CHAPTER IV

 The dominance of U.S. cultural exports is felt

everywhere. Of the 50 worldwide highest-grossing films
by 2008, all were U.S. productions. Kung Fu Panda
(which came in at thirty-sixth) had grossed $631.5
million in its first year and had been the top earner of the
year in diverse markets such as Singapore ($4.3
million), Lithuania ($493,000), Argentina ($5.8 million).
 In television, during the initial stage of the life cycle, the
domestic industry has only fledgling production and
cheap imports-primarily from the United States-to fill the
time slots. With time, however, homegrown production
develops and its market share increases. The top TV
show in South Africa is Generations (a soap opera); in
France, it is Julie Lescaut (a police series); and in Brazil,
it is O Clone (a soap opera).
 Art Attack, an art show for Disney Channel (which is
seen around the world), included 216 episodes shot in
26 different languages. A single format (a set that
features oversized paint pots and paint brushes, in
fuchsia pink and lime green).
 In Europe, a number of developments seem to conspire
to favor U.S. films. The spread of multiplex cinemas has
increased attendance, but the multiplexes tend to show
more U.S. movies. Le Fabuleux Destin d’Amѐlie
Poulain, a French-made romantic comedy, recaptured
the French box office to the tune of $37.7 million in
receipts. It was one of four French films released in
2001 that sold more than five million tickets, beating a
record set in 1947.
 The trade in entertainment is no longer a one-way street
making all who watch and listen clones of one another.
Much of the U.S. content going abroad is adjusted to its
markets, as is the material coming into the United
States. Britain’s Bob the Builder has hammered his way
into U.S. homes and the homes of 29 other countries but
with the loss of his Staffordshire accent; since its
introduction in May 2001, 2.9 million videos of this
animated series have been sold.
 For years, marketers have been heralding the arrival of
the global customer, an individual or entity that would
both think and purchase alike the world or region over.
These universal needs could then be translated into
marketing programs that would exploit these similarities.
However, if this approach were based on the premise of
standardization, a critical and fatal mistake would be
made. Overseas success is very much a function of
cultural adaptability: patience, flexibility, and tolerance
for other’s beliefs.
 In expanding their presence, marketers will acquire not
only new customers but new partners as well. These
essential partners, whose efforts are necessary for
market development and penetration, include agents,
distributors, other facilitating agents (such as advertising
agencies and law firms), and, in many cases, the
government.
 Cultural differences often are the subject of anecdotes,
and business blunders may provide a good laugh.
Cultural diversity must be recognized not simply as a
fact of life but as a positive benefit; that is, differences
may actually suggest better solutions to challenges
shared across borders. Cultural competence must be
recognized as a key marketing skill.

 The intent of this chapter is first to analyze the concept

of culture and its various elements and then to provide
suggestions for meeting the cultural challenge.
 Culture gives an individual an anchoring point-an
identity-as well as codes of conduct. Of the more than
160 definitions of culture analyzed by Alfred Kroeber
and Clyde Kluckhohn, some conceive of culture as
separating humans from non-humans, some define it as
communicable knowledge, and some see it as the sum
of historical achievements produced by humanity’s
social life. Common ways of thinking and behaving that
are developed are then reinforced through social
pressure. Geert Hofstede calls this the “collective
programming of the mind.”
 Culture is defined as an integrated system of learned
behaviour patterns that are distinguishing characteristics
of the members of any given society. Every person is
encultured into a particular culture, learning the “right
way” of doing things. Problems may arise when a
person encultured in one culture has to adjust to another
one. The process of acculturation-adjusting and
adapting to a specific culture other than one’s own-is
one of the keys to success in international operations.
 Edward T. Hall, who has made some of the most
valuable studies on the effects of culture on business,
makes a distinction between high and low context
cultures. In high context cultures, such as Japan and
Saudi Arabia, context is at least as important as what is
actually said. The speaker and the listener rely on a
common understanding of the context. In low context
cultures, however, most of the information is contained
explicitly in the words. North American cultures engage
in low context communications.
 The international manager’s task is to distinguish
relevant cross-cultural and intracultural differences and
then to isolate potential opportunities and problems.
Good examples are the Hispanic subculture in the
United States and the Flemish and the Walloons in
Belgium. For example, IKEA’s research in the United
States found that Latin families wanted bigger dining
room tables to accommodate bigger families. Here the
international business entity will act as a change agent
by introducing new products or ideas and practices.
 The example of Kentucky Fried Chicken in India
illustrates the difficulties marketers may have in entering
culturally complex markets. KFC could have alleviated
or eliminated some of the anti-Western passions by
taking a series of preparatory steps:
1. First, KFC should have allied with local partners for
advice and support.
2. Second, KFC should have tried to appear more Indian
rather than using high-profile advertising with Western
ideas.
3. Finally, KFC should have planned for reaction by
competition that came from small restaurants with
political clout at the local level.
 In some cases, the international marketer may be
accused of cultural imperialism, especially if the
changes brought about are dramatic or if culture-specific
adaptations are not made in the marketing approach. In
2005, the United Nations Educational, Scientific, and
Cultural Organization passed the Convention on the
Protection and Promotion of Diversity of Cultural
Expressions, which declares the right of countries to
“maintain, adopt, and implement policies and measures
that they deem appropriate for the protection and
promotion of music, art, language, and ideas as well as
cultural activities, goods, and services.
 In October 2005, the European Court of Justice brought
to a close one of the most controversial disputes over
geographic indications, removing the right of any non-
Greek EU producers to use the name Feta for cheese.

