Cultural Diversity In The International Market Place - Case Study Example

Cultural Diversity In The International Market Place Introduction International trade has existed for a long time in history. However, its importance has more continuously risen in recent history than ever. International trade involves the exchange of services, goods and capital across geographical and international territories or borders (Bradley, 2005). In the course of international trade, marketers encounter people of diverse cultural backgrounds. These people, in many cases, effectively form a potential market for an organization’s services and goods. Understanding different economic, political and cultural environments is important for every organization’s success. While the fact stated above is admitted, it is noted that cultural is a major challenge to international trade. In respect of cultural diversity in the international market, two main schools of thought currently exist. While one school of thought argues that business is business irrespective of cultural differences and place, the other argues that cultural differences should be respected and taken into consideration when marketing goods internationally (Czinkota and Ilkka, 2009). Given the importance marketing is to business success, this paper is dedicated to analyzing cultural diversity and its impacts on the international marketplace. The two schools of thought stated earlier will also be analyzed in depth with reference to works by different researchers including Geert Hendrik Hofstede. International Marketing Marketing is a process that is concerned with promotion of an organization’s products for the purpose of effecting sales (Bradley, 2005). Brandley notes that it is through marketing that organizations create value for consumers and customers and build sustainable customer relations with an aim of capturing their return. In other words, marketing helps in the creation, sustenance and satisfaction of customers. Many companies have come to appreciate the importance of international marketing according to Brandley (2005). International marketing involves activities that are designed to price, promote, plan and promote the organization’s flow of services and products to users or consumers, for profit, in two or more nations. More and more, organizations have realised that competition is not restricted only to the existence of domestic companies. Further, with an aim of sustaining or improving growth and profit margins, companies have had to search for alternative markets for their services and goods. Companies such as Coca Cola, IBM, Nestlé, McDonalds and Nike conduct business in several countries. One challenge that these and other companies experience in their international marketing exercises is the need to appreciate the diverse environments the company must operate in to profitably survive. If the business has to succeed in the international market, its corporate strategies must be formulated in a way that it anticipates uncontrollable factors that affect the market while also allowing for maximum flexibility in case there is need to make future changes. Culture and Cultural Diversity Culture, according to anthropologists, may generally be defined as the set of shared goals, practices, attitudes, practices, customs, and values that characterizes a group, institution or organization. In other words, a people’s culture is also the integrated pattern of behaviour, belief and knowledge that ideally depends on their capacity for social learning and symbolic thought (Linhart, 1997). Aspects of a society’s culture that are passed over from generation to generation include shared goals, assumptions and understandings. Like the legal, political, and weather and climate environments, businesses have no control over cultural of the people or society it serves. The business may therefore choose to ignore the culture or appreciate it. Many societies have emerged with marked differences in culture since time immemorial. According to Linhart (1997), multiculturalism or cultural diversity is commonplace and almost unavoidable in modern society. Cultural diversity refers to the variety of human cultures or societies in a particular place or throughout the world. Obvious differences in respect of culture include dress, religion, communication, language, attitudes, social structure, values and traditions. Significant differences also persist in the concept of morality, the way a people interact with the environment and in the way they organize themselves. Dimensions of Culture According to Geert Geert Hendrik Hofstede has noted that there are five main dimensions of culture (Van der Stede, 2003;’ Brendan, 2002). These dimensions are uncertainty avoidance, power distance, femininity and masculinity, short versus long term orientation and collectivism versus individualism (Brendan, 2002). In cultures such as Denmark, New Zealand, Australia and Austria that have low power distance, people accept and expect more democratic or consultative power relations. In other words, people relate to each other more as equals without much regard to formal positions. In countries such as Malaysia that have high power distance, people with less power accept paternalistic or autocratic power relations. In individualistic cultures, individuals are encouraged to develop their personalities and decide what to do according to (Brendan, 2002). In collectivist cultures, people act and are mostly defined as members of a group. The individual, for example, may act as a member of a religious group, family, town, profession or age cohort. Also, in Masculine cultures, assertiveness, accumulation of material possession and wealth, competitiveness and ambition are valued. On the other hand feminine cultures value quality of life and relationships. Different societies generally cope with anxiety with an aim of avoiding uncertainty in different ways. Some cultures prefer to perform formally structured activities and obey explicit rules. On the other hand, some cultures tend to offer flexibility in the way people act and have no strict guidelines to be followed that are aimed at avoiding uncertainty.. Yet again, different cultural groups attach importance to short-term or long-term goals. In cultures that are long-term oriented, attitudes and actions affecting