Adaptation in internationalmarketing

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Culture,Management Style,and Business SystemsVasily ErokhinSchool of Economics and ManagementHarbin Engineering UniversityContents: Adaptation in international marketing Management styles around the world Business ethicsAdaptation in internationalmarketingAdaptationAdaptation is about developing a thorough understandingof local requirements and modifying different aspects ofyour marketing strategy in order to succeed in individualmarketsFor adaptation, more than tolerance of an alien culture isrequired. Affirmative acceptance, that is, opentolerance may be needed as well. Through such affirmativeacceptance, adaptation becomes easier becauseempathy for another’s point of view naturally leads to ideasfor meeting cultural differencesBasic criteria of 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 environmentDegree of adaptationWhat is essential to effective adaptation: Awareness of one’s own culture Recognition that differences in others can causeanxiety, frustration, and misunderstanding of the host’sintentionsThe self-reference criterion (SRC) is especiallyoperative in business customsThe key to adaptation is to remain yourself but todevelop an understanding of and willingness toaccommodate the differences that existBusiness customs1. Cultural imperatives2. Cultural electives3. Cultural exclusivesCultural imperativesCultural imperatives are the business customs andexpectations that must be met and conformed to or avoided ifrelationships are to be successful.Informal discussions, entertaining, mutual friends, contacts areways trusting relationships are developed.Establishing friendship is an imperative in many cultures.In some cultures, a person’s demeanor is more critical than inother cultures.Cultural electivesCultural electives relate to areas of behavior or to customs thatcultural aliens may wish to conform to or participate in but thatare not required.A symbolic attempt to participate in cultural electives is not onlyacceptable but also may help establish good relations. Itdemonstrates that the marketer has studied the culture.A cultural elective in one county may be an imperative in another.Cultural exclusivesCultural exclusives are those customs or behavior patternsreserved exclusively for the locals and from which theforeigner is barred.Few cultural traits are reserved exclusively for locals, but aforeigner must carefully refrain from participating in those thatare.Foreign managers need to be perceptive enough to know whenthey are dealing with an imperative, an elective, or anexclusive and have the adaptability to respond to each.Managementstyles aroundthe worldAuthority and decision makingBusiness size, ownership, public accountability, and culturalvalues that determine the prominence of status and position(Power Distance Index, or PDI) combine to influence theauthority structure of business.In high-PDI countries, understanding the rank and status ofclients and business partners is much more important than inmore egalitarian low-PDI societies.In high-PDI countries, subordinates are not likely to contradictbosses, but in low-PDI countries, they often do.Typical patterns of decision making1. Top-level management decision making is generallyfound in situations in which family or close ownership givesabsolute control to owners and businesses are smallenough to allow such centralized decision making.2. Decentralized decision making allows executives atdifferent levels of management to exercise authority overtheir own functions.3. Committee decision making is by group or consensus.Management objectives andaspirationsSociety as a whole establishes the social rank or status ofmanagement, and cultural background dictates patterns ofaspirations and objectives among businesspeople.These cultural influences affect the attitude of managers towardinnovation, new products, and conducting business withforeigners.To fully understand another’s management style, one mustappreciate an individual’s values, which are usually reflectedin the goals of the business organization and in the practicesthat prevail within the company.Security and mobilityPersonal security and job mobility relate directly to basichuman motivation and therefore have widespreadeconomic and social implications.What is security?Companies in the more hierarchical (PDI) countries, have astrong paternalistic orientation, and it is assumed thatindividuals will work for one company for the majority of theirlives.Commitment of workers to their companies is higher incountries higher in individualism (IDV) and lower in powerdistance (PDI).Personal lifeFor many individuals, a goodpersonal and/or family life takespriority over profit, security, orany other goal.David McClelland discoveredthat the culture of some countriesstressed the virtue of a goodpersonal life as far more importantthan profit or achievementAnnual hours workedAffiliation and social acceptanceIn some countries, acceptance by neighbors andfellow workers appears to be a predominant goalwithin businessPower and achievementMany businessleaders are notonly profit orientedbut also use theirbusiness positionsto become socialand politicalleaders.Communication stylesCommunication involves much morethan just words.Edward Hall describes the symbolicmeanings (silent languages) oftime, space, things, friendships, andagreements and how they varyacross cultures.Face-to-face communicationNo language readily translates into another because themeanings of words differ widely among languages.Managers often fail to develop even a basic understanding ofjust one other language.Communication in a high-context culture depends heavilyon the contextual or nonverbal aspects of communication.Communication in a low-context culture depends more onexplicit, verbally expressed communicationsContext,communicationand cultures:Edward Hall’sscaleInternet communicationNothing about the Web will change the extent to which peopleidentify 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 allInternet usersCountry-specific Web sitesWeb site should be examined for any symbols, icons, and othernonverbal impressions that could convey and unwantedmessageP-time versus M-timeMonochronic 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-TimePolychronic 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 ofhigh-context culturesMost cultures offer a mix of P-time and M-time