International Business Culture and Globalisation - Coursework Example

International Business Introduction: International business and globalization both are same concept. When any organization able to initiate international business outside its host country then one can easily mentioned that the process of globalization for that company has been initiated successfully. The concept of globalization can be defined as “the growing interdependence of countries world-wide through the increasing volume and variety of cross border transaction in goods and services and of international capital flows as well as through rapid and wide spread diffusion of technology.” (Johnson & Turner, 2010, p. 21). There are various key factors associated with the process of globalization and these are: Effective demand management in foreign countries, spread of international governance and regulations based on the country where the organization is operating or having their new customer base, effective and well planned distribution of finance and man power to ensure proper servicing and after sale service to retain the customer base and developing new set of customers, distribution of information as well as communication technology to convey the message better, social and cultural convergence to get up close and personal with the new customers in the new country etc. (Johnson & Turner, 2010, pp.21-26) To develop business in a new country and at the same time developing new customer base and retain the existing ones, every organization needs to serve their customer better and on a timely manner to ensure that those customer can’t complain about the service. It is very important in terms of establishing better relations and serving them as per their culture and choice of the people of the country where they are looking to develop a new customer base. In this paper I would like to discuss how the difference in the business culture in two different countries has its impact on customer retention and how the organizations need to alter its own business strategy in terms of after sale service to retain the customer base and at the same time increase the business opportunity for the future. Individual Reflection: Cultural Elements in Business Environment: If I analyze the importance of culture in the process of business operation in China it is very clear that there is a distinct difference in the process which the companies in china used to follow with the organizational culture in the UK. While discussing about the impact of culture I must focus about following points: Material culture, which is associated with ‘stuff’; social culture, which is focusing on values and meanings associated with intangibles and largely the human interaction; natural world, which is associated with understanding the values and meanings related to human-spiritual interaction language of the nation where the company like to operates. (Keillor, 2013, pp. 28-31) China: Culture and Trends of Organization and Customer China has observed a large amount of industrial revolution in last two and half decades largely based on its cultural and social revolution. In China, one of the key factors that every organization needs to follow while expanding their business unit is product safety issue. After coming under pressure from the EU and USA, china has stringent its product safety norms and now all the companies has to follow the same. Apart from product safety, environmental crisis and labour laws are also key while operating in Chinese market.(Keung, 2008, pp. 211-213) In this case the UK based company need to follow the environment issue and most importantly product safety as the product supply by them is not up to the standard as promised by them. I can say that like every other country, the traditional contingency theory suggests that business environment impacts organizational strategy, and on the other sideecological dynamism refers to the degree of the volatility of change inside the companys environment. (Dess and Beard, 1984) The common business culture in the China is based on low cost, quality, standard performance as per the company’s bulletin and flexibility. (Ward et al., 1998) The cost of operating business in China is very high and every organization need to deliver what they promise to their customer to sustain in the market as due to government rule the promotional activity is very much restricted. Organization can only succeed if they deliver what they promise and at the same time if they can develop better customer relationship by timely service. To stand in the Chinese market, every institutehas to contest with local merchants as well as other foreign retailers. Meeting customer expectation is the only benchmark that every Chinese customer allays looks for. In china another key factor associated with their business culture is following government rules and regulation. For every company in China or those who serve the requirements of the customers in the country need to follow the standard set by the government. (Yu & Ramanathan, 2012) Trends in UK: In contrast when I consider the organizational culture as well as business culture in the UK there is some kind of differences existing in contrast to China. Most common or striking difference is existing in the work –life culture. In the UK, governments are very keen on balancing the work life and personal life of their employees.(Bond, 2004, pp. 3) In the UK people used to purchase to fulfill their needs and here solving requirement is the key and not the what a brand promise and what actually they deliver. Comparative Study of Consumer Behavior’s in China and UK: Consumer behavior is another key factor which is associated with the globalization process of any MNCs. I find that the consumer behavior pattern in China then it is very clear that superficial risk has been found convenient to describe variations of customersselections across industries. There are three key factors which generally develops uncertainty among the Chinese consumer across various industries. First, a consumers trust of a business organization and/or its employees can be affected by macro-economic conditions and institutional factors.” Secondly, a consumers trust in the firm could be affected by the perceived trust of the business context in which it operates. In China the emergence of various types of retail formats in the past 15 years has offered more choices for shopping to Chinese consumers, so to keep a steady customer base the UK organization has to keep the after sale service level up to the mark.(Grayson, et. al, 2008). Thirdly, the promotional activity is strictly under the government control in china so the in this case the company of UK need to build its brand based on the product and after sale services. As mentioned by Twing-Kwong et.al (2013) “marketers tend to use advertising mainly for the creation of brand awareness instead of educating consumers about the features and benefits of the product/service. Compared to their counterparts in Western countries, Chinese customers in general do not have adequate product and retail service knowledge and find it difficult to predict the outcome associated with the purchase.”