advantages and Disadvantages

While Hofstede’s Cultural Dimensions Theory provides a framework to help in understanding
etiquette and communication across cultures, considerations are needed when recommending its
application.

Advantages
Enhances cultural insight: It helps understanding of diverse cultures, fostering an appreciation
for diversity.

Promotes global collaboration: It supports informed management of individuals from diverse

cultures to reduce misunderstanding and conflict while optimizing communication and
collaboration.

Disadvantages
Dated dimensions: It could be argued that the dimensions of power distance index, masculinity/
femininity, individualism/ collectivism, short term versus long term orientation and uncertainty
avoidance do not fully capture the intricacies of various social cultures.

Cultures not individuals: Although the model aims to define cultures and not individuals, every
individual is still ultimately unique, shaped by personal experiences that influence their values
throughout life.

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High and Low Context Cultures:

Different cultures can be classified along a continuum with two conceptual extremes.
These extremes are high and low-context cultures. “High context” and “Low context” are
the terms that were popularized by Hall (1976) and they are employed to describe the
wide cultural differences among the societies of people. In this paper, the high and low
contexts cultures are going to be looked at. The context is going to be related to the
people doing business in different countries in which there might be low or high context.
The High and Low Context:

High context is where the groups of people or societies in which individuals have had

close links in the course of a long period. Most of the cultural behavior aspects are not

open for the reason that many of the members are aware of what to do and what thoughts

to engage in. This is so because of the long period these people have stayed together

(Beer, 2003).

On the other hand, low context is in the case where people in the society have many

connections with each other but these connections are just for a short period for the

reasons that are specific nature. In such societies, there is need to spell out the beliefs as

well as the cultural behaviors in a most explicit manner so that those people who are

coming into such a society can be able to behave in such a cultural environment (Hooker,

2008).

Low context communication is mostly found in those cultures whose roots can be traced

to Western Europe. Such countries in which there is low context communication include

Canada, the U.S.A, Australia, New Zealand, and most parts of Europe. The remaining

parts of the world are much more inclined to high context communication. However,
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many countries have the context that lies between the low-context and high-context

communication. A country like the United Kingdom lies in between the high-context and

the low-context cultures, that is, in the middle of the classification continuum (Lee,

1966).

One of the common characteristics of the low-context culture is the large number of signs

as well as the widespread presence of written instructions. These may include such things

as maps that are detailed on the streets, walls, in buses among other places. But on the

other hand, in high context countries or cultures, very minimal information does exist that

can assist someone strange in a place to get direction. People in such places already have

information regarding what they are supposed to do and they do not need many

directions.

One who is entering a country that has a high-context culture and wants to engage in

business, the person may experience so many difficulties and it may take a very long

period for the person to settle down to business. This is for the reason that, there are not

many directions that guide a new person on how to go about in his or her undertakings.

The people in such a place are used to knowing what to do, where to go, and so on, and

they are not dependent on anybody for guidance. A new person in such a context needs

more time to get to learn the culture and have to form relationships with people here

before he or she can comfortably operate a business.

The case is not the same when one enters a low-context culture. Here people rely on

written instructions and most of the people there do not have long-term social ties to a

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level that they come to understand one another more to a point that they no longer have to

rely on written instructions. We might have a situation in which a person is coming from

a high context culture and entering a country where there is low context culture to do

business. This person might find it difficult to operate in such an environment in which

people have to rely on instructions to go about in business. The person is used to staying

in a society where there have been long-term relations that have brought about a shared

understanding among the members of the society. Unfortunately, this person is no longer

in such a society. Therefore, this person will have to take a longer time to adjust to the

new environment by learning to operate by instructions; verbal as well as written.

