Kingston University

MSc in International Business Management

CULTURAL DISTANCE:

HOW IS IT MEASURED AND HOW DOES IT IMPACT

ON GLOBAL MARKETING BASED ON A RESEARCH OF

THE CRISIS OF THE COCA-COLA COMPANY

Submitted by: Maxie

Submission date: 20/10/2013

SYNOPSIS

Cultural distance is a well-known terms which been used in Business in general and in the field of Marketing

in particular; and when it has been recognized to be as a dimension that means it can be measured. In a

few decades, there were a several pioneers who have researched and invented some different methods to

measure this distance. For instance, the model of Hofstede and Trompenaars based on extrapolating the

data a set of distributed questionnaires among the employees; whereas Shalom Schwartz’s frameworks

focused on the nature of basic human values by a survey among people from cross-cultural countries. This

essay assignment firstly aims to evaluate those methods critically to compare some methods of the cultural

measurement and also figures out the strengths and weakness as the influences which they have. In

addition to this, because the cultural gap creates an enormous impact on the inevitability of global

marketing operations; therefore, the rest of this assignment will focus on analyzing and identifying that

issue by explaining the reason Coca-Cola failed on the international market by a crisis itself in 1999. It also

interprets the awareness off the importance of the cultural distance by the way Coca-Cola changed their

marketing activities to have been adapted to fit the diverse culture from different countries as restored the

Coca-Cola’s prosperity and keep being successful.

CULTURAL DISTANCE: HOW IS IT MEASURED AND HOW DOES IT IMPACT ON GLOBAL

MARKETING BASED ON A RESEARCH OF THE CRISIS OF THE COCA-COLA COMPANY

Cultural distance is probably considered as a well-known term which is presented in philosophical and

psychological specialized (Crane & Hannibal, 2013). However, it also becomes a vital aspect for doing

research of Global Marketing in particular and International Business Management in general nowadays

(Hofstede & Bond, 1998). Therefore, there are many experts in the field of business who invest their time

to find out the methods as computational tools to measure the dimensions of the cultural distance (e.g. the

Hofstede’s model, the Schwartz’s frameworks or the Globe project). Nonetheless, according to an article

from University of Technology Sydney (Tang, 2013), it cannot be denied that cultural distance is an elusive

variable as a function which is difficult to determine. Generally speaking, those measuring methods of the

cultural gap are very different as gives the dissimilarity results. The Hofstede’s model might be assessed as

a premise of the theory that the cultural distance is a quantity which can be figured out. Notwithstanding, it

has been argued that the model of Hofstede has been outdated with the rapid changes of the world today

and using Schwart’s framework would be a better option [Fougère & Moulettes (2007); Jones (2007); Joannidès

et al (2012)]. However, by using both of Schwartz and Hofstede’s works on some research together,

Drogendijk and Slangen (2006, p.362) might led to an opposite conclusion that it was not a good

perspective to judge the value of the models. Correspondingly, as the purpose of this assignment for

getting a clearer perspective on estimating the distance in culture, the next paragraphs will analysis some

typical measuring patterns, from the original model of Hofstede to the recent GLOBE project, under the

look and the evaluation of critical thinking to indicate the arguments from various views. Furthermore, it

cannot be denied that the cultural distance has made an unavoidable effect on the global marketing

operation. By applying the models which have been referred and evaluated above on the Coca-Cola’s crisis,

this essay assignment will also illustrate and extend the role of this impact based on some relevant

information and correlative data. In addition, it indicates how the cultural gap has affected the marketing

operations around the world. Likewise, it interprets the significant meaning of the cultural differences on

running the global business successfully.

Hofstede’s model and the criticism revolves around his works

First and foremost, this paragraph analyses and evaluates the cultural distant model of Geert Hofstede.

From a worldwide survey of the values of a large multinational corporation and employees, IBM and forty

different countries, Hofstede (1984) has been known as one of the pioneers on introducing the concept of

measuring the differences between cultures. Through all his research, he led to a conclusion that

“organizations are cultural-bounded” (p. 252). Based on a view on Hofstede’s official website (2013), it can

be recognized that Hofstede identified a six-dimensional space: Power Distance (PDI), Individualism versus

collectivism (IDV), Masculinity versus femininity (MAS), Uncertainty avoidance (UAI), Long-term versus

short-term orientation (LTO) and a new dimension has been added recently, Indulgence versus Restraint

(IVR) [see table 1].

