Cultural Differences in International Companies

This chapter discuses the effects of the cultural environment on international firms and problems facing them when they go global. It will discuss a background to the research. It will further present the aims and objectives of the study, problem discussion , and finally the research questions

BACKGROUND TO THE STUDY

As the number of companies operating internatiomally increases, the issue of cultural differences must be addresses for companies to operate a successful market internationally. The knowledge of a country’s culture is critical to international marketers in other for them to adapt in a foreign market. Due to the high competition that multinationals face when operating abroad, they are faced with conquering the cultural barrier in other to penetrate the foreign market successfully. This challenges all boils down to culture. This is so because business could be influenced by language barrier, religion, values and attitudes, and the customs of the host country they are operating in. International Marketing Managers need to overcome this obstacles by understanding the local culure and abiding by the relion, norms and values of their target market.

Thus for Managers to be successful in international business, they must learn how to adapt to the culture of other countries

Understanding culture affects how multinationals segment their international segments, adapt and standardize their product, and adopt their International marketing strategies.

“Managers need to broaden their perspectives, adapt to other cultures and make decisions that reflect the needs and desires of those cultures” (Rugman &Hodgetts 2003 p 126)

Several researchers have opined that the marketing strategy of companies will be greatly influenced by the local culture of the target country. Thus, today’s body of knowledge suggests that international marketing managers need to,be cautious about ensuring they understand the cultural differences when developing marketing activities (Herrmann and Heitmann, 2006). Therefore Managers should eschew the ethnocentric approach which focuses on ones way of doing business thereby ignores the national cultures of other countries. Managers need to learn about the cultural differences where their multinationals will be operating in a foreign country.

OBJECTIVES OF THE STUDY

The Objectives of this study is to

• Identify the various elements of culture which includes language, religion, aesthetics, values and education, education and customs and their impact on International Marketing decisions
• Address the major issues facing International marketers when operating in foreign countries
• To present a critical analysis of culture study streams in international marketing and offer suggestions for future development

STATEMENT OF THE RESEARCH PROBLEM

The concept of culture comes with complexities which poses as a challenge to international marketing. For many years, authors who have dealt with culture have come up with different definitions of culture. Culture is complex and individual behavior is influenced by culture not determined by it.( Usunier & Lee,2009). Hofstede defined culture as “the collective programming of the mind which distinguishes the members of one human group from the other” (1980, p87). Multinational companies have to find marketing solutions by tailoring their marketing mix to satisfy and adapt to cultural changes and differences in other countries. This brings us to two possible problems which has long being an issue of debate.

First, Adaptation which implies the company adjusting its marketing strategy and adapting its marketing mix to suit each international market.

Second, Standardization which implies the company using the same marketing strategy and marketing mix in all its international markets.

RESEARCH QUESTIONS

The following questions have being developed based on the research problems:

How do cultural differences affect International marketing in general?

What are the important cultural factors that international companies should consider when operating abroad?

STRUCTURE OF DISSERTATION

This research project is composed of three(3) chapters. The first chapter is the introduction which discusses the background of culture, its importance on international marketing and the research questions . The second chapter talks about the review of related literature which discusses the concept of culture and international marketing, the various elements of culture, the theories of culture and the effects of cultural differences on international business and Finally chapter three, we describe the methodology used in carrying out this research.

PURPOSE OF RESEARCH

Based on the research questions mentioned above, The main purpose of this research is to critically analiyse and review the impact of cultural differences on multinational International marketing strategy and how multinationals can manage cultural differences when marketing abroad.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

CONCEPT OF CULTURE

The term “culture” is so complex and multidimensional that it is difficult to define.In relation to International marketing, Several Authors have given different definitions of culture. Hofstede (1980,p87) defined culture as the ” the collective programming of the mind which distinguishes members of one human group from the other.” In the same vein, Rugman& Hodgetts(2003, p126) defined culture as the “acquired knowledge that people use to interpret experience and to generate social behavior”. Selfridge & Sokolik (1975) had a different definition. They defined culture is more complex and composed of a “visible and invisible part of the culture”. Whichever way we look at it, culture is about what we believe in, our norms and values, and our customs or traditions. The issue of culture is sometimes overlooked by companies when they go international but its underlying significance cannot be ignored. International marketing managers sometimes make the mistake of having an ethnocentric view of marketing internationally which focuses on using the same approach of doing business abroad rather than the polycentric view which focuses on adopting marketing strategies to meet the needs of each target market abroad. In other words, multinationals must think globally and act locally. The company recognizes the importance of inherent differences in overseas markets. The polycentric approach of marketing are best suited to deal with local market conditions of a country. For example, Kentuck Fried Chiken must realize that they way it prepares its chicken in USA for instance may not work in Islamic countries due to beliefs and customs. This is so because culture plays a significant role in doing business internationally.

