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This essay is divided into two parts first part is about culture and importance of cultures. Second part As this world is a global village and organization have new horizons for trade. When an organization goes borderless the first problem it faces is culture. Even in a country there can be a national culture or there can be more than one sub culture. This essay will explain some problems the multinational companies face and how the overcome it.
This essay will demonstrate why cultural factors are important for international marketer. This essay will also explain why international marketer should have knowledge of different cultures and why this factor has significantly important to make any business strategies. If they have sufficient knowledge of cultures they can make good and acceptable strategies for their business. It is the important to know culture before marketer go across the border.
This world becomes a global village and it creates many opportunities for businessmen to go across the border to expand his/her business. As thought full international marketers who are concerned about culture, cultural diversity and the means of communication of the different countries where they want to initiate their business, they should have knowledge of culture of particular country. The World has some 6000 communities and as many distinct languages. Such difference obviously leads to diversity of vision, values beliefs, practice and expression which all deserve equal respect and dignity. The successful international marketer have to know the values of each different culture and language of that definite country. The international migration rate is growing fast every year and by reason of this easy for the managers to acquire the awareness of the different culture and language.
As discussed by Greet Hofsted (2003, P-5) "Culture is a mental software" This statement give you an idea about that culture are not inherited but culture always learned. Like computer software a mind is programmed to make decisions in the light of what he felt, heard, learned. A man learned his culture from the social environment. Culture is large and integral part of our everyday lives. It is our beliefs, values, behaviours and material objects that create our way of life. It is the human nature. There are two types of cultures one part is tangible. This includes things like building and art like that. The other part is opposite to it that includes things like religion, philosophy, ideas and beliefs.
The word culture encapsulates spiritual, intellectual and emotional features of society or a social group and also lifestyle, ways of living together values of system, tradition and beliefs. " A cultural subgroup differentiated by status, ethnic background, residence, religion or other factors that functionally unify the group and act collectively on each member." (Geert Hofsted 2001)
At the start of this essay one term used "Globalization" that is why it is very important to explain subculture as well. Taking example of England, there are so many people living who have different culture. All together England has one culture but in this culture there are different sub cultures. One geographic boundary does not necessarily mean one culture.
As early as 1950 David Riesman distinguished between a majority, "which passively accepted commercially provided styles and meanings, and a 'subculture' which actively sought a minority style and interpreted it in accordance with subversive values"(Middleton 1990). In other words, subcultures are good of individuals who, through a variety of methods, present themselves in opposition to the mainstream trends of their culture if the subculture is characterized by systematic opposition to the dominant culture. If the subculture is characterised by systematic opposition to the dominant culture, then it may be described as a counterculture.
McDonald's is one of the biggest fast food chains in this world and they are successive because they understand the importance of culture and subculture. That is why they have branches all over the world. McDonald's is very much successful in all cultures because before they launching their branch in new country or new culture they study immense about their culture and when it fails to do this they fail to do business. In all different countries culture is different for example in Europe culture is different and in Asia its totally different.
This example will explain the importance to have knowledge of subcultures and why it is the most important to consider culture factor central core of making policy. In USA vegetarians people protest against McDonald and their point was McDonald frying chips(fries) with other non vegetarian products in same oil. This thing happened in India as well, In India most of people are vegetarian. It is a part of their religion as well. Management team was sensible the study culture more in detail and they formulate new policies how to minimize these problems for example they start using vegetable oil. They make ingredients charts and place it on front so that customer can see details etc.
The other example is HSBC bank the bank known to be World's local bank. Why they think that because they have very clear strategy about culture. HSBC got branches all over the world and getting great response from all over the world. "We know that employing diverse people makes us more adaptable to new situations. This not simply about gender, ethnicity, disability or age: it is about respecting individuals and treating everyone, customers and colleagues, with dignity" (http://www.ukpersonal.hsbc.co.uk).
Following example will make clear that cultural factor is central core of marketing policy. When HSBC launch their business in Islamic countries like Middle East, Pakistan. They study Islamic terms and how they can attract customers by giving them services according to their religion and culture. Like it mentioned above that this world becomes global village even in London there are so many people living how have different cultures. HSBC made strategies to focus on sub cultures as well. HSBC started Amanah banking that is Islamic banking. HSBC started this just to attract Muslim customers . "At its heart , HSBC Amanah premier offers you a suite of financial products that comply with the highest standards of Shaiah authenticity. Structured under the strict supervision of our world-renowned Shariah scholars, our range of Amanah products cater to all your banking needs". (http://www.hsbcamanah.com/amanah/personal/premier)
At the end it is essential for the international marketers to have vast knowledge of cultures. If they have inadequate information about culture then it is impossible for them to do business in specific country or culture. Managers should have knowledge sufficient knowledge of culture values to avoid any ethical dilemma. Above all mentioned reasons proves it that cultural factor should considered central core of marketing policy.
According to the Dean Foster "I like to think that the world is getting bigger not smaller the world culture perhaps unique among many aspects of life that are indeed being homogenized" .This world has one culture according to dean and as now it's a global village and world is just going towards convergence and we are going to adopt a unique culture. As now a child from Asia resemble with a child from America or Europe regarding the fashion dress and way of living. That thing tells that the world is going towards convergence.
