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Contemporary managers should not make managerial blunders caused by prejudice on people of different cultures. Managers of international and global corporations should be aware of the flux of cultural variables that they might be submerged in and realize their effects on workplace behaviors, therefore, appreciation of cultural diversity and the ability to develop effective relationships across cultures should be important goals of managers in this increasingly global marketplace. It is good that our team is composed of members from different nationalities, mixed cultures, values and beliefs, as this is advantageous for our work as we are a global human resources consulting group to help out with different human related projects of our company clients, so we should all work together to first understand our different cultures within our team and the job starts off with me as I am new to the team.
My first step is to adapt with a team full of international diversity of cultures, remembering each member's names demonstrates respect to each person and is the first step towards work harmony and cooperation. Our main goal of collaboration is to offer human resources consultancy so any culture bias or ethnocentric thought of superiority should be eliminated at our best while working together. Meetings will be held frequently to discuss on clients' concern so as to gather the wealth of our different perspectives instead of taking it for granted. We have a mutual goal to serve multinational organizations in the human resources areas which transcend the individual differences of our group members.
As globalization of a corporation continues, people directly get involved in international business increasingly benefit from a certain degree of cultural literacy. Cultural literacy improves people's ability to manage employees, market products, conduct negotiations in other countries and by understanding the local needs bring the firm closer to customers hence improving their competitiveness. If companies exhibit geocentrism, it reflects a belief in the company that being responsive to both local cultures and markets is necessary, these companies normally hire a good mix of local and international managers from any region of the world. However, ethnocentric individuals believe that their ways of doing things are the best, no matter which cultures are involved. Similarly, a manager who is parochialistic believes that there is no way of doing things other than that found within one's own culture. Both parochialism and ethnocentrism tends to reflect a sense of superiority and not cultural sensitive. Therefore we must avoid reacting with ethnocentricity while developing our cultural literacy.
Phatak, Bhagat & Kashlak (2005) mentioned that managers with higher levels of cultural sensitivity, that is a state of heightened awareness for the values of others, tend to be less parochial in their thinking and are often willing to examine the way management practices might be implemented in dissimilar cultures, if not, conflicts and misunderstandings will occur when members of a group take the view that their values are correct and best.
Cultural dimensionsare basic concepts that help us understand how two or more cultures might be different or similar along each dimension. Various frameworks have been developed at different times using different approaches, and these frameworks represent average tendencies or norms of the major value systems that define a culture found in a particular region of the world. Kluckhohn and Stodtbeck developed the
Kluckhohn and Strodtbeck's Frameworkto describe the emphasis a culture places on various dimensions. Thomas (2002) explained the framework briefly that it describes people's values on six issues which are:
- Relationships to nature when people have a need to dominate nature or surrender to nature or harmonize with it, for example Polynesians believe what happens to them is their destiny and they are not able to change it by their behavior while Japanese emphasizes the value of coexisting with nature but the western world believes that some of nature's forces can be controlled;
- Beliefs about human nature when people are inherently good, evil or a mixture of good and evil, for example at work, business deals in Japan could be based on verbal agreements and trust among coworkers while American workers are watchful to one another and Norway reflects the medium orientation in that there is a general atmosphere of goodwill and trust among its citizens yet there are very strict laws governing the use of alcohol;
- Relationships among people when the greatest responsibility is either for one's self and immediate family, or for one's own collateral group, or for one's groups that are arranged in a rigid hierarchy;
- Nature of human activity when people should concentrate on living for the moment, striving for goals or reflecting, for example, people in USA are normally heavily scheduled to accomplish a series of things which contrasts with rural areas of Mexico, India and Latin America where spontaneous reactions to feelings are expected, decisions and rewards are based on emotions, while a thinking orientation society, people are socialized preferring to achieve a work-life balance like the French and Spanish;
- Conception of space because the physical space we use is private or public or a mixture of both, for example, societies in Germany, USA and UK value privacy and employees consider it important to have their own space whereas in India, lower level employees may only share a common area of work;
- Orientation to time as people should make decisions with respect to traditions or events in the past, present or future, for example, the Middle East and Mediterranean countries have a profound tendency to emphasize past precedents in resolving important issues while Americans are conscious at the present such as quarterly financial reports and daily returns on stock market performance, while many Japanese and Korean companies plan for improving their performance in the long term.
