Global business field is heavily influenced by cultural differences. Understanding of cultural environment is essential in making business decisions. Business partners need to consider the prevailing mindset, domestic or global. International investors must compare their home verse their host culture. Geert Hofstede’s 6 dimensions, provide the best basis for analysis of cultural differences.
The graph below focuses on United States, Mexico, China, Israel, and United Arab Emirates under the Geert Hofstede’s 6 Dimensions. The graph compares similarities and differences the United States with its potential business partners from Mexico, China, Israel, and United Arab Emirates.
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To start the analysis Power Distance scores is prominence cultural value. “Power Distance is the degree to which the minority members of organizations in a country expect and accept the disproportionate dispersion of power. China UAE, China, and Mexico ranks h higher than the United States. The high ranking translates to acceptance of hierarchical order where each individual person has a place. Most people in these countries do not any justification for their place in the hierarchy. The management style dominantly applied is that of ruler. Command comes from above. Israel ranks lower than the United State on Power Distance. Israelis prefer equality and justification of hierarchy. On its part, the United States prefer equal power distribution; however, in a lesser extent to Israel.
Individualism is the measure of the important of individuals or group power. Countries high on this dimension are those where people live on “myself, and I” concept. Based on this dimension, the higher the score, the more independence is cherished. Countries linked to Collectivism are those of “we” mindset, they are characterized by socialism. From the score, the United States is highly individualistic country as compared to its partners. Israel follows the United States in Individualism, though in a midway. Mexico, China, and UAE, are Collective countries. The gap between the USA and Mexico, China, and UAE is huge, showing the contrasting cultural environments.
According to Hofstede’s definition Masculinity is the tendency a culture to lean towards “masculine” traits in areas such as competiveness, achievement, and reward for success. Femininity; on the other hand, refers to importance put on areas such as cooperation, being more consensus-oriented, and caring for the weak. The United States, as well as China, and the UAE are high in masculinity. Mexico and Israel have less leaning towards masculinity
Uncertainty Avoidance is the way a country is conscious of uncertainties. Countries have unique. Some prefer the laid-back “let it happen” culture while others struggle to avoid uncertainties. From the graph, the United States takes a mid-attitude. The country accepts that some are unavoidable. China is rigid and do not accept unorthodox way of handling uncertainties. Israel, Mexico, and the United Arab Emirates tend to be more relaxed and new ways; they value experiments than principles.
Long Term Orientation shows how rigidity to tradition and norms as compared to flexibility in changes. Some countries are fast in change adoption than others. From the graph, The United States and Mexico lean toward long-term orientation. The two countries are pragmatic as compared to the other three. Israel has slightly higher pragmatism. China, on the other hand, hardly astray from its traditions and norms as compared to its partners. Finally, Hofstede’s 6th and last dimension is Indulgence. This is the acceptance of free gratification: enjoying life and having fun, or free expression of people. Countries with gratification environment are comparable to restraint ones. Based on the graph, the United States inclines towards Indulgence. Mexico has the highest Indulgence. China is Restraint nation.
In conclusion, the cultural environment identified by Hofestede is important in determining business strategy. Based on how close or different the cultures are, investors can decide to adopt the host or home culture for business operations. At the same time, some cultures do not promote outside ventures.