 If European negotiators in the World Trade Organization

get their way, food names associated with specific
regions-Parma ham from Italy, Stilton cheese from the
United Kingdom, and Marsala wine from Italy-would be
reserved solely for companies located in the respective
regions.
 For many, the European idea is bald-faced protectionism
and has no merit on protecting cultural values. “This
does not speak of free trade; it is about making a
monopoly of trade,” said Sergio Marchi, Canada’s
ambassador to the WTO. “It is even hard to calculate the
cost and confusion of administering such a thing.”
 Furthermore, no market is only an exporter of culture.
Given the ethnic diversity in the United States (as in
many other country markets), programming from around
the world is made readily available. Global marketers
and media have made it possible for national and
regional artists to break into worldwide markets,
especially the U.S. and European markets. Thailand’s
Tata Young has been signed by SONY BMG to be
groomed for global stardom.
 The worst scenario for marketers is when they are
accused of pushing alien behaviors and values-along
with products and promotions-into other cultures, which
can result in consumer boycotts and even destruction of
property. McDonald’s, KFC, Coca-Cola, Disney, and
Pepsi, for example, have all drawn the ire of anti-
American demonstrators for being icons of globalization.
In the United States, those protests were aimed at
French and Germans, while opponents of the war
focused on U.S. companies.
 The study of culture has led to generalizations that may
apply to all cultures. Such characteristics are called
cultural universals, which are manifestations of the
total way of life of any group of people. These include
such elements as bodily adornments, courtship,
etiquette, family gestures, joking, mealtimes, music,
personal names, status differentiation, and trade.
 Observation of the major denominators summarized in
Exhibit 4.1 suggests that the elements are both material
(such as tools) and abstract (such as attitudes). The
sensitivity and adaptation to these elements by an
international firm depends on the firm’s level of
involvement in the market.
 A total of 6,912 known living languages exist in the
world, with 311 being spoken in the United States, 297
in Mexico, 13 in Finland, and 241 in China. Language
has been described as the mirror of culture. Language
itself is multidimensional by nature.
 Language capability serves four distinct roles in
International Marketing:
1. Language aids in information gathering and evaluation
efforts.
2. Language provides access to local society.
3. Language capability is increasingly important in
company communications, whether within the
corporate family or with channel members.
4. Language provides more than the ability to
communicate.
 Similar challenges occur with other languages and
markets. Swedish is spoken as a mother tongue by 8
percent of the population in Finland, where it has idioms
that are not well understood by Swedes. Good year has
identified five different terms for the word tires in the
Spanish-speaking Americas: cauchos in Venezuela,
cubiertas in Argentina, gomas in Puerto Rico,
neumaticos in Chile, and Ilantas in most of the other
countries in the region.
 The role of language extends beyond that of a
communications medium. Linguistic diversity often is an
indicator of other types of diversity. In Quebec, the
French language has always been a major
consideration of most francophone governments
because it is one of the clear manifestations of the
identity of the province that separates it from the
English-speaking provinces.
 Despite the fact that English is encountered daily by
those on the Internet, the “e” in e-business does not
translate into “English”. In a survey, European users
highlighted the need to bridge the culture gap. One third
of the senior managers said they will not tolerate English
online, while less than 20 percent of the German middle
managers and less than 50 percent of the French ones
believe they can use English well.

