Culture and Business Practices

1
Culture and Business Practices
2
Session Outline

• Assignments
• Culture defined
• Characteristics and levels of culture
• Hofstedes framework of national culture
• Dimensions
• Implications
• Cultural distance
• Strategy and performance implications
• Case
• NES China Business Ethics

3
Individual Assignment

• American Fast Food in Korea
• 2000 words
• 2 questions
• Does Korea represent an attractive investment
  opportunity for an American fast food company?
  (10 marks)
• If the company was to enter Korea, what entry
  strategies would you consider and what would be
  your final recommendation? (10 marks)
• Key issues
• Critical analysis (i.e. pros and cons)
• Rationale/justification

4
Syndicate Assignment

• Part A Market Attractiveness
• 1000 words, 10 marks
• Requires syndicates to conduct a market
  attractiveness study of a country
• Identify the most important environmental factors
  in the country
• Analyse the factors in terms of the
  barriers/risks and opportunities/motives that
  they present
• Such analysis is dependent on a deep
  understanding of your chosen company (i.e.
  capabilities, resources, industry,
  product/service/retail)
• Conclude with an overall statement of the
  markets attractiveness

5
Syndicate Assignment

• Part B International Marketing Strategy
• 2500 words, 20 marks
• Design a marketing strategy for a company in the
  chosen country
• Strategy elements that you may want to consider
• Product, price, promotion, place for
  consumer/industrial products
• 4Ps plus people, processes and physical evidence
  for services
• Merchandise, trading format, customer service and
  communication for retail firms

6
Syndicate Assignment

• Issues to focus on
• Standardisation and adaptation
• Justification for all decisions/recommendations
• Acknowledgement of any limitations or risks
  associated with your strategy decisions
• Word limit does not include
• Executive Summary
• Appendices
• Reference List
• Must submit two copies of the assignment

7
Culture Defined
8
Culture - Characteristics

• Learned
• Acquired by people over time through membership
  of a group
• Interrelated
• One part of the culture is deeply connected with
  another part, such as business and social status
• Shared
• Codes of belief extend to other members of the
  group

9
Culture - Levels
Visible daily behaviour

• Body language
• Clothing
• Lifestyle

Values and social morals

• Family values
• Gender roles
• Friendship patterns

Basic cultural assumptions

• National identity
• Ethnic culture
• Religion

10
National Culture

• Hofstede (1980 1983 1991)
• Developed an empirical framework of national
  culture
• Survey of 117,000 IBM employees
• Across 50 countries and 3 multi-country regions
• Data collected between 1968 and 1972
• Questionnaire focused on work-related values
• Identified four dimensions of national culture

11
Power Distance

• The extent to which the less powerful members of
  institutions and organizations within a country
  expect that power is distributed unequally
• High power distance
• Preference for senior management to make
  decisions in an autocratic or paternalistic
  manner, as employees are afraid of disagreeing
  with their boss
• i.e. Asia (Malaysia, Indonesia, Singapore,
  Thailand)
• Low power distance
• Preference for senior management to adopt a
  consultative decision-making style
• i.e. Australia, New Zealand, Canada, Switzerland

12
Uncertainty Avoidance

• The extent to which the members of a culture
  feel threatened by uncertain or unknown
  situations
• High uncertainty avoidance
• Seek to minimise ambiguous situations by
  establishing clear structure, rules and
  guidelines in their organisations and
  interpersonal relationships
• i.e. Austria, Germany, Switzerland, Japan and
  South Korea
• Low uncertainty avoidance
• Only establish rules that are strictly necessary
  and have a high level of tolerance for ambiguity
• i.e. UK, USA, Australia, New Zealand, Canada

13
Individualism-Collectivism

• Individualism
• Societies in which the ties between individuals
  are loose everyone is expected to look after
  him/herself and his/her immediate family
• i.e. Nearly all wealthy countries (USA, UK,
  Germany)
• Collectivism
• Societies in which people from birth onwards are
  integrated into strong, cohesive ingroups, which
  throughout peoples lifetime continue to protect
  them in exchange for unquestioning loyalty
• i.e. Many poor or less developed countries
  (Colombia, Panama, Ecuador)

