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Culture denotes the way people lead their lives. Corrado (1996) says that culture has an impact on a person's life which can be seen in his consumption behavior also. For example Indians eat their food with their hands and some of them may lick their fingers too, whereas Chinese use chopsticks to ear noodles. An Englishman on the other hand may not relish his food until and fork and knife are given to him. All this forms a part of the culture which pervades all forms of living standards.
As far as the definition of culture is concerned, culture is defined differently by different thinkers. For example, Hofstede (1980, P.21) defines culture as "the collective programming of the mind that distinguishes the members of one human group from another". Tylor (1871) defined culture as "that complex whole that includes knowledge, beliefs, art, laws, custom, and any other capabilities and habits acquired by man as a member of society".
Ronen (1986, p.18) sees culture as 'the frame of reference' of individuals, and Harris and Moran (1987, p.102) discuss the 'mental frameworks' which groups, organizations and nations develop. Kluckhohn (1951, p. 86) provides that the fundamental webs of culture constitute a patterned way of thinking, acting, feeling and interpreting. Hofstede (2001) defines culture as "software of the mind which provides a guide for humans on how to think and behave" Hill (2009) asserts that culture has an influence on conduct of international business and a marketer cannot succeed unless and until he understands the various cross cultural influences which have an influence on demand of consumers in the market.
Impact of culture on International business and implications for Multinational enterprises
Hollensen (2004) describe culture as "the learned ways in which a society understands, decides and communicates". Daniel and Malhotra (1993), contends that culture differs among different countries and without keeping in mind the cross cultural characteristics which may have an impact on consumption pattern of consumers, an international marketer cannot succeed in the market. Thus culture has an important meaning for the international marketer and its implications for multinational enterprises can be understood through a number of examples which highlight the importance of understanding culture for an international marketer. Hill (2009) asserted that culture of a country influences the cost of doing business in a country. Prince and Hoppe (2004) say that a company incurs heavy cost of doing business in a foreign country if it enters the country without understanding the culture of the host country. Hill (2009) demonstrates that a multinational corporation should know that there are differences in work related practices in different countries. For example, there are some cultures which observe more holidays than others. A company entering such a cultural backdrop must adjust the scheduling of labor accordingly even if this involves extra costs.
Hofstede (1980) in his study at International business machines (IBM) have identified that an international marketer needs to understand four dimensions before entering into a new territory. These four dimensions include power distance, individualism versus collectivism, uncertainty avoidance and masculinity versus femininity. Hofstede (1980) argued that different countries have different scores on the above four variables. In his study, Hofstede (1980) rated twenty countries on a scale of 0 to 100. Hofstede (1980) showed that an international marketer before targeting a country should keep the scores in mind and accordingly formulate marketing strategy to target the market. Hill (2009) asserts that modification of strategies by an international marketer will result in his success in the market. For example two different economies which consist of Pakistan and Arab countries represent more masculine and collective countries compared with feminine and individual North Europe, and as a result there are also some systematic differences in their values. An international marketer cannot target the countries in Pakistan and Arab economies with the same products as is done in case of North Europe. Hofstede (1980) further contends that culture includes values, norms, religion, language and social class in the society. All these cross cultural characteristics have to be kept in mind by the international marketer before targeting these countries. Hofstede five dimension model is shown below:
In 2001, Hofstede expanded his concept of culture by including a fifth dimension to the above four dimensions. This dimension was termed as Confucian Dynamism or Long term Orientation by Hofstede. Hofstede (2001) contended that the dimension of Confucian Dynamism deals with the aspect of individual countries towards time, persistence, respect for traditions and reciprocation of gifts and favors among the individuals in the country. Hofstede in his initial study has highlighted the fundamental building blocks of culture. Hofstede (1980) contended that culture includes values and norms. Values are concerned with ideas as to what society believes to be good, right and desirable (Hofstede 1980) According to Hofstede; values include the attitude of individuals towards their freedom, loyalty, justice, responsibility and personal relations. On the other hand norms are the rules and regulations which