In this concept of cultural variation, the framework identifies that a high preference for one assumption does not necessarily imply a low preference for the other two assumptions in the same value orientation and all preferences can be represented in a society and in an organization.
Wild, Wild & Han (2010), Thomas (2002) and Phatak et al. (2005) give a wide coverage on the
Hofstede Framework, which was developed by Geert Hofstede, a Dutch psychologist, from studying 110,000 people working in IBM among 40 countries and a subsequent study of students in 23 countries in 1980. Hofstede Framework compares cultures along five dimensions: 1) Individualism versus collectivism which is the extent to which one's self-identity is defined according to individual characteristics or by the characteristics of the collective groups to which the individual belongs on a permanent basis affecting their social patterns; 2) Power distance refers to the extent that power differentiation is accepted in a society where a centralized authority generally designates working procedures and inequalities in rewards are easily accepted; 3) Uncertainty avoidance is the extent to which societies focus on ways to reduce uncertainties so as to create stability and the resulting anxiety on uncertainty varies from society to society, and cultures that are high in uncertainty avoidance tend to be more expressive; 4) Masculinity and Femininity refers to the extent of which traditional male orientations of ambition and achievement are emphasized over traditional female orientations of nurturing and interpersonal harmony; and lastly 5) Long-term time orientation when in some cultures, efficient use of time is emphasized whereas in other countries, time is considered to be not limited and valuable but an inexhaustible resource.
However, many scholars have argued that Hofstede's framework was only developed from two surveys inside IBM that restricts the ability to generalize to other organizations whose members might be systematically different. Other methodological criticisms include the mathematical analysis in that there were too few data points in the questionnaire and many of the items within dimensions seem to be unrelated to each other. Regardless of the criticism, Hofstede's framework of the four cultural dimensions seem to make sense and widely studied by philosophers, therefore as a human resources consultant group, we should be alert on the cultural issues among nations and within societies that exemplify in an international firm.
The Schwartz Value Survey (SVS)is another system on understanding culture. Schwartz, an Israeli cross-cultural researcher, and his colleagues indentified three universal human requirements, the first issue was the nature of the relationship between the individual and the group. The second issue is the preservation of the society itself, and the final problem related to the relationship of people to the natural world. From these requirements that all societies share, they derived 56 values that reflected various ways of satisfying these needs. The results of his study suggest that the structure of values is consistent across cultures, that is, there is a similar relationship among values in all cultures.
Another recent broad based framework is the
Trompenaars's Framework,developed by a European researcher, Fons Trompenaars, who conducted the research with 15,000 managers from 28 countries, representing 47 national cultures. He describes cultural differences using seven dimensions. Five dimensions are concerned with how people relate to each other: 1) universalism versus particularism; 2) individualism versus collectivism; 3) neutral versus affective relationships; 4) specific versus diffuse relationships focuses on how a culture emphasizes notions of privacy and access to privacy; and 5) achievement versus ascription describing the methods used to achieve power and status; 6) time relationship in which time is viewed as linear versus holistic and integrative with past and present with future possibilities; and 7) relation to environment when the nature environment is seen as more powerful and that people should strive to achieve harmony with it. Tromenaars's framework can be seen as extensions and refinements of Hofstede's individualism-collectivism and power-distance dimensions and is also consistent with the relationship found between the SVS survey.
Use of the frameworks:The significance of being able to systematically define cultural variations is that it provides a basis for explaining and predicting behavior on a comparative basis. However, the ability to profile national cultures along a limited number of dimensions is over simplifying the effect of culture and constraining the way in which people regard members of another culture. Still, the frameworks allow us to speculate about the general consequences of particular cultural patterns. They are useful tools, both for researchers and managers, as long as their limitations are understood and care should be taken when these dimensions or cultural stereotypes are applied.
Culture and Social groups:A key aspect of culture is that culture is associated with a specific group of people. Identifying ourselves with a particular social group places boundaries around the group and may exclude other members. Membership in a cultural group helps to determine how we perceive ourselves, our self identity, as well as how others perceive us, individuals are thought to be relatively more similar in their beliefs and behavior. This categorization results in a comparison of one group with other cultural groups resulting in intergroup bias which can be either positive or negative. Groups are a part of almost every organization and when people work together in groups to perform a task, the cultural differences among group members often become apparent. The long term effectiveness of a work group help organizations to meet the quantity, quality and timeliness standards and group members bring in resources to the group, such as personal attributes, values, attitudes, their skills and abilities, for example, a product development task force engaged in planning a product introduction to a foreign market might benefit substantially from having foreign nationals represented in the group. Because of the reality of a multicultural workforce in most industrialized countries, managers are now faced with the task of managing work groups composed of culturally different members.
