Chapter 05 Culture, Management Style, and Business System

Chapter 5

Culture, Management Style, and Business Systems

International Marketing15th edition

Philip R. Cateora, Mary C. Gilly, and John L. Graham

5Imperatives, Electives, 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 locals2Roy Philip

5The Impact of American

Culture 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 3Roy Philip

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

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5Formality and Tempo

• 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 5Roy Philip

5Contextual Background of Various Countries

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Exhibit 5.2

5P-Time versus M-Time• 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.

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5Marketing Orientation

• 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

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5Business EthicsCorruption

• 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

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5The Western Focus on Bribery

• 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

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5Transparency International

Corruption Perception Index

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Exhibit 5.5

5Bribery –

Variations 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

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5

5-13

Bribery – Variations 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 bribes

5Ethical and Socially 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?)

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5Dimensions of Culture – A Synthesis

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Exhibit 5.7