I n t e r n a t i o n a l M a r k e t i n g I n t e r n a t i o n a l M a r k e t i n g

Culture, Management Style,

and Business Systems

Chapter 5

1 4 t h E d i t i o nP h i l i p R. C a t e o r a

M a r y C. G i l l yJ o h n L . G r a h a m

McGraw-Hill/IrwinInternational Marketing 14/e

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

5-2

What Should You Learn?What Should You Learn?

• The necessity for adapting to cultural differences

• How and why management styles vary around the world

• The extent and implications of gender bias in other countries

• The importance of cultural differences in business ethics

• The differences between relationship-oriented and information-oriented cultures

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Global PerspectiveDo Blondes Have More Fun in Japan?

Global PerspectiveDo Blondes Have More Fun in Japan?

• Culture, including all its elements, profoundly affects management style and overall business systems

– Max Weber (1930)

• Americans

– Individualists

• Japanese

– Consensus oriented & committed to the group

• Central & Southern Europeans

– Elitists and rank conscious

5-4

Global PerspectiveDo Blondes Have More Fun in Japan?

Global PerspectiveDo Blondes Have More Fun in Japan?

• Knowledge of the management style existing in a country and a willingness to accommodate the differences are important to success in an international market

– Business culture– Management values– Business methods– Behaviors

5-5

Required AdaptationRequired Adaptation

• Adaptation is a key concept in international marketing

• Ten basic criteria for adaptation1) open tolerance2) flexibility3) humility4) justice/fairness5) ability to adjust to varying tempos6) curiosity/interest7) knowledge of the country8) liking for others9) ability to command respect10) ability to integrate oneself into the environment

5-6

Degree of AdaptationDegree of Adaptation

• Essential to effective adaptation

– Awareness of one’s own culture and the – Recognition that differences in others can cause anxiety,

frustration, and misunderstanding of the host’s intentions

• The self-reference criterion (SRC) is especially operative in business customs

• The key to adaptation is to remain American but to develop an understanding of and willingness to accommodate the differences that exist

5-7

Imperatives, Electives, and Exclusives

Imperatives, Electives, and Exclusives

• Cultural imperatives– Business customs and expectations that must be met and conformed to

or avoided if relationships are to be successful ► The significance friendship cannot be overemphasized

– In some cultures a person’s demeanor is more critical than in others– Imperatives vary from culture to culture

• Cultural electives– Relate to areas of behavior or to customs that cultural aliens may wish

to conform to or participate in but that are not required– A cultural elective in one county may be an imperative in another– Cultural electives are most visibly different customs

• Cultural exclusives– Customs or behavior patterns reserved exclusively for the locals

5-8

The Impact of American Culture on Management Style

The Impact of American Culture on Management Style

• “Master of destiny” viewpoint

• Independent enterprise as the instrument of social action

• Personnel selection and reward based on merit

• Decisions based on objective analysis

• Wide sharing in decision making

• Never-ending quest for improvement

• Competition producing efficiency

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Authority and Decision MakingAuthority and Decision Making

• Influencers of the authority structure of business:

– High PDI Countries► Mexico, Malaysia

– Low PDI Countries► Denmark, Israel

• Three typical authority patterns:

– Top-level management decisions– Decentralized decisions– Committee or group decisions

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Management Objectives and Aspirations

Management Objectives and Aspirations

• Security and mobility

– Relate directly to basic human motivation and therefore have widespread economic and social implications

• Personal life

– Worldwide study of individual aspirations, (David McClelland)

• Affiliation and social acceptance

– In some countries, acceptance by neighbors and fellow workers appears to be a predominant goal within business

• Power and achievement

– South American countries

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Annual Hours WorkedAnnual Hours Worked

Exhibit 5.1

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Communication StylesCommunication Styles

• Face-to-face communication– Managers often fail to develop even a basic understanding of just one

other language

– Much business communication depends on implicit messages that are not verbalized

• Internet communications– Nothing about the Web will change the extent to which people identify

with their own language and cultures► 78% of today’s Web site content is written in English► An English e-mail message cannot be understood by 35% of all Internet users

– Country-specific Web sites

– Web site should be examined for any symbols, icons, and other nonverbal impressions that could convey and unwanted message

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Formality and TempoFormality and Tempo• Breezy informality and haste characterize American

business relationships

• Europeans not necessarily “Americanized”

• Higher on Hofstede’s Power Distance Index (PDI)

– May lead to business misunderstandings

• Haste and impatience most common mistakes

– Middle East

• For maximum success marketers must deal with foreign executives in acceptable ways

– Developing friendships

5-14

Contextual Background of Various Countries

Contextual Background of Various Countries

Exhibit 5.2

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P-Time versus M-TimeP-Time versus M-Time

• Monochronic time– Tend to concentrate on one thing at a time– Divide time into small units and are concerned with promptness– Most low-context cultures operate on M-Time

• Polychronic time– Dominant in high-context cultures– Characterized by the simultaneous occurrence of many things– Allows for relationships to build and context to be absorbed as parts of high-

context cultures

• Most cultures offer a mix of P-time and M-time behavior– Have a tendency to be either more P-time or M-time in regard to the role

time plays

• As global markets expand more businesspeople from P-time cultures are adapting to M-time.