Table 1. The defintions of the imensions of Culture Measurement in Hofstede Model (Hofstede, 2013)

The first dimension of the Hofstede model is power distance (PDI) which has also been referred to the

social hierarchy (West & Graham, 2004). As described in more detail (Hofstede, 2013), this dimension

defined as the acceptance on the power's unequally distribution of the less powerful members in the

institutions or organizations. The second dimension (IDV) is a continuum that ranges from the

‘individualism’, as whom only have the responsibility on looking after themselves and their immediate

family, to the ‘collectivism’, as whom have their duty on taking care to their groups or collectivities to

express the loyalty. The next dimension (MAS) also describes another continuum, between the 'masculinity'

and the 'femininity' and defines the gender roles in organizations (Terlutter, Diehl and Mueller, 2006). It

illustrates that 'masculinity' is as a circumstance which has the dominant value of society on the awareness

of success, money and competition. In contrast, the 'femininity', stands for a preference for cooperation,

focuses on looking after the others and identifies the quality of life. Furthermore, as Hofstede (2013)

suggests, society is more consensus-oriented in the term of 'femininity'. The uncertainty avoidance (UAI),

refers to people’s tolerance of ambiguity (Wu, 2006), has implied that the level of the threatened feeling,

by the problematic and unidentified conditions, can impact the beliefs of people. According to an article of

Minkov and Hofstede (2012), the fifth dimension (LTO), also been known as "Confucian Work Dynamism"

(Bond, 1987), has been renamed by Hofstede to LTO (1988). Hofstede interprets this cultural perspective

on a ‘long-term’ or “as dealing with society’s search for virtue” versus a ‘short-term basis’ or “as having a

strong concern with establishing the absolute truth” (2013). The newest dimension is Indulgence versus

Restraint (IVR) which seems to perceive as an explanation for the conflict between satisfying the needs of

human nature with the strict regulations and the standard norms of society (2013).

It cannot be denied that the six dimensions of Hofstede model have many appealing and useful attributes

which support on doing research to measure the cultural gap for scholars and practitioners effectively

(Jones, 2007). Nonetheless, it also cannot avoid the limitation itself and there are many significant

criticisms which have been increased against his cultural model over the years. For example, one gentle

critique has suggested that Hoefstede’s study was basically meant to describe organizational cultures and

not national cultures (Crane & Hannibal, 2013). As having a look sharper, Jones (2007) pointed out eight of

the most common and typical criticisms on the Hofstede model are about relevancy, cultural homogeneity,

national divisions, political influences, one company approach, out-dated, two few dimensions, statistical

integrity. Besides, Jones (2007) also mentioned the response and opposite arguments from Hofstede and

others' opinions on the criticisms [see Table 2].

Table 2. The criticisms and arguments on the difference perspectives of the Hofstede model (Jones, 2007)

Some typical frameworks of the measuring methods the cultural distance after the Hofstede

model: the model of Trompenaars, Schwartz, Inglehart and GLOBE project

Secondly, this segment of the assignment keeps going further in interpretation and analysis the

measurement of the cultural distance. It is true that after Hofstede built the theory and techniques to

measure the cultural gap, there were also many researchers who continued to develop the measuring

methods, based on the model of Hofstede as made their own models (Bertsch, 2012). The models are best

known as seven dimensions of Trompenaars (1998), seven values of Schwartz (1994), the World Wide

Survey of Inglehart (1997), and nine units of the GLOBE project (2004) which has been evaluated as one of

the most effective model in recent years. These tables below will give an overview of the model of

Trompenaars, Schwartz and Inglehart in brief [see Table 3 and Figure 1a, 1b, 2].

Table 3. The seven dimension of Trompenaars’ and Hampden-Turner’s cultural factors (ChangingMinds, 2013)

Figure 1a. Schwartz’s cultural values [Schwartz (1999 and 2006, p.142)]

Figure 1b. Schwartz’s cultural values in a short description [Schwartz (1999 and 2006, p.142)]

Figure 2. Map of countries, based on the Inglehart’s World Values Survey [Inglehart & Welzel (2005, p.63)]

Taking everything in consideration, Drogendijk and Slangen (2006) stated that the value research of

Schwartz has overcome many of the apparent limitations of Hofstede’s model. As can be seen in table 2,

Schwartz (1994) criticized that Hofstede’s cultural dimensions was complicated in detail but lacks of

consistency and not relevancy. In addition, Schwartz (1994, p. 91) argued that Hofstede's survey on the IBM

employees had too many defects in terms of education, scientific and technological background, especially

in modernizing forces. Despite Hofstede (1980) had responded on this, Schwartz continued to make

sustained arguments with his analysis under some strong evidences. According to Schwartz (1994), it is

important to clarify the concept of cultural dimensions in the way of understanding people’s value items. It

cannot be denied that there are many scholars who appreciate and support the Schwartz frameworks. As

also mentioned in the article of Drogendijk and Slangen (2006), they emphasized the words of some

researchers that Schwartz’s framework has been rated much higher than the Hofstede model. However,

this assessment is a large relativity. Although Steenkamp (2001), a professional analyst, put his position on

Schwartz’s perspective of cultural measurement, he was still not entirely sure to stop using Hofstede's

models. Steenkamp (2001) claimed that the Schwartz's framework had also not been tested in practical

fully. Frankly speaking, there are still many arguments and mixed opinions but because the framework of

this essay assignment is limited; hence, the table shown below will give an overview of some measuring

model on cultural distance in comparison with first five dimensions of Hofstede briefly [see Table 4].