National culture and Subculture:Managers have to be aware that nation-states intervene in business to preserve national culture, regulate culturally sensitive sectors of the economy, as in filmmaking and broadcasting. A group of people who share a unique way of life within a larger, dominant culture is known as a subculture which may differ from the national dominant culture and exist in all nations. China is a typical example when north China and south China differ in people's life styles including eating and drinking, accommodations and communication styles. For example, ‘We like McDonald's but no beef please' is the crisis in India especially in Bombay as over 80% of the country's population is Hindu and are vegetarian, in the eventual course that McDonald stressed the vegetarian-friendly nature of its menu. Similarly McDonald's development in China in early 1980's was not popular because cows are part of the agricultural life in many areas of China, this was why Kentucky Chicken outperforms McDonald's business in China at that time.
National differences in work attitudes are complex and involve other factors in addition to culture, therefore, as a team of human resources consultant, we would advise managers in international companies to be aware of the complexity of national workplace attitudes and incorporate this knowledge into compensation and reward systems because perceived opportunity for financial reward is a strong element in attitudes toward work in any culture. Asian workers are more likely to work long hours as they see this will lead to promotion and increased pay but European employees see job security and benefits, such as national health care, more important.
We would also advise managers when they are sent as expatriates to work overseas to be cultural literate, flexible and tolerant especially in understanding the work styles of local employees, for example a Norwegian working in Japan may find it frustrating that Japanese workers requires longer time for decision making and take action due to the avoidance complexity index for Japanese is much larger than that in Norway. Gender responsibility is another element that cultural literate managers should be aware of because women, in Japan particularly, tend to serve in lower ranks and prefer less accountability at work as they may focus on their family needs more although this situation is changing gently.
More ways to improve global mind-set:The ways that managers can develop a global mind-set is to be cultural adaptable, which means managers need to alter their behavior when working with people from other cultures, develop one's knowledge of unfamiliar cultures, act on that knowledge to alter behavior appropriately and in an unbiased manner in response to cultural expectations. Managers must learn to be flexible as different cultural behavior may cause many issues, for example Japanese managers may sit and wait for directions and consultation with many instead of making decision alone. International research can be conducted and training of understanding and adapting to a foreign culture can be offered to expatriates working overseas for the organization. Companies can apply personality-testing psychometric tests to measure the global aptitude of managers and employees for profound understanding of their values. A few famous and commonly used examples are: SHL's Leadership Aptitude test, Hogan's leadership profile test on one's adjustment, ambition, prudence, inquisitive, sociability, interpersonal sensitivity and learning approach and Hogan's Values Test on a leader's need of recognition, power, hedonism, altruistic, affiliation, tradition, security, commerce, aesthetics, and science; DISC (Dominance, Influence, Steadiness, Conscientious) behavioral test, Birkman First Look (BFL) assessment on one's team-workmanship, MBTI (Myers-Briggs Type Indicator) 16 psychological differences personalities test generated after a mix among the characteristics of extraversion, introversion, sensing, intuition, thinking, feeling, judging and perceiving.
Conclusions.Cultural variables determine basic attitudes toward time, work, materialism, and norms concerning how relationships are maintained and sustained over time. Even if it were possible to determine the optimal cultural mix in a particular work group situation, it is unrealistic for managers to control the cultural composition of work groups. Instead they must try to find ways to maximize the positive consequences of both homogeneity and diversity while minimizing the negative consequences of both. Over time, cultures evolve as societies adapt to transitions in their internal and external environments. Cultures of more traditional societies, such as China, Japan, India, Greece and Egypt, have gone through changes through experiences in the last century. It is clear that cultural variables, such as shared beliefs, values, and attitudes, affect how managers in global corporations develop their policies and execute various tasks. Although values and attitudes are under continually greater pressure from globalization, their transformation is still gradual rather than abrupt because they are deeply ingrained in culture. Improvements in cultural sensitivity will occur only after managers examine the deep rooted values of their own culture. Our human resources consulting team would utilize our best composition of multinational and multi-cultural expertise to assist our clients in expanding their knowledge of understanding so as to enhance their business through a cooperative workforce despite of their culture mix.
