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  • Culture, including all of its elements, profoundly affects management style and overall business systemsCulture not only establishes the criteria for day-to-day business behavior but also forms general patterns of values and motivations. Various studies have identified North Americans as “individualists,” Japanese as “consensus oriented,” and Europeans as “elitists and rank conscious”
  • A lack of empathy for and knowledge of foreign business practices can create insurmountable barriers to successful business relations. Knowledge of the management style – the business culture, management values, and business methods and behaviors existing in a country and a willingness to accommodate the differences are important to success in an international market. Culture has an important influence on strategic thinking
  • We can get some measure of the work/personal life trade-off made in different cultures in Exhibit 5.1. As a point of reference, 40 hours per week times 50 weeks equals 2,000 hours. The Americans appear to be in the middle of hours worked, far above the Europeans and below the Southeast Asians. Most Americans are getting about two weeks of paid vacation, while in Europe they are taking between four and six weeks! In Singapore and Hong Kong Saturday is a workday. While we don’t have any numbers listed for China, the new pressures of free enterprise are adding hours and stress there as well. However, the scariest datum isn’t in the table. While hours worked are decreasing almost everywhere, in the States the numbers are increasing, up 36 from 1990.
  • Based on decades of anthropological fieldwork, Hall places 11 cultures along a high-context/low-context continuum in Exhibit 5.2. Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication, whereas the low-context culture depends more on explicit, verbally expressed communications. A brief exemplar of the high/low-context dimension of communication style regards an international marketing executive’s description of a Los Angeles business entertainment event. When a German client requested something “local” for dinner, the executive took him to what he thought was a great Mexican place in Santa Monica and had it all, guacamole, salsa, enchiladas, and burritos. When he asked the client how he liked the food the response he got was, ‘It wasn’t very good.” Germans, being very low-context oriented, just deliver the information without any social padding. And a high-context oriented Japanese would really pad the response with something like, “It was very good. Thanks. But then the Japanese would never order Mexican food again. While an American or German might view the Japanese response as less than truthful, from the Japanese perspective, he was just preserving a harmonious relationship. Indeed, the Japanese have two words for truth, honne (true mind) and tatemae (official stance). The former delivers the information and the latter preserves the relationship. And in high-context Japan the latter is often more important.
  • In Exhibit 5.3, 31 countries are ranked for overall pace of life based on a combination of three measures: (1) minutes downtown pedestrians take to walk 60 feet, (2) minutes it takes a postal clerk to complete a stamp-purchase transaction, and (3) accuracy in minutes of public clocks. It is no surprise that Switzerland, the land of precision time-keeping ranks number one overall, and number one in the accuracy of public clocks. In Ireland, people walk the fastest, while in Germany the postal clerk clocks in ahead of the rest. The United States ranks 16th overall, while Mexico, both the country and postal clerk, come in last at number 31.
  • Exhibit 5.4 show the relatively low percentage of women who sit on corporate boards. In Norway, women comprise a little over 20 percent of board members while in Japan, that number drops below five percent. The U.S. ranks third with 12 percent female board members.
  • Exhibit 5.5 shows the Transparency International Corruption Perception Index. Higher numbers correspond to a lower prevalence of bribe taking. In this table, the top 25 and bottom 25 are shown. Among its various activities, TI conducts an international survey of businesspeople, political analysts, and the general public to determine their perceptions of corruption in 180 countries. In the Corruption Perception Index (CPI), Denmark, Finland, and New Zealand, with scores of 9.4 out of a maximum of 10, were perceived to be the least corrupt, while Myanmar and Somalia, with scores of 1.4, were seen as the most corrupt.
  • TI also ranks 30 bribe-paying countries, and the ranking is reported here in Exhibit 5.6. TI is very emphatic that its intent is not to expose villains and cast blame, but to raise public awareness that will lead to constructive action. As one would expect, those countries receiving low scores are not pleased; however, the effect has been to raise public ire and debates in parliaments around the world – exactly the goal of TI. The most notable datum in the TI scores is Japan’s speedy ascendance in the last decade from 5.8 in 1998 to 7.5 in 2007. As a point of comparison, the United States has fallen in the rankings over the same time period from 7.5 to 7.3. No large, affluent country has moved up the rankings this fast. Now, at least according to TI, America is more corrupt than Japan! While the difference between the two major exporters is perhaps insignificant, the numbers fly in the face of Americans that have consistently criticized Japan as corrupt.
