Cross Cultural Analysis: The Philippine - Research Paper Example

Cross Cultural Analysis: The Philippine This is a report on the Philippines and is primarily designed to inform TESCO’s objective of entering the domestic retail market. For this purpose, this report is expected to help the management in identifying and evaluating business opportunities through an evaluation of the country’s cultural environment. The report will examine cultural trends in four main areas: social institutions; social classes, race, ethnicity and subcultures; aesthetics; recreation, sports and other leisure activities; and, business protocols. The method of inquiry follows an analytical and historical accounting of secondary sources available in the academic literature as well as reports from organizations, firms, the media and those released by the government. 1.0 BACKGROUND 1.1 Geography The Philippines is an archipelago of more than 7,100 islands and is strategically located in Southeast Asia between the South China Sea and the Philippine Sea. The total area is 300,000 sq. km. Its location has attracted several logistics companies such as DHL and FedEx to establish regional hubs at certain point in the past. Its archipelagic sea lanes are also important trading routes. Many ships to and from Japan, South Korea, Hong Kong, Taiwan and other destinations pass through its sea lanes. Much of the Australian exports to Northeast Asia also pass through the Philippine archipelago while the US has an interest in ensuring that its naval vessels can continue to pass through the country’s seas (Kwa and Skogan, 2007, p.128). The climate is tropical with two seasons: summer and rainy seasons. The Philippines is geographically situated in the typhoon belt and is hit by an average of 21 typhoons annually, six of which are always considered dangerous (FAO, 2000, p.31). Specific areas that are often visited by the typhoons are the northern Luzon provinces, Eastern Visayas, Bicol and Central Luzon regions. Typhoons batter the country from May way until December. Like most tropical cyclones and typhoons, those that occur in the Philippines are characterized by high winds and storm surges that could destroy homes and other structures (FAO, p.31). 1.2 Demographics Recent statistics estimates the population of the Philippines to be more than 103,000,000 Filipinos, making the country one of the top ten most populous countries in the world. They are divided into several ethnic groups, which are dominated by Tagalog (28.1%), Cebuano (13.1%), Ilocano (9%), Bisaya (7.6%), Hiligaynon Illonggo (7.5%), Bikol (6%), Waray (3.4%), and others (25.3%). The median age of the population is 22.9 years for males and 23.4 for females while the country has 1.873% population growth rate, ranked 63rd in the world (CIA 2012). The UN considers the Philippines as one of the youngest population, with more than 75 percent below thirty-five years old (Gonzalez, 1998, p.45). The literacy rate is high, with at least 92% Filipinos who are able to read and write. The unemployment rate as of 2009 figures was pegged at 17.4% (CIA 2012). Unlike many Asian countries, the Philippines is distinguished by the fact that it is a predominantly Roman Catholic country. Around 85% percent belong to this denomination. This is because the country has been a colony of Spain for more than 3 centuries. The United States has also colonized the country immediately after its independence from Spain and until the end of World War II. Because of these variables, the country has a unique blend of Western and Eastern culture and customs. English is also widely spoken by Filipinos and, along with Filipino, is considered as the official language, used as the medium of instruction at schools and in government. Generally speaking, based on its geographic and demographic profile, the Philippines offers several opportunities for retail. The first of these is the population. The country is considered a huge market in addition to the fact that it has an abundant labour force. In addition, there is a considerable number of Overseas Filipino Workers (OFW), working in various countries abroad who send billions of dollars at home annually. Secondly, the country has a dominant Western culture and values and its people are familiar with all the Western products and artifacts whether it be material, cultural, and even political. The cultural environment is, hence, not extremely different from those found in Western countries where TESCO has thrived. Finally, the Philippines is strategically located making it easier for the organization to integrate the country in its global logistics and supply system. The following cultural variables would further demonstrate why the country can provide a conducive and profitable environment for a TESCO retail store. 2.0 THE PHILIPPINE SOCIETY 2.1 Religion There are numerous anthropologists who studied the dynamics of the Philippines socio-cultural character. One of these was Frank Lynch, an American Peace Corps member and anthropologist. He has studied the Philippine society, particularly after 1945. His work is a chronicle of invaluable insights and emphasized the relationship (i.e. similarities and differences) of the Philippine and American society and culture and reconciliation of these two communities in his effort to introduce Western values to Filipinos. One of his important analogies summarized the social and cultural character of the Philippines. This is the town fiesta. In his observations, Lynch described this phenomenon in the following words: The town fiesta, so vital and dominant in the Philippine social calendar, is analyzed as a specific cultural focus which relates to almost every other social and psychological facet of Philippine life. The fiesta is understood as a religious phenomenon, but one which has critical ramifications with regard to preparation, social participation, economic and commercial activities, and the meaning of social coherence (Lynch and Hollnsteiner, 2004, p.20). Other observers, scholars and academics would touch on the above view in similar vein and this is not surprising. Religion and religious institutions are powerful forces in Philippine society. The more than 300 years of Catholic Spain’s colonization has embedded a strong Christian values and way of life. The Filipinos have inherited the Spaniards devotion to Christianity, conservative belief systems and love for celebrations and pageantry. This is shown in the town fiesta. It is a religious celebration, as it commemorates the day of the patron saint of each village, town and city but the celebration involve not just religious but leisure activities, and engages commercial and economic institutions. The dominance of religion in Philippine society is particularly surprising for Westerners. This is especially highlighted when political institutions are also deeply attached to religion. It is not unusual to find Bible verses scattered throughout daily newspapers and Bible lessons or studies in op-ed sections and for the Philippine president or other politicians to invoke religion or defer to religious leaders in areas of policymaking (Woods, p.118). 