Week 8

Cultural and Ethical Considerations in International Business & Global

Consumer Behavior

• International Marketing and Consumer Behavior

• Adapting marketing strategies for international markets.
• Cross-cultural consumer behavior
Introduction
• What is International Business?
• Engaging in trade and investments across national borders, including exports,
imports, foreign direct investment, and global partnerships.
• Businesses must navigate diverse cultural norms, regulations, and ethical
standards.
• Why is This Important?
• Companies expanding internationally must understand cultural sensitivities to
succeed.
• Ethical considerations such as labor laws, corruption, and environmental impact
influence global operations.
• Consumer behavior varies significantly across different cultures and economic
conditions.
Understanding Culture in Business
• Definition of Culture: A shared system of values, beliefs, traditions, and
behaviors that shape individuals and societies.
• Impact on Business:
• Communication Styles: Some cultures value direct, explicit communication (e.g.,
U.S.), while others rely on implicit, high-context communication (e.g., Japan).
• Negotiation Tactics: Bargaining and deal-making vary—some cultures favor
aggressive negotiations, while others prioritize relationships and trust.
• Consumer Preferences: Product designs, packaging, advertising styles, and even
brand names may need adjustments to fit cultural expectations.
Hofstede’s Cultural Dimensions Theory
• Power Distance: Measures acceptance of hierarchical structures. High
(e.g., India, Mexico) vs. Low (e.g., Sweden, Denmark).
• Individualism vs. Collectivism: Focus on personal achievements (e.g.,
U.S.) vs. group harmony (e.g., China).
• Uncertainty Avoidance: Comfort with ambiguity and risk—high (e.g.,
Japan) vs. low (e.g., Singapore).
• Long-Term vs. Short-Term Orientation: Future-focused (e.g., South
Korea) vs. present-oriented (e.g., Nigeria).
• Example: U.S. companies encourage individual decision-making,
while Japanese firms emphasize group consensus.
Ethical Considerations in International
Business
• Common Ethical Dilemmas:
• Bribery and Corruption: Some countries have lenient corruption norms, while
others enforce strict anti-bribery laws (e.g., FCPA in the U.S.).
• Labor Exploitation: Low-wage economies often struggle with fair wages, safe
conditions, and child labor issues.
• Environmental Responsibility: Companies face scrutiny regarding pollution,
resource use, and sustainability.
• Example: Nike faced backlash in the 1990s for sweatshops but later
improved labor conditions by enforcing strict supplier codes.
Corporate Social Responsibility (CSR)
• Definition: The obligation of businesses to operate ethically while
considering social and environmental impacts.
• Example: Patagonia donates a percentage of profits to environmental
causes and ensures fair labor practices in its supply chain.
• Discussion Question: How can companies balance profitability with
ethical responsibilities?
Cultural Differences in Communication
• Hall’s High-Context vs. Low-Context Cultures (1976):
• High-Context (Japan, China): Rely on nonverbal cues, context, and relationships
in communication.
• Low-Context (USA, Germany): Prefer explicit, straightforward communication
with little reliance on background knowledge.
• Example: In Japan, silence can indicate agreement, whereas in the U.S.,
silence may signal disinterest.
Consumer Behavior Across Cultures
• Cultural Norms: Influence purchasing habits, preferences, and
expectations.
• Social Influences: Family, peers, and societal trends shape buying
behavior.
• Economic Conditions: Wealthier economies may favor luxury goods,
while price sensitivity drives purchasing in emerging markets.
• Example: The Korean beauty industry successfully adapted global
marketing to local traditions, emphasizing skincare rather than heavy
makeup.
International Marketing Strategies
• Standardization vs. Localization :
• Standardization: Using a uniform marketing approach worldwide (e.g., Coca-
Cola maintains its branding across countries).
• Localization: Adapting products and marketing strategies to local preferences
(e.g., McDonald’s McVeggie in India).
• Example: Nestlé customizes flavors of KitKat in Japan, offering matcha
and sake varieties.
Adapting Marketing Strategies for International Markets
• To effectively adapt marketing strategies, businesses must consider the following:
• Product Adaptation: Modifying products to meet local tastes, preferences, and
regulations. For example, Unilever adapts its skincare products to suit different
climates and skin types.
• Pricing Strategies: Pricing must reflect local purchasing power and economic
conditions. For instance, luxury brands may adopt premium pricing in developed
markets but offer lower-priced alternatives in emerging markets.
• Promotion and Communication: Advertising campaigns must align with cultural
values and norms. Humor, imagery, and language used in ads must be culturally
appropriate. For example, Procter & Gamble’s “Thank You, Mom” campaign was
adapted to resonate with diverse audiences during the Olympics.
• Distribution Channels: Understanding local distribution networks is crucial. In
some markets, e-commerce dominates, while in others, traditional retail channels
are more effective.
Global Consumer Behavior Trends
• Digital Transformation: The rise of e-commerce and mobile
commerce (e.g., Amazon, Alibaba).
• Sustainable Consumption: More consumers prioritize eco-friendly
products and ethical brands (e.g., Tesla's focus on renewable energy).
• Example: Alibaba’s “Singles’ Day” has become the world’s largest
online shopping event.
Challenges in International Business &
Marketing
• Cultural Misinterpretations:
• Example: Pepsi’s “Come Alive with Pepsi” slogan translated to “Pepsi brings
your ancestors back from the dead” in China.
• Legal and Regulatory Differences:
• Example: The EU’s GDPR regulations impact digital marketing by limiting data
collection.