the future such as thrift, perseverance, shame and persistence are valued (Brendan, 2002). Short-term oriented societies on the contrary value attitudes and actions that are affected by the past or the present. People from short-term oriented cultures will for example respect traditions, exchange favours, gifts and greetings more often, and seek immediate stability. Elements of Culture The main elements of culture include aesthetics, religion, language social organisation, values and attitudes, technology and material culture, law and politics, and education. All of these elements affect how business may be conducted when dealing with people of different cultures according to Marieke (2004). For example, while many companies may ignore the impact religion, many cultures find a reason for being in religion. A good example of the effect of religion in business is the ban of alcoholic beverages and pork products in Middle East countries. The international marketer must therefore appreciate religious divisions of the country the business operates in. During marketing, more often than not, communication is key. Communication involves the transfer of information between two or more people or parties. Effective multicultural communication comprises the accurate relay of information and exchange of right information (Deresk, 2008). Although people from different cultures may use the same language to communicate, their attributions may, to a great deal, vary. Given that certain cultures are considered to be of high context and others are of low context, marketers must note that literal or poor translation of words used in advertisements may lead to great confusion. It is also worth noting that people from diverse cultures may have dissimilar thought patterns and may therefore assign different meanings to non-verbal language. In order to achieve effective communication, it is important for international marketers to have knowledge of the cultures of their target groups according to (Deresk, 2008). This knowledge will go a long way in ensuring that they have a clear understanding of behavioural and cognitive constrains as well as the way different cultural groups perceive the world to be. Accepting, understanding, and respecting cultural diversity generally helps in eliminating the problems of stereotyping and ethnocentrism that commonly exist when it comes to dealing with people from other cultures. Cultural Diversity in the Marketplace As the trans-national, multinational or international business expands, one of the most important elements of the organization’s success is the respect and appreciation of country and regional cultural differences (Bush , Rose, Gilbert and Ingram, 2001). Etiquette, manners and intercultural communication are vital elements for global business employees, managers and executives (Bush et al.). Having insight into the dynamics of different cultures of a region or country can be very helpful in the understanding of the way its people act, and to act or communicate appropriately when dealing with them. According to LaPlante (2005), notions about differences in culture usually form the basis upon which global brand management strategies and international communications are founded. According to LaPlante, international marketers have continued to appreciate the importance of culture as fuelled by technological advances that make it possible for them to reach consumers even beyond national boundaries. This is one reason companies such as Google, IBM and Nike spend fortunes every now and then in an attempt to understand cultural differences. Dealing with Cultural Diversity in the Marketplace Many marketers often find dealing with people of different cultures in the marketplace because their cultures are often difficult to understand and nebulous by nature (Deresk, 2008). A marketer, for example, may quite easily go against cultural norms of a foreign country unintentionally and without realizing this. Also, individuals from different cultural backgrounds may find it uncomfortable being in one another’s presence without really understanding why (Deresk, 2008). Two speakers, for example, may try unconsciously to adjust to a level of preferred interpersonal distance. In Deresk’s view (2008), one common obstacle to international trade is ethnocentrism and use of self reliance criterion. An ethnocentric approach to marketing in the international scene is based upon the assumption that whatever works well in a country will work as well in other countries. Basing business decisions on one’s experiences, values and culture, according to international marketing experts could cause great loss to the business. When marketers react to situations this way, cultural differences are assumed or ignored which could result in offensive behaviour in another culture (István, 2002). It is also noted that companies that are less ego-centric achieve greater success in marketing their services and products in the international environment. It is often common for people to over-generalize or stereotype other people and their cultures. In fact, social psychology researchers have in the past suggested that there is a tendency for individuals or groups to assume that an “out-group” is more homogeneous when compared to an “in-group”. For example, while some cultures commonly perceive dog as man’s best friend, Muslim traditionalists consider dogs as “unclean” animals. If a company portrays man’s friendship with dog in an advertisement that targets Muslims, the advert may end up being counter-productive. Also, while most people in the United States tend to focus on content, many Asians tend to look at packaging and by extension associate it with product quality. Also, a Chinese may interpret the world in a different way compared to her/his Australian or American counterpart. The unique aspects of a culture may be quickly spotted in symbols that are assigned specific meanings. If a country’s aesthetic values are incorrectly interpreted by ignoring its culture, several marketing problems may be encountered. Lack of sensitivity to aesthetic values of a particular culture may create a negative impression, offend or can render the marketing efforts ineffective (István, 2002). Marketers when introducing a new product to a new culture may opt to wait for the culture to change