Developing Global Awareness

To be globally aware is to have:

 Tolerance ‫تقبل اآلخر‬
 knowledge of cultures, history, world market potential, and global economic, social, and
political trends.
For example, that slurping and burping is a sign of respect for the host’s cooking and not bad
manners, it means that the guests are thoroughly enjoying the food.
self-reference criterion (SRC) An unconscious reference to one’s own cultural values,
experience, and knowledge as a basis for a decision.
Ethnocentrism and the SRC can influence an evaluation of the appropriateness of a
domestically designed marketing mix for a foreign market. If U.S. marketers are not aware, they
might evaluate a marketing mix based on U.S. experiences (i.e., their SRC) without fully
appreciating the cultural differences that require adaptation. Certainly, having a great cup of
coffee handy at a major tourist attraction seems like a great idea. So Starbucks opened a store in
the Forbidden City in Beijing. While American tourists were happy to buy, Chinese took great
umbrage with the tactic. It took Starbucks six years to correct the error. Women’s clothing maker
Zara, headquartered in Spain, fixed things much faster. They had offered online a striped blouse
with a yellow six-pointed star emblazoned across the heart. For Jews, it was reminiscent of World
War II concentration camp uniforms. Consumers complained, and Zara took the product off the
market immediately. Damage was still done. Both of these examples were real mistakes made by
major companies stemming from their reliance on their SRC in making a decision.
To avoid SRC & Ethnocentrism
 Define the business problem or goal in home-country cultural traits, habits, or norms.
 Define the business problem or goal in foreigncountry cultural traits, habits, or norms
through consultation with natives of the target country. Make no value judgments.
 Isolate the SRC influence in the problem and examine it carefully to see how it complicates
the problem.
 Redefine the problem without the SRC influence and solve for the optimum business goal
situation.
Stages of International Marketing Involvement
 No Direct Foreign Marketing
 Infrequent Foreign Marketing
 Regular Foreign Marketing
 International Marketing
 Global Marketing
Culture in Marketing:
 When a promotional message is written, symbols recognizable and meaningful to the
market (the culture) must be used.
 When designing a product, the style, uses, and other related marketing activities must be
made culturally acceptable.
 Culture is pervasive in all marketing activities—pricing, research, promotion, channels of
distribution, product, packaging, and styling.
Culture in Consumption
 The manner in and amount which people consume, the priority of needs and wants they
attempt to satisfy, and the manner in which they satisfy them are functions of their culture
that temper, mold, and dictate their style of living.
 Culture is the sum total of knowledge, beliefs, art, morals, laws, customs, and any other
capabilities and habits acquired by humans as members of society
Culture’s Pervasive Impact
 Culture influences every part of our lives
o From morning till we sleep (how we sleep)
 Cultures impact on birth rates
o Birthrates have implications for sellers of diapers, toys, schools, and colleges

Definitions of Culture
Culture is the sum of the “values, rituals, symbols, beliefs, and thought processes that
are learned, shared by a group of people, and transmitted from generation to generation”
“software of the mind, problem-solving tool” (Hofstede)

Origins of Culture:
Geography:
 which includes climate, topography, flora, fauna, and microbiology, influences our social
institutions
 Jared Diamond states that historically innovations spread faster east-to-west than north-to-
south
 Philip Parker reports strong correlations between the latitude (climate) and the per capita
GDP of countries
History:
 The impact of specific events in history can be seen reflected in technology, social
institutions, cultural values, and even consumer behavior
 The military conflicts in the Middle East in 2003 bred new cola brands, Mecca Cola, Muslim
Up, and Arab Cola
The Political Economy:
For most of the 20th Century three approaches to governance competed for world dominance:
• Colonialism
• Fascism
o Fascism fell in 1945
• Communism
o Communism crumbled in the 1990s
• Democracy/free enterprise
Technology:
• Technological innovations influence cultural values
 • Jet aircraft, air conditioning, televisions, computers, and the internet have all influenced
culture
Social Institutions:
1. Family behavior varies across the world, e.g., extended families living together to Dad
washing dishes
2. Religious value systems differ across the world, e.g., Muslims not allowed to eat pork to
Hindus not allowed to consume beef
3. School and education, and literacy rates affect culture and economic growth.
4. Media (magazines, TV, the Internet) influences culture and behavior.
5. Government policies influence the thinking and behaviors citizens of adult citizens, e.g.,
the French government offers new “birth bonuses” of $800 given to women as an
incentive to increase family size.
6. Corporations influence culture via the products they market.