 One of the simplest methods of control is back-

translation-the translating of a foreign language version
back to the original language by a different person from
the one who made the first translation.
 Managers must analyze and become familiar with the
hidden language of foreign cultures.

 Five key topics

 Time
 Space
 Material possessions
 Friendship patterns and
 Business agreements
 Offer a starting point from which managers can begin to
acquire the understanding necessary to do business in
foreign countries.

 Individuals vary in the amount of space they want

separating them from others. Arabs and Latin Americans
like to stand close to people they are talking with.
International body language must be included in the
nonverbal language of international business. Northern
Europeans are quite reserved in using their hands and
maintain a good amount of personal space, whereas
Southern Europeans involve their bodies to a far greater
degree in making a point.
 Religion defines the ideals for life, which in return are
reflected in the values and attitudes of societies and
individuals. Religion provides the basis for transcultural
similarities under shared beliefs and behaviour.

 The impact of these similarities will be assessed in

terms of the dominant religions of the world:
 Christianity
 Islam
 Hinduism
 Buddhism
 Confucianism
 Christianity has the largest following among world
religions, with more than 2 billion people. While there
are many significant groups within Christianity, the major
ones are Catholicism and Protestantism.

 Islam, which reaches from the West coast of Africa to

the Philippines and across a wide band that includes
Tanzania, Central Asia, Western China, India and
Malaysia, has more than 1.2 billion followers. One of the
fastest growing segments in the financial sector is
Islamic banking. Religion affects the marketing of
products and service delivery.
 Hinduism has 860 million followers, mainly in India, Nepal,
Malaysia, Guyana, Suriname, and Sri Lanka. The family is
an important element in Hindu society, with extended
families being the norm.

 Buddhism, which extends its influence throughout Asia

from Sri Lanka to Japan, has 360 million followers. The
emphasis in Buddhism is on spiritual achievement rather
than worldly goods.

 Confucianism has over 150 million followers throughout

Asia, especially among the Chinese, and has been
characterized as a code of conduct rather than a religion.
The emphasis on relationships is very evident when
developing business ties in Asia.
 Values are shared beliefs and group norms that have
been internalized by individuals. Attitudes are
evaluations of alternatives based on these values. The
more rooted values and attitudes are in central beliefs
(such as religion), the more cautiously the international
marketing manager has to move. Attitude toward
change is basically positive in industrialized countries,
whereas in more tradition-bound societies, change is
viewed with great suspicion, especially when it comes
from a foreign entity.
 While products that hit the right cultural buttons can be
huge successes in foreign markets, not all top brands
will translate easily from one culture to another. One of
the main reasons was that while the Japanese have
positive attitudes toward American pop culture, the
Europeans are quite content with their own cultural
values and traditions.
 Changes occurring in manners and customs must be
carefully monitored, especially in cases that seem to
indicate narrowing of cultural differences between
people.

 Understanding manners and customs is especially

important in negotiations, because interpretations based
on one’s own frame of reference may lead to a totally
incorrect conclusion. To negotiate effectively abroad,
one needs to read correctly all types of communication.
 Preparation is needed not only in the business sense
but in a cultural sense as well. Some of the potential
areas in which marketers may not be prepared include:

 Insufficient understanding of different ways of thinking;

 Insufficient attention to the necessity of saving face;
 Insufficient knowledge and appreciation of the host
country-history, culture, government, and image of
foreigners;
 Insufficient recognition of the decision-making process
and the role of personal relations and personalities;
and
 Insufficient allocation of time for negotiations
 Managers must be concerned with differences in the
ways products are used. The international manager
must ask, “What are we selling?” “What are the use
benefits we should be providing?” and “Who or what are
we competing against?”