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The concept of SRC:

The key to successful international marketing is an adaptation to the environmental differences
from one market to another. Adaptation is a conscious effort on the part of the international
marketer to anticipate the influences of both the foreign and domestic uncontrollable factors on a
marketing mix and then to adjust the marketing mix to minimize the effects. The primary
obstacles to success in international marketing are a person’s self-reference criterion (SRC) and
associated ethnocentrism. SRC (self-reference criterion) is an unconscious reference to one’s
own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is
ethnocentrism, that is, the notion that one’s own culture or company knows best how to do
things. Ethnocentrism is generally a problem when managers from affluent countries work with
managers and markets in less-affluent countries. Cross-cultural analysis isolates the SRC
influences and to maintain vigilance regarding ethnocentrism. However, the Global Marketing
Concept can be used in some situations as a company adopts a concept wherein it views an entire
set of country markets as a unit, identifying groups of prospective buyers with similar needs as a
global market segment and developing a marketing plan that strives for standardization wherever
it is cost and culturally effective.
If there is one thing that I can take away from my experiences as being an International Business
student—its’ culture. Culture is the sum of values, rituals, symbols, beliefs, and thought
processes that are learned and shared by a group of people, then transmitted from generation to
generation. Culture is a powerful human tool for survival, but it is a fragile phenomenon. It is
constantly changing and easily lost because it exists only in our minds.

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The influence of Culture on consumption decisions:

What are Cultural Factors ?

Cultural factors comprise of set of values and ideologies of a particular community or

group of individuals. It is the culture of an individual which decides the way he/she behaves.

In simpler words, culture is nothing but values of an individual. What an individual learns from
his parents and relatives as a child becomes his culture.

Example - In India, people still value joint family system and family ties. Children in India are
conditioned to stay with their parents till they get married as compared to foreign countries
where children are more independent and leave their parents once they start earning a living for
themselves.

Cultural factors have a significant effect on an individual’s buying decision.

Every individual has different sets of habits, beliefs and principles which he/she develops from
his family status and background. What they see from their childhood becomes their culture.

Let us understand the influence of cultural factors on buying decision of individuals with
the help of various examples.

Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns.

Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern
India as this is what their culture is. Girls in South India wear skirts and blouses as compared to
girls in north India who are more into Salwar Kameez.

Our culture says that we need to wear traditional attire on marriages and this is what we have
been following since years.

People in North India prefer breads over rice which is a favorite with people in South India and
East India.

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Subcultures

Each culture further comprises of various subcultures such as religion, age, geographical
location, gender (male/female), status etc.

Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc)

A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride
wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious
occasions.

Muslims on the other hand prefer to wear green on important occasions.

For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely
relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it.

A sixty year old individual would not like something which is too bright and colorful. He would
prefer something which is more sophisticated and simple. On the other hand a teenager would
prefer funky dresses and loud colours.

In India widows are expected to wear whites. Widows wearing bright colours are treated with
suspicion.

Status (Upper Class, Middle class and Lower Class)

People from upper class generally have a tendency to spend on luxurious items such as
expensive gadgets, cars, dresses [Link] would hardly find an individual from a lower class
spending money on high-end products.

A person who finds it difficult to make ends meet would rather prefer spending on items
necessary for survival. Individuals from middle class segment generally are more interested in
buying products which would make their future secure.

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Problems associated with Cross Cultural differences:

SIX KEY BARRIERS FOR CROSS-CULTURAL COMMUNICATIONS

1- ETHNOCENTRISM

We all have a natural tendency to look at other cultures through our own lenses. Ethnocentrism

happens when we implicitly believe our way of doing things and seeing things is the right and

only way. As a result, we negatively judge behaviours that don’t conform to our world vision.

We perceive other’s behaviours as odd and improper. Ethnocentrism also creates an “us versus

them” mentality that can be detrimental. In a previous company I worked for, countless times

I’ve heard the French complain about the Americans in an ethnocentric way and vice-versa.

2- STEREOTYPING

It’s also common to rely on oversimplified clichés about people from different cultures. In fact,

there are quite a few cross-cultural trainings in the market that are focused on memorizing

cultural differences and can reinforce stereotyping. Learning about differences can be useful as a

starting point. But individuals are unique; you can never predict a person’s behaviour based on

his or her nationality. When we were moving to the UK, French friends told us, The British never

invite you for dinner, which is a common social activity in France. We happen to have the

loveliest British neighbours who invite us for dinner often.

