Analyzing Cultural Impact on Business Environments

This report delves into the multifaceted influence of culture on business operations, distinguishing between national and organizational cultures and their respective impacts. It employs Hofstede's 6-D Model to comparatively analyze the cultural characteristics of China, Japan, and Germany, examining dimensions like power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence. The analysis explores how these cultural dimensions shape business environments, decision-making processes, leadership styles, and HR practices. The report highlights specific cultural traits of each country, such as Confucianism in China and its emphasis on relationships (Guanxi), the Japanese focus on harmony and long-term orientation, and the German approach to uncertainty avoidance and individualism. It concludes by assessing the advantages and disadvantages of doing business in each country, offering insights for strategic decision-making, and recommending a focus on establishing a factory in China for solar panels. The report underscores the importance of understanding cultural nuances for successful international business ventures.

Culture
It is an umbrella term which incorporates the social conduct and standards found in
human social orders, just as the information, convictions, expressions, laws, customs, abilities,
and propensities of the people in these groups. Also, Culture regards manifestation of collective
human intellectual, to be more precise it is a way of life of people of a particular society. It has
both intrinsic and extrinsic value.
National Culture refers to a shared system of norms, behaviors, beliefs, and customs by the
people of a society. National Culture deals with cultural history, characteristic like ethnicity,
religion and language of a nation. National Culture serves as a source of affecting organizational
culture like decision making, leadership style, HR Practices, managerial function and motivation.
Organizational Culture refers to a bunch of inner qualities and practices in an association. This
collection of values, expectations and practices are set guide for team members of a particular
organization. Also, Organization Culture serves as a source of helping guide for making
decisions, how individuals shout interact and how work should be done.
Difference Between National and Organization Culture (Difference Between
Organisational And National Culture Business Essay, 2021)
National Culture contrast for the most part at the degree of qualities, while Organizational
Culture vary for the most part at the level of the shallower practices. Through the lens of
Hofstede dimension, organizational culture could be different from national culture of the
country.
National Culture Organizational Culture
National Cultural Values have unconditional
relationship
Organizational Values have conditional
relationship
People of a society are completely immersed
into National Culture
Employees of organization are partially
immersed into organizational culture
It is broader and more complex It is narrow and manageable
Inhabitants of a country are born into national
culture
Organizational employees are socialized into
Organizational Culture
Since it is learnt at early life so difficult to
change
Organizational Culture is learnt at conscious
level so easy to make changes
China’s cultural characteristics impacting Business Environment
Chinese business culture is to a great extent impacted by Confucianism. Hence, essentially, the
Confucian idea of Guanxi implies that a relationship network is pivotal and dependent on the
upsides of fortitude, faithfulness, humility and civility. Among the fundamental business
culture’s principles Ethics has been integral part of decision making. Since Power Distance is
dominant so people are respected on the basis of their title and seniority. Chinese people never
criticize employees publicly yet direct questioning in China is very much common. Chinese
believe in the supremacy of strong relationship before closing a deal, so one might have to meet

Chinese personnel several times for a business deal. Also, maintenance of composure during the
meeting is essential. (Lihua, 2021)
Cultural Comparison between China and Germany by using Hofstede’s 6-D
Model (Country Comparison - Hofstede Insights, 2021)
 Power Distance means all inhabitants of a country are not equal. This dimension depicts
the cultural attitude towards society’s inequalities. At a Score of 80, China believes in
pluralistic inequalities and there is no defense mechanism against power abuse and it is
common notion that Chinese people should not have aspirations beyond their rank. While
Germany at a Score of 20 does not believe in the polarized subordinate-superior
relationship.
 Individualism means the extent of interdependence a society preserves among its
individuals. At a score of 20 China sits in the lowest ranks of individualistic society and it
has been considered to be a highly collectivist culture. People believe in the supremacy of
acting in the interest of group rather than an individual self. While Germen at a score of
ranks higher in individualism.
 Masculinity, At a score of 66 China tends to be a very Masculine society where standing
out from the crowd is admirable, society runs on the principles of success, achievement
and competition. And same for Germany as well.
 Uncertainty Avoidance means a society is driven by the principle that future cannot be
known and there is always something ambiguous and unknown situation. China sits in
lowest rank by having a score of 30 while Germany has a higher score on uncertainty
avoidance. Chinese people are comfortable with ambiguity.