 Meticulous research plays a major role in avoiding these

types of problems. Concept tests determine the potential
acceptance and proper understanding of a proposed
new product. Focus groups, each consisting of eight to
twelve consumers representatives of the proposed
target audience, can be interviewed and their responses
used to check for disasters and to fine-tune research
findings.
 Material culture results from technology and is directly
related to the way a society organizes its economic
activity. It is manifested in the availability and adequacy
of the basic economic, social, financial, and marketing
infrastructures. The basic economic infrastructure
consists of transportation, energy, and communications
systems.
 Social infrastructure refers to housing, health, and
educational systems. Financial and marketing
infrastructures provide the facilitating agencies for the
international firm’s operation in a given market in terms
of, for example, banks and research firms. The level of
material culture can be a segmentation variable if the
degree of industrialization of the market is used as a
basis.

 One the one hand, many Chinese do not comprehend

the need to return phone calls or to respond to
customers. On the other hand, Chinese do not leave
messages either, expecting to talk to a live person.
 Mobile payment services (m-payments) enable
consumers to pay for goods and services from their
bank account using their mobile phone. These services
have evolved over time from using voice or short
message services (SMS) to initiate and settle a
transaction to the present-day use of a phone for one-
step instant purchases.
 However, while analysts predicted that m-payments
would account for as much as $15 billion by 2010, m-
payments have taken off in Japan and Korea but failed
to reach estimated potential within the European Union
and the United States. In the European Union and the
United States, payment cards are already deeply
embedded in consumer behaviour; consumers may not
be eager to move away from a familiar system, and they
may not have thought of using phones as payment
devices.
 Technological advances have probably been the major
cause of cultural change in many countries. Consumers
around the world are showing greater acceptance of
equipment for personal use, reflected in increased sales
of mobile phones and small computers as well as
increased Internet use. With technological advancement
also comes cultural convergence.

 Material culture-mainly the degree to which it exists

and how much it is esteemed-will have an impact on
marketing decisions. Many exporters do not understand
the degree to which U.S. consumers are package-
conscious.
 Each culture makes a clear statement concerning good
taste, as expressed in the arts and in the particular
symbolism of colors, form, and music. What is and what
is not acceptable may vary dramatically even in
otherwise highly similar markets.

 Color is often used as a mechanism for brand

identification, feature reinforcement, and differentiation.
In international markets, colors have more symbolic
value than in domestic markets.
 International firms have to take into consideration local
tastes and concerns in designing their facilities. They
may have a general policy of uniformity in building or
office space design, but local tastes may often warrant
modifications. Respecting local cultural traditions may
also generate goodwill toward the international
marketer. For example, McDonald’s painstakingly
renovated a seventeenth-century building for its third
outlet in Moscow. History may also play a role. The
Shanghai World Financial Center (developed largely by
the Japanese Mori Building Corporation) became the
tallest structure in China in 2008 at 492 meters/1,641
feet.
 Education, either formal or informal, plays a major role
in the passing on and sharing of culture. Educational
levels of a culture can be assessed using literacy rates
and enrollment in secondary or higher education,
information available from secondary data sources.

 Educational levels will have an impact on various

business functions. Training programs for a production
facility will have to take the educational backgrounds of
trainees into account.
 The international marketing manager may also have to
be prepared to fight obstacles in recruiting a suitable
sales force or support personnel. If technology is
marketed, the level of sophistication of the product will
depend on the educational level of future users. Product
adaptation decisions are often influenced by the extent
to which targeted customers are able to use the product
or service properly.
 Social institutions affect the ways in which people relate
to each other. The family unit, which in Western
industrialized countries consists of parents and children,
in a number of cultures is extended to include
grandparents and other relatives. This will have an
impact on consumption patterns and must be taken into
account, for example, when conducting market
research.
 The division of a particular population into classes is
termed social stratification. Stratification ranges from
the situation in Northern Europe, where most people are
members of the middle class, to highly stratified
societies such as India, in which the higher strata control
most of the buying power and decision-making
positions.
 An important part of the socialization process of
consumers worldwide is reference groups. These
groups provide the values and attitudes that become
influential in shaping behaviour. Reference groups also
provide a baseline for compliance with group norms
through either conforming to or avoiding certain
behaviors.

