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BU 612 Understanding (Cultural and)

Institutional Influences (Week 4)

Cultural Influences (contd) Political, Economic and Regional Influences (text)

Industry InfluencesLegal and Regulatory Influences

Readings?Ch 5, 6; Fernhaber et al. 2007 + Australian Tourism

Next class?Ch 7 and 8; Czinkota et al. 2009

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Culturethe intellectual and social heritage of a specific society

an accepted way of life of a group of people

learned and passed on from generation to generationrepresents a societys shared meanings and traditions reflected in values, attitudes, etc.provides people with a sense of identity

impacts what we consume, how we dispose of it, and all our decisionsaround consumption/disposition

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How is Culture Transmitted?

MassMedia

Church

School

Family

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Hofstedes Cultural Dimensions

Work-related value dimensions

Most influential effort to group nations by cultural values

Surveyed over 116,000 employees in more than 70countries

Created maps of pairs of dimensions

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Discussion Question: note from last classWhen we travel, we often have an unconscious reference to our owncultural values when attempting to understand another culture. This iscalled self- reference criterion.

Use the information provided from Hofstede (1991), create a table thatcompares your own cultural values with those of the country youve beenallocated. Include a general assessment of the extent to which your allocatedcountry is higher or lower context.

Discuss the implications of these comparisons for the set-up andmerchandising of a retail store of your choice (in that country). Also explain theimplications for store personnel.

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Individualism-CollectivismIndividualism

High value on autonomy

Individual achievement

Privacy

Collectivism

High value on groupFamily, clan, organization

Loyalty

Devotion

Conformity

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Masculinity-FemininityMasculinity

Achievement

Success

Assertive acquisition of money/power

Femininity

Relationships

Equality of genders

Caring for disadvantaged

Harmony

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Power DistanceHigh Power Distance

Accept position

Follow authority

Concentrated & centralizedauthority

Hierarchical

Low-Power Distance

Avoid concentration of

authorityDecentralized

Fewer layers of management

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Low Uncertainty Avoidance

Embrace unpredictableLess adherence to rules,procedures, or hierarchies

Risk taking desirable

High Uncertainty

Avoidance

Threatened by ambiguityNeed stable & predictableworkplace

Reliance on rules

Uncertainty Avoidance

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Time OrientationLong-term

PerseveranceFulfilling socialobligationsThrift

Concern for proper waysof doing things

Short-termPursuit of stabilityPursuit of happiness

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Alternative Dimensions(Trompenaars and Hampden-Turner 1995)

Focus on values and relationships

Survey of 15,000 managers

Over 10-year periodFrom 28 countries

Bipolar cultural dimensions, examples include

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culture in which emotions areheld in

people try not to showtheir feelings, act stoicallyand maintain theircomposure

VS.Neutral Emotional

culture in which emotions areexpressed openly and naturally

people smile a great deal,talk loudly when excitedand greet each other withenthusiasm

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public and private space aresimilar in size, individuals guard

public space carefully because itis shared with private space

people often appear to beindirect and introverted,and work and private lifeoften are closely linked

VS.Specific Diffuse

individuals have a large publicspace shared with others and a

small private space they guardclosely and share only with closefriends and associates

people are more open andextroverted, and there is astrong separation of work andprivate life

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Sequential approachPeople do only one activity at a time, keep appointments strictly, prefer tofollow plans as laid out

Synchronous approachPeople tend to multi-task, view appointments as approximate, schedules areseen as subordinate to relationships

Present oriented/future orientedFuture is more importantPresent is more importantBoth time periods equally important

Time

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Beyond Values?Language opens doorsTranslations can be difficult

Non-verbal communication and symbols may differ or be more/lessimportant relative to language

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Influences on Marketing?

Knowledge

Sensitivity

Social

Conventions

Styles

Etic

Emic

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Institutional Influence defined: The institutional environment describes the rules,expectations, and habitualized actions to which

organizations must conform to receive legitimacy (Scottand Meyer 1983).

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Discussion QuestionA useful resource for international marketers is the Global Edge , based at Michigan State University

Go to http://globaledge.msu.edu/countries/ Find your country and read the information available on it.Given the above, what are the key things to consider and be aware of when establishing a business relationship with a potential distributor inyour allocated country? Why? Explain.

http://globaledge.msu.edu/countries/http://globaledge.msu.edu/countries/

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Insights from Fernhaber et al. (2007)

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Main legal systemsCommon Law

UK, Canada, the USA, many of the former colonies of the UK

Code Law (aka civil law)Found where common law is not usedBased on an all-inclusive system of written rules of law (civil, commercial andcriminal)

Islamic Law Encompasses religious duties and obligations and the secular aspect of the lawregarding human rightsOften applied with code or common law

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Islamic lawKoran is the basis for Shariah (Islamic law)It encompasses:

religious duties and obligations

patterns of social and economic behavior for all individualsproperty rights, economic decision making and types of economic freedom

The overriding objective of the Islamic system is social justiceAdvocates risk sharingProhibits the payment of interestProhibits investment in activities that violate the Shariah , e.g., thebusiness of alcohol, gambling, casinos

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Marxist-socialist tenetsGovern Eastern European countries commercial legal system

Czech and Poland revised and re-instituted pre World War II commercial legalcodes

USSR and China need an entire commercial legal system with respect toprivate ownership, contracts, due process, and other legal mechanisms

Russia is moving toward a democratic systemChina is attempting to activate a private sector within a multi-componenteconomy, but their legal systems are still nascent

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Please read the pdf file labeled Tourism Australia on D2L.Also, check out this link:http://www.youtube.com/watch?v=rn0lwGk4u9o

Tourism Australia

http://www.youtube.com/watch?v=rn0lwGk4u9ohttp://www.youtube.com/watch?v=rn0lwGk4u9o

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How does the law impact marketing?Product

Price

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Sales, Service and Distribution

Communications

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IP, counterfeiting and piracyMillions of dollars to establish brand names, designs, trademarks etc.

Inadequate protection from products being counterfeited or pirated as

many countries do not recognize trademarks and patents registered inother countries.McDonald had to buy its trademark back in Japan

In a common-law country, ownership of intellectual property rights isestablished by prior use.

In many code-law countries, ownership is established by registration.A trademark in Jordan belongs to whoever registers it first in Jordan so thereare McDonalds restaurants, Microsoft software, and Safeway groceriesall legally belonging to a Jordanian

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Country differences (e.g.)USA

Operates under the first toinvent rule Protects individual inventorsPatents

Applications secretGranted in up to 24 mos.

Valid for 17 years afterapproval

JapanOperates under the first toregister policy Promotes technology sharingPatents

Applications publicGranted in 4-6 years

Valid for 20 years from timeof application

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Cyber-lawExisting internet law does not completely cover the protection of domainnames, taxes, jurisdiction in cross-border transactions and contractualissues

Countries are drafting legislation to address the myriad legal questions notclearly addressed by current law

Examples of unresolved issues

Cyber squatters register descriptive nouns, geographic names, ethnic groups,

pharmaceutical substances and other similar descriptors and hold them until they aresold at an inflated price

The collection of taxes on sale of products, i.e., when taxes should be collected, wherethey should be collected, and by whom