2.2 Religion and Political Institution One of the important examples of the role of religion on politics was the bloodless EDSA Revolution in 1986 when the Roman Catholic Church helped toppled President Ferdinand Marcos. It appears that that the ritual and values of this religion has appealed to pre-colonial Filipinos who were drawn to animist beliefs. With at least 85 percent membership, the Catholic Church is major institution in Philippine society. It has provided the Filipinos the rituals, symbols, language and metaphors used to express their identity and in navigating times of crisis. There are experts who point out the Catholicism was been modified in the Philippines as the religion has been embraced and practiced according to the local beliefs and practices. The fiesta previously mentioned is a testament to this. Today, there are religious groups such as the El Shaddai and Iglesia ni Cristo that influential and wealthy because of growing religious Filipino members. The significance of this religious institution for businesses is particularly important. This is primarily because religion, or religious leaders or religious values legitimizes much of the policies and economic and political activities. A criticism on individual, organization or initiative from religious figure or institution is always considered a negative publicity. 2.3 Family Another important institution in the Philippines is the family. The family and marriage are considered sacred in the Philippines, safeguarded by the government and its laws. The 1987 Philippine Constitution, for instance, ensures this in Article XV, which states: Sec (1) The State recognizes the Filipino family as the foundation of the nation. Accordingly, it shall strengthen its solidarity and actively promote its total development; Sec (2) Marriage, as an inviolable social institution, is the foundation of the family and shall be protected by the State (Gonzales, p.45). Today, the Philippines is only one of the two countries in the world that outlaws divorce. It is also interesting to note that family and education has a particularly strong relationship. In a study by Ballantine and Roberts (2011), it was found that family and education are interconnected. The researchers found that when children enter school, they bring their prior experience, including socialization experiences from parents, brothers and sisters and other relatives, making familial influence as the single most important influence on academic achievement and performance (p.369). The importance accorded to families is significant in the influencing individual behavior. The opinion of family members is an important driver of decision making. For example, during elections, there is the so-called “block votes” wherein a family would vote entirely for a particular political candidate. The role of family is also credited to the persistence of oligarchy in the Philippines wherein the political and economic elite is composed of families. Needless to say, Filipino families are close-knit and could grow into an extended one, through affinity ties that bind to family groupings people who do not share blood ties. The basic building blocks of the Philippine business community are extended family conglomerates (Reis and Moore, 2005, p.60). It is not surprising, hence, to find how the family can exert a forceful hold on its members to the point that reduces the strength of other social institutions. Today, even when nuclear family in Philippines is decreasing in size, it still plays an important and ubiquitous role on economic, political, cultural spheres. It is not uncommon for Filipinos families and its members to be cohesive and share the same political beliefs, work in related jobs, live in close proximity with each other and maintain the same values. These variables are crucial for business enterprises especially those directly catering to the needs of individuals, whose decisions are influenced by the family. TESCO should be able take advantage of this factor in establishing its foothold in the Philippines. 3.0 SOCIAL CLASSES Like any large society, social classes exist in the Philippines. The stratification is classified primarily according to economic status, and also education and lifestyle. There are three general classes: the elite, the middle class and the lower class. Each Filipino social class carries with it unique behaviors and characteristics such as how children of the upper class are expected to ride cars while those from the lower class are expected to ride jeepneys or buses (Bustos and Espiritu, p. 100). Unlike countries such as Thailand, Malaysia and Indonesia, the Philippines had no strong traditional indigenous aristocracy. In its place were the landed families and mestizos (Filipinos with Spanish ancestry) who owned vast tracks of lands. These landowners were the traditional elites in the Philippines. According to Reis and Moore, the origins of the landed family-centred elite lie in the pattern of land ownership and control established under the Spanish colonialism and the American rule later on (p. 60). For years after the Philippine independence, the elite or the upper class dominated the economic and political life in the Philippines. 3.1 Expanding Middle Class Today, the situation is gradually changing. The middle class is growing, modifying the class structure that has prevailed in the past decades. In recent studies, it was found that the country’s middle class was growing at 9 percent and by 2015 is expected to represent a fifth of the Philippine population (Dumlao, 2012). The huge number of OFWs also augments many families’ income as remittances annually even exceeds the foreign direct investments posted in the Philippines in recent years. The changing structure and composition of the Philippine social classes pose huge opportunities for TESCO. For example, it is estimated that at least 10 million households in the Philippines has the ability to spend because of the brightening economic prospects. These are those who recently are no longer classified within the poverty line and join the expanding Philippine market for consumer goods like food and beverage, fast food, personal care, pharmaceutical products as well as durable goods such as television sets, cell phones, motor cycles, cars, housing, computers and other high-value electronic products (Villegas 2012). This aspect in the Philippines as an investment destination is further supported by the positive trends in its labour market. Today, the Philippines has a sizable number of OFWs, who send billions of dollars at home annually. In addition, the country also has a vibrant business processing and outsourcing industry, which employs around 600,000 workers and is expanding more each year. This last group belongs to the services sector which accounts for the 46 percent of the labor force that contributes more than 50 percent to the country’s gross domestic product. The growing middle class and the positive trends in the labour sector are huge opportunities for TESCO. 