• Economic Disparities: Income levels and economic conditions vary

widely, requiring tailored pricing and product strategies.
Best Practices for Success in Global Business
• Research & Adaptation: Conduct thorough market research before
entering a new country.
• Ethical Business Practices: Avoid corruption, ensure fair labor
conditions, and comply with regulations.
• Strong Marketing Strategies: Balance global brand consistency with
local adaptations.
Conclusion

• Cultural and ethical considerations are vital in international business.

• Consumer behavior varies across different regions.
• Companies must research and adapt marketing strategies for success.
Discussion Questions
1.Can you think of a company that successfully adapted to a new
culture?
2.What ethical issues should businesses consider when entering
international markets?
3.How has globalization influenced consumer behavior?
1. Can you think of a company that
successfully adapted to a new culture?
• Starbucks • KFC (Kentucky Fried Chicken)
• In China, Starbucks recognized • KFC is the most successful fast-
that tea culture is deeply food chain in China,
ingrained, so they introduced outperforming McDonald's. It
tea-based beverages and larger, localized its menu with items like
more social seating spaces in Peking Duck Wraps and Sichuan
their stores to align with Chinese Spicy Chicken to appeal to
consumer habits. This helped Chinese tastes. Unlike in the
Starbucks thrive in a country U.S., KFC also offers breakfast
where coffee consumption was options and larger family-sized
initially low. meals, catering to local dining
habits.
1. Can you think of a company that
successfully adapted to a new culture?
• Coca-Cola • IKEA
• In Japan, Coca-Cola successfully • In India, IKEA adjusted its store
introduced Georgia Coffee, a designs and products to match
canned coffee drink, to match local preferences. They
the local preference for ready- downsized furniture to fit
to-drink coffee. Instead of smaller apartments and offered
relying solely on sodas, Coca- assembly services, knowing that
Cola adapted by diversifying its Indian consumers are less likely
product range. to assemble furniture
themselves compared to
European customers.
2. What ethical issues should businesses consider
when entering international markets?
• Child Labor & Fair Wages – • Bribery & Corruption – Siemens
H&M and Adidas Scandal
• Many clothing brands, including • Siemens, a German
H&M and Adidas, have been multinational company, was
criticized for sourcing products caught in one of the largest
from factories with poor labor bribery scandals in history,
conditions. In response, they where they paid bribes to secure
introduced sustainability contracts in multiple countries.
programs, such as fair wages After being fined $1.6 billion,
and ethical sourcing policies, to Siemens implemented strict
ensure compliance with labor anti-corruption policies and
laws. compliance programs.
2. What ethical issues should businesses consider
when entering international markets?
• Environmental Responsibility – • Consumer Data Privacy –
Nestlé Facebook (Meta) and GDPR
• Nestlé has faced criticism for • Facebook was fined for violating
excessive water extraction in the General Data Protection
areas where local communities Regulation (GDPR) in Europe
struggle with water shortages. after mishandling user data.
The company has since Companies expanding
introduced water sustainability internationally must ensure they
initiatives to mitigate its follow regional data privacy laws
environmental impact. to avoid similar legal issues.
3. How has globalization influenced consumer
behavior?
• Rise of K-Pop and Korean • Tesla’s Global Expansion
Products (Hallyu Wave) • Tesla's rise shows how
• Globalization has made K-pop, globalization increases demand
Korean skincare brands for sustainable electric vehicles
(Innisfree, Laneige), and Korean (EVs). European and Asian
food (ramyeon, samgyeopsal) countries have shifted towards
immensely popular worldwide. eco-friendly cars due to
Companies like Samsung and increasing environmental
Hyundai also benefit from the awareness and regulations.
"Korean Wave" influence in
global markets.
3. How has globalization influenced consumer
behavior?
• The Popularity of Online • McDonald’s Digital Ordering &
Marketplaces (Amazon, Shopee, Local Adaptations
Alibaba) • McDonald’s has adapted to
• Globalization has transformed consumer behavior changes by
shopping habits, with platforms integrating mobile ordering,
like Amazon and Alibaba drive-thru innovations, and AI-
allowing consumers to purchase powered recommendations in
products from international different countries to suit local
sellers with just a few clicks. preferences.
Week 9: with Group 1 Final Product
• International Trade Logistics and Supply Chain Management
• Shipping, warehousing, and customs regulations.
• Managing global supply chains.

Objectives: To enumerate the different types of logistics and supply

chain management in international business.
Week 10 – with Group 2 Final Product
• Financing International Trade
• > Methods of payment in international trade (e.g., letter of credit,
advance payment).
• > Role of international financial institutions like the IMF and World
Bank.

Objective: To identify the different methods of payment and the role of

international financial institutions.
Week 11 – with Group 3 Final Product
• Emerging Trends in International Business
• > Impact of technology on global trade.
• > E-commerce and digital trade.
• > Sustainability and green trade practices.

Objectives : To identify the emerging trends in international business.

Week 12 – with Group 4 Final Product
• Risk Management in International Business
• > Political, economic, and environmental risks.
• > Mitigating trade risks (e.g., insurance, hedging).

Objectives: To discuss and learn how to manage risk in international

business.
Week 13: Final Product Presentation
Week 14 – Final Examinations