supplement - ch 3&5 (cultural and political environments)
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7/28/2019 Supplement - Ch 3&5 (Cultural and Political Environments)
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Culture Defined
Cultural is the sum total of all learned activities. It islearned, shared, and transmitted from one generation tothe next
an integrated system of learned behavior patterns thatare distinguishing characteristics of the members of anygiven society. Includes what a group thinks, says, does andmakes including shared systems of attitudes and feelings
Self- reference criterion- a tendency to rely on ones owncultural values, personal experience and knowledge as theprimary basis for making decisions (ethnocentrism).
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High vs. Low-Context Cultures
The international manager must identify cross-cultural and intra-cultural differences and isolatepotential opportunities and problems.
The international marketer may be accused ofcultural imperialism," especially if the changes aredramatic or pose to be a radical
High context cultures: The speaker and the listenerrely on a common understanding of the context.
Low Context cultures: Most of the information iscontained explicitly in the words.
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High vs. Low-Context Cultures
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The Elements of CultureLanguage Manners and customs
Verbal Material elements
Nonverbal Aesthetics
Religion Education
Values and attitudes Social Institutions
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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 businessagreements (Hall 1960).
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Religion Religion shapes our behavior, sets standards for ethics,
guides our consumption and forces us to think undercertain 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
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Values and AttitudesValues are shared beliefs that have been internalized
by individuals.
Attitudes are evaluations of alternatives based on thesevalues.
Example: Irans Ministry of Education is marketingDara and Sara dolls as alternatives to Ken and Barbie.
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Manners and Customs Understanding manners and customs is vital in
negotiations and proper business etiquette (giftgiving).
Managers must be aware of the need to adapt aproduct to a market. Ex. Campbells soup.
Focus groups of the target customers should be used toavoid potentially costly mistakes .
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Material Elements Material cultures results from technology, and
economic, social, financial and marketinginfrastructures are good indicators of potentialdemand.
Technological advances have been the impetus for
cultural change. Push for 35 hour work weeks in Germany.
High demand for electronics and convenience items inChina.
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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
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Education Different countries emphasize certain types of
education (sciences in Japan and Korea).
Educational levels and backgrounds will be an issuefor recruiting managers and in training programs.
If technology is marketed, adoption may depend onthe education levels of the users.
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Social Institutions Reference groups such as family and coworkers provide
the values and attitudes that are influential to shapingbehavior.
Social organization also determines how managers andsubordinates will interact.
Ex. Nissan USA promotes worker equality by havingno reserved parking and identical white jump suits forall employees.
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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 socialinequality, i.e., inequality between superiors and subordinateswithin a social system. Higher score (e.g., Arab countries)means more hierarchical.
Uncertainty avoidance index (UAI): Refers to the intolerance ofambiguity and uncertainty among members of a society.Higher score (e.g., Greece) means less tolerance foruncertainty.
Masculinity/feminity (MAS): Refers to ones desire forachievement and entrepreneurial tendencies. Higher score(e.g., Latin culture) means more assertiveness and masculinity.
Future orientation: Refers to the future or long-termorientation of the society
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Cultural Values and Clusters
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Cultural Training How do you foster cultural sensitivity and acceptance
within an organization? Why use formal trainingprograms?
Types of training: Area studies- environmental briefings and cultural orientation
programs.
Cultural assimilator- a program in which trainees must respond toscenarios of specific situations in a particular country.
Sensitivity training- focuses on enhancing a managers flexibility insituations that are quite different from those at home.
Field experience- exposes a manager to different culturalenvironment for a limited amount of time.
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Cross Cultural Training Methods
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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
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Chapter 3 Discussion Questions1. Culture is one of the most challenging elements in
international marketing. How can an internationalmarketer face the challenge?
2. Define Culture. Explain eight elements of culture wediscussed in class.
3. Self-reference criterion (SRC)- the unconscious
reference to ones own cultural values- is the root ofmost international business problems. Explain.
4. How culture affects the different elements of themarketing mix? Explain.
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Understanding a Political System Political systemthe complete set of institutions,
political organizations, and interest groups, therelationships amongst those institutions, and thepolitical norms and rules that govern their functions.
Political System of the Home and Host Country-bothneed to be studied
Firms activities are controlled/influenced by thetreaties, intra-governmental negotiations,membership in international organizations, andpolicies, rules, and regulations of the government
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Government Control Governments may control exports and imports using
following instruments:
Tariff Barriers
Nontariff Barriers
Rationale for government control (arguments forProtectionism)
Fighting unemployment
Promoting industrialization/protecting infant industries Supporting foreign policy
Improving BOP position
Preserving essential industries/national identity
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Export ControlWhy export control?
Most export control systems are designed to deny or atleast delay the acquisition of strategically import goodsby adversaries.legal basis for exports varies acrossnations
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 theDepartment of Commerce.
The Arms Expert Control Act, administered by theDepartment of State.
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The U.S. Export Control System
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Import ControlAgain, why import control?
Supporting domestic firms, price controls, maintaincompetitiveness
Economic and noneconomic reasons
Temporary support/incentive is given to domestic firmsto provide safety/cushion
Import control instruments
Tariff, Subsidy, VER, Quota, Buy local Embargoes, Boycotts
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Effect of Nontariff Barrier
Effect on Subsidy Aids/
Loans
Quota Buylocal
Price
Production
Market
Motivation
Trade
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Political Risk
Political risk: the expectation, i.e., the likelihood, that thepolitical climate in a country will change in such a way thata firms operating position or investment value willdeteriorate. 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 respectiveindustries
Catastrophic: random political events
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Nationalization Expropriation is the seizure of foreign assets by a
government with payment to the owners. Expropriationusually provides unsatisfactory payment to owners. Theuse of expropriation has decreased over time.
Confiscation is the transfer of ownership from theforeign firm to the host country without compensation.
Domestication is another way of transferring ownership
to local people in a planned way.
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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 participategovernment 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 beeasily accessible and able to conduct transactions with
many new persons every day.
Does create new opportunities in a few industries likeconstruction, security, technology.
Creates reduced revenues or increased costs.
Chill effect- sharp reduction in demand for bothconsumer and industrial goods
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Ethical Issues Corporate Governance and Responsibility
Intellectual Property
Definition: refers to a legal entitlement of exclusiverights 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
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Comparative Corporate
Governance Regimes
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Chapter 5 Discussion Questions1. Why do government use export or import controls?
What role does it play in international marketing?
2. What is protectionism? What are the rationale fortrade control/protectionism?
3. Define political risk. What a company can do tomanage political risk?
4. What are three types of legal system we studied inclass? Explain them with implications ininternational marketing.
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