International Businesses Relative to the Global Market - Coursework Example

INTERNATIONAL MARKETING MSc in Marketing 14 MN7331 Vasitti Tejagupta ID 139039659 Submitted: 14 May Word count: 3,504 Table ofContents. Page I. Introduction……………………………………………………………………………….3s II. Globalization or Localization?.............................................................................................5 III. Culture and Environment…….............................................................................................6 IV. Localization and Culture…………………………………………………………………..8 V. Language…………………………………………………………………………………..9 VI. Religious Considerations……………………………………………………………..….10 VII. Education………………………………………………………………………………...11 VIII. Manners and Customs……………………………………………………………………12 IX. Conclusion……………………………………………………….………………………13 X. List of references…………………………………………………………………………16 Introduction. The world today has become a global village, thanks to advancement in technology and communication. Communication enables people to be in touch with others from any corner of the world while modernization of transportation means someone can easily travel any part of the world. The ultimate outcome is that transacting in any part of the world is no longer a big issue and this is greatly revolutionizing the way business is done. Organizations whether tiny or large are therefore left with no choice but to concentrate on aligning their processes in order to conform to the changing and globalised modern business environment. This is because the world has become the biggest source of market for business especially when companies decide go international. Marketing in the global settings is very too complex to define (Lee & Carter, 2012), however, the idea begins with thinking of the world market as having no center and boundaries. The global market place is therefore comprised of nations of the world; both the developed, developing and underdeveloped countries of the world makeup the global market. The international market therefore coordinates through very diverse elements and structures which include regional blocks forming free trade areas as well as bilateral and international agreements such as the WTO in order to ensure a smooth trading environment between nations. Apart from the fact that technological advancement in the fields of transport & communication virtually make the world one global village, the innovations also affect the customers who are now able to access the market in many different ways making them more homogeneous. The organizations on their part need to really understand the desires and needs of customers so as to create opportunities differentiate & obtain competitive edge and maximize on these opportunities in order to give value t the customer. The rapid changes in international marketing begin with changes in the world business environment. The emergence of the international market place is attributable to number of factors; growth in technological innovations, growth in the media, the ever improving service sector and emergence of new countries with great economic potentials such as China, Brazil, India & Russia (Lee & Carter, 2012). Furthermore the modern market which is globalised doesn’t rely solely on products and services; instead much emphasis is placed on the people. This implies that the customer continues to become the most significant element of international marketing. Globalization has affected customers in a many ways and resent years have seen tremendous changes in trends, behaviors, perspectives & attitudes among the consumers. Another very important factor of marketing and business on the international stage is culture; it comes with various elements which impact on consumer trends, patterns as well manners and ultimately choices. Customers for international market have different cultures since they are from different countries some of which are very from each other and as such international marketers as well as managers of international companies must understand, appreciate and value national cultures for the good of their businesses. A very crucial success element in overseas business is the ability to comprehend the specific behaviors among target customers, understand their social and cultural values and integrate them in the business strategy (Lee & Carter, 2012). In this essay I aim at examining international businesses relative to the global market as well as their efforts at maximizing available market opportunities with their marketing strategies which could be standardization or localization in relation to customer cultures in order to identify with consumers and make maximal benefits of the global market. The paper explains globalization and its link to the concepts of standardization and localization. The effect of culture and its relation to the concepts is examined comprehensively; the various elements of culture are synthesized as well as the effects of culture on international firms that choose localization as a marketing stand point. Finally he paper will make use of relevant examples and case studies to ensure clear illustration of the arguments advanced. Globalization or Localization? Ramarapu et al (1999), note that the concepts of globalization and localization have a history which began with extended marketing strategies that were carried to the foreign market place. According to (Levitt 1983n), globalization involves corporations having operations in many countries and becoming homogenized in the single large market with low costs as a result of factors such as technology, cross cultures and the interactions & communications among people. Globalization through standardization is where companies produce similar products for the international market making use of economies of scale which translates into low for the end consumers. Strategies of marketing mix can be employed throughout the various markets. Global companies according to Ramarapu et al (1999) were thought of as having similarities with market segmentation where market segmentation forms a significant part international marketing. On the other hand Onkvisit & Shaw (1991) observed that for multinationals to attain success in the international market place they must consider localization and adjustment of certain strategic aspects like production or product standards, and comply with government requirements in the foreign countries they set operations. This results in the adaptation of distinguished strategies