4.0 LEISURE AND RECREATION This is section can overlap with the cultural variable that characterize Philippine society as discussed in the section I. The town fiesta and the love to celebrate, among other lifestyle characteristics figure prominently in the leisure and recreation patterns and preferences. Filipinos love to have a good time and people always find reason to celebrate. This is the reason why shopping malls are popular destinations for Filipinos both for leisure and entertainment. The Philippines boasts of the third largest mall in Asia and more are being constructed. It has been said that there is currently the so-called “mall culture” in the Philippines. In an analysis, Tolentino explained that this can be explained in the manner by which these malls are considered as multinational enforcement and reception in the national space, involving among others, the transmutation of promenade space of the plaza in the Spanish colonial era into the present-day air-conditioned Luneta (the biggest Philippine park); the construction of an ideal transnational space housing everything within one roof; the franchisement of middle-class entertainment and culture; the problematic involved in the more complicated task of organizing labour and people; and the dream materialized of “First Worldization” in a Third World, among others (p. 100). The above cultural landscape is reflected in the national economic statistics, which identifies consumer spending claiming 80 percent of the national economy, which is as high as those in the United Kingdom (Oxford Business Group, p. 51). In 2009, the country managed to avoid recession because the economy was supported by strong consumer demand (Marr and Reynard, p.6). Although, there is a disparate wealth levels among the populace, the Filipinos always manages to shop and get entertained. Today, because of some steady economic growth, the country is emerging as a leading economy of developing Asia, with a high per capita income of $11,800 (Marr and Reynard, p. 6). While the Philippine population might not match the economic firepower of China or Indonesia, its citizens has a culture of spending. Entering the Philippine retail market for TESCO is easy and expected to be successful. There is a huge market for the expansion and it is a market that understands Western goods and services. The Philippine affinity and historical links to the United States made its consumers familiar with American and Western-made product as evidenced by the fact that they generally perform well in terms sales in the country than in many parts of Asia (Bullis, 1997, p.100). It is not uncommon to find retail stores in Philippine cities stocked with the latest consumer goods and its theaters showing American films and people listening and singing to American pop tunes. 5.0 BUSINESS PROTOCOLS In terms of business protocols, the Philippines is more Asian in nature, resembling those in China and Japan. Although, many business models are adopted from the United States, there are crucial instances when local custom dictates. This is because the Philippine business practices puts importance on personal relationships. Here, establishing trust and a personal relationship is not only important, it is virtually required that is things take time and foreign businessperson should plan on spending considerable amount of time getting acquainted with Philippine colleagues, culture and country (Nolan, p. 156). However, unlike its Asian counterparts, Filipinos in business puts more emphasis on the person as an individual and not more on groups. So it is not uncommon for Filipinos to be warm and friendly and expect the same from foreign colleagues. Friendship is seen as an integral part of successful business relationships. The downside of this aspect is when it comes to the enforcement of government laws. The Philippine laws are especially harsh and strong in spelling out offenses, punishments and adjudication procedures in almost areas of business (Nolan, p. 158). But these laws can take the form of selective enforcement that is why it is recommended to smooth out interpersonal relations so that conflict is avoided. 6.0 RECOMMENDATION TESCO’s expansion in the Philippines will be successful based on one fundamental variable: there is a ready market for retail stores. There has been a growing middle class population that can sustain a local TESCO subsidiary even amidst strong domestic competition. The Philippine cultural landscape is not only acceptable but conducive to a new retail firm. Retail stores where people can shop, as depicted in the concept of the “mall culture” as cited by this report, are positively received as long as they are marketed according to the local culture and belief systems. As previously cited, there are strong and distinct cultural norms such as those encouraged by influential religious institution. The character of the Filipino people – the businessmen and those who run the bureaucracy – also needs to be taken seriously. There is significant difference in business protocols, family values and consumer spending culture that could lead to failure if they are not properly addressed. References Ballantine, J. and Roberts, K. (2011). Our Social World: Introduction to Sociology. 3rd ed. Pine Forge Press. Bullis, D. (1997). Selling to India's Consumer Market. Westport, CT: Greenwood Publishing Group. Bustos, A.S. and Espiritu, S.C. (1996). Foundation of Education I. Quezon City: Katha Publishing Co., Inc. Dumlao, D. (2012). Philippine economy seen heading toward high-growth path. Philippine Daily Inquirer. (Feb. 27, 2012). Retrieved from http://business.inquirer.net/46553/philippine-economy-seen-heading-toward-high-growth-path. Food and Agriculture Organization of the United Nations (FAO). (2000). 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