3- PSYCHOLOGICAL BARRIERS

To manage cross-cultural teams successfully, you need to flex your own style. It’s not easy to go

against your natural preferences. People can feel unauthentic and incompetent. I know the case

of a French manager who went to the United States. He found out that his typical French style of

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giving feedback, focused on what was “wrong” rather than on what was working well, was

undermining his team’s confidence. He realised what the problem was, but he felt artificial acting

the “American” way. He went back to France as soon as he could.

4- LANGUAGE BARRIERS

All teams have a common language, but when some people are more fluent than others, it creates

social distance between members. In global teams, people who are less fluent in English tend to

withdraw from communication, which means the team may not get all the input it needs.

Understanding what’s said can be challenging if people speak too fast or use too much slang.

This also might have an influence on how people’s competence and performance are perceived. I

worked for an organisation where non-English native speakers felt that their career progression

opportunities were not the same as for English native speakers.

5- GEOGRAPHICAL DISTANCE

In global virtual teams, people don’t get the chance to interact and build relationships with each

other as in a traditional office environment. And the less you know about people, the less you

share information with them. Collaboration within virtual teams is, therefore, more challenging.

Groups outside of the head office can also feel excluded. On the other hand, head office group

members might think that other colleagues are not contributing. Differences in time zones also

can be challenging. Often if you’re not in the headquarters, you are expected to cope with

meeting timings that are less convenient. I know of a highly talented woman who left a global

senior leadership role because she got tired of having frequent meetings in the night.

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6- CONFLICTING VALUES

Culture is like an iceberg: what you see are the behaviours, and those are influenced by the

invisible values under the water line. Cultural clashes happen when other people’s behaviour

compromises our own values. Often, when you don’t understand or don’t agree with a behaviour,

it means that there are conflicting values under the water line. There is no right or wrong way of

doing things; it’s just a matter of cultural norms. Below, you’ll see a (non-exhaustive) list of

common conflicting cultural values:

Task oriented vs. relationship oriented

In some countries like the US, people view conversations as an opportunity to exchange

information. People get down to business quickly. In Latin American countries, for instance,

conversations are primarily an opportunity to enhance the relationship. I once worked for an

American company where, in meetings, participants barely introduced each other; we got down

to work immediately. Being a Latin American, it took me a while to get used to it.

Direct vs. indirect communication

In countries like Germany, it is a sign of professionalism to speak clearly and leave no room for

misinterpretation. In countries like Korea, people prefer to communicate indirectly. People

approach problems through vague references. The danger here is that a person from a direct

culture may come across as insensitive, while the person from the indirect culture may appear

imprecise.

Open subtle disagreement

Cultures that place a high value on “face” and group harmony may be averse to confrontation,

like in China. In other cultures, having a “good fight” is a sign of trust, like in the Netherlands.

People from different parts of the world also vary in the amount of emotion they show during
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professional conversations. For example, Italians raise their voices, while the British are more

composed.

Informality vs. formality

In some countries, such as Australia, people are generally casual; in others, like Japan, people

tend to be more formal. To informal people, formality might be interpreted as the sign of

stiffness, while informality to formal people might be perceived as a lack of professionalism.

Structured vs. flexible scheduling

All businesses follow timetables, but in some cultures, people strictly adhere to the schedule,

whereas in others, they treat it as a suggestion. For some, “five minutes” could mean half an

hour, and “tomorrow” could mean the next few days. In Brazil, I wouldn’t start a meeting exactly

on time. It feels disrespectful not to wait a bit for the late comers. In the UK, not starting the

meeting on time might be considered disrespectful towards those who made it to the meeting on

time.

Egalitarian vs. hierarchical

Team members from more egalitarian countries, such as Sweden, may be accustomed to voicing

their unfiltered opinions and ideas, while those from more hierarchical cultures tend to speak up

only after more senior colleagues have expressed their views. I ran quite a few audits in

Morocco, and people’s behaviours were totally different, depending on whether their bosses were

in the same room or not.

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