3 - selection of foreign markets Flashcards
Different layers of culture
- national culture
- business/industry culture
- company culture
- individual behaviour
National culture.
This gives the overall framework of cultural concepts and legislation for business activities.
Business/industry culture.
Every business is conducted within a certain competitive framework and within a specific industry. Industry culture is very much related to a branch of industry, and this culture of business behaviour and ethics is similar across borders.
Company culture (organizational culture).
Functional culture is expressed through the shared values, beliefs, meanings and behaviours of the members of a function within an organization (e.g. marketing, finance, shipping, purchasing, top management and blue-collar workers).
Individual behaviour.
The individual is affected by the other cultural levels. In the interaction environment, the individual becomes the core person who ‘interacts’ with the other actors in industrial marketing settings. Culture is learned; it is not innate. The learning process creates individuals due to different environments in learning and different individual characteristics.
Elements of culture
- LANGUAGE
- MANNERS & CUSTOMS
- TECHNOLOGY & MATERIAL CULTURE
- SOCIAL INSTITUTIONS
- EDUCATION
- VALUES & ATTITUDES
- AESTHETICS
- RELIGION
Aesthetics refers to
attitudes towards beauty and good taste in the art, music, folklore and drama of a culture. The aesthetics of a particular culture can be important in the interpretation of symbolic meanings of various artistic expressions.
Social institutions –
business, political, family or class related – influence the behaviour of people and the ways in which people relate to each other. In some countries, for example, the family is the most important social group, and family relationships sometimes influence the work environment and employment practices.
An important part of the socialization process of consumers worldwide is
reference groups. These groups provide the values and attitudes that become influential in shaping behaviour.
Education includes
the process of transmitting skills, ideas and attitudes, as well as training in particular disciplines. One function of education is the transmission of the existing culture and traditions to the new generation. However, education can also be used for cultural change.
Our attitudes and values
help to determine what we think is right or appropriate, what is important and what is desirable
According to Hofstede, the way people in different countries perceive and interpret their world varies along four dimensions:
- power distance, 2. uncertainty avoidance, 3. individualism and 4. masculinity.
Power distance
the degree of inequality between people in physical and educational terms. In high power distance societies, power is concentrated among a few people at the top who make all the decisions.
Uncertainty avoidance is
the degree to which people in a country prefer formal rules and fixed patterns of life, such as career structures and laws, as means of enhancing security.
Individualism denotes the
degree to which people in a country learn to act as individuals rather than as members of groups. In individualistic societies, people are self-centred and feel little need for dependency on others.
Masculinity relates to
the degree to which ‘masculine’ values, such as achievement, performance, success, money and competition, prevail over ‘feminine’ values, such as quality of life, maintaining warm personal relationships, service, care for the weak, preserving the environment and solidarity.
The right mix between local knowledge of different cultures and globalization/integration of national marketing strategies is
the key to success in global marketing.
Youth culture
- Youth cultures are more international than national.
- Today’s young people have greater freedom than previous generations had.
A classification of a company as ‘most ethical’ requires that the firm’s code of ethics should address the following six major issues:
- Organizational relations, including competition, strategic alliances and local sourcing.
- Economic relations, including financing, taxation, transfer prices, local reinvestment, equity participation.
- Employee relations, including compensation, safety, human rights, non-discrimination, collective bargaining, training and sexual harassment.
- Customer relations, including pricing, quality and advertising.
- Industrial relations, including technology transfer, research and development, infrastructure development and organizational stability/longevity.
- Political relations, including legal compliance, bribery and other corrupt activities,
subsidies, tax incentives, environmental protection and political involvement.
Concentration VS diversification
The firm must also decide whether to concentrate resources on a limited number of similar markets, or alternatively to diversify across a number of different markets.
Draw the market expansion matrix
.
Factors favouring country diversification
COMPANY FACTORS - objective of growth through market development - little market knowledge PRODUCT FACTORS - Low volume - Early or late in product life cycle MARKET FACTORS - Unstable markets - Many similar markets - New or declining markets - Low customer loyalty MARKETING FACTORS - Low communication costs for additional markets - Low physical distribution costs for additional markets
Factors favouring country concentration
COMPANY FACTORS - objective of growth through market penetration - Low management risk consciousness PRODUCT FACTORS - high volume - repeat-purchase product - Middle of product life cycle MARKET FACTORS - Stable markets - Limited number of markets - Mature markets - high growth rate in each market - high customer loyalty MARKETING FACTORS - high communication costs for additional markets - high physical distribution costs for additional markets