  • When we compare linguistic distance in Exhibit 5.7 (to English) and Transparency International’s Corruption Perception Index to the other three, we see similar levels of correlations among all five dimensions. And while metrics for other dimensions of business culture do not yet exist, a pattern appears to be evident.

Student international marketing_15th_edition_chapter_5 Presentation Transcript

  • 1. International Marketing 15th edition Philip R. Cateora, Mary C. Gilly, and John L. GrahamMcGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 2. Introduction (1 of 2) 5• Culture, including all of its elements, profoundly affects management style and overall business systems• Culture not only establishes the criteria for day- to-day business behavior but also forms general patterns of values and motivations• Various studies have identified North Americans as “individualists,” Japanese as “consensus oriented,” and Europeans as “elitists and rank conscious” Roy Philip 5-2
  • 3. Introduction (2 of 2) 5• A lack of empathy for and knowledge of foreign business practices can create insurmountable barriers to successful business relations• Knowledge of the management style – the business culture, management values, and business methods and behaviors existing in a country and a willingness to accommodate the differences are important to success in an international market• Culture has an important influence on strategic thinking Roy Philip 5-3
  • 4. Overview 5• The necessity for adapting to cultural differences with imperatives, electives, and exclusives• Different management styles vary around the world• The extent and implications of gender bias in other countries• The importance of cultural differences in business ethics• The differences between relationship-oriented and information-oriented cultures Roy Philip 5-4
  • 5. Global Perspective 5Do Blondes Have More Fun in Japan?• Very odd in Japan to see a woman, who is blonde, young, and very tall by Japanese standards, leading business negotiations• The Japanese would not even look at the lead negotiator because she was a woman• Mattell Inc. research showed that the original Barbie, with her yellow hair and blue eyes, played as well in Hong Kong as it did in Hollywood• But this standardized approach taken by Mattell since the research caused sales to plummet Roy Philip 5-5
  • 6. Required Adaptation 5• Adaptation is a key concept in international marketing• Ten basic criteria for adaptation 1) Open tolerance 2) Flexibility 3) Humility 4) Justice/fairness 5) Ability to adjust to varying tempos 6) Curiosity/interest 7) Knowledge of the country 8) Liking for others 9) Ability to command respect 10) Ability to integrate oneself into the environment Roy Philip 5-6
  • 7. Degree of Adaptation 5• Essential to effective adaptation – Awareness of one’s own culture and the – Recognition that differences in others can cause anxiety, frustration, and misunderstanding of the host’s intentions• The self-reference criterion (SRC) is especially operative in business customs• The key to adaptation is to remain American but to develop an understanding of and willingness to accommodate the differences that exist Roy Philip 5-7
  • 8. Imperatives, Electives, 5 and Exclusives• Cultural imperatives - Business customs and expectations that must be met and conformed to or avoided if relationships are to be successful – In some cultures a person’s demeanor is more critical than in others – Imperatives vary from culture to culture• Cultural electives - Relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required – A cultural elective in one county may be an imperative in another• Cultural exclusives - Customs or behavior patterns reserved exclusively for the locals Roy Philip 5-8
  • 9. The Impact of American Culture 5 on Management Style• “Master of destiny” viewpoint• Independent enterprise as the instrument of social action• Personnel selection and reward based on merit• Decisions based on objective analysis• Wide sharing in decision making• Never-ending quest for improvement• Competition producing efficiency Roy Philip 5-9
  • 10. Management Styles 5 around the World• Authority and decision making• Management objectives and aspirations• Communication styles• Formality and tempo• P-time versus M-time• Negotiation emphasis• Marketing orientation Roy Philip 5-10
  • 11. 5Authority and Decision Making • Influencers of the authority structure of business: – High PDI Countries • Mexico, Malaysia – Low PDI Countries • Denmark, Israel • Three typical authority patterns: – Top-level management decisions – Decentralized decisions – Committee or group decisions Roy Philip 5-11
