International Business UNIT #3 Flashcards
Culture, subculture, counterculture and examples of
Culture: The knowledge, experience, beliefs, values, attitudes, religion, symbols and possessions acquired by a group of people who have lived in the same region or country for years. It is transmitted from one generation to the next through education and example
Subculture: A cultural group within a larger or predominant culture, distinguished from it by factors such as class, ethnic background, and religion, and unified by shared beliefs and interests. Many immigrant communities exist as subcultures in Canada. Examples: Ex. Little Italy, Chinatown, Thornhill
Counterculture: A culture that has values or lifestyles that are in opposition to those of the current accepted culture. Oppose mainstream values and attitudes usually with a view to influence change.
Impact of culture on foreign markets and what is rationalization
The Canadian government, influenced by labour unions and cultural values, regulates the labour force:
Provides minimum wage
Mandates workplace safety
Prevents discrimination
legislates holidays and hours of work
What is Rationalization
Any attempt to increase a company’s effectiveness or efficiency including:
Downsizing
Cutbacks
Layoffs
Relocating corporate functions and activities to countries that have cheaper labour and few or no union problems.
Not all countries share Canada’s values in terms of labour and the workplace. Canadian business people may encounter differences in the following areas:
Child labour
Discrimination
Wages
Standards and practices
Indigenous cultures
3 decisions needed to be made with “Product” when selling internationally
PACKAGING
Package Weights
Canada uses the metric system (G and KG)
The United States uses the imperial system (Ounces and pounds)
Package Colours
Colours have symbolic meanings that vary from one culture to another.
Legal Requirements
Every country has laws that affect the packaging of goods (related to environmental impact).
Labelling Requirements
Different regulations with regards to ingredient and food value labelling, product warning and even the picture of the product.
E.g. In California cars must have a label that provides consumers with the vehicle’s global warming score.
Language Requirements
Info. on the package must be translated into the language of the target country.
Some may have two or more languages!
2. INGREDIENTS
Strong taboos (religion and cultural) that prohibit the use of certain products (food).
E.g. Islam, Hinduism, Buddhism and some branches of Christianity do not permit the consumption of alcohol.
- STYLE
Fashion differs among countries & culture
Cultural determinants
- History
- Religion
- Topography/Geography
- Social Structure
- Political philosophy
- Language
- Economic philosophy
- Education
Demographics
Target markets are typically defined by demographic information, which is statistical data about various aspects of the population such as:
Age
Stage in family life cycle
Occupation
Economic circumstances
Lifestyle
Social influence variables (family background, reference groups, roles and status)
Polychronic vs monochronic time perception
MONOCHRONIC
Time is seen as linear and sequential.
Focus is placed on one thing at a time in a logical progression.
Most common in cultures with European influences.
POLYCHRONIC
Time is seen as involving many things happening simultaneously with the participation of many people.
Time is flexible and results more important than schedules.
More common in Mediterranean and Latin cultures as well as some Eastern and African cultures.
Forms of promotion
Advertising
Premiums (free goods offered with purchase)
Coupons
Contests
Personal Selling (direct contact/talking with a salesperson)
Social media
Advertising and promotion:
Use Existing Ads
Saves money, but markets must be similar.
Translate Ads
Replicating an ad campaign in another language is
difficult.
Create New Ads
Expensive, but the Internet has made customizing promotions much easier.
Logistics
Logistics consists of the flow of goods and services both into and out of an organization.
Consists of:
- Transportation
- Inventory management
- Warehousing and storage
- Packaging
Pricing strategies
Penetration Pricing
Where the organization sets a low price to increase sales and market share
In an international market, this would influence buyers to try your product
Price Skimming
Entering a market at a high price during the introductory phase
Early adopters can help migrate the high cost of entering the new country
Skimming provides the image that the product is innovative and exclusive
Once the early adopters have tried the product, the company then lowers the price
Competition Pricing
Setting a price in comparison with competitors.
A firm has three options, price lower, price the same, or price higher.
Product Line Pricing
Pricing different products within the same product range at different price points.
An example would be Ford offering different F 150’s with different features at different prices. The greater the features and benefits obtained the greater the consumer will pay.
Premium Pricing
The price is set high to reflect the exclusiveness of the product.
Evokes an illusion of luxury and high quality
High price is sustained
Acquisition
When a company purchases another company in a foreign country.
Could eliminate competition in the market.
Advantages are that it buys:
employees
management
reputation
cultural expertise
In 1993, Coca Cola bought Thums Up, the #1 cola sold in India.
It considered killing the competitor but decided to buy it to compete against Pepsi
Competitive advantage
LOWER PRODUCTION COSTS
According to the theory of economies of scale, the more products you can make in one factory, using the same labour and sharing overhead costs, the cheaper each individual unit is to make
LOWER DISTRIBUTION COSTS
Companies with factories in their target market have lower costs.
PRODUCT DIFFERENTIATION
Difference in flavour, quality, packaging, scent, etc.
BRAND EQUITY
The number of consumers that can identify the brand.