for marketing in the various markets which embrace localization adaptation approaches. Localization is one practice by world corporations and multinationals in many local territories aimed at adapting products and services with otherwise high costs (Levitt, 1983). The Globalization and Localization Association defines localization as a process in which a product/content is adapted to certain specific localities. The most important goal is presenting the product as having designed with the target market in mind and therefore eliminating or minimizing any local sensitivity that could otherwise arise (Veness, 2012). Some critics on the other hand opine that localization as a strategy aims at manipulating fresh and appropriate market territories in order to make maximal sales and attain more customer trust (Quelch & Hoff, 1986). Nestlé’s Kit Kat and Kittu Kitsu in Japan represent a perfect success story for a company that embraced the strategy of localization. They adapted a strategy for marketing that is unique to the culture in Japan where different flavors of Kit Kat were typically presented as Japanese Products (Tunimaal, 2013). Localization has sometimes failed to work for certain multinationals such as Campbell Soups since they employed marketing strategies based on their home nations (Rutihinda & Elimimian, 2003). It is important to note that globalization is an important research question in modern business; an increasing number of researchers concur and support the many benefits of globalization. But according to (Kellner, 2012) the concept of globalization is not good for democracy and places poor states under the capitalistic control of their developed counterparts. In the face of the many benefits of globalization, a significant hurdle for the company going international is to embrace the different economic, cultural, government expectations and the legal business environment in foreign lands in order to design a relevant marketing strategy (Jeannette & Hennessey, 2004) Culture and Environment. Global organizations having operations in different national environments will definitely have to face the impacts of national cultures on their operations (Ittersum & Wong, 2010). Culture is therefore one very important factor impacting the understanding of international marketing. Culture is defined in many different ways; according to Jeannet & Hennessey (2004), culture comprises of standards, values and ideas that are leant, acknowledged and appreciated by society. The Hofstede Center on the other hand refers to culture as collective mind programming that distinguishes groups or categories of persons from other. Lee & Carter (2012) argue that an important consideration in global marketing dynamics is the understanding of cultural universality, which forms the basis of lifestyle and impacts operations in the society. There are specific activities which are consistent with certain societies and these results in nations having diversity of culture. International marketers and managers therefore need to attain great understanding of the cultural diversities so as to comprehensively apprehend consumers’ trends and needs relative to their specific cultures and craft appropriate marketing strategies for each country. Similarly, Czinkota & Ronkainen (2004) observed that understanding the various cultures, is powerful and very significant to international business as enables marketing managers embrace marketing strategies and local practices that are effective. Companies with overseas operations are therefore bound to implement successful marketing strategies given they can comprehend, adapt and adjust their operations & values to accommodate and conform to surrounding local cultural values. Great understanding of cultural aspects is a very important element of success for international corporations. There are many companies in the modern world that have had successful international business and their success is greatly attributed to comprehending and embracing practices that resonate with local cultures. Case studies of such companies include IBM and Levi (Lee and Carter, 2012). But there are also firms that have failed to manipulate new markets and craft entry strategies with local cultures in mind. Such companies may also have been unable to implement proper marketing plans as a result of improper consideration consumer behaviors and their influences to global business (Rutihinda & Elimimian, 2002). It is therefore of grave importance that international marketing managers take enough time to study, understand and comprehend the local cultures in the different nations they wish to venture into before formulating entry and market strategies. This will not only allow the companies to have it easy when entering the international territories and attain sales volumes, but also understand local consumer patterns & trends and ultimately win the trust of locals. Localization and Culture. Culture is one very important factor in identifying consumer behaviors such as their habits when it comes to consumption, personal values, lifestyles, tests and preferences when it comes to purchasing. Knowledge of culture can greatly assist marketing professionals in the global settings to identify unique consumer needs and hence craft their marketing programs to specifically address the same. It assists multinationals make maximum use of presenting global market opportunities by appreciating cultural diversities. In the realization of this therefore many international firms take up localization of products and production as well as marketing strategies and segment the markets of target so as to approach customers in a culturally competent manner. With this knowledge the companies are able to effectively communicate to the local consumers, achieve more recognition for their brands, and ultimately maintain their brands strong through adaptation of localized strategies. The greatest challenge is for companies to consider all important factors that impact marketing e.g. the impact of culture when making decision on whether to standardize or localize as a business strategy. A number of cultural components play to influence the international business environment; these include educational attainment, languages, value & belief systems, customs, attitudes and mannerisms. The adaptation of each of these cultural elements is informed by level at which the particular multinational firms engages with the market (Czinkoka & Rankainen, 2004). Language