  • 12. Management Objectives 5 and Aspirations• Security and mobility – Relate directly to basic human motivation and therefore have widespread economic and social implications• Personal life – Worldwide study of individual aspirations, (David McClelland)• Affiliation and social acceptance – In some countries, acceptance by neighbors and fellow workers appears to be a predominant goal within business• Power and achievement - South American countries Roy Philip 5-12
  • 13. Annual Hours Worked 5Exhibit 5.1 Roy Philip 5-13
  • 14. Communication Styles 5• Face-to-face communication – Managers often fail to develop even a basic understanding of just one other language – Much business communication depends on nonverbal messages• Internet communications – Nothing about the Web will change the extent to which people identify with their own language and cultures • 78% of today’s Web site content is written in English • An English e-mail message cannot be understood by 35% of all Internet users – Country-specific Web sites – Web site should be examined for any symbols, icons, and other nonverbal impressions that could convey and unwanted message – www.nike.com – a great example of a company with a webpage for many countries Roy Philip 5-14
  • 15. American Slangs – 5 Foreign Interpretations• “Let’s do a deal” • Arab=“Let’s do something unethical”• “What’s the bottom line?” • Japanese=“What is your starting bid?”• “Okay” or “That’s okay” • Chinese “Not really good, could be better” • Indian=“You have insulted• “That’s a shame” me”• “I get a kick from that” • Japanese= “It hurts”• “Can we close on this?” • Chinese= “We should stop, cancel this”• “That is too good to be true” • Malaysian= “You must be cheating me” Roy Philip 5-15
  • 16. Formality and Tempo 5• Breezy informality and haste characterize American business relationships• Europeans not necessarily “Americanized”• Higher on Hofstede’s Power Distance Index (PDI) – May lead to business misunderstandings• Haste and impatience most common mistakes made by Americans in the Middle East• For maximum success marketers must deal with foreign executives in acceptable ways Roy Philip 5-16
  • 17. Contextual Background 5 of Various CountriesExhibit 5.2 Roy Philip 5-17
  • 18. P-Time versus M-Time 5• Monochronic time – Tend to concentrate on one thing at a time – Divide time into small units and are concerned with promptness – Most low-context cultures operate on M-Time• Polychronic time – Dominant in high-context cultures – Characterized by the simultaneous occurrence of many things – Allows for relationships to build and context to be absorbed as parts of high-context cultures• Most cultures offer a mix of P-time and M-time behavior• As global markets expand more businesspeople from P-time cultures are adapting to M-time. Roy Philip 5-18
  • 19. Speed is Relative 5Exhibit 5.3 Roy Philip 5-19
  • 20. Negotiations Emphasis 5• Business negotiations are perhaps the most fundamental business rituals• The basic elements of business negotiations are the same in any country – They relate to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers• One standard rule in negotiating is “know thyself” first, and second, “know your counterpart” Roy Philip 5-20
  • 21. Marketing Orientation 5• The extent of a company’s market orientation has been shown to relate positively to profits• Firms in other countries have not been able to move from the traditional production, product, and sales orientation to the marketing orientation• Research has shown that sometimes in can be difficult to encourage a marketing orientation across diverse business units in global companies Roy Philip 5-21
  • 22. Gender Bias 5 in International Business• Women represent less than 20% of the employees who are chosen for international assignments• In many cultures (Asia, Middle East, Latin America) women not typically found in upper levels of management, and are treated very differently from men• Prejudices toward women in foreign countries• Cross-mentoring system instituted by Lufthansa• Executives who have had international experience are – more likely to get promoted, – have higher rewards, and have – greater occupational tenure Roy Philip 5-22
  • 23. Female Directors on 5 Corporate BoardsExhibit 5.4 Roy Philip 5-23
  • 24. Business Ethics 5 Corruption• What is Corruption? – Profits (Marxism) – Individualism (Japan) – Rampant consumerism (India) – Missionaries (China) – Intellectual property laws (Sub-Sahara Africa) – Currency speculation ( Southeast Asia)• Criticisms of Mattel and Barbie – Sales of Barbie declined worldwide after the global standardization – Parents and government did react – Mattel’s strategy boosted sales of its competition Roy Philip 5-24
