International Business in the Globalization Environment - Dissertation Example

18 December 2007 International Business Globalization opens new opportunities for domestic companies to go global and expend their business activities. Asian countries represent the most attractive and fast grow market for European countries and Great Britain. High rates of economic development and political stability in Asia attracts British companies and opens opportunities for market penetration. In order to compete on this market, British companies pay a special attention to consumer ethnocentrism and cross cultural differences which have a crucial impact on marketing and profitability of companies. It is important to note that the structure of the business network in the international commercial area, has led to the necessity of specific marketing strategies that could offer a competitive advantage. The great layer of research studies discusses the problems and threats of consumer ethnocentrism and importance of strategic approach to marketing. Balabanis et al (2001) and Klein (2002) examine perception of foreign products by consumers in developing countries. they pay a special attention to product image and consumer aversion to goods. these researchers underline that at a deeper level it comprises their notions of 'right' and 'wrong', their norms, and their notions about what is 'good' and 'bad', their values. Managers tend to see international market as societies in microcosm with their own specific cultures and ways of transmitting these cultures to their members. Samiee et al (2005) and Verlegh (2007) examine the impact on home country and unique brand image of the product on perception and buying patterns in targeted markets. They find that national stereotypes and buyer attitudes toward countries of origin influence buying process and profitability of the company. Another layer of literature is based on theoretical materials and concepts aimed to discuss and evaluate business strategies and international marketing trends around the world. the most recent are 'International Marketing (2004) by Cateora and Graham and International Marketing Strategy (2004)by Doole and Lowe. These authors examine international marketing primarily under the views stated in the theory and the tests that have been made by researchers in this area. They examine the impact of culture on the formulation and the application of an international marketing strategy. The home country and the host country environment constitute an open interaction system. The strategies of the firm play the primary role in the interaction; secondary roles are played by a number of other players. A special attention should be given to such countries as Malaysia, Thailand and Philippine affected by strong national culture and traditions. The results of the interaction may be more or less successful from the point of view of the firm, the host country, or other institutions or organizations involved (Balabanis et al 157). The host country environment presents another set of macro and micro environmental factors. On the macro environmental level cultural forces need to be evaluated. On the micro environmental level, the factors become more specific; they include (1) buyer-seller relationships, (2) nature of supply and demand, (3) market price mechanism, (4) nature of competition, (5) barriers to market entry, and (6) nature of distribution. At the operational level, factors such as (1) soft versus hard currency, (2) exchange rate fluctuations, (3) inflation, (4) tariffs and quotas, and (5) invisible barriers become extremely important (Doole and Lowe 82). Research suggests that "cultural distance" also presents a major challenge to an entrepreneur assessing the potential of the host market. The notion of "cultural distance" comprises the differences of the host country relative to the home country regarding social values and styles of life, income distribution, attitudes to foreign products, language, legal system, and any other relevant artifacts of culture. The definition of culture as an element of the international marketing is not much differentiated from its original form. In this context it has been stated that culture can be defined as "the interactive aggregate of common characteristics that influences a group's response to its environment," and furthermore as a "collective programming of the mind which distinguishes the members of one group or category of people from those of another." (Fam, and Grohs 519). British businesses should distinguish in three layers of culture. At its most visible it represents those artefacts and goods that most readily distinguish one culture from another, such as architecture, food, ceremonies and language (Doole and Lowe 81).. Following G. Hofstede, tt is possible to distinguish two different models of cultures: individualistic and collectivistic. Individualistic societies such as the USA and the UK are depicted by a preference for looking after yourself or immediate family group, a belief in freedom and a tendency towards a calculative involvement with work organizations. Collectivistic societies such as India, China and Vietnam show concern for a much wider group and emphasize belongingness which can extend to organizations (Doole and Lowe 43 Elliott and Cameron 49). British companies targeting the Asian market should take into account the impact and role of consumer ethnocentrism. Following Verlegh (2007): "consumer ethnocentrism represents a belief that it is inappropriate to buy foreign products, and that consumers should support domestic companies through the purchase of domestic products. Subsequent studies confirm that consumer ethnocentrism influences the extent to which consumers prefer domestic goods over foreign alternatives" (361). In this case, the main factors which influence international marketing are brand image and the image of the exporting country. To some extent, country of origin is a mark of quality based on certain stereotypes. For this reason, British manufacturers should take into consideration theories, methods and models to analyze perspectives, opportunities and possible threats connected with stereotypes about the country of origin and its perception on the global scale (Elliott and Cameron 49). British products are very popular in Asian countries because of a positive and strong image of British goods. High quality and conservatism in production attracts Asian consumers who value old traditions and quality. "One could associate local brands and products with international marketing success, allowing consumers to 'bask in the reflected glory' of this success" (Verlegh 361). According to theoretical studies, at the very least country's images can be formidable obstacles that can affect brand image strategy even to the point where manufacturers of foreign products should not stress their origin (Cateora and Graham 43). The most populate UK brand (companies) are Unilever, Sainsbury, Jaguar, Dawson, Teklynx, Guinness, etc. These companies should take into account that consumers' perceptions are affected by familiarity and availability of products together with the stereotype of the country. In general these perceptions and attitudes can be positive or negative. On the positive side, as one marketing expert has pointed out," British is synonymous with quality engineering, style and the old national traditions. This fact can be explained by unique perception and attitude towards GB brand in Asia where consumers prefer to determine a product's origin before buying (Doole and Lowe 82). Global product structure is often considered as a separate marketing context requiring adaptations of the product, its price and the way it is promoted to account for differences in cultural expectations or constraints imposed by the governments of nation states. Geographic approach allows a firm to select particular markets similar to their organizational arrangements, which help to avoid a failure if products are not tailored to local markets. Such differences have led many firms to appoint local agents in different countries to market their products or else engage in a joint venture with a local firm (Balabanis et al 157). In this context, the standardisation of advertising should be based on the premise that "needs and wants of people are basically the same everywhere and that a carefully conceived and executed appeal can strike common responsive chords in consumers in different countries" (Cateora and Graham 57). In order to achieve a successful research regarding the impact of culture on international marketing, British companies should primarily locate the specific needs of the subject. From a general point of view, culture is human -connected and for this reason the relevant research should be human - focused. This assumption justifies at a first level the use of qualitative (and not quantitative) data (Elliott and Cameron 49). Cross-cultural marketing strategy is influence by personal perception and cultural values of Asian buyers. For instance, weak uncertainty avoidance as displayed in Hong Kong, USA and Thailand is associated with a willingness to accept new ideas, take risks and buy unknown products. It is possible to distinguish masculine and feminine models of culture. Masculine societies such as Japan tend to display a preference for achievement, assertiveness and material success and display a strong belief in gender roles. Feminine societies like Sweden and Holland place more emphasis on the quality of life, care for others and equality, more especially between the sexes. Following Balabanis et al (2001): The manner in which demographic characteristics and the patriotism, nationalism and internationalism measures are related to consumer ethnocentrism is fundamentally different in the countries. Regarding demographic characteristics, in the Turkish sample, gender, age and income show significant effects consistent with those observed in previous studies (with females, older and lower income consumers being more ethnocentric)" (157). Globalization can be considered as one of the factors hic influence the growth of international marketing in Asian countries. Globalization and the initiation of new technologies have significantly changed the way business, government and society are organized (Tayeb 92). One of the key driving forces behind these changes is new international business models. Host government regulations/incentives, as well as other environmental forces, can drive globalization. Similarity of tariff barriers, product standards, marketing regulations, and incentives for foreign direct investment can serve as stimuli for globalization, Britain places more emphasis on market growth and penetration and in these aspects they are definite leaders. Britain has the benefit of a large domestic market but it appears that they also benefit from their emphasis on improvement in product quality and productivity (Balabanis et al 157). Following Samiee et a; (2005): "Of particular importance to international marketing managers is the influence of brand origin on customer acceptance of globally standardized brands. With increased interest in globalization and the achievement of greater economies of scale, the issue should necessarily be viewed from the perspective of the firm's global strategy" (384). Technological advances are also considered major drivers of international marketing. Technological innovations and leadership in IT industry influence global business and science. Great Britain plays a crucial role in globalization of automotive and IT industries. Communication and transportation technology makes integrated global operations feasible and desirable. Industries with high technology intensity are particularly conducive to standardized marketing approaches (Tayeb 92). Among market factors which can drive globalization are: emergence of global customers, homogenization of consumer needs and wants, existence of global marketing channels, and transferability of marketing practices (Doole and Lowe 88). These factors are important because they influence country of origin image and its perception by Asian consumers. Key benefits include economies of scale in marketing and production, economies of scope, efficiencies in sourcing and transportation, and synergies in other value-adding activities. The response to competitive challenge is another major driver of globalization. In order to locate and evaluate the impact of culture to the international marketing strategies British companies should primarily examine the general commercial environment in which the specific business operates. At a next level, the examination of all the issues related with the culture of a particular country is necessary in order to formulate a 'secure' assumption regarding the specific issue. It should be noticed that the above impact can be differentiated across the countries in accordance with the level of interaction of the culture with the people's daily life. In this context, because of the close connection of culture with the human activities, a possible research on this issue should be based on the personal experiences of the participants regarding a firm's international marketing strategy (Doole and Lowe 89). Under all circumstances, the research on the culture's impact on the strategies that will be followed by an international firm has to be based on the current cultural and social conditions of a specific country but also of the specific team of participants. Finally, during the stage of data analysis, a combination of the human experiences with the approaches presented in the literature will help the formulation of an objective result. Following Samiee and Shimp (2005): If brand origin plays a salient role in consumers' everyday