prescribe the behaviors which should be followed by individuals in certain situations. Hofstede (1980) has contended that by understanding the cultural dimensions a company can target the consumers by providing products which suit to the culture of respective country. There are many examples of companies which have gained success in the market by understanding the culture of the country. Cross cultural issues have an impact on multinational enterprises because they influence the cost of doing business in the country. These examples highlight the importance of considering cross cultural issues which need to be understood by the marketers before framing adequate marketing strategies for targeting the company. For example, Shoji (1991) discussed the case of DeBeers which is a raw diamond supplier in many countries. Shoji (1991) showed how by understanding the cross cultural differences the company gained success in a situation which was deemed as failure. The company ran its advertisement of diamonds in Japan that showed western couples in evening dress which shows the standard mentality that equates diamond with grandeur. The company analyzed that its advertisement is not resulting in addition of its sales. The company through a thorough analysis of Japanese culture learnt that Japanese woman do not smile and kiss their husbands when they receive diamonds as presents. Instead they shed a few tears and pretend they are angry at their husband for spending so much money. This presented the need for chaining advertisement by DeBeers to suit to the culture of the Japan. The company changed its Christmas campaign and showed a tired wage earner and his hard working wife in their tiny apartment. Upon receiving the sparkling present, she snaps at her extravagant spouse by saying "Oh, You stupid"! This advertisement was a marketing success, boosting the popularity of diamonds in Japan and showed the importance of understanding cross cultural issues by a multinational enterprise.
Another example of not understanding cross cultural issues can be analyzed in the case of Ford (Kwintessential article 2008). The company introduced its new car Pinto in Brazil. The company observed that it has very good features but still its sale is not increasing. The company analyzed the reasons and find that its sales does not pick up because Brazilians did not want to be seen driving a car meaning 'tiny male genitals' which was the meaning of Pinto in language of Brazil. The company changed the name of the car and observed that the car gained popularity in Brazil. Cassie (2007) in his article highlighted that even small products like a curling iron are inhibited by language. For example, Clairol's 'Mist Stick' forgot that Mist is a German slang word for manure. This resulted in failure of products. The thorough analysis of culture which includes language, religion, rituals and values and norms influences the cost of doing business in the country. Kwintessential article (2008) highlight that culture is the reason why many hotels in the USA or UK do not have a room number 13. Another example is of Nippon Airways which is operating in Japan and it do not have seat number 4 or 9 not considered auspicious Kwintessential article (2008). The article shows that apart from language, a company needs to be careful in using images also for the various advertisement campaigns. For example at one place the image may appear to be very attractive but the same image may result in retaliation in another country. It is very common to see the pictures of women wearing bikinis in advertisement posters in UK and US but such images would result in outrage and retaliation in Middle East. Another example of a mismatch between culture and product of a country can be seen in Africa where majority of food products sellers often show the pictures of food in the package because majority of people cannot read English. In this scenario, Gerber introduced its baby food with the picture of a cute little baby on the carton. This created horror in Africa among the consumers. The company has to change the carton to suit to the market. All these examples shows the need of understanding culture before introducing new products, new marketing or advertisement campaigns in a country and the inability of the company to follow this will result in failure of products as well as rise in cost of doing business in the country. An international marketer needs to understand the cross cultural issues apart from just understanding the economic environment of the host country. Culture has an influence on cost of doing business in a country and the failure or inability to understand cultural differences between countries has been the cause of many of the business and product failures. There are many examples of companies which have gained success or failure as a result of understanding or failure to understand cross cultural issues in international marketing arena. Hofstede (1980, 2001) in his model has identified the importance of understanding the various dimensions of culture by a marketer who is entering into a foreign market. In his studies of 40 countries, he has rated various countries on the different dimensions of culture and has shown that before targeting a new country, an international marketer should ensure that culture of the country should be understood otherwise it would result in failure of product and loss of investment for the company.