Managing Cultural Dynamics In Global Markets Commerce Essay

Managing Cultural Dynamics In Global Markets Commerce Essay Culture defines a certain way of life. The study of culture is one of the prerequisite for the studies of management and international management in particular. The knowledge of culture is also required for designing products and business strategies for the consumers of a foreign market. Figure 7: Components of Culture The management is a dynamic process and needs constant innovation and changes to accomodate as per economic conditions and cultural influences.The business strategy is formed as result of business effort, economic conditions and other components of culture. In this chapter of thesis, i choose to describe the sensitivity of management to dynamics of culture. It also focuses on origin and elements of cultures in different countries. 2.2 Cultures Pervasive Impact The culture affect the life of an individual from birth to death. It influences the consumption pattern as well as other habits. For example, Spanish are considered sleeping less than other Europeans. The birth rates  [2]  have been severely effected by other religious beliefs. For example, in China, there is more child births in the year of dragon(12 animals) as it is a symbol of good luck. The year witnessed huge sales of toys, diapers etc. So, the managerial decisions need to take account of such things. The below mentioned table shows the different consumption pattern existing across different countries: Table 1- Consumption patterns( annual per capita) Country Cut Flowers Chocolate (Kg) Fish (Kg) Pasta ( Kg) Tobacco (sticks) Wine (Lt) France 81 4.3 27.6 4.6 1375 30.4 Germany 120 8.7 10.2 5.1 1719 21.3 Italy 87 2.5 22.2 20.7 1869 34.4 Netherlands 125 5.0 22.6 2.5 1050 17.9 Spain 33 1.7 37.4 4.4 2288 13.1 United Kingdom 48 10.5 15.4 2.1 973 15.7 Japan 110 1.8 37.8 10.9 2472 6.9 United States 75 5.6 19.0 3.5 1428 5.9 Source: Euro monitor international, 2010 and 2011 From the above table, one can see the British consume highest amount of chocolate. This habit can be attributed to cool British environment, which enables better storage and taste. There is also trends of declining chocolate consumption in Six of European countries with decreasing latitude. Another important thing is about the fish consumption of Japan, as Japanese island is surrounded with water there is a special liking for Fish and seafoods. The Spanish have special liking for fish as well while the flat geography of England is suited for red meat consumption and production. The high noodle consumption of Japan is because of its proximity to China. There is one more interesting table on data related to consequences of consumption. Table 2: Consequences of Consumption Country Birthrate (per 100,000) Life expectancy Heart Disease Liver Diseases Lung Cancer Stomach cancer France 12.3 79 75 16 42 9 Germany 8.2 78 241 22 46 16 Italy 8.6 79 131 19 55 19 Netherlands 10.6 78 113 5 54 11 Spain 8.9 78 100 15 59 15 United Kingdom 10.6 77 162 9 57 12 Japan 9.2 81 59 11 42 41 United States 13.1 78 193 11 55 5 Source: http://www3.who.int/whosis/menu.cfm The longest life of Japanese is attributed to their fish consumption. But high incidence of stomach cancer is because of salty food, like soya sauce and bacterium Helicobacter pylori. This bacteria is because of unhealthy sanitaery conditions in aftermath of world war 2.This has also lead to inventions of some of the best methods to fight stomach cancer in Japan. Similiarly, the high rates of lung cancer among Spanish people is because of their high cigarette consumption. 2.3 Origin of Culture  [3]   To study how the culture of a particular country originated, its needed to study the things like geography, history, social institutions, economy etc. 2.3.1 Geography It is a broad term which includes climate, topography, flora, fauna and micro biology. The presence of large amount of sea water and ports in a country made it a trading hub. Also, Netherlands being a country with lesser colour due to year round snow fall made the people to bring best flowers to country. 2.3.2 History: The historical events have a strong effect on technology, social institutions, cultural values and consumer behavior. The most recent example is of 2003 Middle east conflict. Due to hatred against American product in particular Coca Cola, there were several brands born for example, Mecca Cola, Muslim Up, Arab Cola etc. There are thousands of examples, one is the formation of independent America and its values in 1776 after the publication of Adam Smiths Wealth of Nations. 