1 Cultural environment 1. Overview 2.Defining culture 3.Elements of Culture 4.Cross-cultural...

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1 Cultural environment 1. Overview 2. Defining culture 3. Elements of Culture 4. Cross-cultural comparisons 5. Adapting to cultures 6. Culture and the marketing mix 7. Business customs and negotiation styles 8. Organisational cultures

Transcript of 1 Cultural environment 1. Overview 2.Defining culture 3.Elements of Culture 4.Cross-cultural...

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Cultural environment1. Overview2. Defining culture3. Elements of Culture4. Cross-cultural comparisons5. Adapting to cultures6. Culture and the marketing mix7. Business customs and negotiation styles8. Organisational cultures

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What is Culture

• “The knowledge, beliefs, art law, morals, customs and other capabilities of one group distinguishing it from other groups.”

• Main features of culture:– Culture is shared– Culture is intangible– Culture is confirmed by others

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Culture and Business

• Culture is very important to the practice of business.– Impacts the way strategic moves are presented.– Influences decisions.– The lens through which motivation occurs.

• Management, decision making, and negotiations are all influenced through culture.

• Culture influences nearly all business functions from accounting to finance to production to service.

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Culture and Business

• Culture is a key ingredient in the “liability of foreign-ness” described earlier in the Multinational Enterprise chapter.

• Culture is what makes business practice difficult or easy, depending on how similar or different cultures are.

• Culture is both divisive and unifying.

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Culture Does Not Explain Everything

• While culture is very important to our understanding of international business, it does not explain everything that is different from one place to another. – Corporate strategy, structure, rivalry,

governmental policy, and economics• Culture is not a residual variable; it is useful to

know that it is not a primary variable either. It is one of many.

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• Culture is an extremely important element in international marketing

• Buyer behaviour and consumer needs are partly circumscribed by cultural norms.

• Within a given culture consumption processes can be described by the following stages:– Access: Does the consumer have physical or economic

access to the product?– Buying behaviour: How do consumers make the decision to

buy in the foreign market?– Consumption characteristics: What factors drive

consumption patterns?– Disposal: How do consumers dispose of the product (in

terms of resale, recycling, etc.)?

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• Terpstra and David offer this business-oriented definition of culture:– Culture is a learned, shared, compelling,

interrelated set of symbols whose meanings provide a set of orientations for members of society. These orientations, taken together provide solutions to problems that all societies must solve if they are to remain viable.

• Cultures may be defined by national borders.• Nations contain different subgroups or subcultures in

their borders. For example, in Sri Lanka the population is divided along religious lines with Buddhist Singhalese versus Hindu Tamils. In Canada people are divided along linguistic lines with Quebec being French-speaking while the rest of Canada is English-speaking.

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Elements of culture• Material life refers to the technologies used to

produce, distribute and consume products within a society.

• Differences in the material environment partly explain differences in the level and type of demand for many consumption goods. For example, energy consumption is not only much higher in developed countries than in developing nations but also relies on more advanced forms of energy production such as nuclear energy.

• Governments in host nations often demand technology transfers as a precondition of investing in their country.

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Elements of culture (cont’d)

• Language is used to communicate and interpret the environment. Language impacts on international marketers in two ways:– Language is a communication tool within cultures.– There is a huge diversity of languages across and within nations.

• Language consists of two components:– The spoken or verbal component. This includes the vocal sounds

and written symbols that people use to communicate with each other.

– The silent or nonverbal component. This includes the complex of nonverbal communication mechanisms that people use to get a message across.

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Elements of culture (cont’d)• Hall identified five distinctive types of silent language:

– Space. Refers to the proximity between people when conversing. For example in business, Latin Americans tend to stand closer to each other than Australians.

– Material possessions. This relates to the role of possessions in people's esteem of one another.

– Friendship patterns cover the notion and treatment of friends.– Time. Its perception varies across cultures. For example,

Americans view time as a valuable commodity to be used wisely as evidenced by the saying ‘time is money’. This impacts on punctuality.

– Agreements. In some cultures the explicit contract is extremely important, whereas in others good faith and trust are more important.

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Elements of culture (cont’d)• Gestures are important to understand as what is acceptable

in one country may be regarded as rude in another.• Even within a country language differences can be

significant. In a small country such as Switzerland (population 7.3 million), there are four official languages: German (spoken by 64% of the population), French (19%), Italian (10%) and Romansch (1%)

• Even in the same language, meanings and expressions vary a great deal among those who share it. For example, when the US corporation Mars introduced their Snickers Bar in the UK they renamed it Marathon as it was felt the US brand name was too close to the British slang term for lingerie, ‘knickers’.

