Culture Affects The Behavior Of The International Firm

What is culture? Why is an understanding of culture important in international marketing? Outline and discuss the principle elements of culture as they affect the behavior of the international firm. 1. Executive summary

Doing business on a global basis requires a good understanding of different cultures.  What works in your country might not work well in another, and could even be interpreted as an insult!  And in your role as an international human resources professional, it’s important to raise the awareness of cultural issues within your organization to ensure effectiveness.

Many companies that expand their market to other countries have to familiarize themselves with the target culture, as the more they know about their new customers the better. These companies need to know the new culture’s educational policies and the content of their training in order to accurately assess their needs.

Index

Huddersfield 1

2. What is Culture?

“Culture is the human-made part of the human environment – the sum total of knowledge, beliefs, art moral, laws, customs and everything that people have, think and do as members of their society.

Culture is often defined as ‘ethical habit’, consisting of values and ideas. Ethical systems create moral communities because their shared languages of good and evil give their members a common moral life.

According to Hofstede, culture is always a collective phenomenon, because it is at least partially shared with people who live or lived within the same environment, which is where it was learned. It is the collective programming of the mind that distinguished the members of one group or category of people from another.

Culture’s essence is captured in the above definitions. In sum, the concept is representative when:

the member of a group share a set of ideas and values

these are transmitted by symbols from one generation to another

culture is learned

culture shapes behavior and our perception of the world

it is reinforced by components such as language, behavior and nation.”

Internation Marketing 3rd edition Pervez N. Ghauri and Philip Cateora P.78

3. The Hofstede Framework

The Hofstede Framework grew from a study of more than 110,000 people working in IBM subsidiaries by Dutch psychologist Geert Hofstede. He developed four dimensions for examining cultures.

3.1 Individualism versus Collectivism

Identifies the extent to which a culture emphasizes the individual versus the group.

a. Individualist cultures value hard work, entrepreneurial risk-taking, and freedom to focus on personal goals.

b. Collectivist cultures feel a strong association to groups, including family and work units. The goal is to maintain group harmony and work toward collective rather than personal goals

3.2. Power Distance

Identifies the degree to which a culture accepts social inequality among its people.

a. A culture with large power distance is characterized by inequality between superiors and subordinates. Organizations are hierarchical, with power derived from prestige, force, and inheritance.

b. Cultures with small power distance display equality, with prestige and rewards equally shared between superiors and subordinates. Power in these cultures derives from hard work and is considered more legitimate.

3.3 Uncertainty Avoidance

Identifies the extent to which a culture avoids uncertainty and ambiguity.

a. Cultures with large uncertainty avoidance value security and place faith in strong systems of rules and procedures in society. Also tend to have lower employee turnover, formal rules for employee behavior, and more difficulty implementing change.

b. Cultures, low on uncertainty avoidance, are more open to change and new ideas.

Internation Marketing 3rd edition Pervez N. Ghauri and Philip Cateora P.81

4. Culture Knowledge

There are two kindly of knowledge about cultures.

Factual knowledge

Factual knowledge about a culture; it is usually obvious and must be learned. Different meanings of colour, different tastes and other traits indigenous to a culture are facts that a marketer can anticipate, study and absord.

Interpretive knowledge

Interpretive knowledge an ability to understand and to appreciate fully the nuances of different culture traits and patterns. For example, the meaning of time, attitudes towards other people and certain objects, the understanding of one’s role in society, and the meanings of life can differ considerably from one culture to another and may require more than factual knowledge to be fully appreciated.

Internation Marketing 3rd edition Pervez N. Ghauri and Philip Cateora P.83

5. Importance of Culture

Business studies have consistently pointed out the importance of culture in the construction of plans and other tools used to measure the performance of the organization. More specifically, studies have constantly cited the work of Hofstede indicating the dimensions of culture that any multinational organization must recognize. These include

Individualism-collectivism,

Masculinity-femininity,

High-low power distance

High-low uncertainty avoidance.

Basically, culture has a considerable effect on the “development and implementation of strategies used to accomplish the firm’s competition goals.” In using the perspective of Hofstede, it shows that the individual’s decision to purchase goods and services are based on the existing norms and standards in their environment. This means that consumer behaves differently in considering the geographical locations. More specifically, the study of Katz, Zarzeski, and Hall (2000, 119) they mentioned that the national culture have a great impact on the manner in which financial analysts interpret the future performance of any organization. This is apparently the same in the use of advertising as a marketing tool in international business. Basically, studies have indicated that the consideration of language skills and culture tends to establish the level of success that an advertising campaign could achieve. In some other studies, it has been said that consumers from different countries react differently when subjected to a particular brand or to the country of origin of a particular product or service. This show that the consumers have preconceived regard on the quality of the product based on the country on which it was made or even the mere brand name used to sell the product.  

Marketer can control the product of offered to a market . Such as its promotion, price and eventual distribution methods. But they have only limited control over the culture environment within which these plans must be implemented. Because they cannot control all the influences on their marketing plans, they must attempt to anticipate the eventual effect of the uncontrollable elements and plan in such a way that also set about to effect changes that lead to faster acceptance of their products or marketing programmes. Planning marketing strategy in terms of the uncontrollable elements of a market is necessary in a domestic market as well, but when a company is operating internationally, each new environment influenced by elements unfamiliar and sometimes unrecognizable to the marketer complicates the task. For these reasons, special effort and study are needed to absorb enough understanding of the foreign culture to cope with the uncontrollable features.