COMPONENTS OF CULTURE

According to Usunier (1993) Culture is made up of three essential components

· Beliefs which is a large number of mental and verbal processes which reflect our knowledge and assessment of products and services (Usunier, 1993)

· Values which are the indicators consumers use to serve as guides for what is appropriate behaviour, they tend to be relatively enduring and stable over time and widely accepted by members of a particular market (Usunier, 1993)

· Customs which are modes of behaviour those constitute culturally approved or acceptable ways of behaving in specific situations. Customs are evident at major events in one‟s life like birth, marriage, death, and at key events in the year like Christmas or Easter (Usunier, 1993)

Beliefs, values and customs are the three components of culture which influence the international marketing (Usunier, 1993). These three components affect consumption behaviours and the purchase pattern of the individual. Each individual buy products thanks to some references in his own culture. Beliefs, values and customs send direct and indirect messages to consumers regarding the selection of goods and services; it is the cultural message (Doole & Lowe, 2001). The culture a customer live determines and affects its decision process. Companies must adapt their product and promotion to suit their area of operation. (Usunier, 1993)

ELEMENTS OF CULTURE

This are the characteristics that differentiate one culture from another one. According to Doole & Lowe (2001) This elements are very important for managing cultural differences from a marketing perspective because they affect marketing decisions and how companies adjust their marketing strategies to suit a particular country because of this cultural elements

LANGUAGE

This is a key element of culture. Without a proper knowledge of a country’s culture, International companies may find it very difficult to do business. According to Czinkota et al (2001) Language serves four important roles in international business. First It is essential tool in obtaining information and communication a about a particular market. Secondly, Language provides easy access to the local society. It is also becoming relevant in company communications. And finally, language provides more than the ability to communicate. (Czinkota et al 2001) The most important role of language in marketing is in business’s negotiations. The language of country needs to be understood perfectly for any business negotiation to be successful. This has a significant impact on the international marketing a strategy of multinationals who want to enter a foreign market. However difficulties could arise when a language is not interpreted correctly which results in translation blunders. A particular sentence or word in japan may meant an entire different thing in Sweden.( Czinkota et al 2001).

Hall&Hall (1986) stated that with language, one has to consider whether national culture falls under the high context culture or low context culture. In the high context culture, verbal communication tend not carry a direct message. Which means what is said might not be what is meant. Countries like Nigeria, Japan, and Arabic countries exhibit the High context culture. Low context culture on the other hand, emphasizes on what is said. This means your word is ur bond. Countries like Usa, Australia and Sweden are low context cultures.

RELIGION

Religion is another important aspect of culture that has a huge impact on International marketing. The religious beliefs of a country must be taken into consideration when operating in an international market.

In Islamic countries like Pakistan, Saudi Arabia, Oman etc, religious holidays and festivals for example Ramadan are strictly adhered to .Hence all foreign companies must abide by the Islamic religious laws. Religion is important to Managers because it influences lifestyles, beliefs, values and attitudes. It also affects work and societal customs as well as politics and business in general. According to Wind & Douglas (2007) in their article on International marketing segmentation,” Difference in belief systems between cultures may affect consumer behavior and purchasing patterns” Dietry laws associated with one religion could affect marketing of food products and service delivery. (Wind & Douglas 2007) For example, According to Islamic religion, a chicken must be drained of blood before it is cooked or prepared( Halal).It is believed that eating a chicken with blood could affect your spirituality and deeds in Islam. This affects the marketing mix of Fastfood companies that are based in Islamic countries because they have to abide by the Islamic law. In other countries like India, the family is an important element. The size of the family could affect purchasing power.Hence this enables marketing researchers in assessing the market potentials and consumption patterns.( Czinkota,M et al 2001)

Aesthetics

This aspect of cultural have implications for international market strategy. According to Rugman& Hodget (2003 p.131), Aesthetics refers to artistic taste of a culture. This taste could in forms, colours,music, design or packaging. Aesthetics values vary depending on the country. International companies need to be aware of the different taste in culture. This is because what is generally accepted in one country may be a taboo in another country. Aesthetic values have an impact on the production and packaging designs of manufacturing industries that operate abroad. International managers need to be aware of taste in colors and symbols when packaging and distributing their products.

EDUCATION

The level of Education a country has will have an impact on International marketing. The literacy level of a country determines how products and services can be advertised. In west African countries where the literacy rate is low, visual aids will be more appropriate during a marketing promotion.On the other hand , In Europe and north America which have high literacy rates, Using Printed materials will be a suitable method of marketing. The International manager faces the obstacles of recruiting and training the right personnel especially in countries with high illiteracy rates.

VALUES AND ATTITUDES

Values are shared beliefs or group norms that have been internalized by individuals.( Czinkota,M et al 2001,p45) An attitude is a persistent tendency to feel and behave in a particular way towards an object( Rugman &Hodgetts 2003,p129). Values and attitudes vary between and within countries.In that case International markets need to adjust their promotion methods or brand messages In 2004, China banned a Nike television commercial showing U.S. basketball star LeBron James in a battle with animated cartoon kung fu masters and two dragons, because it was argued that the ad insults Chinese national dignity.

CUSTOMS AND MANNERS

Customs and manners have a significant impact on consumer behavior, consumption patterns and product packaging. In the United States and Europe black is used for mourning the dead, while in Japan and the Far East white is the color used for mourning. In countries. In countries where status quo is highly regarded, Multinationals have to send a delegation of senior staff to carry out a business negotiation.