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Elements of culture (cont’d)• Cert, a London-based consultancy, gives the following

advice in talking to foreigners in English:– Vocabulary. Use simple words. Treat colloquial words

with care. For example, use rich instead of loaded.– Idioms. Use them carefully. For example, most non-

Australians wouldn’t understand the meaning of fair dinkum.

– Grammar. Express one idea in each sentence.– Cultural references. Avoid culture-specific

references. Most non-Australians wouldn’t understand the meaning of the nickname bluey.

– Understanding the foreigner. If you don’t understand, make it seem that it is you, not the foreigner, who is slow.

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Elements of culture (cont’d)

• In order to avoid embarrassing blunders when translating it is important to employ back translation. This is a procedure in which a document is translated from one language into another, then translated back into the original language. This should by done by at least two different translators who are booth native speakers of each of the two languages.

• This would avoid blunders such as the following:– The following sign was found in English in a doctor’s

surgery in Italy: Specialist in women and other diseases.

– A US beer slogan ‘Turn it Loose’ was translated to ‘Suffer from Diarrhoea’ in Spanish.

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Elements of culture (cont’d)• Kinship relations vary across countries:

– The most common family unit in most Western countries is the nuclear family. This consists of the parents and their children.

– The extended family consists of members outside the immediate family. These include grandparents, uncles, aunts and cousins. These are common in developing countries.

• Reference groups are the set of people to whom an individual looks for guidance in values and attitudes. These include:– This with whom you interact are called membership groups.

Examples are family, friends and professional groups.– Aspirational groups. They are those to whom you would like

to belong such as billionaires.– Dissociative groups are those to whom you would not like to

belong. For example, parking inspectors.

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3. Elements of culture (cont’d) • Aesthetics refers to what a society regards as beautiful or

in good taste.• In the Asia-Pacific region aesthetic expressions are

underpinned by three principles:– Complexity and decoration.– Harmony.– Displays of nature.

• Colour is an important aesthetic consideration for international marketers. For example:– White is associated with death in many Asian countries.– Purple is associated with funeral parlours in France.– Red is regarded as a lucky colour in China, while it is

associated with witchcraft in many African countries and passion in Western countries.

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3. Elements of culture (cont’d)

• Belief systems play a vital role in many societies.• Religion refers to a belief in supernatural agents. It embraces

three elements:– Explanation (e.g. God seen as a ‘first cause’ behind the

creation of the universe.– A standardised organisation (e.g. priest, rabbis, imams,

churches, synagogues, mosques and rituals).– Moral rules of good behaviour.

• This has implications for international marketers. For example, observant Jews and Muslims would require their food to be kosher or halal respectively.

• In many Asian countries the Chinese philosophy of feng shui (‘wind water’) plays an important role in the placement of buildings or retail spaces.

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3. Elements of culture (cont’d)

• The level and quality of education of a country are important for an international marketer. For example, the level of literacy determines the type of advertising that may be used or sophistication of the products sold.

• Values are guiding principles in life, which are intrinsic to a person’s identity and inner self. For example, even after decades of communism, traditional Chinese values such as saving face, long-tern exchange relationships and respect for leaders heavily influence market entry and product decisions.

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Cross-cultural comparisons

• Cultures often differ and an understanding of these differences by marketers helps in making more effective decisions about international marketing strategies.

• A high context culture is a culture that primarily communicates through implicit messages. Nonverbal messages are considered very important. Many Asian cultures are high context.

• A low context culture communicates primarily through explicit messages that are coded in specific terms to be understood. Verbal aspects and clarity are very important. Australia and the US are examples of such cultures.

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Cross-cultural comparisons (cont’d)

• Cultures vary in their attitudes towards time.• Monochronic cultures tend to concentrate on

one thing at a time. They are concerned about promptness and treat time as tangible (time can be wasted, used and lost). Americans tend to be monochronic.

• Polychronic cultures tend to view time as continuous, stressing the interaction between time and people, where several activities are done simultaneously and time is seldom wasted. The French are an example of such a culture.

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Cross-cultural comparisons (cont’d)

• Cultures differ according to their degree of homogeneity.• Homophilous cultures are ones in which people share

the same beliefs, speak the same language and practise the same religion. Japan is an example of such a culture.

• Heterophilous cultures on the hand, have a great amount of diversity, with several languages spoken and religions practised and varying belief systems. The US is such a culture. Besides English, Spanish is widely spoken. Many religions coexist in the US. Americans consist of many ethnicities and races.

