SOCIAL AND CULTURAL

DIFFERENCESA2 International Business

SOCIAL AND CULTURAL DIFFERENCES These come from the fact that individual

societies and groups within them may have a distinctive way of life.

This will affect their patterns of consumption and the products they favour. But it will also affect the way they do business with one another.

Corporate Culture: the set of important assumptions that are shared by people working in a particular business and influence the ways in which decisions are taken there.

WHY DO THEY MATTER? Social and cultural differences can be very

different. They have to be taken into account in any

activity that involves different groups of people.

Businesses have quite often easily underestimated the impact of these changes.

The term culture refers to the shared values, customs and expectations that define groups of people.

Social differences relate to different ways of communicating and expectations.

WHY DO THEY MATTER? If businesses with inflexible business

models expand abroad, they will encounter problems.

Unfamiliar national and local cultures may stun their expectations about the markets they propose to operate in.

AREAS OF DIFFERENCE The areas of difference between various

country markets can be summed up as:Product designCommunication methodsBusiness conventions: how organisations

operate and how to avoid misunderstandings and from offending people.

Languages and marketing messages: they have to appropriate (lost in translation: always avoid literal translations)

Pricing and Distribution strategies.

WHAT TO DO? In order to avoid the mistakes of other

companies that have failed (only half succeed) action needs to be taken.

40% of firms trading abroad get their products designed locally.

Unilever has 68 design and innovation centres on over 20 countries. They study local markets and devise products that best meet their needs.

This has allowed them to serve different market segments within certain countries.

WHAT TO DO? Some businesses have assumed that if

incomes are low and then so must be prices.

Levis struggled to sell their Jeans at full price in India and so changed its design/price strategy (came with affordable jeans)

Products have to be appropriate and not just cheap i.e. do the job they are designed for.

APPROPRIATE MARKETING Businesses that want to expand into

new countries must get to know their target markets.

They must seek out partners and decide whether joint ventures would be more appropriate.

Businesses will need local agents and local employees to better understand their target markets.

APPROPRIATE MARKETING

ADAPTING TO CHANGE Many businesses have made serious money

by breaking into new markets but some have found them risky.

Some have pulled out and some companies still pour money into these ventures in the hope that one day it way pay off.

Being well informed about cultural differences can reduce risks.

The best businesses are well informed, adapt and keep up with change and flexible enough to work within differing cultures.