  • 25. The Western Focus on Bribery 5 • In the 1970s, bribery became a national issue with public disclosure of political payoffs to foreign recipients by U.S. firms • The decision to pay a bribe creates a major conflict between what is ethical and proper and what is profitable and sometimes necessary for business • The Organization for Economic Corporation and Development (OECD) and Transparency International (TI) are combating the bribery of foreign public officials in international business transactions Roy Philip 5-25
  • 26. Transparency International 5 Corruption Perception IndexExhibit 5.5 Roy Philip 5-26
  • 27. Transparency International 5 Bribe Payer’s IndexExhibit 5.6 Roy Philip 5-27
  • 28. Bribery – 5Variations on a Theme (1 of 2)• Bribery and Extortion – Bribery is voluntary offered payment by someone seeking unlawful advantage is bribery – Extortion takes place only if payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to• Subornation and Lubrication – Lubrication involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law – Subornation involves giving large sums of money, frequently not properly accounted for, designed to entice an official to commit an illegal act on behalf of the one offering the bribe Roy Philip 5-28
  • 29. Bribery – 5Variations on a Theme (2 of 2)• Agent’s Fees – When a businessperson is uncertain of a country’s rules and regulations, an agent may be hired to represent the company in that country – The Foreign Corrupt Practices Act (FCPA) – Change will come only from more ethically and socially responsible decisions by both buyers and sellers and by governments willing to take a stand • Since 1994, US businesses have bowed out of 294 major overseas commercial contracts valued at $145 billion rather than paying bribes5-29 5-29
  • 30. Ethical and Socially 5 Responsible Decisions• Difficulties arise in making decisions, establishing policies, and engaging in business operations in five broad areas – Employment practices and policies – Consumer protection – Environmental protection – Political payments and involvement in political affairs of the country – Basic human rights and fundamental freedoms• Laws are the markers of past behavior that society has deemed unethical or socially irresponsible• Ethical principles to help the marketer distinguish between right and wrong, determine what ought to be done, and justify actions – Utilitarian Ethics (Does it achieve a common good?) – Rights of the Parties (Does the actions involve the rights of the individual?) – Justice or Fairness (Does the action represent fairness for all?) Roy Philip 5-30
  • 31. Culture’s Influence 5 on Strategic Thinking• British-American – Individualistic• Japan & Germany – Communitarian• In the less individualistic cultures labor and management cooperate• A competitive, individualistic approach works well in the context of an economic boom• Fourth kind of capitalism – – Common in Chinese cultures – Predicted by culture Roy Philip 5-31
  • 32. A Synthesis – Relationship-Oriented 5 vs. Information-Oriented Cultures• Studies are noting a strong relationship between Hall’s high/low context and Hofstede’s Individualism/Collective and Power Distance indexes• Not every culture fits every dimension of culture in a precise way• Information-oriented culture – United States• Relationship culture – Japan• Synthesis of cultural differences allows us to make predictions about unfamiliar cultures Roy Philip 5-32
  • 33. Dimensions of Culture – 5 A SynthesisExhibit 5.7 Roy Philip 5-33
  • 34. Summary (1 of 2) 5• Some cultures appear to emphasize the importance of information and competition while others focus more on relationships and transaction cost reductions• Businesspersons working in another country must be sensitive to the business environment and must be willing to adapt when necessary• Understanding the culture you are entering is the only sound basis for planning• Business behavior is derived in large part from the basic cultural environment in which the business operates and, as such, is subject to the extreme diversity encountered among various cultures and subcultures Roy Philip 5-34
  • 35. Summary (2 of 2) 5• Environmental considerations significantly affect the attitudes, behavior, and outlook of foreign businesspeople• Varying motivational patterns inevitably affect methods of doing business in different countries• The international trader must be constantly alert and prepared to adapt when necessary• No matter how long in a country, the outsider is not a local – in many countries that person may always be treated as an outsider• Assuming that knowledge of one culture will provide acceptability in another is a critical mistake Roy Philip 5-35