International Commerce Ethics - Essay Example

International Marketing Ethics Paper - Riordan Manufacturing Cynthia Soré MKT 450 International Marketing of Phoenix Aaron Armendariz July10, 2007 Ethics is the branch of philosophy that deals with the rules of right conduct (Webster’s, 1984). The subject influences the business practices of companies. Businesses with operations in foreign countries must consider the ethical standards of the people within different regions. The behavior of customers are influenced by their culture, thus marketing efforts have to align with the preferences of the international clients. This paper studies how ethics affect a company’s decision of entering into the German market. Executive Summary Riordan Manufacturing is a global leader in the plastics industry with annual sales of over $46 million dollar a year. Their main product offerings are beverage containers, custom plastic parts and plastic fan parts. The company invested in a research & development plant which has helped them accomplished their goal of offering innovative solutions to their customer base. Riordan Manufacturing prides itself in the quality of its product, its flexible relationship with customers and good pricing structure. The company is currently looking to expand its operation to a new region. They are targeting Germany as potential country to expand and market its products. Other countries within the European or Asian continent are viable alternative as well. Companies establishing operations in a foreign country must consider the traditions and cultures of the citizens, the generally accepted business practices, and the corporate culture. Marketing strategies are highly influence by these and other factors within a region. Riordan Manufacturing has to compare if the organization and its practices fit the profile of a German operation. Profile Germany Germany is a country with a population of 82.6 million people and an annual gross national product of $2897 billion which its expected to grow at a 2.4% rate during 2007 (Economic Intelligence Unit, 2007). Germans are industrious, honest, orderly people which appreciate punctuality, privacy, intelligence and skill (CultureGrams, 2007). They have a have a rich history in which science and arts have influenced the culture a lot. Germans are very proud of their heritage and in business affairs they thrive on offering products with the highest quality standards. Mercedes Benz, a manufacturing company of luxury cars, is a good example of German excellence. The German business culture is influenced by the procedures and policies of the federal government (Katz). Key German ethical and cultural standards Germany is known as a conservative business culture in which entrepreneurship or innovative companies do not thrive (Katz). Riordan Manufacturing thrives in innovation which is a key factor of its corporate success. Within this culture the organizational structure that dominates the business environment is the classical or traditional structure. The main reason is that the classical structure is better suited for bureaucratic systems. A new Riordan Manufacturing operation in Germany is more suited for the matrix organizational system. Communication lines in Germany are very slow and top management gets involved in the decision making of day to day activities. Information is not openly shared with the employees (Katz). A business culture which does not operate in a fast working environment brings certain constraints for the introduction of new products into a market. The German people are very loyal to their local business and prefer to buy domestically produced German merchandise. A foreign American company might have troubles introducing themselves into such a market. Growth in such an atmosphere is possible, but it would take a long period of time to establish a costumer base in a market with such characteristics. A country which has opposite characteristics to Germany as far as their acceptance of American products is the United Kingdom. The British people love American culture and their governments have a very close relationship. Ethics in Germany is not considered a field of much practical use. The Germans considered ethics a subject suited for theoretical discussion within academic settings, in comparison American businesses try to apply ethical standards within their procedures as much as possible (Oldenburn). A German business case that demonstrates lack of ethical standards was the Heros case. Heros was a money transporting operation founded in Germany that moved large amounts of currency across Europe. The company’s owner, Mr. Weiss, began to intentionally delay delivery of money to clients to deposit the money in his own accounts and obtain short-term interest gains (Economist, 2007). The company unethical practices later turned into a full fraudulent scheme. This is an isolated case, but it demonstrates how not focusing on ethics within business practices can turn grey ethical areas into a source of temptation for businesspeople. Riordan’s Marketing Plan Riordan Manufacturing has a marketing plan with deficiencies which affect integration into a new market such as Germany. The company needs a system to help them learn the cultural and ethical differences of the customer base to be able to attract clients. The databases include too much utilization of obsolete technologies such as paper and pencil, microfiche, and excessive storing of key customer information in file cabinets. The methodology the company utilizes to prepare its annual marketing plan is based on historical data and performance. A company on the verge of major global expansion into European or Asian markets needs a better information technology systems and vision based on the present and future, not on the past. The company experiences are mostly based on the American culture. The information stored in the cabinets is practically worthless for preparing a marking plan in a German, Indonesian or Swedish market. In order for this company to learn faster about new foreign markets they need to be able to analyze and manipulate vast amounts of data efficiently. They need electronic storage of data and a fully integrated customer relationship management (CRM) system. A CRM in Germany would help the company in their marketing campaigns. The Germans are conservative and it’s essential to analyze how the customer would react to different types of advertising campaign of the products. The wrong approach could turn off the customer. Penetrating such a market requires patience and carefully studying the purchasing patters of the Germans. Under no circumstance can Riordan Manufacturing rush the plan and quick penetration of the market beyond pre-negotiated contracts is not realistic. The fact that the Germans are known for their world class quality standards is an aspect of starting an operation in Germany which is very beneficial for the company. A possible strategy the company can utilize is to export production from Germany with Made in Germany logos on the packaging boxes. This could provide a competitive advantage especially for the fan parts product line. Conclusion Business ethics affects the way companies realized business worldwide. Different cultures have peculiar business practices which a company entering a new market must understand do be successful. A marketing plan is geared to attract clients based on consumer preferences. In the Riordan Manufacturing case the company realized that the German culture values classical organizational structures and high quality standards. They are loyal to locally produced products and the business culture perceives ethics as an element of little important in the business world. In order for a company to have a chance at succeeding in international expansions they must carefully study the cultural characteristics of the population. References CultureGrams (2007). Federal Republic of Germany. Retrieved July 11, 2007 from CultureGrams database. Economist.com (2007). Retrieved July 11, 2007 from http://www.economist.com Economic Intelligence Unit (2007). Germany – Country Report. 5. Retrieved July 8, 2007 from Economic Intelligence Unit database. Katz, J. International Business Ethics: Germany. Retrieved July 8, 2007 from http://www.pitt.edu/~ethics/Germany/culture.html Oldenburg. International Business Ethics: Global and Social Responsibilities and the Management of International Business in Developing Areas. Retrieved July 11, 2007 from http://www.uni-oldenburg.de/ute/1317.shtml Webster’s II (1984). New Riverside Dictionary. Berkley Brooks, New York. 238. Read More