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Tutorial 4 Answers - T utorial 4 1 Critical Thinking...

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Tutorial 4 1. Critical Thinking & Discussion Qs (Textbook, p125): 1 - 3 1. Explain how the culture of a country might influence the costs of doing business in that country. Illustrate your answer with examples. This week’s reading provides numerous reasons and examples of how culture influences the costs of doing business. The costs of doing business rise as people grapple with unfamiliar ways of doing business. For example, different class structures and social mobility raise the costs of doing business, for if there are inhibitions against working with people from different classes, then the efficiency with which information can flow may be limited and the cost of running a business increased. A country’s religion can also affect the costs of business, as religious values can affect attitudes towards work, entrepreneurship, honesty, fairness and social responsibility. 2. How are business practices in Islamic countries such as Pakistan and Indonesia likely to differ from business practices in Australia and New Zealand? A number of aspects of the cultural differences between an Islamic country and Australia and New Zealand will cause business practices to differ. The underlying philosophy and role of business differs from Islamic countries and non-Islamic countries. Since Muslims are stewards of property for God, rather than owners, they are more likely to use their resources carefully and may be less likely to give up or sell something to a person who may not practice the same stewardship. Additionally, the prohibitions on interest
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payments in some Islamic countries means that the wording of the terms of an agreement must be done carefully so that ‘fair profits’ are not construed as being ‘interest payments.’ 3. What are the implications for international business of differences in the dominant religion or ethical system of a country?
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