International Marketing Chapter 05


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  • What we learned in Chapter 4, particularly Hofstede’s cultural value dimensions are applicable to business customs and how business is conducted in various countries. For example, in high power distance countries, authority and hierarchy needs to be respected while conducting business.
  • Unless marketers remain flexible by accepting differences in basic patterns of thinking, local business tempo, religious practices, political structure, and family loyalty, they are hampered, if not prevented, from reaching satisfactory conclusions to business transactions.
  • Cultural imperatives are “must do” things in another culture, such as meeting and greeting, exchange of business cards in Asian cultures (eg: China, Japan and Korea). Cultural electives are optional activities that a foreigner may or may not want to engage in, such as drinking aperitifs (strong alcoholic drinks) before lunch in the Czech Republic or coffee in Saudi Arabia, no offense is taken if one refuses to participate in these cultural customs.
  • In general, politics and religion are taboo in conversations many cultures, particularly for foreigners. In Mexico, McDonalds used the national symbol of the Mexican Flag on paper placemats and insulted the people (as you treat anything with the national symbol with the utmost respect). These are cultural exclusives, things you never engage in or do when in another culture.
  • American culture is based on a few basic premises listed above, reward is based on merit and not group performance. Decisions are made objectively not subjectively, it is a competitive business environment where continuous improvement and to get better is the goal.
  • For Americans, a self-awareness will help adapt to working with associates in other cultures. This knowledge will help everyone be more patient while conducting business across borders. Just as in the 1980s Japanese management practices were imitated almost everywhere.
  • In Exhibit 5.1: Americans appear to be in the middle of hours worked, far above the northern Europeans and way below the South Koreans.
  • High versus low context culture score for different countries based on Hall’s classification.
  • This picture demonstrates office space in the U.S. and Japan, the U.S. is more individualistic, more space between cubicles and Japan more collectivistic.
  • How fast does it take pedestrians to walk 60 feet downtown in different cultures? The longer it takes, the more polychronic the culture is. Accuracy of public clocks is also an indication of M-time versus P-time.
  • Gender bias is an issue in international negotiations. Women may not be easily accepted in certain cultures (eg: Middle East and Latin America). This poses challenges in cross-cultural negotiations.
  • Percent of women executives in different countries.
  • Bribery is a problem when conducting business cross-culturally. It is an illegal concept in the U.S and U.S. subsidiaries are not allowed to take bribes. The Foreign Corrupt Practices of 1977 applies to all U.S. companies.
  • International Marketing Chapter 05

    1. 1. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Culture, Management Style, and Business Systems Chapter 5
    2. 2. 5-2 Learning Objectives LO1 The necessity for adapting to cultural differences LO2 How and why management styles vary around the world LO3 The extent and implications of gender bias in other countries LO4 The importance of cultural differences in business ethics LO5 The differences between relationship-oriented and information-oriented cultures
    3. 3. 5-3 Business Customs in Global Marketing  Business etiquette is largely driven by cultural norms.  Cultural analysis often pinpoints market opportunities, gives companies a competitive edge
    4. 4. 5-4 Requires Adaptation  Adaptation is a key concept in international marketing  To successfully deal with individuals, firms, or authorities in foreign countries, managers should exhibit: • open tolerance, • flexibility, • humility, • justice/fairness, • ability to adjust to varying tempos, • curiosity/interest, • knowledge of the country, • liking for others, • ability to command respect, and • ability to integrate oneself into the environment
    5. 5. 5-5 Cultural Imperatives, Electives and Exclusives  Cultural imperatives: • business customs and expectations that must be met, conformed, recognized and accommodated if relationships are to be successful  Cultural electives: • areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required
    6. 6. BEIJING, CHINA: German Chancellor Angela Merkel and Chinese Prime Minister Wen Jiabao toast after the EU–China Business Summit at the Great Hall of the People in Beijing. The summit was boosted by the settlement of a trade row that had left 80 million Chinese-made garments piled up in European seaports, unable to be delivered to shops under a quota pact agreed to at the time. Drinking half a bottle is a cultural elective, but taking a sip is more of an imperative in this case. 5-6
