Supplement - Ch 3&5 (Cultural and Political Environments)

7/28/2019 Supplement - Ch 3&5 (Cultural and Political Environments)

1/34


2/34

Culture Defined

Cultural is the sum total of all learned activities. It islearned, shared, and transmitted from one generation tothe next

an integrated system of learned behavior patterns thatare distinguishing characteristics of the members of anygiven society. Includes what a group thinks, says, does andmakes including shared systems of attitudes and feelings

Self- reference criterion- a tendency to rely on ones owncultural values, personal experience and knowledge as theprimary basis for making decisions (ethnocentrism).


3/34

High vs. Low-Context Cultures

The international manager must identify cross-cultural and intra-cultural differences and isolatepotential opportunities and problems.

The international marketer may be accused ofcultural imperialism," especially if the changes aredramatic or pose to be a radical

High context cultures: The speaker and the listenerrely on a common understanding of the context.

Low Context cultures: Most of the information iscontained explicitly in the words.


4/34

High vs. Low-Context Cultures


5/34

The Elements of CultureLanguage Manners and customs

Verbal Material elements

Nonverbal Aesthetics

Religion Education

Values and attitudes Social Institutions


6/34

Language-Verbal and Nonverbal Medium of expression, we form bonds, is the conveyer

of culture

The Silent Language of time, space, material,possessions, friendship patterns, and businessagreements (Hall 1960).


7/34

Religion Religion shapes our behavior, sets standards for ethics,

guides our consumption and forces us to think undercertain parameters

Dominant organized religions of the world:

Christianity- 2.0 billion followers

Islam 1.2 billion followers

Hinduism- 860 million followers Buddhism 360 million followers

Confucianism -150 million followers


8/34

Values and AttitudesValues are shared beliefs that have been internalized

by individuals.

Attitudes are evaluations of alternatives based on thesevalues.

Example: Irans Ministry of Education is marketingDara and Sara dolls as alternatives to Ken and Barbie.


9/34

Manners and Customs Understanding manners and customs is vital in

negotiations and proper business etiquette (giftgiving).

Managers must be aware of the need to adapt aproduct to a market. Ex. Campbells soup.

Focus groups of the target customers should be used toavoid potentially costly mistakes .


10/34

Material Elements Material cultures results from technology, and

economic, social, financial and marketinginfrastructures are good indicators of potentialdemand.

Technological advances have been the impetus for

cultural change. Push for 35 hour work weeks in Germany.

High demand for electronics and convenience items inChina.


11/34

Aesthetics Each culture is particular concerning good taste

concerning the symbolism of colors, form and music.

Sense of beauty The color symbolizing mourning and death varies by

region.

Black: U.S. and Europe

White: Japan and Far East Green: Singapore


12/34

Education Different countries emphasize certain types of

education (sciences in Japan and Korea).

Educational levels and backgrounds will be an issuefor recruiting managers and in training programs.

If technology is marketed, adoption may depend onthe education levels of the users.


13/34

Social Institutions Reference groups such as family and coworkers provide

the values and attitudes that are influential to shapingbehavior.

Social organization also determines how managers andsubordinates will interact.

Ex. Nissan USA promotes worker equality by havingno reserved parking and identical white jump suits forall employees.


14/34

14

Hofstedes Cultural Value

Individualism/collective index (IDV): Refers to preference of

behavior that promotes ones self interest. Higher score (e.g.,USA) means high on individualism.

Power distance index (PDI): Measures the tolerance of socialinequality, i.e., inequality between superiors and subordinateswithin a social system. Higher score (e.g., Arab countries)means more hierarchical.

Uncertainty avoidance index (UAI): Refers to the intolerance ofambiguity and uncertainty among members of a society.Higher score (e.g., Greece) means less tolerance foruncertainty.

Masculinity/feminity (MAS): Refers to ones desire forachievement and entrepreneurial tendencies. Higher score(e.g., Latin culture) means more assertiveness and masculinity.

Future orientation: Refers to the future or long-termorientation of the society


15/34

Cultural Values and Clusters


16/34

Cultural Training How do you foster cultural sensitivity and acceptance

within an organization? Why use formal trainingprograms?

Types of training: Area studies- environmental briefings and cultural orientation

programs.

Cultural assimilator- a program in which trainees must respond toscenarios of specific situations in a particular country.

Sensitivity training- focuses on enhancing a managers flexibility insituations that are quite different from those at home.

Field experience- exposes a manager to different culturalenvironment for a limited amount of time.


