Culture Defined

Cultural is the sum total of all learned activities. It is

learned, shared, and transmitted from one generation to the next an integrated system of learned behavior patterns that are distinguishing characteristics of the members of any given society. Includes what a group thinks, says, does and makes including shared systems of attitudes and feelings Self- reference criterion- a tendency to rely on ones own cultural values, personal experience and knowledge as the primary basis for making decisions (ethnocentrism).

High vs. Low-Context Cultures

The international manager must identify cross-

cultural and intra-cultural differences and isolate potential opportunities and problems. The international marketer may be accused of cultural imperialism," especially if the changes are dramatic or pose to be a radical High context cultures: The speaker and the listener rely on a common understanding of the context. Low Context cultures: Most of the information is contained explicitly in the words.

High vs. Low-Context Cultures

The Elements of Culture

Language Verbal Nonverbal Religion Values and attitudes Manners and customs Material elements Aesthetics Education Social Institutions

Language-Verbal and Nonverbal

Medium of expression, we form bonds, is the conveyer

of culture The Silent Language of time, space, material, possessions, friendship patterns, and business agreements (Hall 1960).

Religion
Religion shapes our behavior, sets standards for ethics,

guides our consumption and forces us to think under certain parameters Dominant organized religions of the world:
Christianity- 2.0 billion followers
Islam 1.2 billion followers Hinduism- 860 million followers

Buddhism 360 million followers

Confucianism -150 million followers

Values and Attitudes

Values are shared beliefs that have been internalized

by individuals.
Attitudes are evaluations of alternatives based on these

values.
Example: Irans Ministry of Education is marketing

Dara and Sara dolls as alternatives to Ken and Barbie.

Manners and Customs

Understanding manners and customs is vital in

negotiations and proper business etiquette (gift giving).

Managers must be aware of the need to adapt a

product to a market. Ex. Campbells soup.

Focus groups of the target customers should be used to

avoid potentially costly mistakes .

Material Elements
Material cultures results from technology, and

economic, social, financial and marketing infrastructures are good indicators of potential demand.
Technological advances have been the impetus for

cultural change.
Push for 35 hour work weeks in Germany. High demand for electronics and convenience items in

China.

Aesthetics
Each culture is particular concerning good taste

concerning the symbolism of colors, form and music. Sense of beauty The color symbolizing mourning and death varies by region.
Black: U.S. and Europe White: Japan and Far East

Green: Singapore

Education
Different countries emphasize certain types of

education (sciences in Japan and Korea).

Educational levels and backgrounds will be an issue

for recruiting managers and in training programs.

If technology is marketed, adoption may depend on

the education levels of the users.

Social Institutions
Reference groups such as family and coworkers provide

the values and attitudes that are influential to shaping behavior.

Social organization also determines how managers and

subordinates will interact.

Ex. Nissan USA promotes worker equality by having

no reserved parking and identical white jump suits for all employees.

Hofstedes Cultural Value

Individualism/collective index (IDV): Refers to preference of

behavior that promotes ones self interest. Higher score (e.g., USA) means high on individualism. Power distance index (PDI): Measures the tolerance of social inequality, i.e., inequality between superiors and subordinates within a social system. Higher score (e.g., Arab countries) means more hierarchical. Uncertainty avoidance index (UAI): Refers to the intolerance of ambiguity and uncertainty among members of a society. Higher score (e.g., Greece) means less tolerance for uncertainty. Masculinity/feminity (MAS): Refers to ones desire for achievement and entrepreneurial tendencies. Higher score (e.g., Latin culture) means more assertiveness and masculinity. Future orientation: Refers to the future or long-term orientation of the society
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Cultural Values and Clusters

Cultural Training
How do you foster cultural sensitivity and acceptance

within an organization? Why use formal training programs? Types of training:

Area studies- environmental briefings and cultural orientation

programs. Cultural assimilator- a program in which trainees must respond to scenarios of specific situations in a particular country. Sensitivity training- focuses on enhancing a managers flexibility in situations that are quite different from those at home. Field experience- exposes a manager to different cultural environment for a limited amount of time.

