INTERNATIONAL BUSINESS Chapter 4

CHAPTER 4

Cultural Dynamics in Assessing 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 DecisionsDeciding 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 marketing

Global 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 cultural products. They help people to live together

Manifestations of cultureSymbols

Heroes

Rituals

Values and

Norms

Expressions of culture

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 CULTURE

Non-material consumer

culture

Material culture of products

(market)

Non-material culture of the firm

(corporate culture)

Transfer of cultureTwo 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