2.3.3 The Political Economy: The most prominent ways to govern a country was of three types- Fascism. Communism. Democracy. The Fascism collapsed in 1945 followed by communism in 1990s. Another things to affect the political economy was seen in aftermath of September 9/11. The effect of political economy on cultural values will be detailed in next sections of this chapter. Figure 8: Origin elements and Consequences of Culture 2.3.4 Technology: One can easily notice the impact of technology on cultural values in United states. Apart from the inventions of jet, Internet the most influencing technology is the advent of birth control pills in USA. It was because of this that the women participation in United states workforce increased. Although, roman catholic church had criticized the advent of this technology . 2.3.5 Social Institutions  [4]  : The social institutions include family, religion, school, government and organization. These all institutions help people to organize and live collectively. Every culture has its own criterion related to the family, group behavior, men and women equality etc. For example, As Canada is diverse and has various sub cultures, a travel advertisement shows picture of a wife alone for English-speaking Canada and wife with husband for French speaking Canada. 2.3.6 Family: The family types vary around the globe. For example, Nepotism is favored in Chinese and Mexican cultures, while it is criticised in American culture. The size of family do vary with cultures, for example, Japanese mothers tend to care for her children alone and also sleep with them. An American family has parents working hard to support their kids. Also, the kids are taught lessons of individualism very early as they are put in separate bassinette. Also, the higher percentage of boys in India and China are because of the favoritism towards male child. 2.3.7 Religion: Religion is the first social institution a child faces on coming out of his house. The protestants believe in confessing directly to god unlike roman catholics, who confess via church. Some scholars are of thought that the protestants action promote equality among people. So, its important for business managers to understand others religion. It is not an easy task, for example, despite having close to 1.2 billion people following Islam, the MNCs often hurt their sentiments. 2.3.8 School: The school is another important social institution, which helps to shape consumer behavior. There are studies that show strong relation between literacy rates and economic development of a country. The world bank report also supports the above fact as it says that the countries with less than 50 per cent literacy rates are unable to develop properly. The good literacy rates of a country also helps in business communication, which is an important tool for business managers. 2.3.9 The Media: Media is the fourth most influential social institution after school, church and family. This emergence of media in past 30 years comes from the fact that the women have increased their participation in media work force and hence the influence of family has reduced over time. And, on average an American kid attends school 180 days per year. So, leaving plenty of time for too much media exposure and now it is being criticized as well. 2.3.10 Government: The government does not influence the thinking of a child or adolescence. The government has responsibility to effect the mid set of adults. For example, the French government promotes procreation among its citizen and also offers money as birth bonus. The Chinese and Japanese governments are promoting creative thinking by changing school activities and timings. Many times the government is also involved in influencing consumption. For example, after a research showing that drinking caused a lost 2 percent of Irish GDP, the government further tightened the rules to prevent under age drinking. 2.3.11 Organizations: The organizations have a say in media. They have access to global markets and has ability to influence innovation. The organizations can promote a new way of thinking and hence influence a culture. 2.4 Elements of Culture  [5]   As the culture has been defined as a combination of values, rituals, symbols, beliefs, and thought process. The management should give due importance to all of five elements. 2.4.1 Cultural values The cultural values differ from one country to another because of existing diversity across the borders. The study of Geert Hofstede explains how a culture affect the business behavior. His studies covered 90,000 people across 66 countries and he put emphasis on four basic dimensions. The Individualism/Collective Index(IDV). Power Distance Index(PDI). Uncertainity Avoidance Index(UAI). Masculinity/Femininity Index(MAS). The MAS index, which focuses on achievement is least important of above four and i chose to not discuss it in my thesis. Table 3: Hofstedes indexes, Languages, and Linguistic Distance Country IDV Score PDI Score UAI Score Primary Language Distance From English Arab countries 38 80 68 Arabic 5 Australia 90 36 51 English 0 Brazil 38 69 76 Portugese 3 Canada 80 39 48 English 3 Colombia 13 67 80 Spanish 3 Finland 63 33 59 Finnish 4 France 71 68 86 French 3 Germany 67 35 65 German 1 Great Britain 89 35 35 English 0 Greece 35 60 112 Greek 3 Guatemala 6 95 101 Spanish 3 India 48 77 40 Hindi 3 Indonesia 14 78 48 Bahsa 7 Iran 41 58 59 Farsi 3 Japan 46 54 92 Japanese 4 Mexico 30 81 82 Spanish 3 Netherlands 80 38 53 Dutch 1 New Zealand 79 22 49 English 0 Pakistan 14 55 70 Urdu 3 South Korea 18 60 85 Korean 4 Taiwan 17 58 69 Taiwanese 6 Turkey 37 66 85 Turkish 4 United States 91 40 46 English 0 Uruguay 36 61 100 Spanish 3 Venezuela 12 81 76 Spanish 3 Source: From Geert Hofstede, Cultures Consequences,2001. 