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Speed is RelativeSpeed is Relative

Exhibit 5.3

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Negotiations EmphasisNegotiations Emphasis

• Business negotiations are perhaps the most fundamental business rituals

• The basic elements of business negotiations are the same in any country

– They relate to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers

• One standard rule in negotiating is “know thyself” first, and second, “know your counterpart”

5-18

Marketing OrientationMarketing Orientation

• A company’s marketing orientation has been positively related to profits (U.S.)

• Other countries have more traditional approach– Production orientation (consumers will prefer products that are

widely available)– Product orientation (consumers will favor products that offer the

most quality performance, or innovative features)– Selling orientation (consumers and businesses alike will not buy

enough without prodding)

• Encouraging a marketing orientation across global business units can be difficult

5-19

Gender Bias in International Business

Gender Bias in International Business

• Women represent only 18% of the employees who are chosen for international assignments

• In many cultures women not typically found in upper levels of management, and are treated very differently from men– Asia, Middle East, Latin America

• Prejudices toward women in foreign countries

• Cross-mentoring system– Lufthansa

• Executives who have had international experience– More likely to get promoted,– Have higher rewards, and have – Greater occupational tenure

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Few and Far Between – Female Directors on Corporate Boards

Few and Far Between – Female Directors on Corporate Boards

Exhibit 5.4

5-21

Corruption DefinedCorruption Defined

• Types of Corruption

– Profits (Marxism)– Individualism (Japan)– Rampant consumerism (India)– Missionaries (China)– Intellectual property laws (Sub-Sahara Africa)– Currency speculation ( Southeast Asia)

• Criticisms of Mattel and Barbie

– Sales of Barbie declined worldwide after the global standardization– Parents and government did react– Mattel’s strategy boosted sales of its competition

5-22

The Western Focus on BriberyThe Western Focus on Bribery

• 1970s, bribery became a national issue with public disclosure of political payoffs to foreign recipients by U.S. firms

• The decision to pay a bribe creates a major conflict between what is ethical and proper and what is profitable and sometimes necessary for business

• OECD Convention on combating the bribery of foreign public officials in international business transactions

• Transparency International (TI)

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Transparency International Corruption Perception IndexTransparency International

Corruption Perception IndexExhibit 5.5

5-24

Transparency International Bribe Payer’s Index

Transparency International Bribe Payer’s Index

Exhibit 5.6

5-25

Bribery – Variations on a Theme

Bribery – Variations on a Theme

• Bribery and Extortion– Voluntary offered payment by someone seeking unlawful advantage is

bribery

– If payments are extracted under duress by someone in authority from a person seeking only what he are she is lawfully entitled to that is extortion

• Subornation and Lubrication– Lubrication involves a relatively small sum of cash, a gift, or a service

given to a low-ranking official in a country where such offerings are not prohibited by law

– Subornation involves giving large sums of money, frequently not properly accounted for, designed to entice an official to commit an illegal act on behalf of the one offering the bribe

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Bribery – Variations on a Theme

Bribery – Variations on a Theme

• Agent’s Fees

– When a businessperson is uncertain of a country’s rules and regulations, an agent may be hired to represent the company in that country

– The Foreign Corrupt Practices Act

– Change will come only from more ethically and socially responsible decisions by both buyers and sellers and by governments willing to take a stand

5-27

Ethical and Socially Responsible Decisions

Ethical and Socially Responsible Decisions

• Difficulties arise in making decisions, establishing policies, and engaging in business operations in five broad areas

– Employment practices and policies– Consumer protection– Environmental protection– Political payments and involvement in political affairs of the country– Basic human rights and fundamental freedoms

• Laws are the markers of past behavior that society has deemed unethical or socially irresponsible

• Ethical principles to help the marketer distinguish between right and wrong, determine what ought to be done, and justify actions

– Utilitarian Ethics– Rights of the Parties– Justice or Fairness

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Culture’s Influence on Strategic ThinkingCulture’s Influence

on Strategic Thinking• British-American

– Individualistic

• Japan & Germany– Communitarian

• In the less individualistic cultures labor and management cooperate

• A competitive, individualistic approach works well in the context of an economic boom

• Fourth kind of capitalism – – Common in Chinese cultures– Predicted by culture

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A Synthesis – Relationship-Oriented vs. Information-Oriented Cultures

A Synthesis – Relationship-Oriented vs. Information-Oriented Cultures

• Studies are noting a strong relationship between Hall’s high/low context and Hofstede’s Individualism/Collective and Power Distance indexes

• Not every culture fits every dimension of culture in a precise way

• Information-oriented culture

– United States

• Relationship culture

– Japan

• Synthesis of cultural differences allows us to make predictions about unfamiliar cultures

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Dimensions of Culture, A SynthesisDimensions of Culture, A Synthesis

Exhibit 5.7

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SummarySummary

• Some cultures appear to emphasize the importance of information and competition while others focus more on relationships and transaction cost reductions

• Businesspersons working in another country must be sensitive to the business environment and must be willing to adapt when necessary

• Understanding the culture you are entering is the only sound basis for planning

• Business behavior is derived in large part from the basic cultural environment in which the business operates and, as such, is subject to the extreme diversity encountered among various cultures and subcultures

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SummarySummary

• Environmental considerations significantly affect the attitudes, behavior, and outlook of foreign businesspeople

• Varying motivational patterns inevitably affect methods of doing business in different countries

• The international trader must be constantly alert and prepared to adapt when necessary

• No matter how long in a country, the outsider is not a local – in many countries that person may always be treated as an outsider

• Assuming that knowledge of one culture will provide acceptability in another is a critical mistake