The cultual factors in international marketing business essay

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Part A of the essay focuses on the Cultural factors and why many International Marketing writers signify culture as the "central core" of marketing policy. To begin with, we must define culture from the viewpoint of business. Culture is the human made part of human environment - the sum total of knowledge, beliefs, art, morals, laws, customs and any other capabilities and habits acquired by human members of society. Culture is 'everything that people have, think and do as members of their society' - Gary Ferraro 'The culture dimension of international business' Prentice Hall 1994. In this paper, we will examine the concepts of culture and some salient cultural dimensions. We will then explain why it is important to understand cultural factors and how firms can cope with and/or manage such factors. Culture has been defined in a variety of ways by different people. Kluckholn (1951) described culture as "patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts." Hofstede defined culture as "the collective programming of the mind which distinguishes the members of one human group from another."

We decided to combine these definitions with our opinion in order to form the following definition: "Culture is a progressing set of shared values, thinking, attitudes, and a logical process which provides cognitive maps for people within a societal group to perceive, think, reason, act, react, and interact. This definition implies that culture is dynamic".

In order to understand better this definition we would like to give an example of two American companies. Organizational or corporate culture can be reinforced through a strong organizational mission, commitment to organizational goals, and other visible symbols such as company lapel pins, and company songs, in the case of many Japanese organizations. Corporations such as IBM and Hewlett-Packard are reported to have strong corporate cultures where employees worldwide identify themselves closely with the organizational goals of the company. Strong corporate cultures can have a homogenizing effect on cross-national culture. Thus, there may be more observed similarities among IBM employees in the United States and in Japan as compared to Japanese employees at IBM and Matsushita, for instance.

Cultural Differences

Cultural differences can affect the success or failure of international firms in a number of important ways. First, because of different preferences and tastes, consumers and customers in foreign countries may not use the same products and/or services demanded by domestic consumers and customers. Even where there is a demand, adaptations may have to be made to the product/service and/or the advertising message. Second, managing and motivating people with vastly different cultural values and attitudes requires variations in management style, systems and practices. Third, in international assignments, the use of the same criteria and training programs to identify candidates and prepare them for living and working in a foreign environment may doom the assignment to failure. Fourth, concepts and constructs that guide business decisions and activities may be very different across countries. Principals among these are the concepts of morality, mind games, competitiveness, and rights. Each factor is discussed below.

Marketing and Advertising

We discovered that Levitt (1983) and Ohmae (1987) argue for product standardization around the world, important differences in consumer tastes and preferences across countries still abound. For one, the level of per capita income determines, to a large extent, the types of products and services that consumers can afford. In many of the less developed nations, for example, the demand for luxury goods is limited. However, even in countries where the per capita income is comparable with or higher than that in the United States, consumers may not demand the same products. An outstanding example is the attempt to sell large refrigerators in Japan. In selling abroad, an international firm cannot assume that what sells in Peoria, Illinois, will also have a ready market abroad. In a similar vein, advertising messages targeted at consumers to entice them to use a certain product/service must appeal to their values, tastes and preferences.

Managing and Motivating Employees

North American models of motivation generally assume that, one, certain job characteristics and organizational dynamics affect the level of job satisfaction experienced by employees; and, two, there is a correlation between job satisfaction and productivity. This may not be the case elsewhere in the world. In Japan, for example, Japanese employees were generally more dissatisfied with their jobs as compared with their North American and European counterparts; yet, the productivity levels remained high. This finding may stem from the fact that it is more difficult for Japanese employees to switch jobs. While this practice is changing, it is nonetheless true that job turnover among Japanese employees is still lower than that of their American counterparts. Furthermore, even if an employee can move to another Japanese entity, they know that the management style and practices will be fairly similar to those found in their current institution. Consequently, even if Japanese employees were dissatisfied with particular aspects of their job, they know that the conditions may not vary significantly at another place. As such, dissatisfaction may not affect their level of productivity. Another difference is in terms of the motivational devices used to spur workers to heighten their levels of performance. In motivation literature, a distinction is made between intrinsic and extrinsic motivators. In advanced economies where employees have attained a high standard of living, an extrinsic reward such as money may be a less powerful motivator than intrinsic motivators, such as ego and self-actualization needs. In less developed countries, however, where workers are operating at the subsistence level, monetary rewards may be the single, most powerful motivating device to spur workers to higher levels of performance.