Table 4. Comparison of Hofstede’s cultural framework on five dimensions with other models [Soares, Farhangmehr and Shoham, (2007, p. 280)]

Taking the models into comparison, the Inglehart’s World Values Survey has classified to be the most often

application in terms of marketing and advertising than the models of Hofstede or Schwartz [Terlutter et al.,

(2006, p. 430)]. Notwithstanding, the recent model of work from organizational and management science,

as referred to GLOBE project (Global Leadership and Organisational Behavior Effectiveness Research

Program), has been considered almost as a standard method and alternative measurement for all models

before, which also proposed that it may prove relevant for advertising and marketing purposes in the most

effective way (p. 431). GLOBE outlined nine dimensions of cultural distance: power distance, uncertainty

avoidance, institutional collectivism, In-group Collectivism, humane orientation, performance orientation,

assertiveness, gender egalitarianism and future orientation [see Table 5]. According to Terlutter et al (2006,

p. 434), GLOBE project has based on six dimensions of Hofstede’s works; however, it clearly distinguishes

between societal values and practices, recognizing that both levels of culture may, on occasion, even be in

conflict. Although GLOBE has some limitations as the average sample of respondents itself, it has been

assessed to be significant potential for the application of societal values on practicing to marketing and

advertising research (p. 435). As mentioned in a worldwide business journal (Shi & Wang, 2011, p. 95),

Hofstede compared his model to GLOBE and furthered his argumentation that GLOBE defined its dimension

in a different way to him as it focuses on psychological issues; however, it is also not clear that Hofstede

has some criticisms on GLOBE project or he simply analysis to improve it. The table 6 shows the differences

between GLOBE Model and Hofstede Model (Shi & Wang, 2011, p. 98).

Table 5. Description of the Nine GLOBE Cultural Dimensions [Javidan et al., (2005, p.62)]

Table 6. Differences between GLOBE Model and Hofstede Model [Shi & Wang (2011, p. 98)]

The effects of cultural distance on global marketing operations based on the crisis of Coca-Cola

Undoubtedly, business world is changing rapidly and cultural distance has made the significant impacts on

the large companies which have the target on expanding their business globally. The next part of this essay

assignment has an intention to focus on a different approach to cultural variability and by some empirical

evidences on the famous soft-drinks company, Coca-Cola, it illustrates how those effects influence the

global marketing operation of Coca-Cola in particular and other worldwide companies in general. As

considering the Coca-Cola' situation, Taylor (2000) recounts the crisis of this multinational organisation in

1999 from a report of health matters in Belgium primary school; children got ill after drinking Coca-Cola (p.

279). Nevertheless, Coca-Cola denied to have responsibility and doubted all those reports on this case. The

consequence of this crisis was that some nations in Western Europe banned the sale of Coca-Cola;

however, some of other Northwestern European countries still kept holding it on sale. The reason for this

situation was related to two cultural dimensions of the Hofstede model, uncertainty avoidance and power

distance (see Table 1; Hofstede, 2013). Although there were more than two dimensions to use, these

dimensions has been thoroughly examined as the most suitable for doing research on public response in

international contexts to the crisis of Coca-Cola and also become the treatment for Coca-Cola company to

solve the problem. As analysed in Taylor article (2000), the final results of this crisis was that Coca-Cola had

to change their business and marketing strategy, from basing on American culture to the norms of the host

nations’ culture to better adapt to the cultural complexities of the global market place. In addition to this,

Coca-Cola had to replace its CEO and changed to a new marketing strategy which may help the organization

avoid the unpredicted and unexpected crises in future (p. 279).

This paragraph analyses the orientation of the uncertainty avoidance and power distance dimension of

Hofstede. According to Taylor (2000, p.281), the uncertainty avoidance has been implied for

communication, crisis and public relations and in the case of solving problems of Coca-Cola, this dimension

needs to link to the power distance dimension (p. 287). Back to history, when Belgian government ordered

Coca-Cola to consider the accident and Spain and France accused the soft-drink manufacturers of selling

the harmful products on June 1999, Coca-Cola has responded to those conditions as a low power distance

and low uncertainty avoidance organization (p. 284). In the article, Taylor (2000) emphasized that under

the reaction of public, the CEO of Coca-Cola had to acknowledge the problem as their mistake at last.