17/34

Cross Cultural Training Methods


18/34

Going to a foreign country

Embrace local culture

Build relationships

Employ locals to gain cultural knowledge Help employees understand you

Adapt products and processes to local markets

Coordinate by region


19/34

Chapter 3 Discussion Questions1. Culture is one of the most challenging elements in

international marketing. How can an internationalmarketer face the challenge?

2. Define Culture. Explain eight elements of culture wediscussed in class.

3. Self-reference criterion (SRC)- the unconscious

reference to ones own cultural values- is the root ofmost international business problems. Explain.

4. How culture affects the different elements of themarketing mix? Explain.


20/34


21/34

Understanding a Political System Political systemthe complete set of institutions,

political organizations, and interest groups, therelationships amongst those institutions, and thepolitical norms and rules that govern their functions.

Political System of the Home and Host Country-bothneed to be studied

Firms activities are controlled/influenced by thetreaties, intra-governmental negotiations,membership in international organizations, andpolicies, rules, and regulations of the government


22/34

Government Control Governments may control exports and imports using

following instruments:

Tariff Barriers

Nontariff Barriers

Rationale for government control (arguments forProtectionism)

Fighting unemployment

Promoting industrialization/protecting infant industries Supporting foreign policy

Improving BOP position

Preserving essential industries/national identity


23/34

Export ControlWhy export control?

Most export control systems are designed to deny or atleast delay the acquisition of strategically import goodsby adversaries.legal basis for exports varies acrossnations

U.S. laws control all exports of goods, services, and ideas.

The U.S. export control system is based on:

Export Administration Act, administered by theDepartment of Commerce.

The Arms Expert Control Act, administered by theDepartment of State.


24/34

The U.S. Export Control System


25/34

Import ControlAgain, why import control?

Supporting domestic firms, price controls, maintaincompetitiveness

Economic and noneconomic reasons

Temporary support/incentive is given to domestic firmsto provide safety/cushion

Import control instruments

Tariff, Subsidy, VER, Quota, Buy local Embargoes, Boycotts


26/34

Effect of Nontariff Barrier

Effect on Subsidy Aids/

Loans

Quota Buylocal

Price

Production

Market

Motivation

Trade


27/34

27

Political Risk

Political risk: the expectation, i.e., the likelihood, that thepolitical climate in a country will change in such a way thata firms operating position or investment value willdeteriorate. Four types of political risks are:

Systemic: a change in public policy that affect everyone

Procedural: bureaucratic delays, labor disputes, etc.

Distributive: tax and regulatory risk in respectiveindustries

Catastrophic: random political events


28/34

Nationalization Expropriation is the seizure of foreign assets by a

government with payment to the owners. Expropriationusually provides unsatisfactory payment to owners. Theuse of expropriation has decreased over time.

Confiscation is the transfer of ownership from theforeign firm to the host country without compensation.

Domestication is another way of transferring ownership

to local people in a planned way.


29/34

29

Managing Political Risks Be a good corporate citizen (example: participate

in development projects, literacy etc.)

Expand power bases through business

relationships (example: joint venture, licensing,political payoffs etc.)

Study government attitude and participategovernment incentive programs

Maintain good relationship with political allies,other embassies in the country


30/34

30

Legal System

Legal system: the mechanism for creating,interpreting, and enforcing the laws in a specified

jurisdiction

Types of legal systems: Common law [based on precedent, traditions]

Civil law [based upon a set of laws that comprise a code]

Theocratic law [based upon religious precepts]

Mixed systems are also possible.


31/34

International Terrorism International Terrorism and Marketing

Automatic level of vulnerability due to firms need to beeasily accessible and able to conduct transactions with

many new persons every day.

Does create new opportunities in a few industries likeconstruction, security, technology.

Creates reduced revenues or increased costs.

Chill effect- sharp reduction in demand for bothconsumer and industrial goods


32/34

Ethical Issues Corporate Governance and Responsibility

Intellectual Property

Definition: refers to a legal entitlement of exclusiverights to use an idea, piece of knowledge, or invention.

Innovation is a vulnerable process.

Examples: online music copyrights and medicines.

Bribery and Corruption Foreign Corrupt Practices Act (FCPA), passed in 1977

Functional lubrication

Sarbanes-Oxley Act, passed in 2002


33/34

Comparative Corporate

Governance Regimes


34/34

Chapter 5 Discussion Questions1. Why do government use export or import controls?

What role does it play in international marketing?

2. What is protectionism? What are the rationale fortrade control/protectionism?

3. Define political risk. What a company can do tomanage political risk?

4. What are three types of legal system we studied inclass? Explain them with implications ininternational marketing.

Supplement - Ch 3&5 (Cultural and Political Environments)

Documents

Transcript of Supplement - Ch 3&5 (Cultural and Political Environments)