DISCUSSION AND CONCLUSION

This paper has examined how organizational behavior and practices can vary across countries. Many of these variances stem, in part, from cultural differences. Managers who seek to conduct business in the global economy have to understand these differences and be aware of their implications for effective performance abroad. The most salient dimensions of culture that can affect the conduct of business overseas were identified and discussed.

These cover a broad spectrum of values and behaviors, including the way in which people perceive, reason and process information. As Fons Trompenaars, a leading European consultant to multinationals on cross-cultural issues, stated: "Increasingly, international managers realize that they can gain competitive advantage by understanding cultural differences. Technologies can be copied quickly. Intercultural competence cannot be copied - it must be learned." In short, while knowledge of cultural awareness cannot compensate for deficiencies in product and technology in gaining market entry, in its absence, however, the best products and technology may yet fail to meet with acceptance in markets around the world.

Part B:

Culture consists of specific learned norms based on attitudes, values and beliefs which exist in every society. Attitudes and values differ from one country to another resulting in different cultural norms. Therefore, whether it be selling products or organizing, financing and managing its global operations, these differences will affect every firm operating on a global basis.

Impact

The cultural impact on international management is reflected by the basic beliefs and behaviors of people. Firms conducting businesses globally have to deal with clients, strategic partners, distributors, and competitors with different cultural mindsets. By nature, managerial work is a "cultural bound" job, thus, national culture affects all level of operations-from interpersonal communication to formulation of strategy. Differences in cultural values often result in varying management practices. For instance, a person's class or status within a society is dictated by how the particular culture values the person in comparison to others. "Social stratification" (the ways in which ranking is determined) varies substantially from country to country and affects various business functions such as employment practices. An organization's recruitment, promotion, compensation and redundancy policies differ from one country to another.

Research conducted by Geert Hofstede shows how national culture affects the values at the workplace. His studies clearly indicated that "work related values are not universal and underlying values persist when a multinational company tries to impose the same norms on all its foreign interests." The four dimensions of culture that Hofstede used in explaining how and why people from various cultures behave, are discussed below.

He employed 'power distance' to indicate the extent to which a society accepts the unequal distribution of power in institutions and organizations. Countries like Argentina and Spain (where power distance is high), inequality is accepted and relationships between superiors and subordinates are characterized by low trust. Subordinates avoid disagreement and prefer to be directed by the boss. Through 'uncertainty avoidance', he measured how far cultures govern societal behaviors and persuades its members into accepting ambiguous situations and tolerating uncertainty about future. In Japan (where uncertainty avoidance is high) people work hard and avoid changing jobs to reduce high level of stress and anxiety caused by uncertain situations. International companies face difficulties while pursuing risky but profitable ventures in countries with high uncertainty avoidance, as stakeholders may not be prepared to take such high risks.

Through 'individualism versus collectivism', he described the relationship between the individual and the group to which he or she belongs. In Japan for example, a collective culture can be seen unlike that of the U.S where the individual and his opinions are given due importance. The dimension of 'masculinity versus femininity' was used to reveal a society's bias towards either masculine value of materialism, competitiveness and assertiveness or towards feminine values of nurturing and the quality of life and relationship. It is usually seen that in a masculine culture, "sex roles are sharply differentiated" and men are expected to be more assertive and competitive. However, in a feminine culture, sex roles are not sharply differentiated and both men and women have equal access to the same jobs.

To a great extent national culture influences organizational cultures. The impact of culture is significant on international firms when their organizational culture is not in line with national cultures. People can acquire or shed a series of organizational culture in the course of their career, but one will never disregard their own national culture. Conducting successful cross cultural negotiations is a key ingredient for many international business transactions. These negotiations are further complicated when participants in the negotiation process are from different cultural backgrounds.