2.4.1.1 Individualism/Collectivism Index: It shows the behavior which promotes self interests. The cultures that score high on this index promotes individuality by rewarding individual efforts while the low score countries promote group work. Individualism refer to a culture where everyone is independent to other members of family and look after themselves. Although, individualism do promote group work only with the difference that individual performance is identified and rewarded. 2.4.1.2 Power Distance Index: This index is a measure of inequality existing in a society. It generally refer to superiors and sub ordinates relationships. The cultures with higher PDI scores in above table reflect hierarchical organization set up and a sense of privilege for the managers enjoying power. The cultures with low PDI score promote equality. 2.4.1.3Uncertainty Avoidance Index: This index deals with the ease of acceptance of changes by the society. The cultures with high UAI scores are unwelcoming to new ideas. These societies have rules to check anxiety and avoid risks. The countries with lower UAI scores are risk takers. 2.4.1.4 Cultural values and Consumer Behavior: The Hofstede index scores do reflect the cultural values and behaviors existing across different countries. For example, the high scores of United States(91) on IDV reflects that the people like to sit alone and have separate office space etc. While high scores on Hofstede uncertainity avoidance index for Japan(92) and France(86) shows the rejection of risk taking behavior or these citizens might be happier not taking risks in stock markets. Americans have a score of (46) and it signals otherwise. 2.4.1.5 Rituals The rituals include behavior patterns that are learned over a period of time and repeated.For example, Marriages ,funerals or graduation ceremony. The rituals differ across countries. The rituals can be of dinning in a restaurant, in Madrid its common to have dessert first and dinner in midnight, the whole process may last for around three hours. So, the rituals help to form expectation among people. 2.4.1.6 Symbols  [6]   The researcher and anthropolgist Edward T. Hall outlines that culture is a type of communication. He further adds that interpreting symbols around us is an indication of socialization. The child starts listening, watching and learning languages, symbols around him. I start discussing step by step, starting with Language. 2.4.1.7Language The languages are in themselves a social institution and also holds political significance. For Example, in Canada there were political disputes over English/French languages in past. The French people are always trying to maintain purity of their language. In world, many of the languages are on the verge of extinction and the cultural diversity is decreasing with time. The importance of language is for managers, for example, a marketer wanting to sell products in Francemust be familiar with French. So, it is not unfair to say that linguistic distances are a measure of trade affairs among different countries and greater distances accompany with higher transaction costs. With time, the researcher have grouped languages into families, For example, Spanish, Italian, French and Portugese have roots in Latin. However, German, Chinese, Japanese are different branches of a language tree. The distance of these languages from english has been shown in previous table. Also, one can predict and expect different behavior based on the above mentioned index. For example, higher distance from English language is a reflection of lesser individualism. Also, French language has two words for you while English has just one, so English language promotes the equivalence of social status. 