Cultural Values:
Hofstede, who studied over 90,000 people in 66 countries, found that the cultures differed
along four primary dimensions.
Individualism/Collectivism Index (IDV):
1. The Individualism/Collective Index refers to the preference for behavior that promotes
one’s self-interest
2. High IDV cultures reflect an “I” mentality and tend to reward and accept individual
initiative
3. Low IDV cultures reflect a “we” mentality and generally subjugate the individual to the
group
4. Collectivism pertains to societies in which people from birth onward are integrated into
strong, cohesive groups, which protect them in exchange for unquestioning loyalty
Power Distance Index (PDI)
1. The Power Distance Index measures power inequality between superiors and subordinates
within a social system
2. Cultures with high PDI scores tend to be hierarchical and value power and social status
3. High PDI cultures the those who hold power are entitled to privileges
4. Cultures with low PDI scores value equality and reflect egalitarian views
Uncertainty Avoidance Index (UAI)
1. The Uncertainty Avoidance Index measures the tolerance of uncertainty and ambiguity
among members of a society
2. High UAI cultures are highly intolerant of ambiguity, experience anxiety and stress, accord
a high level of authority to rules as a means of avoiding risk
3. Low UAI cultures are associated with a low level of anxiety and stress, a tolerance of
deviance and dissent, and a willingness to take risks
Rituals and Symbols:
• Rituals are patterns of behavior and interaction that are learned and repeated vary from
country to country
o e.g., extended lunch hours in Spain and Greece
o How events are celebrated (Ramadan)
 o Wedding ceremonies and death funerals
• Language as Symbols: the “languages” of time, space, things, friendships, and
agreements
Beliefs:
• Beliefs, which mainly stem from religious training, vary from culture to culture
o The western aversion to the number 13 or refusing to walk under a ladder
o Japanese concern about Year of the Fire Horse
o The Chinese practice of Feng Shui in designing buildings

Thought Processes:
• Thought processes also vary across cultures
o “Asian and Western” thinking
o Other examples

Cultural Sensitivity and Tolerance:

• Successful foreign marketing begins with cultural sensitivity —being familiar with nuances
• A new culture can be viewed objectively, evaluated, and appreciated.
Planned and Unplanned Cultural change:
• Cultural congruence - marketing products similar to ones already on the market in a
manner as congruent as possible with existing cultural norms, thereby minimizing
resistance.
• Planned Change - deliberately set out to change those aspects of the culture offering
resistance to predetermined marketing goals.
Requires Adaptation:
• Adaptation is a key concept in international marketing
• To successfully deal with individuals, firms, or authorities in foreign countries, managers
should exhibit:
o open tolerance,
o flexibility,
o humility,
o justice/fairness,
o ability to adjust to varying tempos,
o curiosity/interest,
o knowledge of the country,
o liking for others,
o ability to command respect, and
o ability to integrate oneself into the environment