behaviorAs global markets expand more businesspeople fromP-time cultures are adapting to M-time.A Synthesis – Relationship-Orientedvs. Information-Oriented CulturesStudies are noting a strong relationship between Hall’s high/lowcontext and Hofstede’s Individualism/Collective and PowerDistance indexesNot every culture fits every dimension of culture in a precise wayInformation-oriented culture: United StatesRelationship culture: JapanSynthesis of cultural differences allows us to make predictionsabout unfamiliar culturesDimensions of culture: synthesisNegotiations emphasisBusiness negotiations are perhaps the most fundamentalbusiness ritualsThe basic elements of business negotiations are the same inany country (product, its price and terms, services associatedwith the product, friendship between vendors and customers)One standard rule in negotiating is “know yourself” first, andsecond, “know your counterpart”Marketing orientationA company’s marketing orientation has been positively relatedto profits (U.S.)Other countries have more traditional approach Production orientation (consumers will prefer products that are widelyavailable) Product orientation (consumers will favor products that offer the mostquality performance, or innovative features) Selling orientation (consumers and businesses alike will not buyenough without prodding)Encouraging a marketing orientation across global businessunits can be difficultBusinessethicsTransparency InternationalCorruptionPerceptionIndexTransparency InternationalBribePayersIndexCorruption: some tendenciesHigher levels of bribery have been found in collectivistic (IDV)and high power distance (PDI) countries.Higher levels of bribery and legal constraints such as theForeign Corrupt Practices Act have deterred firms’participation in such countries.Firms seem generally to eschew investments in corrupt countriesas well.When executives of multinational firms behave ethically in suchcountries, they also tend to promote more ethical businessbehaviors among their host country counterpartsBriberyCulturally, attitudes about bribery are significantly differentamong different peoples.Some cultures seem to be more open about taking bribes,whereas others are publicly contemptuous of such practices.A first step in understanding the culture of bribery is toappreciate the limitless variations from extortion throughsubornation to lubrication.Bribery and extortionBribery is a voluntarily offered payment by someone seekingunlawful advantage.Extortion is when payments are extracted under duress bysomeone in authority from a person seeking only what he orshe is lawfully entitled to.Even if it is not legally wrong, extortion is morally wrong.Lubrication and subornationLubrication involves a relatively small sum of cash, a gift, or aservice given to a low-ranking official in a country wheresuch offerings are not prohibited by law.Subornation involves giving large sums of money designed toentice an official to commit an illegal act on behalf of theone offering the bribe.Lubrication payments accompany requests for a person to do ajob more rapidly or more efficiently; subornation is a requestfor officials to turn their heads, to not do their jobs, or to breakthe law.Agent‘s feesWhen a businessperson is uncertain of a country’s rules and regulations, anagent may be hired to represent the company in that country. While thispractice is often a legal and useful procedure, if a part of that agent’sfee is used to pay bribes, the intermediary’s fees are being usedunlawfully.Attorneys, agents, distributors, and so forth may function simply as conduitsfor illegal payments.The process is further complicated by legal codes that vary from country tocountry; what is illegal in one country may be winked at in another andbe legal in a third.Ethical and socially responsibledecisionsBehaving in an ethically and socially responsible way should be the hallmarkof every businessperson’s behavior, domestic or international.The complex relationships among politics, corruption, and corporate socialresponsibility are only now beginning to receive attention on the part ofscholars and practitioners.In many countries, the international marketer faces the dilemma ofresponding to sundry situations where local law does not exist, wherelocal practices appear to condone a certain behavior, or where acompany willing to “do what is necessary” is favored over a companythat refuses to engage in certain practices.Areas where difficulties arise inmaking decisions1. Employment practices and policies2. Consumer protection3. Environmental protection4. Political payments and involvement in politicalaffairs of the country5. Basic human rights and fundamental freedomsEthical principles1. 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 therights of the individuals involved?3. Justice or fairness. Does the action respect thecanons of justice or fairness to all parties involved?Culture’s influence on strategicthinkingBritish-American IndividualisticJapan & Germany CommunitarianIn the less individualistic cultures laborand management cooperateA competitive, individualistic approachworks well in the context of an economicboomLester ThurowSummary Some cultures appear to emphasize the importance ofinformation and competition while others focus more onrelationships and transaction cost reductions Businesspersons working in another country must be sensitive tothe business environment and must be willing to adapt whennecessary Understanding the culture you are entering is the only soundbasis for planning Business behavior is derived in large part from the basic culturalenvironment in which the business operates and, as such, issubject to the extreme diversity encountered among variouscultures and subculturesSummary Environmental considerations significantly affect the attitudes,behavior, and outlook of foreign businesspeople Varying motivational patterns inevitably affect methods ofdoing business in different countries The international trader must be constantly alert and preparedto adapt when necessary No matter how long in a country, the outsider is not a local – inmany countries that person may always be treated as anoutsider Assuming that knowledge of one culture will provideacceptability in another is a critical mistakeThank youfor your attention!Vasily ErokhinSchool of Economics and ManagementHarbin Engineering University

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