2.4 2 Aesthetics as Symbols  [7]   As we know an art has tendency to communicate. For example, in lieu of writing 1000 words one can draw a picture. So, aesthetics become an important issue to be tackled by business managers. Every culture has its own unique myths and metaphors. For example, if one goes to a Japanese restaurant, its common to hear subtle earth tones while if one goes to an ethnic Chinese restaurant, its normal to encounter bright red and yellow lights. The error on aesthetics issues can lead to huge business blunders. These issues are of more importance in deciding advertising, packaging signs of a product. For example, the Japanese word for four is shi, it also means death. In Japan, the teacups are sold in set of five not four. There are a set of different metaphors representing different cultures as shown in below mentioned table. Table 4: Metaphorical of 23 Countries The Thai Kingdom The Traditional British House The Japanese Garden The Malaysian Balik Kampung India: The Dance of Shiva The Nigerian Marketplace Bedouin Jewelry and Saudi Arabia The Israeli Kibbutzim and Moshavim The Turkish Coffeehouse The Italian Opera The Brazilian Samba Belgian Lace The Polish village Church The Mexican Fiesta Kimchi and Korea The Russian Ballet The German Symphony The Spanish Bullfight The Swedish Stuga The Portugese Bullfight Irish Conversations The Chinese Family Altar American Football Source: Martin J Gannon, Understanding global culture 2.4.3 Beliefs  [8]   The human belief is generally formed from reading religious texts. For example, the Western world donot like to use number 13, as they consider it unauspicious. This eminates from the fact that Jesus sat with 12 people in his last supper. There are various secular beliefs as well and they are also called superstition. For Example, the belief of ghosts and demons prevelant in many countries. The Chinese has special significance of number 8, as it denotes prosperity, so the business managers try to put price tags such that they end with number 8. There is another very interesting belief in China, that is of feng shui. It is a way to link a human body to external or driving source of energy, which is responsible for life. The fundamental is to reduce negative energy and ensure good luck, prosperity and good health to owner of the house. The business people often seek the advice of feng shui master to decide entrance of house, day of establishing business etc. In China, people donot like houses having North-West and South-West entrances, as both of the directions are considered to be of devils. This kind of practices must be taken care by business leaders. For Example, Hong-Kong Disney Land is built with the help of a feng shui master. Generally, it is found that some beliefs of a culture are not taken seriously by persons belonging to another culture. Such mistakes should be minimized as beliefs are a culturtal fabric and guide behavior of a society. Thought Processes: Across different cultures around the globe, the thinking method is very different. The book by Richard Nisbett The Geography of Thought is a master work on this issue and shows the existing different thinking patterns prevelant in Asian and Western societies. The author cautions that one should not try to generalize Japanese, Chinese and Korean culture as well as European and American culture. The general findings of the book are consistent with the data used in this thesis. The Nisbetts book shows one very good example of different way to look at a figure by Asians and Europeans. He found that if an Asian sees a picture, he will recall the key figure as well as backlground. But, if an European looks at the same figure, he will only recall the key central figure. This variation of thinking shows wide differences in preferences, values and expectations. The business managers need to be prompt in the above criterion, particularily in case of selling a new product or service. 2.5 Cultural Knowledge  [9]   The cultural knowledge cab be divided into two parts: Factual Knowledge. Interpretive Knowledge. The factual knowledge is associated with the facts which a manager is obliged to learn like, meanings of symbols, colours and tastes. The managers are also required to anticipate various cultural traits. The interpretive knowledge includes learning things like , the peoples attitude towards others, value of time and other cultural patterns. The interpretive knowledge also includes meaning of life in a particular culture etc. 2.5.1 Factual Versus Interpretive Knowledge  [10]   It is very important for managers to have full understanding of factual as well as interpretive knowledge of a society. For example, it is a well known fact that 98 percent of Mexican population is Roman catholic. But, it is also very important to understand that being a catholic in Mexico is different from being a catholic is Spain or Poland. For example, in all catholic countries All souls day is an important festival. The Mexicans also name it as The Day of Dead and believe that the dead persons come to feast and put the favorite food of ancestors on their graves. Its common to see market full of chocolates in the shape of bones etc. Also, the prayers are offered, candles lit. The later activities are catholic but the dead feasting is pre-christain Mexican thinking. The same day is celebrated very differently in other catholic countries. The interpretive knowledge includes the understanding of feelings. Although, this knowledge is dependent on past experiences but should be kept distant from the home countrys self reference criterion(SRC). The managers can be dependent on the text materials related to a culture for learning but the best method of learning is to spend some time in that culture. 