 Social organization also determines the roles of

managers and subordinates and the way they relate to
one another. In some cultures, managers and
subordinates are separated explicitly and implicitly by
various boundaries ranging from social class differences
to separate office facilities.
 Cultural knowledge can be defined by the way it is
acquired. Objective or factual information is obtained
from others through communication, research, and
education.

 Experiential knowledge, on the other hand, can be

acquired only by being involved in a culture other than
one’s own. Both factual and experiential information can
be general or country-specific. In fact, the more a
manager becomes involved in the international arena,
the more he or she is able to develop a meta-
knowledge, that is, ground rules that apply to a great
extent whether in Kuala Lumpur, Malaysia, or Asuncion,
Paraguay.
 Various sources and methods are available to the
manager for extending his or her knowledge of specific
cultures. Most of these sources deal with factual
information that provides a necessary basis for market
studies. Beyond the normal business literature and its
anecdotal information, specific country studies are
published by governments, private companies, and
universities.
 U.S Department of Commerce’s (http://www.ita.doc.gov)
Country Commercial Guides cover 133 countries
 Economist Intelligence Unit’s (http://www.eiu.com)
Country Reports cover 180 countries
 Culturegrams (http://www.culturegrams.com) which
detail the customs of peoples of 187 countries

 Many facilitating agencies-such as advertising agencies,

banks, consulting firms, and transportation companies-
provide background information on the markets they
serve for their clients.
 For example:

 Runzheimer International’s (http://www.runzheimer.com)

international reports on employee relocation and site
selection for 44 countries
 Hong Kong and Shanghai Banking Corporation’s
(http://www.hsbc.com) Business Profile Series for 22
countries in the Asia-Pacific
 World Trade magazine’s
(http://www.worldtrademag.com) “Put Your Best Foot
Forward” series, which covers Europe, Asia,
Mexico/Canada, and Russia.
 International business success requires not only
comprehensive fact finding and preparation, but also an
ability to understand and fully appreciate the nuances of
different cultural traits and patterns. Gaining this
interpretive knowledge requires “getting one’s feet
wet” over a sufficient length of time.
 To try to understand and explain differences among
cultures and subsequently in cross-cultural behavior, the
marketer can develop checklists and models showing
pertinent variables and their interaction.
 The key variable of the model is propensity to change,
which is a function of three constructs:

1. Cultural lifestyle of individuals in terms of how deeply

held their traditional beliefs and attitudes are, and also
which elements of culture are dominant;
2. Change agents (such as international marketers and
their practices) and strategic opinion leaders; and
3. Communication about the innovation from commercial
sources, neutral sources (such as government), and
social sources, such as friends and relatives.
 It has been argued that differences in cultural lifestyle
can be accounted for by four major dimensions of
culture:

 Individualism
 Power distance
 Uncertainty avoidance
 Masculinity

 Knowledge of similarities along these four dimensions

allows us to cluster countries and regions establish
regional and national marketing programs.
 Adjusting to differences requires putting one’s own
cultural values aside. James E. Lee proposes that the
natural self-reference criterion- the unconscious
reference to one’s own cultural values-is the root of most
international business problems. However, recognizing
and admitting this are often quite difficult.
 The following analytical approach is recommended to
reduce the influence of one’s own cultural values;

