Chapter 3
History and GeographyThe Foundations of Culture
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Chapter Learning Objectives
• The importance of history and geography in the understanding of international markets
• The effects of history on a country’s culture• How culture interprets events through its own eyes• How the United States moved west and how this more affected
attitudes• The effect of geographic diversity on economic profiles of a
country• Why markets need to be responsive to geography of a country• Economic effects of controlling population growth versus aging
population• Communications are an integral part of international commerce
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Impact of history and Geography on The International Marketer
• International marketers must know how the unique geographic characteristics will affect the marketing of their product.
• The marketer needs to ask himself/herself how geography will affect price, promotion, place, product, people, and politics, i.e, the 6 P’s.
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Historical Perspective In Global Business
• Historical insights of a country are important for understanding
- Attitudes about the role of government and business
- Relations between Managers and Subordinates
- Sources of Management Authority- Attitudes toward Foreign Corporations
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History and Contemporary Behavior
1. Historical events between nations influence business and history
2. Why do the Japanese have such strong loyalty toward their companies?
3. Why is a distribution system so difficult for an outsider to develop?
4. Why are decisions made by consensus?
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Global PerspectiveBirth of a Nation – Panama in 67 Hours
• To fully understand a society’s actions and its points of view, you must have an appreciation for the influence of historical events and the geographical uniqueness to which a culture has had to adapt.
• To interpret a culture’s behavior and attitudes, a marketer must have some idea of a country’s history and geography.
Culture is defined as a society’s accepted basis for responding to external and internal events.
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History and Contemporary Behavior
• Japanese History:- Seven centuries under the shogun feudal system- The isolation before the coming of Admiral Perry in 1853- Threat of domination by colonial powers- Rise of new social classes- Western influences- Humiliation of World War II- Involvement in the international community
• Historically, loyalty and service, a sense of responsibility, and respect for discipline, training, and artistry were stressed to maintain stability and order.
• A historical perspective gives the foreigner in Japan a basis on which to begin developing cultural sensitivity and a better understanding of contemporary Japanese behavior.
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History is Subjective
• Historical events always are viewed from one’s own biases and SRC.
• A crucial element in understanding any nation’s business and political culture is the subjective perception of its history.
- Relationship between U.S. and Mexico• Monroe Doctrine
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Territorial Expansion of United States from 1783
• Insert Exhibit 3.1
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Manifest Destiny and the Monroe Doctrine
• Both accepted as the basis for U.S. foreign policy during much of the 19th and 20th centuries.
• The idea of Manifest Destiny was used to justify U.S. annexation of Texas, Oregon, New Mexico, and California and later, U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines.
• Three basic dicta of the Monroe Doctrine:- No further European colonization in the New World- Abstention of the U.S. from European political affairs- Nonintervention of European governments in the governments of the
Western Hemisphere
• Change in the Monroe Doctrine:- 1881, Roosevelt Corollary
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U.S. Intervention in Latin America Since 1945
• Insert Exhibit 3.2
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GEOGRAPHY & GLOBAL MARKETS
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Geography
The study of earth’s surface, climate, continents, countries, peoples, industries and resources
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Climate & Topography
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TOPOGRAPHY
Topography is the study of earth’s surface, shape and features or those of planets
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Climate and Topography
• Climatic conditions, such as altitude, humidity, and temperature, can have an effect on products.
• Within even a single national market, climate can be sufficiently diverse to require major adjustments.
• Topographical issues and geographic hurdles can have a deep effect on the distribution channels of the product and a country’s economy.
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Channel Tunnel: Between UK and France
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Oresund Link
»Sweden/Denmark built bridge and tunnel across the Baltic Strait to Continental Europe
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Geography, Nature and Economic Growth
• Less-privileged (developing) countries suffer disproportionately from natural disasters over more economically stable countries
• In more prosperous countries, the ability to prepare, plan and overcome natural disasters is much greater.
Environmental issues:- Disruption of ecosystems- Relocation of people- Inadequate hazardous waste management- Industrial pollution
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Geography, Nature and Economic Growth
• Less-privileged (developing) countries suffer disproportionately from natural disasters over more economically stable countries
• In more prosperous countries, the ability to prepare, plan and overcome natural disasters is much greater.
