Impact of Culture & Ethics in International Business

FLOW OF THOUGHT

Need for Understanding Culture Standardisation V/s Adaptation The Classical Dilemma What is Culture?

Approaches to the study of Culture

Applications of Cultural Insights to Marketing Summary

CULTURE
An Understanding of Culture And Its Impact on International Business

Need for Understanding Culture

Similar Surfaces; Dissimilar Roots ===> CULTURAL MYOPIA

Standardization V/s Adaptation

- The Classical Dilemma

Universal Values v/s Local Values Nature of the Product (Consumer Products v/s B2B)

The Search for Cultural Universals

Universal = Mode of behaviour existing in all cultures Universal aspects = opportunities to standardize some or all elements of a marketing program

Universals v/s Local Differences

UNIVERSAL TRENDS shaping Youth attitudes about Cool Globally

Option Overload More Discerning, More Brand Savvy.

Metopia Freedom of Choice & Increased Sense of Control Individualistic Me-First Culture

Fully Loaded Living Multi-tasking, part time jobs, work hard & party
harder. Stress A Status Symbol Future Digested Expecting & looking forward to tremendous change, not deterred by the pace of innovation

Universals v/s Local Differences

LOCAL CONNOTATIONS - What youth across the world think is COOL
USA Different & Effortless

CHINA Knowing your own taste

INDIA Being first with new things; Different within Reason

BRAZIL Right Look, Laid Back

What IS Culture ?
The integrated sum total of learned behavioral traits that are manifest & shared by members of society

OR

The way in which people in a society collectively attach meanings to concepts & contexts around them & respond on the basis of those meanings

What IS Culture ?
Culture as ways of living Conscious and unconscious values, ideas, attitudes, and symbols that shape human behaviour Culture is learned, not innate Culture defines the boundaries between different groups All facets of culture are interrelated

Components of Culture
social interactions among people; nuclear family, extended family; reference groups technologies that are used to produce, distribute, and consume goods and services language has two parts: the spoken and the silent language

values shape peoples norms and standards One of the major vehicles to channel from one generation to the next communitys set of beliefs that relate to a reality that cannot be verified empirically

ideas and perceptions that a culture upholds in terms of beauty and good taste

Approaches to the study of Culture

High & Low Context Cultures
LOW-CONTEXT CULTURE

Messages are explicit

Words carry most of the information in communication United States, Switzerland, Germany

HIGH-CONTEXT CULTURE Less information is contained in the verbal part of the message More information resides in the context of communication (background, associations, basic values of communicators) Japan, China, South Korea, Mexico

Approaches to the study of Culture

Sources of Culture

Material Culture Tools, Artefacts, Technology, Infrastructure Language Reflects the nature & Values of Society Aesthetics Expressions of Art Music, Drama, Dancing, Colour & Form Education - often means common interests and outlook Religion, Attitudes & Values Social Organisation Way people relate to each other (Extended families, units, kinship)

Approaches to the study of Culture

Hofstedes Model
Symbols
Heroes

Rituals

Values

Practices

Expressions of culture at different levels of depth

Approaches to the study of Culture

Hofstedes Cultural Typology

Culture A better indicator than Material & Structural Conditions of Cultural Attributes.

Constructs or Indices of Research

Power Distance Social Equality or vice a versa Individualism Individual Responsibility v/s Integration
Masculinity - Emphasis on work goals, as opposed to personal goals and nurturance

Uncertainty Avoidance Openness or Resistance to Change

Confucian Dynamism Professional Hierarchy v/s Social Obligations

Hofstedes Cultural Factors

High Individualism : US, Australia, Great Britain, Canada Low Individualism: Japan, Venezuela, Thailand, Japan, Mexico, China Individualism vs collectivism Feminine: Netherlands, France, Sweden Masculine: Japan, Mexico, Britain, Germany

High : Korea, Japan, Mexico Low: India, Australia, US, Germany

Power Distance

Hofstedes Cultural Factors

Masculinity Vs Femininity

Long term orientation Long Term: Hong Kong, Japan Short Term: Great Britain, US, Germany

Uncertainty avoidance

High : France, Japan, Mexico Low: India, Hong Kong, US, Great Britain

SOME ISSUES?

Is face important? Independence or interdependence? Egalitarian or hierarchical? Task focused or relationship focused? How important are connections? Status, titles, and family relationships? Gender-based expectations? Attitudes towards time? How important is relationship building in the target culture and how is it accomplished? Decision making: hierarchical or consensual? Negotiation tactics? How is conflict resolved?

CULTURE AND BUSINESS

Business Environment Internal and External factors JVs, M&A, Global Alliance, etc. Socio-Economic Organisations
Marketing Environment Consumption characteristics Buying behavior Access Distribution Products and Services

International Economy

Foreign Intervention

Decisions made by competitors

Infrastructure (transport, communications) Technology

International laws and regulations

External Factors
International Impact Stakeholder & resources

Decisions made by suppliers

Decisions made by customers

Trade unions, trade organizations, consumer groups National trade and economic policies National Laws and regulation Industry Culture

Company Policy

Markets (labor, finance) Markets (labor, material, finance)

Human Resource

Capital

Monetary Machinery
Inflation National Economy

Community
NGOs Political Context Local Community National Culture

Factors in the natural environment

CULTURE AND MARKETING MIX

Product Policy: Certain products are more culture-bound than others e.g. Food &Beverages and Life-style products .
Pricing: Pricing policies are driven by four Cs: Customers Company (costs, objectives, strategy) Competition Collaborators (e.g., distributors) Distribution: Cultural variables do dictate distribution strategies. Promotion: Cultural influence on communication strategy Local cultural taboos Folklores, Mores and Norms

PROTOCOLS AND RELATIONSHIP BUILDING

Dietary and dining customs Gifts:

Expected? What kind is appropriate? How does one receive gifts? Styles, Colors, etc.

Appropriate Dress

Current events Taboo subjects

Application of cultural insights to marketing

The AXE Effect - Happy Dussera

Application of cultural insights to marketing

Headline: MEXICO - Wards off hunger

INDIA - Wards off evil

HSBC
Subhead: Never underestimate the importance of local knowledge

CURRENT PRACTICES

Training!!
75%

of US companies provides no cross-cultural training.

Employees for international assignments

Flexible

work timings Clear Communicators Comfortable in new situations And culturally mindful

GLOBE
Global Leadership & Organizational Behavior Effectiveness

Explores cultural values and impact on organizational leadership Uncertainty avoidance, power distance, and collectivism as in Hofstedes constructs. Other Dimensions : collectivism II gender egalitarianism assertiveness future orientation performance orientation humane orientation

ULTIMATELY

Think Globally. Act Locally.

~ Derek Torrington, 1994
Learn Globally and Deliver Locally