14
Masculinity-Femininity

• Masculinity
• Societies in which social gender roles are
  clearly distinct
• Strong focus on material success and growth
• Men are expected to be ambitious and assertive,
  women are expected to be tender and caring
• Femininity
• Societies in which social gender roles overlap
• Focus on caring for others as relationships are
  of great importance
• Both men and women demonstrate tenderness and are
  equally responsible for caring

15
Masculinity-Femininity

• Masculine Countries
• Japan, Austria, Switzerland, Ireland, UK, Germany
• Moderately Masculine
• USA, Australia, New Zealand
• Feminine
• Sweden, Norway, Netherlands, Denmark, Finland

16
National Culture Key Issues

• Power Distance
• Equality distribution of power
• Uncertainty Avoidance
• Use of/preference for structure, rules etc. to
  minimise uncertainty
• Individualism/Collectivism
• Importance placed on the individual or the group
• Masculinity/Femininity
• Importance placed on material success or people
  relationships

17
Implications

• Implications for International Marketing in terms
  of
• Motives and Barriers?
• Internationalisation Process?
• Entry Strategy?
• Marketing Strategy?

18
Advertising Implications (Mooij, 1998)

• Power Distance
• HPD - use status symbols more frequently than LPD
  cultures
• LPD - desire appeals like independence, and
  humour is more widely used
• Individualism/Collectivism
• IND appeals are more personalised (i.e.
  LOreals advertising campaign because your
  worth it, or Nikes slogan Just do it)
• COL - an indirect approach is favoured. Appeals
  like its so good, you want to share it with
  others
• Masculinity/Femininity
• MAS - expect appeals like effective, convenient
  and productivity
• FEM - appeals focused on relationships
• Uncertainty Avoidance
• HUA - greater need for explanations, structure,
  expert testimonials compared to LUA cultures

19
Cultural Distance

• The distance between the home country and a
  foreign country based on the perception of
  cultural differences
• Based on Hofstedes dimensions
• Based on cultural stereotypes and preconceived
  notions

20
Cultural Distance
Collectivist
Individualist
Low Power Distance
High Power Distance
21
Cultural Distance
Weak Uncertainty Avoidance
UK
IND
IRE
PHI
CAN
USA
NZL
SAF
AUS
Strong Uncertainty Avoidance
Feminine
Masculine
22
Cultural Distance

• Implications for International Marketing
• Differences can cause uncertainty
• Barriers
• Internationalisation process
• Entry strategy
• Performance measurement
• Differences can be a source of differentiation
• Marketing strategy
• Cultural differences are the primary source of
  discretionary adaptation

23
Case NES China
24
Business Practices and Customs

• Three categories
• Imperative
• Customs and expectations that must be met and
  conformed to if relationships are to be
  successful
• Guan-xi
• Optional
• Areas of behaviour or customs that foreigners may
  wish to conform to, but that are not required
• Local dress
• Exclusive
• Customs and behaviours reserved exclusively for
  the local people and from which the foreigner is
  excluded
• Religious customs

25
Business Ethics

• Extortion
• Payments extracted under duress by someone in
  authority from a person seeking only what they
  are lawfully entitled to
• Bribery
• Voluntarily offered payments by someone seeking
  unlawful advantage

26
Business Ethics

• Lubrication
• Involves a relatively small sum of cash, a gift,
  or a service made to a low-ranking official in a
  country where such offerings are not prohibited
  by law
• Purpose is to facilitate or expedite the normal,
  lawful performance of a duty by that official
• Subornation
• Involves large sums of money designed to entice
  an official to commit an illegal act on behalf of
  the one paying the bribe

27
Summary Key Points

• Objectives
• Will firms have different objectives for
  culturally close and distant markets?
• Research and Planning
• Do firms need to conduct as much research in
  similar markets as they do in culturally distant
  markets?
• Entry Strategy
• Are firms more likely to use a foreign partner in
  culturally distant markets?
• Marketing Strategy
• Do firms need to adapt more in culturally distant
  markets?
• Performance
• Will firms perform better in culturally close or
  culturally distant markets?