Research clearly indicates that cultural differences are the biggest source of difficulty in post merger integration. Differences in organizational and national cultures lead to different management styles, communication problems and difficulty in developing trust. For instance, French managers indicate that the most important function for a manager is to control, while their British counterparts believe it is to co-ordinate. Different attitudes towards power can be seen. Cultural forces also play a major role in shaping a company's global marketing mix program.

Pricing decisions are greatly influenced as customer's willingness to pay for a product varies from one culture to another. For instance, in countries such as the U.S.A or the U.K., high prices for certain products is seen as a signal of premium quality, whereas in emerging markets like India, high prices are usually looked upon as gouging the customer. Products that are perceived as 'good value' in one culture may have very little or no value in another. Local cultural norms and taboos have significant influence on advertising styles. In certain countries religious norms dictate advertisement campaign. For instance, all advertisements in Iran are required to be cleared by the Islamic censors. The board can take days, months or even years to clear a simple advertisement. Marketing strategies that are effective in certain cultures can be counterproductive in other cultures. Problems are usually faced when international firms tend to do things abroad the way they are done at home. To a very large extent, local culture drives the success of international marketing.

Managing the Impact

To operate globally, firms have to be aware of the 'cultural biases that influences ones actions and thoughts.' Firms need to maintain a balance between the concerns they have for selling their products globally and meeting the local needs of the market. International firms gain a competitive edge over others when they meet the cultural needs of the market that most competitors easily ignore. For instance, Japanese diaper makers were able to gain a substantial market share from P&G by selling diapers which met the desires of Japanese mothers. Consumption patterns are greatly influenced by cultural paradigms in which the consumer thrives. Culture consists of interrelated components, which affects a firm's market, and firms operating on a global basis require a deep understanding of these parts.

One of the key elements of culture is its material aspect. Material life refers to the technologies used for production, distribution and consumption of goods and services in a society. Differences in the level and type of demand for consumption products are partly explained by the differences in material environment. International firms have to improvise and look for alternative ways of producing or delivering their products if the country's transportation and infrastructural facilities are poor. Firms operating in foreign markets have to take into consideration its religious norms. Religion plays a key role in many societies and an understanding of it would be crucial to appreciate buying motives. Mc Donald's was able gain a substantial market share when they decided not to sell hamburgers containing beef to cater the needs of Hindu believers in India.

Language is often described as the 'mirror image of a culture' reflecting the content and nature of the culture it represents. A thorough understanding and knowledge of it is necessary in order to communicate with people in different countries. Mistranslations may covey a company's lack of care for its customers. Every culture has a value system that outlines people's norms and standards. Product positioning and design decisions can easily be influenced by local attitudes towards foreign culture. The situation calls for thorough research and a localized approach with major commitment from the head office for a considerable period of time. In many countries cultural norms dictate selling approaches. In Japan, for example, aggressiveness is not valued. As a result, Dell had to change its strategy because it simply could not apply its policy of promoting lower prices and had to resort to alternative strategies. Different strategies are required to be undertaken to meet demand in diverse national markets.

Firms can employ product extension as a strategy for pursuing opportunities in different markets. Under this strategy, a company sells identical products, with similar advertising strategies as used in the home country, in some or all world markets. Alternatively, depending upon the cultural needs, international firms can have the basic home market promotional strategy while adapting the product to local use or preference conditions. For example, Exxon adapts its gasoline formulations to meet the weather conditions prevailing in different markets while extending the same basic communication appeal.

Dynamism and adaptations are effective strategies under certain circumstances, however it does not address to global market opportunities. Due to certain norms people may not buy either the existing or adapted product. Under such circumstances, firms need to develop an entirely new product to satisfy the requirements of consumers by keeping in mind local norms and beliefs. Colgate pursued a strategy in developing Total (a toothpaste brand) that possessed a formulation; imagery and ultimate consumer appeal engineered to meet the specific needs of different cultures.

Conclusion

As markets globalize, there is a need for consistency in organizational design, systems and procedures. Taking into account the local characteristic of the market, the cultural system and the socio-economic conditions, managers are under constant pressure to adapt their organizations under these conditions. Corporate success largely depends upon this balance between consistency and adaptation

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