Answer to Question 1
Answer: Geert Hofstede developed one of the most widely referenced approaches to helping managers better understand differences between national cultures. His research found that countries vary on five dimensions of national culture.
a. Individualism versus collectivism - Individualism refers to a social framework where people look after their own interests and those of their immediate family. The opposite of this is collectivism, that is characterized by a social framework where people expect others in the group that they are a part of to look after them and to protect them when they are in trouble.
b. Power distance - A high power distance society accepts wide differences in power in organizations. Employees show a great deal of respect for those in authority. On the other hand, a low power distance society plays down inequalities. Employees in a low power distance organization are not afraid to approach their boss.
c. Uncertainty avoidance - A society that is high in uncertainty avoidance is threatened with ambiguity and characterized by a high level of anxiety among its people. A society that is low in uncertainty avoidance is comfortable with taking risks and is also tolerant of different behavior and opinions.
d. Achievement and nurturing - Achievement is the degree to which values such as assertiveness, the acquisition of money and material goods, and competition prevail. Nurturing is an attribute that emphasizes relationships and concern for others.
e. Long-term and short-term orientation - People in a long-term orientation society look to the future and value thrift and persistence. People in short-term orientation societies value the past and emphasize respect for tradition.
Answer to Question 2
Answer:
a. Type of economy There are two major types of economies. A market economy is one in which resources are primarily owned and controlled by the private sector. A command economy is one in which economic decisions are planned by a central government. Managers need to know about a country's economic system because it has the potential to constrain decisions and actions. As China shifts from a more planned economy to a more free market, changing regulations and policies affect the decisions of managers conducting business in that country.
b. Currency exchange rates - A global firm's profits can vary dramatically depending on the strength of its home currency and the currencies of the countries in which it operates. Any revaluation of a nation's currency can affect the managers' decisions and the level of a company's profits. For instance, prior to the overall global economic slowdown, the rising value of the euro against both the dollar and the yen contributed to strong profits for German companies.
c. Inflation means that prices for products and services are going up. But it also affects interest rates, exchange rates, the cost of living, and the general confidence in a country's political and economic system. Managers need to monitor inflation trends so that they can make good decisions and anticipate any possible changes in a country's monetary policies. Inflation rates from -.8 in the Northern Mariana Islands to +57.4 in Belarus impact the purchasing and pricing decisions of global managers.
d. Diverse tax policies are a major worry for a global manager. Some host countries are more restrictive than the organization's home country. Others are far more lenient. Managers need exact information on the various tax rules in countries in which they operate to minimize their business's overall tax obligation. For the past several years, small business investment decisions in the United States have been affected by the uncertainty surrounding domestic tax policies.
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Art and culture
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