    7. 7. 5-7 Cultural Imperatives, Electives and Exclusives  Cultural exclusives: • customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred and must not participate
    8. 8. 5-8 The Impact of American Culture  Ways in which U.S. culture has influenced management style include, but are not limited to, the following: 1. Personnel selection and reward based on merit 2. Decisions based on objective analysis 3. Wide sharing in decision making 4. Never-ending quest for improvement 5. Competition yielding efficiency
    9. 9. 5-9 American Culture and Management Style  There are at least three reasons to focus briefly on American culture and management style: 1. for Americans, it is important to be aware of the elements of culture influencing decisions and behaviors. 2. for those new to American culture, it is useful to better understand business associates from the States as the U.S. market is the biggest export market in the world 3. since the late 1990s, American business culture has been exported around the world
    10. 10. 5-10 Differences in Management Styles Around the World  Authority and Decision Making • In high-PDI countries subordinates are not likely to contradict bosses, but in low-PDI countries they often do • Three typical patterns exist: 1. top-level management decisions, 2. decentralized decisions, and 3. committee or group decisions  Management Objectives and Aspirations • Security and Mobility • Personal Life • Affiliation and Social Acceptance • Power and Achievement
    11. 11. Insert Exhibit 5.1 Annual Hours Worked Source: OECD, Labor Market Indicators, 2012. 5-11
    12. 12. 5-12 Differences in Management Styles Around the World  Differences in Communication Styles • Face to Face Communication • Internet Communication  According to Edward T. Hall, the symbolic meanings of time, space, things, friendships, and agreements, vary across cultures  Hall places eleven cultures along a high-context/low-context continuum  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  Communication in a low-context culture depends more on explicit, verbally expressed communications
    13. 13. 5-13
    14. 14. 5-14
    15. 15. 5-15 Differences in Management Styles Around the World  Formality and Tempo • Level of formality in addressing business clients by first name • Level of formality in addressing your boss by first name • Tempo or speed in getting “down to business” • Perception of time varies in many cultures
    16. 16. 5-16 Differences in Management Styles Around the World  P-Time versus M-Time • M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians • Most low-context cultures operate on M-time concentrating on one thing at a time • P-time, or polychronic time, is more dominant in high- context cultures • P-time is characterized by multi-tasking and by “a great involvement with people”
    17. 17. 5-17
    18. 18. 5-18 Differences in Management Styles Around the World  Negotiations Emphasis • Differences with respect to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers  Market Orientation • American companies are embracing the market orientation philosophy • Other countries are still in the traditional production, product and selling orientations
    19. 19. 5-19 Gender Bias in International Business  The gender bias against women managers exists in some countries • Women are not easily accepted in upper level management roles in Asia, Middle East, and Latin America (although this is changing)  Gender bias poses significant challenges in cross-cultural negotiations
    20. 20. 5-20
    21. 21. 5-21
    22. 22. 5-22 Business Ethics  Business ethics is complex in the international marketplace because value judgments differ widely among culturally diverse groups  Corruption varyingly defined from culture to culture
    23. 23. 5-23 Business Ethics  Existence of different levels of corruption, bribery, and fraud • The Foreign Corrupt Practices Act 1977: Imprisonment for bribery  Bribery creates a major conflict between ethics and profitability
    24. 24. Transparency International Transparency International - USA 5-24
    25. 25. 5-25
    26. 26. 5-26 Bribery: Variations on a Theme  Bribery • Voluntarily offered payment by someone seeking unlawful advantage  Extortion • Payments are extracted under duress by someone in authority from a person seeking only what they are lawfully entitled
    27. 27. 5-27 Bribery: Variations on a Theme  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; involves breaking the law
    28. 28. 5-28 A Framework for Ethical Principles (1) Utilitarian ethics Does the action optimize the “common good” or benefits of all constituencies? And, who are the pertinent constituencies? (2) Rights of the parties Does the action respect the rights of the individuals involved? (3) Justice or fairness Does the action respect the canons of justice or fairness to all parties involved?
    29. 29. 5-29