Unit 2: International Business Cultures
The role of culture in business activities is present in all markets across the globe. When we look at the various sets of beliefs, values, thinking, and practices of different groups of people, we can understand how those people behave, reason, and make decisions. Of course, to be successful, businesses must fully understand the value systems of the countries they are operating in to best meet those consumers' needs. Cultures are formed by the political, economic, and social philosophies of their nations and their education, religion, and social structure. These all affect how businesses should be operating in those nations. In this unit, we will explore cultural factors in detail and look at how they affect business decisions around the world.
Completing this unit should take you approximately 6 hours.
Upon successful completion of this unit, you will be able to:
- describe issues that are important for culturally sensitive international marketing, such as language, gender, customs, and art;
- explain Hofstede's cultural framework and how it provides marketers with important information about differences between countries and how to manage such differences;
- differentiate between ethnocentric, polycentric, and geocentric approaches in international marketing;
- evaluate the demographic, geographic, behavioral, and psychographic bases for segmenting international markets; and
- identify cultural considerations that can be used in determining communication strategies in international markets.
2.1: Global Cultural Factors and Hofstede's Cultural Dimensions
Many theories explore culture across the globe, but here we will take a closer look at Hofstede's Cultural Dimensions. These include power distance, uncertainty avoidance, individualism vs. collectivism, masculinity vs. femininity, long-term orientation, and indulgence vs. restraint. Read this in-depth evaluation of Hofstede's Cultural Dimensions. As you read, consider the cultural factors that define you and the markets you live and work in.
- Numerous factors affect the development of an international market strategy. We will look at some of the most basic elements, which include demographics, values and beliefs, and business norms. We will also cover some additional information about trade agreements and policies that will reinforce what we learned in the previous unit.
Now, we will take a closer look at organizational culture and the role culture plays in the business environment and further explore Hofstede's Cultural Dimensions. This section will also explore Shein's theory, which looks at the impact of business artifacts, such as furniture and clothing; values, which encompass what the company represents; and assumptions, which explore how people within an organization communicate, whether consciously or unconsciously. Charles Handy's theory, which continues to be relevant today, explores the power structure of an organization, the identified roles of employees, the formation of teams, and each individual's value within the company. Which of these theories do you see in action within your organizations? Where do you see your fit within the culture?
2.2: International Marketing – Success and Failures
Competition in the grocery industry in Germany is fierce. There is a growing number of discount supermarket chains that are all competing for business. When Walmart entered this market, they anticipated the same kind of success they enjoyed in other countries. However, because they didn't sufficiently understand the marketplace, their efforts were a failure. There were breakdowns in communication due to language barriers. They didn't fully understand the laws and regulations in the country. They didn't understand how consumers approached their shopping trips, and there were insufficient locations available for expansion. As you read, think about how you might have approached this market entry. What steps could Walmart have taken to have an ongoing presence in Germany?
In this article, we will look at differing points of view about globalization. Many years ago, Theodore Levitt posited that global markets would accept the products sold by international organizations. However, he didn't consider the push-back from some markets based on cultural differences. In more recent times, Thomas Friedman echoed similar thoughts. He believed that several events he called "flatteners", such as distance, language, and geography, would create a unified business world. Several other economists have sought to demonstrate that these theories are not valid and that the differences in global markets prove that it is essential to understand the factors that drive business operations in different countries and cultures. The examples of Toyota, Coca-Cola, and Walmart all point to the need to understand each market into which a company is entering, and adapt products, marketing strategies, and operations, to suit cultural, political, and social characteristics and variations.
2.3: Culture and the Social, Political, and Legal Environment
This introduction will set the foundation for the factors we will explore in this section. Pay close attention to the definitions of these strategies and think about them as you read the rest of the materials in this section.
As we've learned, marketing on an international scale requires attention to many elements beyond political and economic factors. We also need to look at social and cultural issues that define different populations. Language is one of the most important of these components. However, even within a single country, people may speak several different languages or different dialects of the same language. Colors also have different meanings among cultures. For example, it is important to avoid using white or purple on packaging in Japanese and Hispanic cultures because these are the colors of mourning and death. Customs also vary, and some things that are acceptable in one part of the world may be improper somewhere else. Read this section for a more in-depth look at the many considerations marketers must make when developing international marketing strategies.
Each side in the debate about globalization looks at the world as either a flat world, where products can be marketed the same way across the globe despite cultural differences, or as various semiglobalized or multi-domestic regions. The CAGE analysis, which encompasses Culture, Administration, Geography, and Economics, is an excellent model for studying national differences. Read these sections for an in-depth look at the intricacies involved in developing effective international marketing strategies.
Tariffs and trade agreements significantly affect international markets and how companies and countries interact for mutual benefit. This section explores the various agreements and organizations that govern and monitor international trade. These began with the GATT (General Agreement on Tariffs and Trade), which was replaced by the WTO (the World Trade Organization) in 1995. Consider these rules and regulations, what they mean to countries around the world, how they affect local markets, and their effects on fair trade.
Global market segmentation involves an analysis of various consumer characteristics, including the measurable factors of demographics and geography and the more qualitative descriptors of behavior and lifestyles. Macro-segmentation relies on measurable factors within markets to identify countries that have a demand for similar products. However, this method does not take into consideration differences between countries or even within the same country. Micro-segmentation focuses on behaviors and lifestyles that are similar among consumers in different locales. Read this section for a more in-depth look at how these factors affect marketing strategies.
This section takes a more in-depth look at demographics, which are the measurable factors we use to identify a segment of the population. We use this information to determine which group of people to focus our marketing efforts on. While this may seem like a simple way of choosing a market, studying the variations among consumers in international markets, the many factors that impact their purchase decisions, and what motivates them to make a purchase takes on a much deeper and more complex meaning. Read this section to see the many traits that differentiate a group of people in one country from the people in another country.
Unit 2 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.