The entire world is made of diverse cultures peoples with close to two thousand six hundred different languages. An understanding of the linguistics in a particular international market of target is crucial in the effective collection of information useful for research and development of business objectives. Furthermore more, this will help the business engage local communities relevantly through appropriate communications. This is because language is the single most important communication tool for business to reach their consumers. According to Hummel (2012) misunderstanding of elementary communication makes the businesses have poor relationships but also lose opportunities. The English luxurious car Rolls-Royce for instance when translated directly into Germany could carry negative connotations (Lee & Carter, 2012). Chevy Nova by Chevrolet encountered marketing challenges in the Spain market since its translation meant something else (Erichsen, n.d.; Snopes.com, 2011). No single person can deny the fact that the English language is very influential in cross cultures when talking globalization (Keegan and Green, 2008). It also is considered as the strongest language in political and economic systems the world over. Some companies have gone ahead to develop content in different languages so as to achieve standardization and overcome the hurdles of many languages since language could encompass cultural aspects like brand and package design. IKEA, one successful international firm makes use of pictures for instruction on products as opposed to words (Usunier, 2005; Usunier & Lee, 2013). In so doing the company is able to communicate in a manner that effectively resonates with both local and global markets (IKEA Systems B. V., 2014). Language of communicating to a specific target audience is therefore important and should be carefully thought it is the only way businesses through which businesses engage consumers. It should be chosen appropriately so as to comply with the expectations of the chosen business strategy. Religious Considerations. Religion is an important aspect of culture and no doubt it has great impact on communities, societies and organizations of certain localities. This is important to international business and marketing as religious values greatly influence life and hence the behavior of consumers. Dressing, color preferences, holiday activities and many other things among consumers have some relation with their religions. The Islamic societies for instance place certain limitations on dress codes for actresses when advertising whereas Christian societies have a lot of merry making, celebrations and holiday events during the Christmas season. Marketing professionals must appreciate that these differences not only come into play when looking at major religions such as Islam, Christianity etc, but may also manifest in sub-religious groups like between Catholics and Protestants. Knowledge of religious values among consumers is therefore an important aspect of international marketing and business at large as it helps avoid stereotypes as well as sensitivities. Islamic culture prohibits the concept of interest on deposits and HSBC, a renowned world brand in banking appreciates this by offering Amanah services which are Sharia compliant in Islamic nations such as Saudi Arabia and Malaysia which are dominated by Islamic religion (HSBC, 2013). This way the banking group is able to localize by identifying with local cultures. The banks slogan is ‘The World’s Local Bank’ which effectively promotes the strategy and advertises as a bank that is culturally competent (Veness, 2012). Many other organizations prefer localization strategy in order to capture different needs of local consumers without appearing to introduce new cultures. Despite the many benefits of localization, standardization is the most apt strategy to take advantage of opportunities presented by different cultures. McDonald adapts local Indian recipes but deliberately does not offer beef products like hamburgers in India since the nation is predominantly Hindu which holds respect the a cow and as such locals do not take beef ( Keegan & Green, 2008). Gillette tries as much possible not to advertise shaving of beards in Iran where the same is not allowed due to religious teachings (Jeannet & Hennessey, 2004). Gillette therefore does not offer razors as main products in Iran but adopts ensures to match their marketing strategy to resonate well with local cultural standpoints. Education. Education is key to business as it shapes the future of individuals. Educational standards (quality & quantity) difer markedly with countries due to different systems adopted. Science is emphasized in nations like Japan and Korea and as such more engineering knowledge is present in Eastern countries as compared to the west ( Czintoka & Ronkainen, 2004). A research on staff training in terms of educational levels in Germany, Japan and USA showed that US employees have the least practical knowledge (Jeannet & Hennessey, 2004). It is important therefore for global firms to hire individuals with the right skills to fill up strategic positions. Education not only impacts on employee performance but also consumers of a company’s products; low educational attainment translates into poor economic status and ultimately lower consumption. It is important for marketers to appreciate segmentation, and possible barriers to communication so as to package relevant promotional messages for the right target audience. Nestle for instance prefers localization on this end, they go out to farmers in the countries where they operate and equip them with relevant trainings which offer useful knowledge and skills for them to grow high quality coffee. The company is therefore able to come up with products for local and international standards at the same time (Nestle, 2013) Cultural Values, Belief Systems and Attitudes. Cultural values, beliefs and individual attitudes have a great impact on consumers in the societies. Global companies feel the effects of these aspects of culture in terms of motivation of both employees and the target customers (Lee & Carter, 2012). These presents international marketing managers with a significant challenge of appreciating the ever changing value & belief systems as well as well as attitudes through a local approach. In meeting these demands in international markets, firms such P&G design and package their products with local values in mind and if