BU 612 Understanding (Cultural and) Institutional Influences (Week 4)

Cultural Influences (contd) Political, Economic and Regional Influences (text) Industry Influences Legal and Regulatory Influences
Readings?

Ch 5, 6; Fernhaber et al. 2007 + Australian Tourism Ch 7 and 8; Czinkota et al. 2009

Next class?

Culture
the intellectual and social heritage of a specific society an accepted way of life of a group of people
learned and passed on from generation to generation represents a societys shared meanings and traditions reflected in values, attitudes, etc. provides people with a sense of identity

impacts what we consume, how we dispose of it, and all our decisions

around consumption/disposition

How is Culture Transmitted?

Mass Media

Church
School

Family

Hofstedes Cultural Dimensions

Work-related value dimensions Most influential effort to group nations by cultural values

Surveyed over 116,000 employees in more than 70

countries
Created maps of pairs of dimensions

Discussion Question: note from last class

When we travel, we often have an unconscious reference to our own

cultural values when attempting to understand another culture. This is called self-reference criterion.
Use the information provided from Hofstede (1991), create a table that

compares your own cultural values with those of the country youve been allocated. Include a general assessment of the extent to which your allocated country is higher or lower context.
Discuss the implications of these comparisons for the set-up and

merchandising of a retail store of your choice (in that country). Also explain the implications for store personnel.

Individualism-Collectivism
Individualism
High value on autonomy Individual achievement Privacy

Collectivism
High value on group
Family, clan, organization

Loyalty
Devotion Conformity

Masculinity-Femininity
Masculinity
Achievement Success Assertive acquisition of

Femininity
Relationships Equality of genders Caring for disadvantaged Harmony

money/power

Power Distance
High Power Distance
Accept position

Low-Power Distance
Avoid concentration of

Follow authority
Concentrated & centralized

authority
Decentralized Fewer layers of

authority
Hierarchical

management

Uncertainty Avoidance
Low Uncertainty Avoidance Embrace unpredictable Less adherence to rules, procedures, or hierarchies Risk taking desirable

High Uncertainty Avoidance Threatened by ambiguity Need stable & predictable workplace Reliance on rules

Time Orientation
Long-term Perseverance Fulfilling social obligations Thrift Concern for proper ways of doing things Short-term Pursuit of stability Pursuit of happiness

Alternative Dimensions
(Trompenaars and Hampden-Turner 1995)

Focus on values and relationships Survey of 15,000 managers Over 10-year period From 28 countries Bipolar cultural dimensions, examples include

Neutral
culture in which emotions are held in
people try not to show

VS.

Emotional
culture in which emotions are expressed openly and naturally
people smile a great deal,

their feelings, act stoically and maintain their composure

talk loudly when excited and greet each other with enthusiasm

Specific
individuals have a large public space shared with others and a small private space they guard

VS.

Diffuse
public and private space are similar in size, individuals guard public space carefully because it is shared with private space
people often appear to be

closely and share only with close friends and associates people are more open and extroverted, and there is a strong separation of work and private life

indirect and introverted, and work and private life often are closely linked

Time
Sequential approach People do only one activity at a time, keep appointments strictly, prefer to follow plans as laid out
Synchronous approach
People tend to multi-task, view appointments as approximate, schedules are

seen as subordinate to relationships

Present oriented/future oriented Future is more important
Present is more important
Both time periods equally important

Beyond Values?

Language opens doors Translations can be difficult

Non-verbal communication and symbols may differ or be more/less

important relative to language

Influences on Marketing?
Knowledge
Etic

Sensitivity Social Conventions Styles

Emic

Institutional Influence defined:

The institutional environment describes the rules,

expectations, and habitualized actions to which organizations must conform to receive legitimacy (Scott and Meyer 1983).

Discussion Question
A useful resource for international marketers is the Global

Edge, based at Michigan State University

Go to http://globaledge.msu.edu/countries/

Find your country and read the information available on it.

Given the above, what are the key things to consider and be aware of

when establishing a business relationship with a potential distributor in your allocated country? Why? Explain.

Insights from Fernhaber et al. (2007)

Main legal systems

Common Law
UK, Canada, the USA, many of the former colonies of the UK

Code Law (aka civil law)

Found where common law is not used Based on an all-inclusive system of written rules of law (civil, commercial and

criminal)

Islamic Law
Encompasses religious duties and obligations and the secular aspect of the law

regarding human rights Often applied with code or common law

Islamic law
Koran is the basis for Shariah (Islamic law) It encompasses:
religious duties and obligations patterns of social and economic behavior for all individuals property rights, economic decision making and types of economic freedom

The overriding objective of the Islamic system is social justice Advocates risk sharing Prohibits the payment of interest Prohibits investment in activities that violate the Shariah, e.g., the

business of alcohol, gambling, casinos

Marxist-socialist tenets
Govern Eastern European countries commercial legal system
Czech and Poland revised and re-instituted preWorld War II commercial legal

codes

USSR and China need an entire commercial legal system with respect to

private ownership, contracts, due process, and other legal mechanisms

Russia is moving toward a democratic system China is attempting to activate a private sector within a multi-component

economy, but their legal systems are still nascent

Tourism Australia
Please read the pdf file labeled Tourism Australia on D2L.

Also, check out this link: http://www.youtube.com/watch?v=rn0lwGk4u9o

How does the law impact marketing?

Product

Price

 Sales, Service and Distribution

Communications

IP, counterfeiting and piracy

Millions of dollars to establish brand names, designs, trademarks etc. Inadequate protection from products being counterfeited or pirated as

many countries do not recognize trademarks and patents registered in other countries.
McDonald had to buy its trademark back in Japan

In a common-law country, ownership of intellectual property rights is

established by prior use.

In many code-law countries, ownership is established by registration.
A trademark in Jordan belongs to whoever registers it first in Jordan so there

are McDonalds restaurants, Microsoft software, and Safeway groceries all legally belonging to a Jordanian

Country differences (e.g.)

USA
Operates under the first to

Japan
Operates under the first to

invent rule Protects individual inventors Patents Applications secret Granted in up to 24 mos. Valid for 17 years after approval

register policy Promotes technology sharing Patents Applications public Granted in 4-6 years Valid for 20 years from time of application

Cyber-law
Existing internet law does not completely cover the protection of domain

names, taxes, jurisdiction in cross-border transactions and contractual issues clearly addressed by current law

Countries are drafting legislation to address the myriad legal questions not Examples of unresolved issues
Cyber squatters register descriptive nouns, geographic names, ethnic groups,

pharmaceutical substances and other similar descriptors and hold them until they are sold at an inflated price they should be collected, and by whom

The collection of taxes on sale of products, i.e., when taxes should be collected, where