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Cross-cultural comparisons (cont’d)

• Geert Hofstede developed a useful cultural classification scheme.

• The elements of this scheme are:– Power distance– Uncertainty avoidance– Individualism– Masculinity– Long-termism

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National Culture Classifications

• Culture and Nation are not synonymous.• National and cultural boundaries overlap partially,

and there will be cultural differences in almost all nations.

• To make things simpler, however, scholars have created cultural typologies that try to describe cultural differences and ascribe them to national boundaries.

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Hofstede’s Dimensions of Culture• Geert Hofstede’s cultural typology is the most often

used. • It is based upon a study of 100,000 IBM employees

who work in IBM divisions throughout the world. • Hofstede’s survey revealed four underlying

dimensions of culture: – Power Distance– Uncertainty Avoidance– Individualism/Collectivism– Masculinity/Femininity– Long-Term Orientation

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Power Distance (PD)

• Power Distance is the extent to which hierarchical differences are accepted in society and articulated in term of deference to higher and lower social and decision levels in organization.

• Artifacts of high PD:– Centralization– # Org. Levels- Height– # Supervisors– Wage Differentials– Values, White & Blue Collar Work

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Power Distance (PD)

Exhibit : Power distance: country examples and organizational implications

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Power Distance (PD)

Exhibit : Rank distinctions among the Japanese

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Uncertainty Avoidance (UA)

• Uncertainty Avoidance is the extent to which uncertainty and ambiguity are tolerated.

• Artifacts of high UA:– Standardization– Structured activities– Written rules– Specialists– No risk tolerance– Ritualistic behavior

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Uncertainty Avoidance (UA)

Exhibit : Uncertainty avoidance: country examples and organizational implications

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Individualism/Collectivism (I/C)

• I/C is the extent to which the self or the group constitutes the center point of identification for the individual.

• Individual self interest is pursued individually, or as a part of a group.

• Artifacts of I/C– Firm as “family”– Utilitarian decision making– Group performance

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Individualism/Collectivism (I/C)

Exhibit : Individualism/collectivism: country examples and organizational implications

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Masculinity-Femininity (M/F)

• Refers to the extent to which traditional masculine values, like aggressiveness and assertiveness, are valued.

• Artifacts of M/F– Sex Roles Minimized– More Women In Jobs– Interpersonal Skills Rewarded– Intuitive Skills Rewarded– Social Rewards Valued

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Masculinity-Femininity (M/F)

Exhibit : Masculinity/femininity: country examples and organizational implications

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Long-Term Orientation (LTO)

• Originally called Confucian Dynamism because of anchoring in the Confucian value system.

• Represents such values as thrift, persistence, and traditional respect of social obligations.

• Organizations likely to adopt longer planning horizon, with individuals ready to delay gratification.

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Criticism of Hofstede

Hofstede has been subject to broad criticism. Among the criticisms:

• Single company’s data, with a large Multinational Enterprise having a strong corporate culture.

• Time dependent results, which are an artifact of the time of data collection and analysis.

• Business culture, not values culture, representing a reflection of business culture at IBM and not national culture of the countries IBM operates within.

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Criticism of Hofstede

• Non-exhaustive, doesn’t identify all the cultural dimensions possible, but just a few.

• Partial geographic coverages, cover only a portion of the world’s cultures and countries.

• Western bias, which values western business ideals. • Attitudinal rather than behavioral measures, with no

connection between employee attitudes and employee behaviors.

• Ecological fallacy, national level data generalized into individual behavior.

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Schwartz’s Classification

• Three polar dimensions of culture:– Embeddedness versus Autonomy

• Embeddedness – emphasis on social relationships and tradition• Autonomy – finding meaning in one’s own uniqueness

– Hierarchy versus Egalitarianism• Hierarchy – legitimacy of hierarchical role and resource allocation• Egalitarianism – transcendence of self-interests and promoting

others’ welfare– Mastery versus Harmony

• Mastery – mastering the social environment via self-assertion• Harmony – being “at peace” with nature and society

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Schwartz’s Classification

Exhibit : Sample country rankings on Schwartz’s dimensions

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Trompenaars and Hampden-Turner’s Classification

• Consists of seven dimensions:1. Universalism versus particularism – rules versus

relationships2. Communitarianism versus individualism – the group

versus the individual3. Neutral versus emotional4. Diffuse versus specific5. Achievement versus ascription6. Attitudes to time7. Attitudes toward the environment