Examples:
• China → make points without winning an argument
• ▪ Germany → inappropriate to use first names
• ▪ Brazilians → touch during conversations
Cultural imperatives:
• business customs and expectations that must be met, conformed, recognized and
accommodated if relationships are to be successful
• Example: Chinese, Japanese and Latin American must make good and friendly
relationships before starting businesses.
• In some cultures, it is never acceptable to lose your patience, raise your voice, correct
someone in public.
Cultural electives:
• areas of behavior or to customs that cultural aliens may wish to conform to or participate in but
that are not required
• The majority of customs fit into this category
• Greeting men with a kiss, eating food that disagree with the digestive system or drink
alcoholic beverages (for health, personal or religious reasons).
• However a symbolic attempt to participate, although not expected, will help to establish
rapport (eg. Japanese bow)
• A cultural elective in one country may imperative in another (eg. Welcoming drinks).
Cultural exclusives:
• customs or behavior patterns reserved exclusively for the locals and from which the foreigner is
barred and must not participate
• Christians acting like Muslims
• Joking about country’s politics
The Impact of American Culture:
1. Master of destiny viewpoint (in control of their destinies)
2. Personnel selection and reward based on merit
3. Decisions based on objective analysis
4. Wide sharing in decision making
5. Never-ending quest for improvement
6. Competition yielding efficiency (greed is good vs cooperation)
Differences in Management Styles Around the World:
• Authority and Decision Making
o In high-PDI countries subordinates are not likely to contradict bosses, but in low-PDI
countries they often do
o Three typical patterns exist:

1. top-level management decisions (family and small-businesses)

2. decentralized decisions (US large scale businesses)
3. committee or group decisions (Asian collectivism and group work)
• Management Objectives and Aspirations
o Security and Mobility – (What does security mea006E to you?)
o Personal Life
o Affiliation and Social Acceptance (Japanese work for x company)
o Power and Achievement (Latin Americans aspire to political and social Positions)

Differences in Management Styles Around the World:

• Differences in Communication Styles
o Face to Face Communication
o Internet Communication
• According to Edward T. Hall, the symbolic meanings of time, space, things, friendships, and
agreements, vary across cultures
• Hall places eleven cultures along a high-context/low-context continuum
 • Communication in a high-context culture depends heavily on the contextual (who says it,
when it is said, how it is said) or nonverbal aspects of communication
• Communication in a low-context culture depends more on explicit, verbally expressed
communications
• Example: American taking German client to dinner
Formality and Tempo
• Level of formality in addressing business clients by first name
• Level of formality in addressing your boss by first name
• Tempo or speed in getting “down to business”
• Managing partner of Kuwait office of KPMG about ‘fly-in visit’ approach: what in the
West might be regarded as dynamic activity – the I’ve got a day here approach – may
be regarded here as rude.
• Perception of time varies in many cultures
P-Time versus M-Time
• M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and
Scandinavians
• Most low-context cultures operate on M-time concentrating on one thing at a time
• One saves time, wastes time, spends time or loses time.
• P-time, or polychronic time, is more dominant in highcontext cultures
• P-time is characterized by multi-tasking and by “a great involvement with people” – allows for
relationships to build
Negotiations Emphasis
• Differences with respect to the product, its price and terms, services associated with the
product, and finally, friendship between vendors and customers.
Marketing Orientation
• American companies are embracing the marketing orientation philosophy (customization).
• Other countries are still in the traditional production, product and selling orientations.
Business Ethics:
• Existence of different levels of corruption, bribery, and fraud
o The Foreign Corrupt Practices Act 1977: Imprisonment for bribery
• Bribery creates a major conflict between ethics and profitability (unethical but
necessary).
Bribery: Variations on a Theme:
• Bribery
o Voluntarily offered payment by someone seeking unlawful advantage
• Extortion
o Payments are extracted under threat by someone in authority from a person
seeking only what they are lawfully entitled
• Lubrication
o 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
 o 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; involves breaking the law.
A Framework for Ethical Principles:
(1) Utilitarian ethics: Does the action optimize the “common good” or benefits of all
constituencies? And, who are the pertinent constituencies?
(2) Rights of the parties: Does the action respect the rights of the individuals involved?
(3) Justice or fairness: Does the action respect the canons of justice or fairness to all parties
involved?
Sovereignty of Nations:
• A sovereign state is independent and free from all external control
o enjoys full legal equality with other states governs its own territory
o selects its own political, economic, and social systems and has the power to enter
into agreements with other nations.
• Sovereignty refers to both the powers exercised by a state in relation to other countries
and the supreme powers exercised over its own members.
• A state sets requirements for citizenship, defines geographical borders, etc.
• A citizen is subject to the state’s laws even outside the country’s borders.
• Nations can and do abridge specific aspects of their sovereign rights to coexist with other
nations(Eg. EU, NAFTA, and WTO).
• However, some countries view the WTO and foreign investments as a threat to
sovereignty, (the fear of relinquishing their nation’s rights for a common goal that might
not benefit them).
Stability of Government Policies:
• For foreign firms, the ideal situation is a stable government in the country they are
operating in.
o Radical shifts in government philosophy can occur when:
o An opposing political party ascends to power
o Pressure from nationalist and self-interest groups
o Weakened economic conditions
o • Bias against foreign investment or conflicts between governments
• Government stability must be assessed as an ongoing business practice (change can
happen in stable countries).
• For foreign businesses, the stability of government policies is the main concern.
• In Italy, more than 50 new governments since World War II without major changes in
business policies.
• Recently, Indian governments are favoring foreign investments and free markets.
Instability of Countries:
• Due to the instability of some African countries (unending civil wars, boundary disputes,
oppressive regimes, etc), a recent World Bank study showed that 47 nations of sub-
Saharan Africa were attracting less than $2 Billion annually in FDI. (1/10 of what
developing countries such as Mexico attracts).
• These countries enter a vicious cycle: they need investments to prosper and investments
need stability.
Instability of Governments and Policies: Political Reasons
• Some forms of government seem to be inherently unstable
 • Changes in political parties during elections can have major effects on trade conditions
• Nationalism
• Animosity targeted toward specific countries