Moreover, Douglas (CEO of Coca-Cola this time) personally must fly a long distance to the region of the

incident to offer an amount of free Coke to consumer and promised to pay more attention on the bottling

process (p. 284). In this circumstance, Belgium and some nations in Western Europe were estimated as high

score on the dimensions of uncertainty avoidance and power distance through cultural variation; that they

expressed a lower tolerance for this issue as required a penalty to Coca-Cola [See Table 7]. Coca-Cola

actually had to pay a big price when they delayed to solve the problem from first. As Taylor mentioned

(2000, p. 285), the customers from these nations not only discontinued consuming their traditional

products, but also stopped purchasing other Coca-Cola products (Fanta, Nestea and so on). By the lack of

the awareness on studying about the condition of Belgian government in particular and the international

nations in general, Coca-Cola completely put the relationships between them and some Western countries

into trouble. If Coca-Cola knew about the scandal of healthy and livestock food issues of Belgium during

that time, it might not probably inevitable for them to avoid the consequences (p. 286). In other words, the

Coca-Cola problem happened at the right moment when the Belgian government needed to do something

to improve the condition of the country’s internal conflict. Therefore, Coca-Cola might be selected as a

sample to solve the Belgian government's issue. Furthermore, Coca-Cola continued to make mistake again

when they did not satisfy the two countries, France and Spain. Coca-Cola declared a challenge for these

countries by sending a message that their products were perfectly safe (p. 286). Coca-Cola did not realize

that the problem of Belgium scandal existed not only in Belgium itself but also has affected the majority of

Western Europe. Hence, there was no reason for any governments in this community which would not try

to demonstrate their ability on protecting the people’s health by doing the same action. As shown in table

7 (Taylor, 2000, p. 286), Belgians, French and Spain would have a low forgiveness for any type of

uncertainty as had a negative view on the activities of the global and multinational companies. In Taylor’s

further analysis (2000, p. 286), the cause of the Coca-Cola crisis was more complex by the impacts of France

and Spain. For instance, France did not want any global products pervade into its culture and French

government gained the pros of the Coca-Cola crisis as a reason to close down the Coca-Cola manufacturing

plant in Dunkirk (p. 286).

Table 7. Hofstede’s Cultural Variation in High Uncertainty and High Power Distance Nations (Taylor, 2000, p. 286)

The rest of Taylor’s research (2000) interprets why Northwestern European countries and America, which

had the lower score in both uncertainty avoidance and power distance index, did not take the same actions

as the three Western European nations during the crisis. Table 8 below illustrated the key answer for this

situation that the Northwestern European countries such as Sweden, Norway and Demark were more

similar to the cultural norms of Coca-Cola in both cultural dimensions. These nations had the score which

were closer to the American score (p. 288).

Table 8. Hofstede’s Cultural Variation in Low Uncertainty and Low Power Distance Nations (Taylor, 2000, p. 288)

Conclusion

Eventually, the purpose of this assignment is to point out some methods of measuring the cross-cultural

distance and also give a brief analysis and evaluation on those models. From the Hofstede model (six

dimensions) to the GLOBE project (nine dimensions), it also indicates that having an understanding and

applying those models in International Business as well as Global Marketing Management is extremely

important. This essay assignment has completely brought some models in comparison to figure out the

strengths and weaknesses of each model. Nonetheless, because of the limitation of words, it is not possible

to analyse and give the discussion in depth and it would also have some inevitable shortcomings. From an

amount of mixed arguments, it can be seen that although the model of Hofstede's was the prior theory and

methods for assessing cultural gap but therefore, it also became the model which encountered a lot of

criticisms. However, as Bhagat and McQuaid implied (1982), the Hofstede will always have its own value by

time. The second part of this assignment has an effort on interpreting the Coca-Cola’s crisis by two cultural

distance of the Hofstede model, the uncertainty avoidance and power distance. The case study of Coca-

Cola illustrated that the incorrect assessment and unidentified awareness, on the variety of cultural

dimensions in different countries as dissimilarity contexts, could lead to an unintended and unexpected

consequences for the international and multinational companies. Likewise, it can be argued that the global

companies should not have the same strategies and tactics for the different countries which have

dissimilarity culture or get a huge range of the cultural distance. To further elucidate this point, Taylor

(2000) referred in his article that Coca-Cola had an ongoing effort to retain back the loyalty of their

customers and consumer by many advertising campaigns and marketing strategies such as “Coke’s Back”

campaign or some road shows, beach parties and rock concerts (pp. 289-291). Coca-Cola had understood

the importance of taking the awareness on its worldwide customers when they constantly changed

business marketing strategy based on the measurement of cultural distance until achieves a great success

as nowadays.

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