 Long Term Orientation means a cultural society keeps links with its past to cope with
future/ present challenges by prioritizing these two different goals separately. China has a
very pragmatic culture. They people tend to think that truth depends on situation, context
and time. Also, a score of 87 reflects that Chinese have the ability to adapt culture/
tradition easily.
 Indulgence defines as the degree to which an individual endeavor to control his wishes
and impulses. A low score of 24 shows that China is a culturally restrained society and it
has the capacity to cynicism and pessimism. Chinese people do not put much time on
leisure while germen people are bit more open towards desires.
Japan’s cultural characteristics impacting Business Environment
Japan is considered to be more relationship oriented yet they think silence is paramount. The
Japanese nation could make effectiveness gains through generally unassuming changes. The way
of life of work in Japan is unnecessarily progressive, decision-making is moderate and
consensual, adaptable working is uncommon. There is a higher possibility of advantageous
interaction between various separate Japanese organizations that structure commonly useful
connections and rally together against outsider business entities. (Donnelly, 2021)

Cultural Comparison between Germany and Japan by using Hofstede’s 6-D
Model (Country Comparison - Hofstede Insights, 2021)
 Power Distance: if we look into Japanese culture through the lens of Hofstede
dimensions, Japan has an intermediate score of 54 which shows that it is a borderline
hierarchical society. They believe in a meritocratic society while the opposite of it is true
for Germany.
 Individualism means how society’s individual define self-image as I or We, Japan has a
collectivist culture. They believe in harmony and they are famous for their loyalty to
organizations. Also, they are more private than other Asian Countries.
 Masculinity: Japan ranks among the most Masculine Society but the competition is
severe between different groups. Their masculinity is known for notorious workaholism
expression. Japanese believe that one can climb up the corporate ladder by hardworking.
 Uncertainty Avoidance: At a score of 92 Japanese are the most uncertainty avoiding
country. The one main reason is that Japanese has faced many natural disasters. These
natural disasters have trained Japanese for unknown situations not only for emergency
but also in every aspect of life. They take facts and figures into consideration before
taking any decision.
 Long term Orientation: Japan sits among the top countries in Long Term Orientation.
Japan has a score of 88 which shows that Japan invests heavily in Research and
Development even in financial crisis. The believe that business entities are here to serve
generations not only for making short-term profit.
 Indulgence: Japan has an indulgence score of 42 which shows that it has a culture of
Restraint. Japanese doesn’t take leisure time. They believe in the tendency to cynicism
and pessimism.
Conclusion
Bottlenecks of doing business in China and Japan/ Why China is relatively better
It is essential to know country’s perspective and insider knowledge before starting any business
outside from the parent company. More businesses are entering the global market it is
fundamental for all businesses to comprehend those cultural differences can affect how they
perform in local markets they are targeting. The most obvious thing is how to cope with the
language barrier in business talks, bridging the gap is extremely important. World is undergoing
an unrelenting technological change so Integration to the global economy has become a global
trend. The culturally equipped and rich nation-state always makes a sound comeback.
Considering the macro level fact, it has been proven that China has the advantage of expansion,
growth and long-term potential for new businesses. While Japan is having a ready market in this
period of time. In Japan consumer has the buying power because of solid Japanese
infrastructure. While speed and cost above quality is being valued in China But complete
opposite in Japan. Japan has been famous for the lifetime value of its customers which is
approximately three times higher than Chinese customers. But cost of acquisition in Japan is
higher since it is harder to persuade them to "switch" from another service of which they are

steadfast and loyal. Japanese people don’t value price alone. China is considered to have higher
competition while Japan does not. In China new businesses are suitable challengers to
officeholders. In Japan, buyers love marks that ooze size, dependability, and history. According
to Hofstede’s 6D Japan has higher uncertainty avoidance and aversion to risk than China. Indeed,
Japanese purchasers are exceptionally open to attempting new innovation yet you should have
the option to show them sizable social verification that others are doing likewise. Conclusively,
CEO Petra Sun should focus on establishing factory China for Solar Panels. It would an
immediate opportunity to build relationship with key stakeholders. And for a fact that all the
business operated in this globalized area are influenced by China. (Tech in Asia - Connecting
Asia's startup ecosystem, 2021)
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