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MGT520 - International Business - Lecture Handout 17

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DIFFERENCES IN CULTURE

Information and Task Processing:

People from different cultures obtain, perceive, and process information in different ways; thus, they may also reach different conclusions.

Perception of Cues:

People identify things by means of their senses in various ways with each sense. The particular cues used vary both for physiological and cultural reasons. [For example, the richer and more precise a language, the better one’s ability to express subtleties.]

Obtaining Information:

Language represents a culture’s means of communication. In a low-context culture, people rely on firsthand information that bears directly on a decision or situation; people say what they mean and mean what they say. In a high-context culture, people also rely on peripheral information and infer meaning from things communicated indirectly; relationships are very important. [For example, while Germany is considered to be a low-context culture, Saudi Arabia is considered to be a high-context culture.

Information Processing:

All cultures categorize, plan and quantify, but the ordering and classification systems they use often vary. In monochromic cultures (e.g., northern Europeans) people prefer to work sequentially, but in polychromic cultures (e.g., southern European) people are more comfortable working on multiple tasks at one time. Likewise, in some cultures people focus first on the whole and then on the parts; similarly, in idealistic cultures people will determine principles before they attempt to resolve issues, but in pragmatic cultures they will focus more on details than principles.

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MGT520 - International Business - Lecture Handout 11

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NATIONAL DIFFERENCES IN POLITICAL ECONOMY

The Determinants of Economic Development:

  1. Different countries have dramatically different levels of development, as shown in Map 2.1. GDP/capita is a good yardstick of economic activity, as it measures average value of the goods and services produced by an individual.
  2. But GDP/capita does not consider the differences in costs of living. The UN's PPP index as shown in Table 2.1 shows the differences in the standards of living of people in different countries.
  3. A problem with both GDP/capita and PPP is that they are static in nature. From an international business perspective it is good to look at the rate of growth in the economy as well as the status of its people. Map 2.3 shows that some of the fastest growing countries economically are those have been slower to develop.
  4. A broader approach to assessing the overall quality of life in different countries is the Human Development Index. This is based on life expectancy, literacy rates, and whether (based on PPP indices) incomes are sufficient to meet the basic needs of individuals. Map 2.4 shows the Human Development Index. Notice that some of the worse off countries are heavily populated and have rapidly expanding populations.
  5. What is the relationship between political economy and economic progress? This is a difficult issue. One thing that is generally accepted is that innovation is the engine of long-run economic growth. Another thing that we have come to generally accept in recent years is that a market economy is better at stimulating innovation than a command economy that does not have the same types of incentives for individual initiative.

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