6. Culture and its Elements

The anthropologist studying culture as a science must investigate every aspect of a culture if an accurate, total picture is to emerge. To implement this goal, there has evolved a cultural scheme that defines the parts of culture. For the marketer, the same thoroughness is necessary if the marketing consequences of cultural differences within a foreign market are to be accurately assessed.

Culture includes every part of life. The scope of the term culture to the anthropologist is illustrated by the elements included within the meaning of the term. These are:

Material culture

Social institutions

Education

Belief systems

Aesthetics

Language

6.1 Material Culture

Material culture is divided into two parts: technology and economics. Technology includes the techniques used in the creation of material goods; it is the technical know-how possessed by the people of a society. A culture’s level of technology is manifest in many ways. Such concepts as preventive maintenance are foreign in many low-technology cultures. In Germany, the United States, Japan or other countries with high levels of technology, the general population has a broad level of technical understanding that allows them to adapt and learn new technology more easily than populations with levels of technology. Simple repairs, preventive maintenance and a general understanding of how thing work all constitute a high level of technology. In china, one of the burdens of that country’s economic growth is providing the general population with a modest level of mechanical skill, that is , a level of technology.

Economics is the manner in which people employ their capabilities and the resulting benefits. Included in the subject of economics are the production of goods and services, their distribution, consumption, means of exchange and the income derived from the creation of utilities.

Material culture affects the level of demand, the quality and types of products demanded and their functional features, as well as the means of production of these goods and their distribution. The marketing implications of the material culture of a country are many: electric can openers and electric juicers are acceptable in the United States, but, in less affluent countries and even some European countries, not only are they unattainable and probably unwanted, they would be a spectacular waste because disposable income could be spent more meaningfully on better houses, clothing or food.

6.2 Social Institutions

Social organization and political structures are concerned with the ways in which people relate to one another, organize their activities to live harmony with in another and govern themselves. The position of men and women in society, the family, social classes, group behavior and age groups are interpreted differently within every culture. Each institutions has an effect on marketing because each influences behavior, values and the overall patterns of life. In cultures where social organization results in close-knit family units. For example, it is more effective to aim a promotional campaign at the family unit than at individual family members. Travel advertising in culturally divided Canada pictures a wife alone for the English audience. But a man and wife together for the French Segments of the population because the French are traditionally more closely bound by family ties. The roles and status positions found within a society are influenced by the dictates of social organization,

6.3 Education

In each society, we teach our generation what is acceptable or not acceptable, right or wrong, and other ways of behavior. The literacy rate in each society is an important aspect and influences the behavior of people. For a marketer it is importance to know the role and level of education in a particular market. It would influence the marketing strategy and techniques used. Which type of advertising and communication is used depends highly on the level of education.

6.4 Belief System

The nature and complexity of the different religions an international marketer could encounter is pretty diverse. The organization needs to make sure that their products and services are not offensive, unlawful or distasteful to the local nation. This includes marketing promotion and branding.

In China in 2007 (which was the year of the pig) all advertising which included pictures of pigs was banned. This was to maintain harmony with the country’s Muslim population of around 2%. The ban included pictures of sausages that contained pork, and even advertising that included an animated (cartoon) pig.

In 2005 France’s Catholic Church won a court injunction to ban a clothing advertisement (by clothing designers Marithe and Francois Girbaud) based upon Leonardo da Vinci’s Christ’s Last Supper.

6.5 AESTHETICS

Closely interwoven with the effect of people and the universe on a culture are its aesthetics; that is, the arts, folklore, music, drama and dance. Aesthetics are of particular interest to the marketer because of their role in interpreting the symbolic meanings of various methods of artistic expression, color and standards of beauty in each culture. The uniqueness of a culture can be spotted quickly in symbols having distinct meanings.

Without a culturally correct interpretation of a country’s aesthetic values, a whole host of marketing problems can arise. Product styling must be aesthetically pleasing to be successful, as must advertisements and package designs. Insensitivity to aesthetic values can offend, create a negative impression and in general, render marketing efforts ineffective. Strong symbolic may be overlooked if one is not familiar with a culture’s aesthetic values

6.6 Language

The importance of understanding the language of a country cannot be overestimated. The successful marketer must achieve expert communication; this requires a thorough understanding of the language as well as the ability to speak it. Advertising copywriters should be concerned less with obvious differences between languages and more with the idiomatic meaning expressed.

With language one should consider whether or not the national culture is predominantly a high context culture or a low context culture (Hall and Hall 1986). The concept relates to the balance between the verbal and the non-verbal communication.

In a low context culture spoken language carries the emphasis of the communication i.e. what is said is what is meant. Examples include Australia and the Netherlands.

In a high context culture verbal communications tend not to carry a direct message i.e. what is said may not be what is meant. So with a high context culture hidden cultural meaning needs to be considered, as does body language. Examples of a high context cultures include Japan and some Arabic nations.

Internation Marketing 3rd edition Pervez N. Ghauri and Philip Cateora P.87-91

7. Culture affect the behavior of the international firm

Marketing

Operating in various international markets require firms to use different marketing mixes indifferent markets. A varied approach is necessary due to unique attitudes and values in different cultures

Human Resource Management

Understanding culture or the lack of cultural awareness not only affects marketing decisions but also greatly impacts the human resource functions with an international business.

Production and Finance

Personnel problems can result from differences in attitudes towards authority, another socio cultural variable.

For example some Latin American countries regard the manager as the ultimate authority figure responsible for their welfare.

8. Conclusion

Doing business on a global basis requires a good understanding of different cultures.  What works in your country might not work well in another, and could even be interpreted as an insult!  And in your role as an international human resources professional, it’s important to raise the awareness of cultural issues within your organization to ensure effectiveness.