INTERNATIONAL BUSINESS Chapter 4Presentation Transcript
CHAPTER 4 Cultural Dynamics inAssessing Global Markets
What is international business? Wide range of activities involved in conducting business transactions across national boundaries. These are heterogeneous, universal and sequential Comprehensive approach to operations of both large and small firms engaged in business abroad. Concerns all activities of the firm (selling, procurement, outsourcing…). About seizing global opportunities (market expansion or diversification) Driving forces (regional economic agreements, converging needs and wants, communication improvements, quality, leverage…) and restraining forces (management myopia, corporate culture, national controls, globaphobia…)
EPRG Model• Ethnocentric: everything is centered on the domestic market.• Polycentric: several important foreign markets exist.• Regiocentric: the market is composed of several large economic regions.• Geocentric: the world is one large global market.
WHAT IS MARKETING? “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.” (Kotler) Process, exchange, value
What is international marketing? “International marketing is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations” (Czinkota and Ronkainen) “International marketing focuses its resources on global market opportunities and threats” (Keegan and Green) It is a tool used to obtain improvement of the firm’s position in the global market Strategy and action: global and local
International Marketing Decisions Deciding whether to go abroad Deciding which markets to enter Deciding how to enter the market Deciding on the marketing program Deciding on the marketing organization
SIMILARITIES and DIFFERENCES between INTERNATIONAL MARKETING and DOMESTIC MARKETING SIMILARITIES: basic concepts, practices and tools are almost identical, key success factors are the same… DIFFERENCES: more strategic, more variables, more complex, cultural differences, legal constraints, information sources, managing distances, entry mode choice etc.
International marketing concept Export Globalmarketing marketing Inter- cultural, multi- cultural marketing
Culture and international marketing• Concepts of culture• Dimensions and models of culture• Examples and international marketing consequences
What is culture?• “Culture is the integrated sum total of learned behavioral traits that are shared by members of a society” (Hoebel)• “Culture is the entirety of societal knowledge, norms and values” (Antonides and Van Raaij) Culture both affects and describes human behavior, it is essential in international marketing
Fundamentals of culture Culture is a total pattern of behavior that is consistent and compatible in its components. It is not a collection of random behaviors… Culture is a learned behavior. It is not biologically transmitted. It depends on environment, not heredity. Culture is behavior that is shared by a group of people, a society. It is a distinctive way of life.
Culture vs. personality• Personality is the individual’s unique personal set of mental programs that he/she does not share with any other human being.• Culture is what members of a group have in common. “It is the glue that binds groups together” (De Mooij)Ideas, values, acts, emotions… are culturalproducts. They help people to live together
Manifestations of culture Symbols Heroes Rituals Values Expressions of and culture Norms
Symbols• Symbols are words, gestures, pictures, or objects that carry a particular meaning recognized only by those who share a culture.• This is the most superficial manifestation of culture.• New symbols are easily developed and old ones quickly disappear.• Symbols from one cultural group are regularly copied by others.
Heroes• Heroes are people, alive or dead, real or imaginary, who possess characteristics that are highly prized in a society.• They serve as role models for behavior.• They can become globally known, but their stories often become local.
Rituals Rituals are the collective activities considered socially essential within a culture. They are carried out for their own sake. They are easily observed, but not always understood.
Values• Values are at the core of culture. Values are stable beliefs regarding desired behavior or end states.• They often have a religious, ideological or humanistic background.• Goals are derived from values.• Values are among the first things children learn, not consciously but implicitly.• Core values are resistant to globalization; they vary across cultures and are not likely to change frequently.
Norms• Norms and values are part of the “non-material” culture.• Norms are beliefs regarding how to behave and how not to behave (do’s and don’ts).• People differ in the extent to which they accept and comply with norms.• They create expectations and criteria regarding the conduct of others.
Explicit vs. implicit culture• Explicit culture: languages, behavior, know- how, institutions (directly observable)• Implicit culture: moral values, learning process, beliefs and representations (subconscious)
Two levels of cultural diversity in Intl business External cultural diversity Cultural determinants influencing purchasing and consumption behaviors (Who buys? What? Where? How? Why?) Cultural determinants influencing negotiations (relationships with suppliers, buyers, partners) Internal cultural diversity Observed within all MNCs (identity and corporate culture) Cultural differences that affect the way subsidiaries work together
Four levels of culture in marketing DOMINANT CULTURENon-material Material culture of Non-material consumer products culture of the firm culture (market) (corporate culture)
Transfer of culture Two main cultural transfer processes:• Socialization: transfer of culture to new generations; older generation to younger generation; education.• Acculturation: transfer of culture to adults who have grown up in different cultures, who have been socialized in different cultures; ethnic minorities; multicultural societies.
4 Processes of cultural change Cohort (Group) effects, Age effects, Democratization and Exclusivation
Cohort effects (Group / Followers) Acceptance of new values and behaviors begins at a young age. These values and behaviors are retained over the years. They are spread in society because young people grow older and the “old” values gradually disappear with the extinction of the older cohorts. Implies a slow cultural change
Age effect Certain values or behaviors are associated with a particular age group. Behaviors are modified as age groups change. Age-bound consumer behavior. Possible reverse socialization.
Democratization• Cultural “leveling” or “spreading”• Cultural differences across social classes decrease.• Results from an increasing level of general welfare, the influence of mass media and the stress on the equality ideal.• Mechanisms of democratization: trickle- down, trickle-up, trickle-across.
Exclusivation Reverse of democratization Occurs less frequently Implies limited social spreading of values, goods and behavior. Cultural change is limited to a certain group (“elite”, “leading edge”).
Dimensions of culture• What makes one culture different from another culture?• How can we compare cultures or cluster cultures according to behavioral characteristics?• Stereotypes vs. cultural dimensions• Different cultures have different stereotypes of other cultures.
CULTURE BY GENDER• Masculine vs. Feminine• “the dominant values in a masculine society are achievement and success; the dominant values in a feminine society are caring for others and quality of life”• Focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, performance, control and power
CULTURE BY GENDER• Shows the importance of status in societies• Indicates the degree of gender differentiation and the importance of masculine values (assertiveness, money, material goods, success…)
Long-term orientation (LTO)• Long-term vs. Short-term orientation• “the extent to which a society exhibits a pragmatic future- oriented perspective rather than a conventional historic or short-term point of view”• High LTO = perseverance, ordering relationships by status, thrift, sense of shame, family ties, long-term thinking, paternalism
Long-term orientation (LTO)• Focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values• Indicates whether the country prescribes to the values of long-term commitments and respect for tradition