Cultural Dynamics of International Markets

2. Cultural Dynamics ofInternational Markets CHAPTER 4 Presentations prepared by Ralph Rossman, Seneca College

3. What you should learn from Chapter 4 • The importance of culture to international marketers • The origins and elements of culture • The role of values, beliefs, and attitudes in reflecting culture • The impact of cultural borrowing • Why and how cultures resist change • The necessity for adapting to cultural change • Cultural elements that may be amenable or resistant to change • The importance of how various cultures view time

4. What is Culture? • Culture is the human-made part of the human environment • the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society • Geert Hofstede refers to it as the “software of the mind” • Markets are the result of: • a marketer’s efforts • economic conditions • all other elements of the culture

5. Definitions and Origins of Culture

6. How Do You Learn Culture? • Socialization • Growing up • Acculturation • Adjusting to a new culture • Individuals also absorb culture through role modelling, or imitation of their peers and/or opinion leaders • People make decisions about consumption and production through application of their culture-based knowledge

7. Elements of Culture • Belief: A mental acceptance of and conviction in the truth, actuality, or validity of something • Attitude: A mental predisposition to view a particular person, object, or idea in either positive or negative terms • Value: An enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.

8. Cultural Values - Geert Hofstede Studying over 90,000 people in 66 countries • Individualism/Collective Index (IDV) • focuses on self-orientation • Power Distance Index (PDI) • focuses on authority orientation • Uncertainty Avoidance Index (UAI) • focuses on risk orientation • Masculinity/ Femininity Index (MAS) • focuses on assertiveness and achievement • Long-Term Orientation (LTO) • focusing on people’s views of and attitudes toward short-term versus long-term time frames

9. Exhibit 4.2 Hofstede’s Indices

10. Linguistic DistanceFrom English English Individualism decreases German 1 Danish 2 Spanish 3 Japanese 4 Hebrew 5 Chinese 6

11. Cultural Values • Rituals • Symbols • The Importance of Language • Spirituality

12. Factual versus Interpretive Knowledge • Factual knowledge - obvious and must be learned. • Different meanings of color, tastes, etc. • Interpretive knowledge - understanding the nuances of different cultural traits and patterns. • the meaning of time, the understanding of one’s role in society, the meanings of life

13. Cultural Borrowing • Learning from others’ cultural ways in the quest for better solutions to a society’s particular problems • After a particular pattern of action is judged acceptable by society, it becomes the approved way and is passed on and taught as part of the group’s cultural heritage • Many behaviours are borrowed from other cultures & combined in a unique manner that becomes typical for a particular society

14. Resistance to Change • Consumers’ acceptance of innovations varies across cultures – innovation was associated with: • higher individualism (IDV) • lower power distance (PDI) • lower uncertainty avoidance (UAI) • After a need is recognized, it may be impossible to prevent the acceptance of a new idea

15. Culture and Management Style • North Americans as individualists • Japanese as consensus oriented and committed to the group • Europeans as elitists and rank conscious • Although these descriptions are stereotypes, they illustrate cultural differences

16. Adaptation - 10 Basic Criteria • Open tolerance, • Flexibility • Humility • Justice/fairness • Ability to adjust to varying tempos • Curiosity/interest • Knowledge of the country • Liking for others • Ability to command respect • Ability to integrate oneself into the environment

17. Degree of Adaptation • Be aware of local customs and accommodate differences that can cause misunderstanding • If we do not understand our foreign counterpart’s customs, we are more likely to evaluate that person’s behavior in terms of what is acceptable to us.

18. Degree of Adaptation • Brazil – touching & close distance • China – make your point without winning the argument • Germany – be on time - use title & last name

19. Cultural Imperatives • In Japan prolonged eye contact is considered offensive. • With Arab and Latin American executives make strong eye contact or you run the risk of being seen as evasive and untrustworthy

20. Cultural Electives • Customs that one may wish to participate in but that are not required • A symbolic attempt to participate in electives may help to establish rapport. • Compliance with the less obvious imperatives & exclusives is more critical...

21. Cultural Exclusives • Those customs or behavior reserved exclusively for the locals and from which the foreigner is excluded • Religious examples • A foreigner criticizing a country’s politics, mores, and peculiarities (that is, peculiar to the foreigner) even though locals may, among themselves, criticize such issues

22. Hall’s High & Low Context Theory • High-context Culture: • Communication depends heavily on the context or nonverbal aspects of communication • Low-context Culture: • depends more on explicit, verbally expressed communications Examples to follow...

23. Some Examples... • low-context North American culture scores low on power distance and high on individualism • high-context Arab cultures score high on power distance and low on individualism.

24. Some Examples... • In a low-context culture, one gets down to business quickly. • In a high-context culture it takes considerably longer because of the need to know more before a relationship develops

25. Contextual Background of Various Countries High Context Implicit Japanese Arabian Latin American Spanish Italian English (UK) French North American (US) Scandinavian German Low Context Explicit Swiss

26. Hall’s P-Time & M-Timemonochronic and polychronic time. M-Time: • M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians. • These Western cultures tend to concentrate on one thing at a time. • They divide time into small units and are concerned with promptness. • M-time is used in a linear way - we save time, waste time, bide time, spend time, and lose time. • Most low-context cultures operate on M-time.

27. P-Time... P-Time • polychronic time, is more dominant in high-context cultures where the completion of a human transaction is emphasized more than holding to schedules. • characterized by the simultaneous occurrence of many things and by “a great involvement with people.” • P-time allows for relationships to build and context to be absorbed as parts of high-context cultures

28. More About P-Time... • A much looser notion of on time or late. Interruptions are routine; delays to be expected. • It is not so much putting things off until tomorrowbut the concept that human activity is not expected to proceed like clockwork • How would this affect you?

29. Negotiations • 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 • friendship between vendors and customers • The risk of misunderstanding increases when negotiating with someone from another culture. • This is especially true if the cultures score differently on Hofstede's PDI and IDV value dimensions.