Environmental issues:- Disruption of ecosystems- Relocation of people- Inadequate hazardous waste management- Industrial pollution
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Social Responsibility and Environmental Management
The marketer must consider what are the environmental consequences of their product.
- This is especially true if the company is producing the product in the country that the product is being marketed.
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Social Responsibility and Environmental Management
•Pollution is on the verge of getting completely out of control
•China has 16 of the world’s 20 most polluted citiesCritical issue: the disposal of hazardous waste
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Social Responsibility and Environmental Management
- Organizations that have formed to address this problem include:
• The Organization for Cooperation & Development• The United Nations• The European Union• Other international activist groups
- Many organizations and governmental agencies are governed by a concept called “sustainable development”
• A joint approach among governmental agencies, organizations and environmentalists who seek economic growth with “wise resource management, equitable distribution of benefits and reduction of negative effects on people and environment from the process of economic growth”
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Resources
• The availability of minerals and the ability to generate energy are the foundations of modern technology.
• The principal supplements to human energy are:
- Animals- Wood- Fossil fuel- Nuclear power- Ocean tides- Geothermal power- The sun
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Resources
• The availability of natural resources has an impact on economic growth
• Most countries are not self-sufficient, this becomes one of the most important imports and has a major impact on a country’s trade deficit or surplus.
• Global interdependence of energy resources is increasingly important and has incredible political power
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World Energy Consumption
• Insert Exhibit 3.3
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Global Population Trends
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Global Population Trends
Important to know about current population trends because people constitute markets for various categories of goods
Important to know about current population trends because people constitute markets for various categories of goods
Necessary to know about: (1) rural/urban population shifts(2) rates of growth (3) age levels, and (4) population control (5) rural-urban migration of world population(6) population decline and aging (7) worker shortage and immigration
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Controlling Population Growth
• Global population trends determine today’s demand for goods
- Rural/urban population shifts- Rates of growth- Age levels- Population control
• Changes in population will profoundly affect future demand
• The most important deterrent to population control is cultural attitudes about the importance of large families
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World Population by Region – 2005-2050Life Expectancy at Birth – 2005-2010 (millions)
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Rural and Urban Population, 2005-2030 (millions)
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Rural/Urban Migration
•Result of a desire for greater access to:
-Sources of education-Health care-Improved job opportunities
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Population Decline and Aging
• Population growth in many countries has dropped below the rate necessary to maintain present levels
• A nation needs a fertility rate of about 2.1 children per woman
• Not one major country has sufficient internal population growth to maintain itself
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Age Density for World and Selected Countries
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• The free flow of immigration will help to ameliorate the dual problems of explosive population expansion in less-developed countries and worker shortage in industrialized regions
• Europe will need 1.4 billion immigrants over the next 50 years
• Japan and the U.S. will need 600 million immigrants between now and 2050
Worker Shortage and Immigration
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500 Years of Trade
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500 Years of Trade
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World Trade Routes and Communication Links
• Progression of trade routes- Overland- Sea routes- Air routes- The Internet
• Trade routes bind world together, minimizing:- Distance- Natural barriers - Lack of resources - Fundamental differences between and economies
• Trade routes represent attempts to overcome influence of geography
- Causing economic and social imbalances
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The Triad: Trade Between the United States and Canada, the European Community, and Japan ($ billions)
EUROPEANCOMMUNITY
UNITED STATES & CANADA
JAPAN
195.4 66.3
151.6 89.0
91.5
141.7
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Communication Links
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Communication Links
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Communication Links
• Telegraph• Telephone• Television• Satellites• Computer• Internet
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Summary
• A prospective international marketer should be reasonably familiar with the world, its climate, and topographic differences.
• Geographic hurdles must be recognized as having a direct effect on marketing and the related activities of communications and distribution.
• Without a historical understanding of a culture, the attitudes within the marketplace may not be fully understood.
• The study of history and geography is needed to provide the marketer with an understanding of why a country has developed as it has rather than as a guide for adapting marketing plans.