Globalization is a word that has recently become common. To some people, globalization means "a global village" linking the world's people economically, culturally and politically through the use of technology and other tools. To others, globalization is something to fear. Globalization, to them, means a complete reorganization of the world's economic and political activity with multinational corporations and the international trade bureaucracies that they establish taking over global control. Michael Porter (1986) "The new multinationals not only transformed international trade but also the relationship between private business enterprise and public institution."
Perhaps there is another definition of globalization. There is another view. Many of the critics are searching for ways to create a more equitable world order that will have international agreements that place the needs of people, local economies and the natural world ahead of the interest of corporations. However, there is no one voice. There is a divergence of opinions about globalization even among those who are wary of the concept.
In the view of multinational companies for example manager of MacDonald in his interview he illustrate that to have understanding of culture and culture diversity is the key point for the success of our chains and for the most of the multinational companies. He stated that if we do not know the culture the traditions and the taste of
the people we cannot work efficiently because if something works in one culture there is slight chance to work with other culture. The most important thing is communication in the organization. According to Jhon Adair "the word itself comes from Latin verb communicare: to impart, to participate, to share."
In this globalized world this is key factor for the business to know the way of communication in different cultural environment. As Stated by Jhon Adair "Unless you are in contact with another person you cannot communicate, if there are undiscovered tribes in South America or in outer space for that matter- neither you nor I can communicate with them we are not connected. The most obvious form of connection is physical proximity or being literally in touch or within touching range".
The best advantage of globalization is that companies can find cheapest and easiest to way for production best example is illustrates this below. Ford Fiesta you can buy this car at Ford display centre but this car spare parts come from different parts of one country or it could be from other countries as well.
The Ford Fiesta Production network in Europe (Dickens, 1998:Regprinted with permission of sage publication )
The risks associated with global commerce can be dramatic. Changes in countries can quickly result in significant risk to shareholder value. Political risks arise from the actions or inaction of a foreign government, your own government, or a third party country or supranational. These risks may deprive a company of its assets, prevent or restrict the performance of a contract, or affect repayment of loans to financing banks and lenders. A foreign government might confiscate, nationalise or selectively discriminate against your assets. You might be forced to abandon a project due to political violence or an international embargo. And revenue repatriation from an overseas project can be affected by currency inconvertibility or exchange transfer problems. MIRANDA GREEN "said the report, launched today by the Regulatory Policy Institute, a think-tank, shows that 63 per cent of respondents to their business survey believed political risk had inhibited investment decisions. For 48 per cent, real or perceived political risk had increased the cost of capital or influenced the structure of corporate finance packages and 69 per cent said it had inhibited strategic decisions".(Financial Times UK)
There are disadvantages of globalization as discussed above elimination or merge with different cultures and same with language and traditions. Beside that there are enormous advantages of globalization regarding the business. Money, technology and raw materials move ever more swiftly across national borders. Along with products and finances, ideas and cultures circulate more freely. As a result, laws, economies, and social movements are forming at the international level. WTO is the best step to systematize business and to make rules for the business for all over the world.
In this era a multinational organization can survive if that organization follows the rules. Manger can follow the rules if they know about different culture and they can work more efficiently with the people of specific culture. Managers can learn all about different cultures Technology has now created the possibility and even the likelihood of a global culture. The Internet, fax machines, satellites, and cable TV are sweeping away cultural boundaries. It's easy for the managers to learn all the traditions and ideas about the specific culture. At the end again it is very necessary for managers to have knowledge of culture diversity.
Following example will illustrate what Cateroa and Ghauri trying to say that multinational companies like Nike, Coca Cola, McDonalds etc become symbol of globalization. Nike dress or trainer can find in Africa, Asia and USA. These companies are working very hard to bringing cultures together if not then it is very difficult for them to go borderless.
At the end, simply globalization creates several opportunities for the companies or organizations whether these companies are small or big. But it makes business for the managers tougher because now mangers have to compete with the entire world. And they have to work with different countries with different cultures. It is so much necessary for the mangers to have the knowledge of culture diversity. As mentioned above now the companies are opening their new departments in other countries where then can produce the same quality product with low cost. Those companies can succeed if they know who to deal with culture diversity culture of the county where they want to initiate their departments. An article shows that (www.tuc.org.uk) "There is no doubt that globalisation creates problems for workers. These problems do not respond to purely national solutions and an international response is therefore needed from the trade union movement in order to safeguard workers' and other social rights." Cateroa and Ghauri trying to say that before starting any business it is very important for managers to know about culture and aspect of cultures.
Geert Hofsted "Culture's consequence 2nd edition", Sage publication LTD. 6 Bonshill street London United kingdom.2001, P 2.
Hosted Geert, Culture and Organization, (Profiled Book LTD 2003) Page 5.
Riesman, David (1950). "Listening to popular music", American Quarterly, 2, p.359-71. Cited in Middleton (1990/2002).
Ken Gelder "The Subcultures Reader", Routledge Traylor and Frances Group 1997.
MIRANDA GREEN, Political risk "holding back investment' REGULATION" Financial Times UK, London Ed1, Sec. NATIONAL NEWS, p 3. February 15th 2006.
Thomas Friedman "Goldman Sachs Book of the Year, The World is Flat" Financial Times UK, London, P 2 November 04 2006.
IMM Lecture NO 6 slide 3.
Llewellyn D. Howell "Country and Political Risk Analysis" Reprinted by permission of IBC USA Licensing Inc, 1994 P-57.
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