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National Cultural Clustering

• The grouping of cultures based on their relative similarity.– Ronen and Shenkar

• A synthesis of eight earlier studies• Eight clusters: Near Eastern, Nordic, Germanic, Anglo, Latin

European, Latin American, Far Eastern, and Arab, as well as Independent

– Huntington• Based on historical and political observations• Distinguishes seven civilizations: Sinic, Japanese, Hindu, Islamic,

Western, Latin American, and African

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National Cultural ClusteringExhibit : Ronen and Shenkar’s culture clustering

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National Cultural ClusteringExhibit : Huntington’s civilization clustering

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Cross-cultural comparisons (cont’d)

• Another research project examining the impact of culture has been Project GLOBE. It identified a number of constructs in addition to Hofstede’s study. These include in-group collectivism, gender egalitarianism, assertiveness, future orientation, performance orientation and humane orientation

• The World Value Study (WVS) assessed values and beliefs in 78 countries. It looked at the traditional versus secular values and quality of life dimensions.

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5. Adapting to cultures• In order to avoid cultural blunders an international marketer

should develop cultural sensitivity. One should be aware of the tendency of judging from the point of view of one’s culture.

• The self reference criterion (SRC) refers to people's tendency to resort to their own cultural experience and values to interpret a given business situation.

• Even more dangerous than the SRC is to fall into the trap of ethnocentrism. This is the belief that one’s own culture is superior to another.

• Language training as well as studying a culture’s history and politics can help minimise the impact of these influences.

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5. Adapting to cultures (cont’d)

• Lee developed a four step process in dealing to cope with the SRC:– Step 1. Define the business problem or goal

in terms of your own cultural traits, customs or values.

– Step 2. Define the business problem or goal in terms of the host culture’s traits, customs or values.

– Step 3. Isolate the SRC influence in the problem and examine it scrupulously to see how it interferes with the business problem.

– Step 4. Redefine the business problem, but this time without the SRC influence and solve for the ‘optimal’ business goal solution.

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6. Culture and the marketing mix• Cultural variables can act as barriers or

opportunities for international marketers. They can have a significant impact on the content of the marketing mix.

• Certain products are more culture-bound than others and may require adaptation. For example, in India McDonald’s can’t use beef in many of its burgers because of the Hindu religion’s view of cows. In their Big Mac equivalent their beef patties have been replaced by mutton.

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6. Culture and the marketing mix (cont’d)

• On a superficial level pricing doesn't appear to have a cultural dimension to it. However, in many developing countries, bargaining is a ritual that is an enjoyable aspect of the exchange process. Successful negotiations can create an atmosphere of common interest and trust, leading to a lasting relationship.

• Distribution can also be affected by cultural variables. For example, Japanese distribution channels have many more intermediaries than their Australian counterparts. Individual Japanese retailers often carry less stock.

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6. Culture and the marketing mix (cont’d)

• Promotion is the most visible marketing mix element. Culture in a country can have a significant impact as to what and how you may advertise. For example, in most Muslim countries dogs aren’t used in advertising as Muslims regard them as unclean animals. Research has shown that Americans prefer individualist appeals whereas Chinese prefer collectivist appeals.

• Country-of-origin appeals can often be used to great effect. For example, the emphasis on the precision engineering and quality of German made cars.

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7. Business customs and negotiation styles

• Culture needs to be considered when conducting business abroad, especially with foreign partners. A lack of knowledge of foreign business practices can often lead to miscommunications with foreign counterparts, difficulties in understanding techniques and procedures in negotiations, frustrations in establishing relationships, and lost business opportunities. Hence, it is imperative that international marketers gain an understanding of how business is conducted in other cultures.

• For example, the Japanese use silence to give them time to think in negotiations. Australians who do not like long pauses often jump in with a more attractive counteroffer to the Japanese to their commercial detriment.

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8. Organisational cultures

• As well as national cultures, most companies are characterised by their organisational (corporate) cultures. Organisational culture can be defined as the pattern of shared values and beliefs that help individuals understand organisational functioning, which provides them norms for behaviour in the organisation.

• Shared beliefs relate to leadership styles, organisational attributes, bonding mechanisms within the organisation and overall strategic emphases.

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8. Organisational cultures

• Four organisational culture types have been identified. These are:– Clan cultures– Adhocracy cultures– Hierarchy cultures– Market cultures

• Most firms have elements of several types of cultures. However, one type of culture typically emerges as dominant. For example, Japanese firms typically are clan-like whereas American companies tend to be more market-like.

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