possible involve customers in their strategies at all levels. They are able then to gain the confidence of consumers and this translates into sales & profits as they are able to have competitive edge (Czinkota & Rankainen, 2014). In Japan for instance P&G creates videos in which they share their experiences with young Japanese housewives and uses the videos as part of advertisement to identify with local cultural values. Manners and Customs It is important that international businesses appreciate manners & customs in foreign hosting nations so to make accurate interpretations while negotiating for business. Silence for US business people when engaging partners for instance could mean disapproval (Czinkota & Ronkainen, 2004). Companies should carefully consider their colors and symbols in international territories so as to identify with local perceptions. White and purple colors are associate with death in Asia and Middle East respectively whereas western nations associate white with cleanliness and purity (Kemmis, 2014). International marketing managers should therefore appreciate and integrate these local perceptions in their communication and design of products to avoid resistance. Some multinationals identify with specific colors to stand out and differentiate their brands international; Coca-Cola and Marlboro are identified with red color while blue is associated with Pepsi. These colors when seen on bill boards or commercials, one would first think of the companies and their products. According to Czinkota and RonKainen (2014), it is of great benefit for international marketers to appreciate product consumptions patterns, trends, preferences and distastes in every country. Heinz takes a localized strategy for production lines in industries abroad where products are availed with the preferred tastes of local consumers in mind (Mikkelson, 2007). Customers in the US have a taste for sweet ketchups while those in Europe preferably take spicy tastes and therefore with information the company produces different flavors in different regions (Czinkota & Ronkainen, 2004). The same way their advertisements are different in different countries bearing in mind the preferred tastes (Kiyshipdx, 2009). In addition to providing different flavors for different tastes the company also offers products for different countries to meet the local preferences and lifestyles (Heinz, 2013). One special case is the African consumer who maintains certain perceptions about taste as a result of cultures and eating habits (Diop, 2012). To respond and appeal, Nestle in Africa uses a local strategy by producing adaptable products with taste and buying power in mind through the use of local raw materials and industries. Firms like McDonalds on the other hand maintain standardization while adapting certain products appropriately in order to market a local taste. But they standardize major product lines such as Big Macs which is present throughout. It just adjusts recipes or menu presentations to conform to local tastes and cultures; in Germany for instance Mac Burger is served while Japanese customers have the option for shrimp burger (Nasr, 2014). Dunkins’ Donuts is another important reference case for international marketers; the approach is to market it for breakfast in the US, and as a snack in Asia and Russia where donuts are not taken as breakfast (Atma Global, 2011). It is therefore clear that manners in different countries come with marked impacts on purchasing and ultimately marketing approaches. Lee and Carter (2012) advance a very important point for the international marketing managers; they ought to comprehend and appreciate analysis of cross cultures. It is a whole complex issue that presents marketers on the international front with significant challenges. Geert Hofstede provided a framework for studying consumer trends in different regions in four dimensions of culture; individualism, masculinity, power distance and avoidance of uncertainty. A wholesome understanding of unique behavior indicators among the customers of target is very crucial for global marketing managers as it informs strategy, promotional marketing packaging, product design & development and the way to effectively engage consumers through advertisement and promotions. Conclusion. In conclusion therefore the modern world has become a global village presenting multinationals with the challenge to adapt or craft appropriate strategies such as standardization or localization. Culture informs our way of living, thinking and acting and as such international companies must sufficiently under cultural trends and patterns in the markets of target since also influences their interaction with business. Some countries have different cultures owing to the diversity of their people and this must be considered also. Additionally culture has a number of elements which influence consumer behaviors and therefore firms must understand how each of the elements can affect consumers, employees and the business environment. Lack of comprehensive knowledge on cultural aspects of target markets for companies going international is a major source of failing strategies. A company can be in the darkness on important market information by lacking good understanding of behavioral trends, and preferences among consumers and as such would formulate strategies which are bound to fail. A winning strategy therefore in global marketing must integrate local cultures in communication, product development and marketing strategy. Product packaging and promotional presentation should be appropriate and go down well with local cultural dynamics, consumer trends and national requirements so as enable organizations make the maximum out of presenting opportunities. Companies need to weigh both standardization and localization with the local consumer in mind in order to adopt the marketing strategy that is appealing to the specific national cultures in the global business environment and achieve success in the ultimate. List of References. 1. Atma Global, 2011. Culture and Business. Available at http://2012bookslardbucket.org/books/challenges-and-opportunities-in-international-business/s07-culture-and-business.html 2. Barbara, & Mikkelson D.P., 2007. Heinz Sight. Urban Legends Reference Pages. Retrieved from http://www.snopes.com/politics/kerry/heinz.asp 3. Beatriz, S. and Ni, S., 2008. Entry Mode Strategy. International Business and Entrepreneurship. 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