I will start with a basic understanding of the Countries A, B and C, then proceed with explaining what international marketing research is, the sources of information and the methodologies. Lastly, I will identify the difficulties and areas of concern for international research.
1 Classification of Developed andDeveloping Countries
I would like to first conjecture the three countries type that Jason Markowitz have segmented and briefly describe the general situations in these countries. Country A, being a developing country but with a low literacy rate could be countries like Pakistan, Sri Lanka, Indonesia, India and Nigeria. China can also be categorized here in certain aspects because the nation is still segregated into highly prospered major cities and low economy and literacy levels in many under-developed districts. As Ball et al. (2008) quoted Norman Myers from The Influence of Affluence on the Environment that the developing nations and three transition nations with enough income enjoy a collective spending power in local purchasing capacity of $6.3 trillion per year, and that they could increase their spending power more by 2010. This Country A category is therefore well worth researched as the buying power could be enormous depending on which cities Jason will invest the business in and how they will promote and convince the consumers since the inhabitants of Country A could be easily influenced.
Country B, having a group-oriented culture could be China again, Cuba, Japan or Islamic countries. These nations are normally tied to a unified ethnic belief. China, for example, is one of the world's largest communist nation and the population density has risen tremendously in the last decade to 3 billion. After the political integration of Hong Kong with mainland China in 1997, the interest of international and global companies to invest in China increases. Chinese is strongly influenced by Confucian thought for many centuries which values kindness, industrious characteristics, manners and family connections. Japanese are fully committed to its national loyalty and aggressive in building its national economy. As for the Islamic countries, the same code of behavior is vividly embraced by all and cannot be broken. Therefore research on Country B is better relied upon local researcher who understands the culture of the specific country and is part of their ethnic group.
Country C, being a highly developed nation could be USA or many countries in North and West Europe, I would include Hong Kong in this category although it is not a country by itself. Research for Country C has a lot of open channels to obtain data of its culture, economy, consumer behavior and other information.
To Bennett (1996), countries may be classified under the headings of a) the industrialized and economically developed market economies of West Europe, USA and Japan, East European nations that have moved from central planning to market-based systems; b) high growth and rapidly industrializing countries (notably in the Pacific Rim); and c) the poorer ‘underdeveloped' economies. Three quarters of all the world's exports are supplied by the industrialized nations and they also take the same proportion of all the world's imports. Underdeveloped countries, conversely, have relatively little involvement with international trade and only rely on large domestic agricultural and domestic goods to provide the majority of their needs. Neither Country A, B or C belongs to the underdeveloped group that Jason selected.
I also assume it is unlikely that Markowitz Tools is an economic tool for calculating investment portfolios, named after Harry Markowitz's Modern Portfolio Theory (MPT) in 1952 which is a theory of investment to minimize risk and maximize return by selecting different assets carefully. The fundamental concept behind MPT is that the assets in a portfolio cannot be chosen individually, it is instead important to note how each asset changes in price relative to the changes in price of every other asset in the investment portfolio. If Markowitz Tools is an investment calculation tool, then Jason would not need to research into Country A due to its low literacy level to comprehend the Tools functions. I therefore assume that Markowitz Tools is hard products that can be distributed and sold in the retail market, hence requiring the following research methodology.
2 International Marketing Research
International market research provides information on national business environments, including cultural practices, politics, regulations and the economy, the market's potential size, buyer behavior, logistics and distribution systems and can help management to decide on the choice of new location and to test consumer reactions.
In the case of Markowitz Tools, Jason should start collecting standardized information which is a type of secondary data that can be either syndicated or standardized, the data collection process and/or the data collected are standardized for all subscribers. Standardized information have many applications, which includes measuring the consumer attitudes, clarifying market segments, conducting market tracking and monitoring the usage of media and effectiveness of promotional activities. Jason needs to work on analyzing the market segment as his priority, by doing so, he could hire limited-service specialist supplier firms to perform research in a specific market sector that may suit Markowitz Tools.
