Cultural dynamics in international business
• Culture is the basis that provides acceptability for shares beliefs values and norms within a society or a business set up. There are different dynamics that define culture within international markets.
• It can be transferred from generation to generation and can be shared. It is defined through different dynamic. There are different dynamics that define what people belief in and some of them include
• Social institutions. This refers to schools, place of work, government and corporations where people relate to each other. Such places organize occupations for people to do.
• Rituals. It refers to the different patterns of behavior that people undertake in.
• Linguistic distance. The language that enables people to communicate when doing business and other activities. The wider the language gap the costly the transaction cost. Language is an important factor that determines how values while be shared when trading in the international market.
• Cultural borrowing. The aspects of learning and borrowing of values and norms from other cultures.
There are also different elements of culture which include
• Values. The shared beliefs or group norms that have been internalized by individuals. The same values are sometimes accommodated or used in the management of business functions.
• Some values support individualistic behaviors other collectivistic as stated by Geert Hofstede or high and low context cultures.
• Symbols. These are the written, unwritten and objects that define the culture for example aesthetics as a symbol. Linguistic distance between the language of certain people and international marketing
• Beliefs. In today’s world superstitions play a very important role in international marketing and trading. It is very important for international companies to understand different beliefs otherwise it can be very expensive if avoided.
• Aesthetics. This is a cultures sense of beauty and good taste for example arts, music, drama dressing and cosmetics.
Business customs and practices in international marketing
• Different countries have different rules and laws pertaining to how businesses should be undertaken. They also have different practices that they uphold when doing business. It is therefore important to measure the corporate strategy of the host country for example economic performance is measured through diverse currencies.
• In international marketing companies need to be competitive against technical standards.
• There are three types of customs
• Cultural Imperatives. Business customs and expectations that MUST be met in order to conduct successful business transactions in other countries/cultures
• Cultural Electives. Business customs and expectations that are OPTIONAL, in which business executives may participate/conform in, but is not required. May help to establish rapport and respect when participation occurs. Majority of customs fall into this category
• Cultural exclusives. These refers to customs that may be reserved for the locals but not for foreigners.
Sources and levels of authority
• The management, Size and cultural values combine to determine the authority structure of the company in the international arena.
• There are different types of patterns of authority:
• Top level management decision making: This type of pattern is found in small businesses where there is family ownership and control. In other cases, it can be for companies where professional managers have to follow decisions made by politicians
• Decentralized management decision making: It allows managers at different levels of management to execute authority over their own functions. It mostly found in large- scale businesses with highly developed management structures.
• Committee decision making: It emphasizes group decision making but at management level. Cultures with high context levels such as the Japanese tend to emphasize this pattern of authority.
Adaptations to customs
• Global perspective: Companies and individuals should be well aware of the cultural behaviors of the international market and be able to adapt to the environment for example marketers should know do research on how products perform.
• Adaptation: The willingness to adapt to other customs is essential in international marketing. Degree of Adaptation, this does not mean that businesses discard their methods of conducting business, rather that executives need to be aware of differences and willing to adapt to the differing customs.
International marketing legal environment
• International marketers need to pay close attention to the laws of each country as no single international law governs foreign business undertakings
• Laws are an integral part of doing business within and between countries and they make up the legal environment of international business.
• In a global perspective marketers need to understand the laws and regulations pertaining to packaging, marketing and presenting products in the middle eastern region. As the laws in such regions in particular fashion, restrict provocative imagery and messages. Doing so could be seen as a provocative way of going against the socio-cultural perception of customers.
• It is therefore important to understand that some government specify specific standards for the international products being marketed to potential customers in the host country. Some policies put in place by governments could be threats or opportunities for international marketers.
• There are different categories of laws pertaining to international marketing and they include the following
? Common law: Mostly found in English speaking countries and it is laws which are associated with customs and judicial precedent. International companies should be well aware of the laws in different countries and also know that they are different in each country not unless they share the same values.
? Code law: This is the type of law that purports to cover a complete system of rules or specific area of laws. Such laws are comprehensive and are continuously updated legal codes. As international managers one should be knowledgeable of the daily changes pertain to laws in the marketing field.
? Commercial legal system: These laws are mostly characterized in Marxist countries such as China and Russia. These laws require individuals and businesses to engage in commerce and other areas in a specific way but it is often considered to be a branch of code or civil law.
• In case of a conflict pertaining to international businesses there are different types of legal disputes. Disputes between governments, between companies and governments, and between two companies.
• Therefore, there can be no international law system, so the main common ways to resolve these legal issues could be through the following
? Based on jurisdictional clauses in agreements
? Based on where an agreement was entered into
? Based on the originality of provisions of the contract
• The most important laws to be aware of in global marketing is the intellectual property rights laws, antitrust laws and cyber laws.
• Subsequently the main marketing objective of an international company should be to develop a plan that will be enacted or at most not negatively affected by the political as well as the legal environments of the host nation.
International marketing strategies
• This is the area of marketing that is concerned with the performance of company activities that direct the constant flow of products and services to customers in more than one nation.
• It is important because it gives a value to surplus by trading hem for something which may gratify a part of their wants and increase amusement.
• The profits from international marketing contributes to the stability of both a nation’s GDP and also the well-being of the international company.
• These strategies enable a company achieve economies of scale through expansive production and reduced per unit cost of production. Some of the strategies used in international marketing include
? Global advertisement: It is related to multinational operations strategy and is referred to as advertising a same product, the same way everywhere for example Coca cola that adopts a global marketing
? Price promotion. This can be done through offering discounts or additional rewards for bought product
? Making use of tradeshows.
? B2B Marketing.
? Inbound marketing: This is done by giving requests to consumers for an additional service other than the one which was being offered.
? Outbound marketing: Mostly done by reaching out to a target group for example students in universities, customers of a bank by letting them know that a particular product or service exist.
International marketing entry strategies
• Ironically there is no single market entry for an international organization therefore marketers rely on a number of strategies to make a significant step in different countries
• A lot of factors will determine the choice of strategy and this same factors may increase or decrease the cost to markets. Some of the market entry strategies include for organizations include
? Franchising. An organization grants a foreign firm the right to use the production process, brand, name and sales information in return for payment.
? Exporting. This refers to send produced goods from one country to another. It termed by marketers as a low-risk market entry that organizations find suitable for new growth opportunities
? Joint venture. This is where a partnership is formed by two companies of different origins (domestic firm and foreign firm) so as to provide a specific service or product to consumers.
? Direct investment. In this strategy multinational companies choose to engage in wide scale production and marketing abroad y direct investment through producing or marketing products overseas.
? Trade intermediaries. If accompany lacks the resources to penetrate a foreign market, then it may opt to hire trade intermediaries
• In summary Culture plays a big part in international marketing therefore companies seeking to engage in global investments must have the knowledge of host nation’s culture before setting base.
• Customs define what kind of marketing a company can engage in, the type of marketing done in the United states cannot be the same as that of the middle east.
• Government policies can stipulate certain types of marketing strategies therefore it is important that international enterprises plan their strategies in line with this
• In conclusion global marketers face a lot of challenges in the international business environment it is therefore necessary for them to be aware of the culture, for example religion, education, customs and values of the environment