Nationalism:
• Nationalism refers to feelings of national pride and unity
o Feelings of nationalism are manifested by:
 Disaster (e.g. 9/11)
 War
 Recession
o Call to “buy our country’s products only,” e.g., “Buy American”
o Restrictions on imports, restrictive tariffs, and other barriers to trade

Targeted Fear and/or Animosity:

Nationalism
o Targets all foreign countries

Animosity
o Targets specific nations

Political Risks of Global Business:

Confiscation
o the most severe political risk, is the seizing of a company’s assets without payment

Expropriation
o is where the government seizes an investment, but some reimbursement for the assets is
made; often the expropriated investment is nationalized to become a government run
entity
Domestication
o occurs when the government mandates local ownership and greater national involvement
in a foreign company’s management
Economic Risks:
Exchange Controls
o This happens when there is a shortage of foreign exchange in the country and the
government restricts the spending in foreign currency. This may result in the imposition of
differential exchange rates for different products entering the country
Local Content Laws
 o All countries and regions may have local content laws, for example NAFTA has a 62.5%
local content requirement for cars originating from the NAFTA region, the EU has a 45%
local content requirement so that it forces companies to use local components.
Import Restrictions
• Countries may impose import restrictions to protect local farmers or industries, but this
may be detrimental to the local economy if it interrupts production in certain industries
Tax Controls
• Taxes that are imposed on foreign companies but not on domestic companies and caused
their products to be more expensive in the country because it is passed on to the
consumer.
Price Controls
• Countries can impose price controls on foreign companies selling essential products such
as food or gasoline, especially during inflationary periods.
Labor Problems
• Unionism and labor laws are different in different countries and there are especially strict
rules for laying off employees by foreign companies.
Political Sanctions:
When one or a group of nations boycott another nation, thereby stopping all trade between the
countries (or sanctions against the trade of specific products).
• Example: Egypt, Saudia Arabia, UAE and Bahrain cut ties with Qatar
NGOs
• Often associated with political activism, nongovernmental organizations (NGOs) are
increasingly affecting policy decisions made by governments. Many are involved in
peaceful protests, lobbying, and even collaborations with governmental organizations.
• Examples of NGOs are the Red Cross and Red Crescent, Amnesty International, Oxfam,
UNICEF, Care, and Habitat for Humanity.