Cross Cultural Training Methods

Going to a foreign country

Embrace local culture
Build relationships Employ locals to gain cultural knowledge Help employees understand you Adapt products and processes to local markets Coordinate by region

Chapter 3 Discussion Questions

Culture is one of the most challenging elements in international marketing. How can an international marketer face the challenge? 2. Define Culture. Explain eight elements of culture we discussed in class. 3. Self-reference criterion (SRC)- the unconscious reference to ones own cultural values- is the root of most international business problems. Explain. 4. How culture affects the different elements of the marketing mix? Explain.
1.

Understanding a Political System

Political systemthe complete set of institutions,

political organizations, and interest groups, the relationships amongst those institutions, and the political norms and rules that govern their functions. Political System of the Home and Host Country-both need to be studied Firms activities are controlled/influenced by the treaties, intra-governmental negotiations, membership in international organizations, and policies, rules, and regulations of the government

Government Control
Governments may control exports and imports using

following instruments:
Tariff Barriers

Nontariff Barriers

Rationale for government control (arguments for

Protectionism)
Fighting unemployment Promoting industrialization/protecting infant industries Supporting foreign policy Improving BOP position

Preserving essential industries/national identity

Export Control
Why export control? Most export control systems are designed to deny or at

least delay the acquisition of strategically import goods by adversaries.legal basis for exports varies across nations U.S. laws control all exports of goods, services, and ideas. The U.S. export control system is based on:
Export Administration Act, administered by the

Department of Commerce. The Arms Expert Control Act, administered by the Department of State.

The U.S. Export Control System

Import Control
Again, why import control? Supporting domestic firms, price controls, maintain competitiveness Economic and noneconomic reasons Temporary support/incentive is given to domestic firms

to provide safety/cushion Import control instruments

Tariff, Subsidy, VER, Quota, Buy local Embargoes, Boycotts

Effect of Nontariff Barrier

Effect on Subsidy Aids/ Loans Quota Buy local

Price
Production Market Motivation Trade

Political Risk
Political risk: the expectation, i.e., the likelihood, that the political climate in a country will change in such a way that a firms operating position or investment value will deteriorate. Four types of political risks are: Systemic: a change in public policy that affect everyone Procedural: bureaucratic delays, labor disputes, etc. Distributive: tax and regulatory risk in respective industries Catastrophic: random political events

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Nationalization
Expropriation is the seizure of foreign assets by a

government with payment to the owners. Expropriation usually provides unsatisfactory payment to owners. The use of expropriation has decreased over time. Confiscation is the transfer of ownership from the foreign firm to the host country without compensation. Domestication is another way of transferring ownership to local people in a planned way.

Managing Political Risks

Be a good corporate citizen (example: participate

in development projects, literacy etc.) Expand power bases through business relationships (example: joint venture, licensing, political payoffs etc.) Study government attitude and participate government incentive programs Maintain good relationship with political allies, other embassies in the country

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Legal System
Legal system: the mechanism for creating, interpreting, and enforcing the laws in a specified jurisdiction Types of legal systems:
Common law [based on precedent, traditions] Civil law [based upon a set of laws that comprise a code] Theocratic law [based upon religious precepts]

Mixed systems are also possible.

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International Terrorism
International Terrorism and Marketing Automatic level of vulnerability due to firms need to be easily accessible and able to conduct transactions with many new persons every day. Does create new opportunities in a few industries like construction, security, technology. Creates reduced revenues or increased costs. Chill effect- sharp reduction in demand for both

consumer and industrial goods

Ethical Issues
Corporate Governance and Responsibility
Intellectual Property Definition: refers to a legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention. Innovation is a vulnerable process. Examples: online music copyrights and medicines. Bribery and Corruption Foreign Corrupt Practices Act (FCPA), passed in 1977 Functional lubrication Sarbanes-Oxley Act, passed in 2002

Comparative Corporate Governance Regimes

Chapter 5 Discussion Questions

Why do government use export or import controls? What role does it play in international marketing? 2. What is protectionism? What are the rationale for trade control/protectionism? 3. Define political risk. What a company can do to manage political risk? 4. What are three types of legal system we studied in class? Explain them with implications in international marketing.
1.