(Twing-Kwong et.al, 2013, 228). I find this in contrast to the branding and promotional activity in the UK and other European countries are not that much rule driven and most importantly it is a proven fact that consumers in these countries often purchased defective product willingly to save money. Whereas in countries like UK, following points are associated directly with consumer behavior: Branding and promotional activities, brand image and brand personality, Perceived product attributes and perceived benefits from the product or services, product involvement and knowledge; effects of the moderators. By analyzing various industry example as well as case studies Bian & Moutinho (2011) in their report has mentioned some key hypothesis. Some of those are: The level of consumers favorableness to the brand personality is directly associated with purchase of the goods or services; Consumers perceptions of product attributes and benefits of the product or services have a positive influence on buying pattern; A negative relationship is exists in the UK market between product knowledge and consumer purchase intention; product knowledge and consumers perceived brand image and product involvement and consumer purchase intention. (Bian & Mouti, 2011, pp. 195-198) How Companies can tackle this situation? On the basis of mentioned case I can discuss the bellow mentioned steps which the team representing the UK’s organization can take while ensuring proper service to their customer in China. For every individual shopping is a degree of satisfaction alongside using the utility of the product or service. So in this case the company needs to ensure that the utility of the purchase is being met accordingly. While providing the service the team needs to develop a good relationship with the customer at the first place. Lloyd et.al (2011) in their review clearly mentioned that “The social or personalizing shopper enjoys conversation with the frontline sales staff and will seek personal relationships with store personnel. The store environment including helpful personnel may thus positively influence feelings.” (Lloyd et.al, 2011) here the same relationship needed to be built during thus after sale service which will help the company to retain their customer. To resolve the issue and at the same time cope up with the differences in the consumer behavior culture between two countries, developing bot cognitive and affective trust is very important. Generally I can define cognitive trust as a belief which consumer use to have on the brand name or on the employees of any particular brand. It is purely based on consumer’s readiness to trust on a service providers ability and consistency and it is the key to influence the decision of the customer regarding whether to reply on the firm or not in the future. (Eastlick and Lotz, 2011). To expand globally it is the key part that every organization needs to develop through their after sale services. Here the company needs to provide justifiable explanation to their Chinese client regarding the problem, how it can be solved and what will be the present alternatives for him. To win customer’s confidence, company needs to provide him some kind of alternative solution, like some other form of service or offering which can yield the desired result for client. Moreover they need to give assurance about how long it will take to replace or rectify the issue and if by any chance if it is not rectifiable then how they will replace the same. If this alternate solution is acceptable for client then the company can develop an affective trust in customer’s mind which in long run can help them immensely to get new customer base. Eastlick and Lotz, (2011) in their review has mentioned that affective trust talks about consumers level of sureness in a service provider on the base of approaches created by the degree of care and concern the service provider demonstrates when the service is needed. (Eastlick and Lotz, 2011). At the initial level developing cognitive trust is the key to retain the old customer, winning the belief of the customer and this is the key steps behind success of any MNC. Company, in order to retain their customer base and at the same time develop new customer needs to satisfy the customer with their after sale service. Customer pleasure valuations involve two distinct dimensions, functional and monetary. At the same time emotional benefits like sense of being appreciated and comfort- all these factors generally lead up to the development of cognitive trust. On the basis of the above discussion I can easily mention that to retain the customer base in the Chinese market the company needs to fulfill the expectation of the customer through their after sale service. At the same time, in retail market as well as in modern world of Globalization, increased level of satisfaction in customer mind from the services provided by the MNCs generally develops higher degree of cognitive trust which directly helps to develops a higher degree of affective trust among the entire target market Conclusion: From the above analysis, I have recognized two distinct characteristics in the UK and Chinese market. First of all, as the promotional activities have high degree of boundary in China, therefore development of cognitive and assertive trust is the key for any company to maintain their market position and at the same time penetrate in the new market. Where as in the UK Customer mainly looks for the effectiveness of the product or services and they don’t mind to pay money for a little defective product as long their requirement is being fulfilled. In Uk advanced branding and promotional activities as well as effectiveness of the product is the key and moreover government used to play very little role in the operation process except the HR issues. Whereas in China, government used to play a key role in deciding the promotional activities so the customer generally rely on word of mouth publicity and after sale service record of various organizations. Cognitive and assertive trust therefore is the key to be a successful player in Chinese market. These are the basic difference between china and UK in terms of consumer behavior and organizational operation-based on these the company needs to tackle the issue with their Chinese customer so that they can retain him and at the same time can increase their customer base. References 1. Bian, X. and Moutinho, L. (2011). The role of brand image, product involvement, and knowledge in explaining consumer purchase behavior of counterfeits. European Journal of Marketing. Vol.45, I. 1 & 2, pp. 191-216 2. Bond, S. (2004). Organizational Culture and Work-Life Conflict in the UK. The International Journal of Sociology and Social Policy. Vol. 24, I.12. pp. 1-24 3. Dess, G.G. and Beard, D.W.(1984). Dimensions of organizational task environments, Administrative Science Quarterly. Vol. 29 No. 1, pp. 52-73 4. Eastlick, M A. and Lotz, S. (2011). Cognitive and institutional predictors of initial trust toward an online retailer. International Journal of Retailing & Distribution Management, Vol. 39 No. 4, pp. 235-55. 5. Grayson, K. et.al; (2008), Is firm trust essential in a trusted environment? How trust in the business context influences customers. Journal of Marketing Research, Vol. 45 No. 2, pp. 241-256. 6. Johnson, D. & Turner, C. (2010). International Business: Themes and Issues in the Modern Global Economy. Routledge 7. Keung, L, P. (2009). The Challenge of Developing a Business Ethics in China. Journal of Business Ethics. V. 88. Pp. 211-224 8. Keillor, D. B. (2013). Understanding the Global Market: Navigating the International Business Environment. ABC-CLIO 9. Lloyd, A.E. et.al. (2011). An examination of the differences in retail service evaluation between domestic and tourist shoppers, Tourism Management. Vol. 32 No. 3, pp. 520-33. 10. Twing-Kwong, S. et.al. (2013); Trust in customer-salesperson relationship in Chinas retail sector. International Journal of Retail & Distribution Management. Vol. 41, I. 3; pp. 226-248. 11. Ward, P.T. et.al. (1998).Competitive priorities in operations management. Decision Sciences, Vol. 29 No. 4, pp. 1035-44. 12. Yu, W. and Ramanathan, R. (2012). Effects of business environment on international retail operations: case study evidence from China. International Journal of Retail & Distribution Management. Vol. 40, I. 3; pp. 218-234. Read More