Punnett & Shenkar (2007) mentioned Adler's (1983) six approaches for conducting international management research. These methods are parochial research, ethnocentric, polycentric, comparative, geocentric, and synergistic research. Each approach focuses on the similarities and differences of culture, hypothetical assumptions of the study, questions asked and the methodology applied. The parochial research is a single culture study with assumed universality in the domestic management so traditional methodologies can be used. The ethnocentric research is a second culture studies searching for similarity by raising the issues of how management research can be standardized across cultures and whether a theory can be applicable to organizations in country A be extended to organizations in country B. Polycentric research deals with studies in many cultures to search for differences instead of accepting universality. Comparative research is a study on contrasting many cultures, looking for both similarities and differences by comparing different organizations with foreign cultures. Both geocentric and synergistic researches are international management studies, geocentric research searches for similarity by studying how multinational organizations function in the complexity of geographical distance whereas synergistic research studies the use of similarities and differences and how these intercultural interaction within work settings is managed, on how organizations create effective structures and processes working with members of all cultures. Geocentric approach is more appropriate for Jason.
With the research design, Leedy & Ormrod (2010) suggested applying ethnography, phenomenological study, grounded theory study, and content analysis. Ethnography means conducting field work to look into the entire country and understand the complexities of the working groups. Phenomenological study is conducting field survey to tap into the respondents' perceptions. Grounded Theory study uses multiple stages of data collection which is why the theory is ‘grounded' on the data. As for content analysis, Jason has to examine the contents of a particular body of material, so as to identify patterns, themes, or biases within the material. Four concepts can be applied to Markowitz Tools to cross examine the company's future selling and developmental trends into the three countries.
3 Secondary Sources of data
Secondary data can be derived from both internal and external sources. I would assume that Jason has grasped the information from the company's internal sources, such as the firm's financial capability to expand into the new markets, advertising and promotion activities recorded, Markowitz Tools manufacturing reports or service by location, etc.
To start off on external sources in an economic way, Jason can utilize reviewing public accessible studies literature from library resources or industry publications and trade journals. For Country C, highly developed and industrialized, both government agencies and private research firms supply ample information. Wild, Wild & Han (2010) provided specific suppliers such as the International Trade Statistics Yearbook of the United Nations lists the export and import volumes of different products for each country. The International Trade Center (www.intracen.org) also provides current import and export figures for more than 100 countries. Information Resources Incorporated (www.usa.infores.com), Survey Research Group (www.surveyresearchgroup.com), and ACNielsen (www2.acnielsen.com) supply these data as well, but at an expense.
If Markowitz Tools is manufacturing products, Jason could consider gathering industrial data, these industry studies, except from being made by the firm's analyst, can be purchased from independent research organizations. Government agencies, chambers of commerce, various industry associations, which generally provide industry-specific forecasts to their members. The Central Intelligence Agency's World Factbook (www.cia.gov) is a useful tool throughout the entire market due to its abundance of facts on each nation's business environment, including geography, climate, natural resources, land use, environmental issues, culture, government systems, the country's debt and exchange rate conditions, economic conditions, quality of transportation and communication systems. The Trade Information Center (TIC) (www.export.gov) by US Department of Commerce offers information on product standards in other countries and advice on opportunities for US companies in individual markets. D&B's Market Identifiers provides data on companies rated by D&B, which can be used to construct sales prospect lists, identify sales territories and sales potentials.
Economic forces are among the most significant uncontrollable forces, firms for many years have been assessing and forecasting economic conditions at the national and international levels so as to know the present situation and plan for future. To do so, Jason could use secondary data published by governments and international organizations, for example, the World Bank (www.worldbank.org), the International Monetary Fund (IMF) (www.imf.org) and the Asian Development Bank (www.adb.org) (Ball et al. 2008). The data published by these organizations may not be as timely or as accurate as business analysts would like, at least, there is a large amount available. These international economic analyses should provide economic data on both actual and prospective markets. Many international banks publish free newsletters containing useful economic data and are available on CD-ROM, through internet or printed versions. Lexis-Nexis database (www.lexisnexis.com), Dow Jones (www.dn.com), DIALOG (www.dialog.com), Google and Yahoo offer update reports, market information and strategies of many international companies for easy reference.
