Cultural Dynamics, Business Customs & Political Environment in

Global Market

Presented By Siddhartha S Majumder (S-93)

MBA-PT(2010-2013)

Cultural Dynamics in Assessing Global Markets

• What is culture?

“sum total of knowledge, beliefs, art, morals, laws, customs, and habits acquired by humans as members of society”.

“Software of the mind” culture is a guide for humans on how to think and behave; it is a problem-solving tool (Hofstede)

Origin of Culture

• Culture resides in the individual’s mind.

• It is the sum of the values, rituals, symbols, beliefs and thought process.

• Geography (climate, topography, flora, fauna and microbiology )directly effect on consumer choice. Which has influenced history, technology, economies, social institutions (family, school, media, Govt., Religious) and our ways of thinking.

Elements of Culture

• Cultural Values :

1. Individualism/ collectivism index (IDV), which focuses on self-orientation

2. Power distance Index (PDI), which focuses on authority orientation.

3. Uncertainly avoidance index (UAI), which focuses on risk orientation

4. Masculinity/Femininity Index (MAS), which focuses on assertiveness and achievement

Elements of Culture

Elements of Culture• Rituals: Rituals are patterns of behavior and

interaction

• Symbols: Language as Symbols - the “languages” of time, space, things, friendships, and agreements.

Aesthetics as Symbols: the arts, folklore, music, drama, and dance.

• Language: a social institution. English spreads around the world via school systems and the internet.

• Beliefs : an organized pattern of knowledge that an individual holds to be true about the world.

• Thought Processes : degree to which ways of thinking vary across cultures.

Cultural Change• Culture is dynamic in nature; it is a living process. It

change & accept or reject new ideas.

• Cultural Borrowing : acceptance of innovations varies across cultures. Innovation associated with higher IDV, lower PDI & UAI.

• Resistance to Change : It is a characteristic of human culture that resist change. Like working women in Masculine societies like Saudi Arabia.

• Planned and Unplanned Cultural Change : First, determine which cultural factors conflict with an innovation, thus creating resistance to its acceptance.

Cultural Change• Second, change those factors from obstacles to

acceptance into stimulants for change.

• Third, marketers can cause change by introducing an idea or product and deliberately setting about to overcome resistance and to cause change that accelerates the rate of acceptance.

• a strategy of planned change by deliberately changing those aspects of the culture offering resistance to predetermined marketing goals

Business Customs in Global Marketing• Business customs are a cultural element of a society

as language & knowledge of the business culture, management attitudes, and business methods and a willingness to accommodate the differences.

• Required Adaptation: Adaptation is a key concept in IM and willingness to adapt is a crucial attitude. There are ten basic criteria : (1) open tolerance, (2) flexibility, (3) humility, (4) justice/fairness, (5) ability to adjust to varying tempos, (6) curiosity/interest, (7) knowledge of the country, (8) liking for others, (9) ability to command respect, and (10) ability to integrate oneself into the environment.

Business Customs in Global Marketing• Degree of Adaptation : effective adaptation is

awareness of one’s own culture and the recognition. The self-reference criterion (SRC) is especially operative in business customs.

• Imperatives, Adiaphora and Exclusives :

Cultural imperatives refer to the business customs and expectations that must be met for successful relationships.

Cultural adiaphora relates to areas of behavior.

Cultural exclusives are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is excluded.

Business Customs in Global Marketing• Sources and Level of Authority :

Top-level management - decision making by small family business.

Decentralized - decision making by large-scale business with highly developed management.

Committee decision making is by group or consensus, may be centralized or decentralized basis.

• Management Objectives and Aspirations

• Personal Goals

• Security and Mobility

• Personal Life

Business Customs in Global Marketing

• Social Acceptance

• Power

• Communications Emphasis

• Formality and Tempo

• P-Time versus M-Time

• Negotiations Emphasis

• Gender Bias in International Business

Political Environment• Global marketing activities take place within the

political environmental of governmental institutions, political parties, and organizations through which a country’s people and rulers exercise power

• The Sovereignty of Nations : In the context of international law, a sovereign state is independent and free from all external control; enjoys full legal equality with other states; governs its own territory; selects its own political, economic, and social systems; and has the power to enter into agreements with other nations.

Political Environment

• Stability of Government Policies - 5 political causes Forms of Government and Political Parties – 3 forms

of Govt.monarchy (or dictatorship), aristocracy (or

oligarchy), and democracy.Nationalism Targeted Fear and/or Animosity Trade Disputes Political Risks of Global Business• Confiscation, Expropriation and Domestication

Political Environment• Local-Content Laws• Import Restrictions• Tax Controls Price Controls• Labor Problems• Political Sanctions• Violence, Terrorism and War• Assessing Political Vulnerability• Sensitive Products and Issues• Economic Risks• Exchange Controls

Political Environment

• Forecasting Political Risk• Lessening Political Vulnerability• Joint Ventures• the Investment Base• Licensing• Planned Domestication• Political Bargaining• Political Payoffs• Government Encouragement