with time or they can cause the change. The latter strategy is based upon the introduction of a product and deliberately working towards overcoming resistances to change. This way, they accelerate the acceptance rate for the product or service that they have to offer. Much success is often achieved by adopting a strategy that is culturally congruent. This could be accomplished by offering products similar to those already in the market but in a way that is congruent with the society’s cultural norms. This way, resistance is highly minimized. On the contrary, when marketing programmes depend on successful cultural change, the organization often has to rely on a strategy of unplanned change (István, 2002). In this case, the organization simply introduces the product or service and then hopes for the best. The company may also apply a strategy that involves planned change. The organization in this respect sets out to change those cultural aspects that offer resistance to its anticipated marketing goals. In order for an advert to be effective, marketers must really appreciate how to tailor its message to a specific culture while also considering when it will most be effective. In many cases, for example, marketing communications that are based on cultural values of a specific society will work best when adverts draw short but focused attention. It is noted that sometimes culture guides consumer decisions while at other times it does not. While several studies have shown that cultural differences matter to consumers greatly, some studies have failed to show similar results. This could be as a result of differences in circumstances under which respondents or participants make their decisions (LaPlante, 2005). According to (Ailon, 2008), historical ties and language differences are reliable predictors of international trade. Also, according to Colin and Martin (1986), imperfect information, caused partly by differences in culture, is a major impediment to trade. Environmental changes also result in changes in the way people behave. This impediment can however be overcome by the use of information sharing networks. Through acculturation and socialization, people can also learn other cultures. Decisions to consume products are often made through the application of knowledge that is culture based. International marketers thus prove to be more effective when they understand and respect cultural differences important to their businesses (Deresk, 2008). Knowledge of the origin of these differences is also important especially if a business foresees changes in its current markets or needs to venture into new markets. Conclusion It is through marketing that organizations create value for consumers and customers and build sustainable customer relations with an aim of capturing their return. Understanding different economic, political and cultural environments is important for every organization’s success. With an aim of sustaining or improving growth and profit margins, companies have had to search for alternative markets for their services and goods. In the course of international trade, marketers encounter people of diverse cultural backgrounds. As the trans-national, multinational or international business expands, one of the most important elements of the organization’s success is the respect and appreciation of cultural diversity. Many marketers often find dealing with people of different cultures in the marketplace because their cultures are often difficult to understand. Some international marketers believe that business is business irrespective of cultural differences and place. Other marketers, however, believe that cultural differences should be respected and taken into consideration when marketing goods internationally. An ethnocentric approach to marketing in the international scene is based upon the assumption that whatever works well in a country will work as well in other countries. Basing business decisions on one’s experiences, values and culture could cause great loss to the business. When marketers react to situations this way, cultural differences are assumed or ignored which could result in offensive behaviour in another culture. It is noted that many times culture guides consumer decisions. If a country’s aesthetic values are incorrectly interpreted by ignoring its culture, the marketing program can encounter many problems. In other words, lack of sensitivity to aesthetic values of a particular culture may create a negative impression, offend or can render the marketing efforts ineffective. International marketing has generally proved more effective when marketers understand and respect cultural differences in their target markets. References Ailon, G. (2008). Mirror, mirror on the wall: Culture's Consequences in a value test of its own design. The Academy of Management Review, 33(4):885-904 Bradley F. (2005) International marketing (5th ed.) Financial Times/Prentice Hall. Brendan M. (2002). "Hofstede's Model Of National Cultural Differences And Their Consequences: A Triumph Of Faith - A Failure Of Analysis". Human Relations 55 (1): 89–118. Bush V, Rose G, Gilbert F & Ingram T. (2001) “Managing cultural diversity”, Journal of the Academy of Marketing Science – Springer. Colin G. and Martin H. (1986) International marketing: Strategy and management (Illustrated ed.), Taylor & Francis. Czinkota M. R. and Ilkka A. R. (2009) Marketing (9th ed.) Cengage Learning, Australia. Deresk, H. (2008) International management: Managing across borders and cultures (6th ed). Pearson Prentice Hall. Hofstede, Geert (2001) Culture's Consequences: comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Thousand Oaks, CA: SAGE Publications. István K. (2002) Modeling cultural barriers in international trade, Economics Department, Boston College. LaPlante A. (2005) When Does Culture Matter in Marketing?, retrieved 2nd December, 2009 http://www.gsb.stanford.edu/news/research/mktg_aaker_cultureinfluences.shtml Marieke K. (2004) Consumer behaviour and culture: Consequences for global marketing and advertising (Illustrated ed.) SAGE. Van der Stede, W. A. (2003) “The Effect of National Culture on Management Control and Incentive System Design in Multi-Business Firms: Evidence of Intracorporate Isomorphism”, European Accounting Review. Vol. 12, No. 2, pp. 264-285. Read More