Define the problem or goal in terms of domestic

cultural traits, habits, or norms.
Define the problem or goal in terms of foreign cultural
traits, habits, or norms. Make no value judgments.
Isolate the self-reference criterion influence in the
problem and examine it carefully to see how it
complicates the problem.
Redefine the problem without the self-reference
criterion influence and solve for the optimal goal
situation.
 Food is arguably one of the most culture-sensitive
categories. Gruma, a company headquartered in
Monterrey, Mexico, is a $2.5 billion international
powerhouse transcending to markets as diverse as the
United States, Mexico, Central America, Venezuela, and
more recently, Europe. The Company began operations
in Mexico in 1949. Gruma developed proprietary
technology that has allowed the company to position
itself as the worldwide leader in corn flour and tortilla
production, in production cost, and product quality.
 Gruma’s success has come in part from the realization
that its product is a carrier of local tastes and it is the
company’s job to adapt that carrier to local tastes.
Ultimately, Gruma’s most versatile and marketable
product has proven to be not a food, but a process-more
specifically, the ability to roll any kind of flour, from corn
to wheat to rice, into salable flatbread.
 In many European countries, however, such as
Portugal, Spain, Italy, Greece, and France, where the
food is healthy and the eating habits are good, it’s
harder to make inroads. Because Italians have very
traditional eating habits, quick-serve restaurants that
offer flatbread were not successful for many years.
Similar sensitivities have to be applied in single-market
efforts as well.
 International managers face a dilemma in terms of
international and intercultural competence. U.S firms
lack of adequate foreign language and international
business skills has resulted in lost contracts, weak
negotiations, and ineffectual management.

 The increase in overall international activity of firms has

increased the need for cultural sensitivity training at all
levels of the organization. Today’s training must take into
consideration not only outsiders to the firm but
interaction within the corporate family as well.
 Some companies try to avoid the training problem by
hiring only nationals or well-travelled executives for their
international operations. To foster cultural sensitivity and
acceptance of new ways of doing things within the
organization, management must institute internal
education programs. These programs may include;

1. Culture-specific information
2. Cultural general information
3. Self-specific information
 Environmental briefings and cultural orientation
programs are types of area studies programs. These
programs provide factual preparation for a manager to
operate in, or work with people from, a particular
country. Area studies should be a basic prerequisite for
other types of training programs. Other, more involved
programs contribute the context in which to put facts so
that they can be properly understood.

 The cultural assimilator is a program in which trainees

must respond to scenarios of specific situations in a
particular country. These programs have been
developed for the Arab countries, Iran, Thailand, Central
America, and Greece.
 Sensitivity training focuses on enhancing a
manager’s flexibility in situations that are quite
different from those at home.
 Finally, training may involve field experience,
which exposes a manager to a different cultural
environment for a limited amount of time.
 Regardless of the degree of training, preparation,
and positive personal characteristics, as a manager
will always remain foreign. A manager should never
rely on his or her own judgment when local
managers can be consulted. Overconfidence in
one’s language capabilities can create problems.
 Managers heading abroad to negotiate a deal,
relocating to a foreign environment, or multicultural
teams working within large organizations are just some
of the scenarios that benefit from cross-cultural training.
Skimping on training in this area can be potentially
hazardous.

 Many organizations are adding online training following

the face-to-face classroom training in order to gain
continuous and additional training.
 Many of the programs use the following elements:

Detailed Scenarios
Gradual Delivery
Support
Relevant Exercises
Online Discussions
 Culture should not be viewed as a challenge but as an
opportunity that can be exploited. This requires, as has
been shown in this chapter, an understanding of the
differences and their fundamental determinants.
 The following rules serve as a summary of how culture
and its appreciation may serve as a tool to ensure
marketing success.

Embrace local culture

Build relationships
Employ locals to gain cultural knowledge
Help employees understand you
Adapt products and processes to local markets
Coordinate by region
 Of all the brands in the world, there is none more
consistent than Disney, which stands for “family magic,”
whether in Penang, Pisa, or Peoria. For the last ten
years, the Walt Disney Company has made it a priority
to build its international business in television, movies,
retail, and theme parks with the goal of half of profits to
come from overseas by 2010. The main approach of
getting to the goal is by embracing local culture.
 Disney’s efforts to give its Hong Kong park a more
Chinese character reflect a broader effort by the
company to understand local culture. Research is
conducted in the homes of Chinese consumers, who are
asked about their knowledge of the Disney brand and
their lifestyles as busy families.

 Adapting products and processes to local market is a

key ingredient of successful global strategy. The gods of
wealth; longevity, and happiness have been added to
the Hong Kong Disneyland gang. To support the
marketing efforts of the theme park, Disney has
expanded its TV, online, and film businesses in China.
 The role of local employees is critical in gaining cultural
knowledge. Disney has given more power to local
managers to develop completely local approaches, to
adapt U.S. franchises and make local versions of them,
or build interest in U.S. shows such as “Hannah
Montana” and “Kim Possible.”