If Jason has finished studying the standardized resources and has reached the stage ready to research on the consumers in the three countries, he could consider using the services of market segment specialist who specializes in collecting data for special market segments such as ethnic minorities, different age clusters to form homogeneous groups. C&R Research and The Stanford Research Institute conduct surveys for Hispanics and Asian-Americans while Strategy Research Corp. specializes in Latin American markets and JRH Marketing Services specializes in the black ethnic markets. These suppliers capitalize on their profound knowledge of the client's target market. Some standardized information sources focus on members of the industrial market, they apply NAICS (North American Industry Classification System) and/or SIC (Standard Industrial Classification) systems, which allow Jason to define industry types specifically. Claritas (http://www.claritas.com) of Nielsen and Acorn help sending promotion messages to targeted consumers and their desktop products can assist Jason to conduct regional and national segmentation studies. Knowing which market segments will help Jason to create his potential customers base in each of the country.
4 Methods of international research
Wild et al. (2010) alerted that few problems may arise in international marketing research because customers may vary due to different cultures, traditions, beliefs and expectations. If this happens, separate country should collect individual country's secondary information and then compare the data difference, which means international marketing research counts more on original primary data of individual country, while secondary information is used as initial basic understanding before conducting primary data research.
Following the process of collecting secondary data information, Jason should start conducting primary market research, which is collecting and analyzing original data by employing outside research agencies to assist on this task. The major research methods used for collecting data includes a) Field observation to physically view the operations of the country people to understand their work culture; b) Interviews to fully understand the people perceptions, viewpoints or experiences; c) Align focus groups to explore the people's common viewpoints openly through group discussion; d) Questionnaires, surveys, to get the people's anonymous truthful responses quickly and easily in a non-threatening manner; e) Environmental scanning to obtain both factual and subjective information on the business environments in which Markowitz Tools wishes to enter.
Research brings with it a variety of psychological emotions towards informants, researchers, and others, so the research supplier/team that Jason hires should have a clear basis and means of allocating tasks and provide appropriate supervision, training and support to the new or local researcher. During any data collection activities, ethical practices must be followed, these practices include telling the participant on the purpose of the research, getting consent from the person, the approximate amount of time required, what is expected from the participant, informing the person the expected risks and benefits, and that the participation is voluntary so that the person can withdraw with no negative repercussions, how confidentiality and privacy will be protected, the name and contact information of the researcher for any questions raised by respondents. Besides, above information must be given in a language and academically comprehensible level that the participant can understand, especially or respondents of Country A and B.
Furthermore, the interviews and focus groups should be based on developing relationship with the interviewees and researchers should be asking ‘open-ended' questions to small group samples, and make the interviews unstructured to get to the depth of information. Besides, the construction of a questionnaire has to be cautious when formulating sensible questions, the wordings and sequence of questions are clear to avoid misinterpretation, and the questions must stay away from excessive complexity, faulty assumption or vague concepts. Using the internet to collect questionnaire or survey data to overcome international boundaries or time frame so as to collect the feedback with spontaneity and anonymity can be practiced in the developed Country C.
5 Difficulties and Areas of Concern in International Research
Different nations, such as the identified countries A, B and C, have each of their unique conditions and circumstances which somehow generate certain difficulties to market research in different nations. Jason must evaluate the research results and assess their relevance to the location-selection decision. The main difficulties associated with conducting international market research are its availability of data, comparability of data and cultural differences. Quality market data is hard to obtain in countries A & B, even if available, the reliability can be challenged, especially when governments of emerging market may be trying to attract investors by overstating estimates of gross income and consumption levels. Data obtained from other countries must be interpreted with great caution, because terms such as poverty, consumption, and literacy differ greatly from one country to another, such data must be accompanied by precise definitions, for example, the annual income of a family of four below US$21,000 is said to be below the poverty line whereas the same income for a Vietnamese family of four is placed high in the upper class.
The different ways in which countries measure data also affect comparability across borders, for instance, some countries state the total quantity of foreign direct investment in their nations in terms of its monetary value, whereas others specify it in terms of the number of investment projects implemented during the year, so researcher should obtain both figures. Acknowledging cultural variables in the three countries is another critical issue to pay attention at. Researcher is better off to be familiarized with the language of the nation rather than relying on interpreters. Questionnaires have to be written in the local language to avoid misunderstanding from the respondents. Written surveys can be greatly affected by the literacy level of the local population particularly in Country A, for example, Pakistan has only 50% of illiteracy rates so researcher may choose a different information gathering technique such as personal interviews or observing purchases in the country.