judgments and decision-making processes, it would be expected that consumers would possess reasonably accurate abilities to recognize brands' Country of Origins. To make an analogy, if it is important and functional for individuals to know how to spell words, it would be expected that they would have stored in memory knowledge of correct spellings" (379). For British companies, it is important to take into account the nature of product and its brand image. Generally, makers of standard, low-margin products would not have an easy time, even if they tried. In many instances, transportation and other economies of scale in international operations would work against small firms. It is found that Consumers' attachment to their country goes well beyond economic concerns, as nationality is part of consumers' identity. Individuals seek to express this identity through consumption, and domestic products often have important social and cultural connotations, and may serve as a symbol for national identity (Verlegh 361). The single most important factor in explaining the exclusively domestic orientation of the majority of the UK small firms is the size of the domestic market. International outlook with regard to exporting is not sufficiently researched. It appears that international marketing involvement requires a different effort than the traditional technological or marketing effort. It is generally argued that an innovator in one area may also be an innovator in another area; however, It is not clear that an entrepreneur building a business on a technologically new process will also be likely to develop a new and creative export program (Balabanis et al 157). The firm must consider the strategy to enter the host country such as direct or indirect exports, licensing, joint venture, strategic alliance, or direct investment, among others. The mode of entry will generally reflect the degree of commitment of the firm to the host country market. Second, once the firm selects the host market entry mode, it must consider the internal mode of operations. Although internal mode of operations is even less likely to represent a "steady state" abroad than at home, it will typically have some degree of permanence after an initial period of experimentation and securing of a viable market share (Doole and Lowe 82). The third strand of strategy implied in the model pertains to the overall internationalization process, that is, the critical choice of first country to enter, the selection of additional countries and modes of entry, and operations in each additional country. The gradual transformation of the firm from a parochial to a global outlook with concomitant changes in organization and resource allocation patterns needs to be considered within the context of the outlined three strands of strategy (Bruce et al 87). The performance resulting from the dynamic interaction of firm and host country market can be measured in terms of the objectives and plans of the entrepreneur or the entrepreneurial firm using conventional financial criteria, but also taking into account the values of distribution channel members, customers, the host country, the home country, and other interested parties (Doole and Lowe 93). Part of the international marketing challenge is to convince the external market to believe in his or her vision. For example, one factor that makes it difficult to obtain capital (not fully secured by collateral) is the perception by the potential providers of these funds that the business will not be successful. The keys to selling anything are image and confidence. For the international marketer operating in Asia, these may be even more critical with respect to selling herself or himself to significant others such as bankers, investors, and employees. Impression management focuses on the public presentation to others in the environment and involves the internal representation of this public self. In everyday social interaction this self presentation can serve the person's strategic goals (Doole and Lowe 134). Tactics such as ingratiation and supplication are especially useful for people who find themselves confronting more powerful others. These normal social tactics may be even more highly developed among entrepreneurs, who depend on others not only for social acceptance but also for access to and use of scarce resources. The differences in economic conditions, national values and culture among nations created different opportunities for the development of industries all over the world. Great Britain has influenced to the competitive pressure by leveraging its competitive position across markets, and by seeking integrated operations. The basic sphere of impact is the international economic and social system, i.e. global manufacture, national economies and the world market. Japan contributes to globalization through investments, access to quality products and technologies, and reciprocal access to foreign markets and managerial development. Unique philosophy and cultural norms of British companies are also penetrated into other countries shaping behavior of people and perception of the world. From the perspective of business, interest in globalization centers on two major facets: the globalization of markets and the globalization of production and the supply chain. As a member of many international organizations, Great Britain determines and influences political and economic relations in the Asia-Pacific region and has a great impact on the world order. Works Cited Page 1. Balabanis, G., Diamantopoulos, A., Mueller, R.D., Melewar, T. C. The Impact of Nationalism, Patriotism and Internationalism on Consumer Ethnocentric Tendencies.. Journal of International Business Studies, 32 (2001), 157. 2. Bruce, M., Moore, Ch., Birtwistle, G. International Retail Marketing: A Case Study Approach. Butterworth-Heinemann, 2004. 3. Cateora, Ph. R., Graham, J. L. International Marketing. McGraw-Hill Companies; 12 edition, 2004. 4. Doole, I., Lowe, R. International Marketing Strategy. CENGAGE Lrng Business Press, 2004. 5. Elliott, G.R., Cameron, R.C. 1994. Consumer perception of product quality and the country-of-origin effect. Journal of International Marketing, 2 (2), pp. 49-62. 6. Klein, J. G. Us versus Them, or Us versus Everyone Delineating Consumer Aversion to Foreign Goods. Journal of International Business Studies, 33 (2002), 345-350. 7. Samiee, S., Shimp, T.A., Sharma, S. Brand Origin Recognition Accuracy: Its Antecedents and Consumers' Cognitive Limitations. Journal of International Business Studies, 36 (2005), 379-389. 8. Tayeb M., 2000. International Business: Theories, Policies and Practices, Harlow, Pearson Education. 9. Verlegh, P. W. J. Home Country Bias in Product Evaluation: The Complementary Roles of Economic and Socio-Psychological Motives. Journal of International Business Studies, 38 (2007), 361-367. Read More