5.2 Need to be aware of Different Country's Economic Situations
Businesses exist within national economic systems that possess unique characteristics, prospects and difficulties. Jason needs to take an interest in both the economic structures of the countries in which he wishes to do business and in the international economy as a whole, in order to establish the size of the different markets, assess the degree of risk attached to operating in specific nations, identify high growth sectors, make investment decisions and deploy company resources in the most effective way. It is important for Jason to understand this because a nation's level of economic development affects all aspects of business, including marketing, production, and finance.
Although nations vary greatly with respect to economic development levels, Ball et al. (2008) group them into categories based on their level of economic development, similar to Jason's classification of countries A, B and C. To Ball et al. (2008), developed countries apply to the industrialized, or service-based nations that have achieved high income per capita and normally people of these countries have high literacy level, as in Western European nations, Japan, Australia, New Zealand, Canada, South Korea and the United States, whereas developing countries are classified for the world's lower-income nations, less technically developed and lower literacy level of its people. At one time, the four Asian tigers, namely, Taiwan, Hong Kong, Singapore and South Korea, were classified as the newly industrializing countries (NICs) as they are what the World Bank considers to be fast growing, middle-income or higher economies.
Among the more important economic indicators are gross domestic product, gross national income, distribution of income, private consumption expenditures, personal ownership of goods, private investment, unit labor costs, exchange rates, inflation rates, and interest rates. A term, purchasing power parity (PPP) is the number of units of a currency required to buy the same amounts of goods and services in the domestic market that one dollar would buy in the United States. Although differences in Gross National Income tell us something about the relative wealth of a nation's inhabitants, the information is somewhat misleading because wealth is usually not evenly spread, so this estimate of purchasing power must be refined by incorporating data on how national income is actually distributed and apportioned among its people. Depending on the type of product and the total population, either situation may represent market opportunities and useful insights for business. For example, although Costa Rica's GNI was $42 billon in PPP in 2005, the fact that just 20% of the population receives nearly 55% of that income indicates that a sizable group of people are potential customers for low-volume, high-priced luxury products. On the contrary, the market is rather small (4 million people) for low-priced goods requiring a high sales volume. Even though China's economy skyrockets, it is growing at the expense of the top PPP and bottom 20% signifies an increase in middle-income families. Data on income distribution are gathered by the World Bank from a number of sources and published yearly in the World Development Indicators.
So Jason must use these data to analyze how the composition of consumption changes with the level of development. Besides, the percentages of household expenditures spent on food and clothing by residents of developing nations are double the percentages consumers in industrialized nations spend. On the other hand, the percentages spent on transport and communication, consumer durables, health care and other consumption by households of developed nations are twice the percentages of those in developing nations. It depends on the nature of Markowitz Tools business which is unknown in the question.
5.3 Socio Economic situations
The major socioeconomic dimensions are population density and distribution, rates of growth and population age distribution. Jason ought to know how consumers allocate their incomes, besides, the human-needs approach defines economic development consequent to the reduced poverty, unemployment, and uneven income distribution for potential market in Country A.
For some firms, age is a salient determinant of market size, but the distribution of age groups within populations varies widely. Generally, because of higher birth rates, developing countries have more youthful populations than do industrial countries. There is a concern for developed industrialized nations due to the decrease in family size and decline in birthrates, versus the situation in Africa and the Middle East, where fertility rates are as high as seven children per woman. A contemporary phenomenon is an increasing number of young Europeans are not marrying, and those who marry are doing it later and having fewer children.
Other aspects of population that concern business are population density and population distribution. Densely populated areas tend to make product distribution and communications simpler and less costly than they are in areas where population density is low; thus in Pakistan, with 192 inhabitants per square kilometer, to be an easier market to serve than Canada with only 3 inhabitants per square kilometer. However, only 34% of Pakistan's population is urban versus the percentages for Canada are 80%. Another phenomenon is the rural-to-urban shift, which is occurring in developing countries, as people move to cities in search of higher wages and more conveniences. The increase in the number of working women is highly significant because it may result in larger family incomes, a greater market for convenience goods, and a need to alter the promotional mix (Ball et al. 2008).
Jason should start by learning more of the three countries from standard information such as government statistical publications, trade association data, books, bulletins, annual reports and business periodicals which can be obtained from library and industry resources. Then he should proceed to look for specialized research agent to obtain primary data of each country and compare them to decide how much and how far to invest the market share. In the research process, Jason should be aware of the difficulties that may differ in these countries, the economy and social economic situations of each country, final decisions must be made on which opportunities suit best to Markowitz Tools.