2.5.2 Cultural sensitivity and tolerance  [11]   The managers need to analysze objectively any new culture. The managers need to be open in accepting new cultural values. The managers should not judge culture as right or wrong but as a different way of life. One should always keep in mind that for every annoying trait the people see in another culture, there are also some annoying facts in own culture. For Example, It may be a compulsion to use perfumes in one culture while the people in other culture may like to maintain their natural body odor. As the job of managers involve introducing changes and improvements, the managers must be open to accepting or rejecting new ideas and suggestions. The business managers must also be aware of methods to unleash any resistances to change as well. 2.5.2.1 Cultural Change The culture has been defined by many researchers as a living object as it is always going through transformations. The cultures changes in different ways, some culture are influenced by any natural distater or they are influenced by some external disturbances like the case of Japan after world war 2. The societies change to adjust for the changing environment. In order words, a culture is the best way to answer common problems poised by external environment of a society. The cultures also try to diagnose themselves by an activity known as cultural borrowings. This refers to looking into anothers culture for solutions to the problem faced in ones own culture. Another way to solve the problems is through inventions. 2.5.2.2 Cultural Borrowing  [12]   As discussed before, it is a systematic way of looking into another societies to solve the problems being faced in one owns society. For example, nowadays a person living in one country frequently uses the things manufactured in another countries, this is a clear demonstration of a way to solve needs of a society in best way. These cultural facets can be in the form of food, things and habits. It should also be noticed that once a solution is found, it is communicated to next generation and with time becomes a culture heritage. This cultural heritage is an important differenciating factor between human beings and animals. The cultural heritage may contain some borrowed behaviors but it becomes unique for a society and business managers need to demonstrate a clear understanding of them in order to ensure cultural empathy. Similarities: An Illusion The inexperienced business managers get illusive in drawing similarities among cultures which is unexistant. There are several nations in the globe who speak same language, have similar cultural heritage but a product acceptable in one culture might not be acceptable to another culture. That same applies to advertisements as well. Even is English speaking countries like USA and Britain, Although the spoken language is same, there may exists different meanings of a same word or phrase. For example, The Americans call bathroom as toilet in general context but in England bathrooms serve the purpose of only bathing. Another example is that an American asks for elevator and British for lift. Anthropologist Edward Hall says that the world pre assumes similiarities in American and British culture, which is not correct approach. Another interesting event for cultural unification is of Europe, the business managers and MNCs have started to refer them as European customers. Although, the concept of European integration is based on the fact that the barriers to trade and commerce must be reduced but this does not make the business managers to believe that all Europeans have same preferences and tastes. Even in European union, the different countries have their own traditions based on hundreds of years of their heritage. It will not be possible to remove those cultural heritages. The differences exist across a country as well, for example, the East and West Germans have seperate cultural values. In USA, the people in Southern parts have different cultural values than Northern part and so on. The business managers should not formulate common policies based on accepted beliefs, they should focus on the innate needs of individual markets. Although, with time the international markets will integrate and countries will have more economic and social interdependence. The managers need to recognise the pattern of cultural borrowings and keep away from mistakes of cultural unifications. As, culture is a broad term the managers should develop strategies according to the needs of culture . The cultural dynamics will keep on innovating with the help of inside inventions and borrowings, and it will always be an assignment for managers to identify and solve those challenges. 2.6 Resistance to Change  [13]   Although the human behavior, taste, habits and life styles change over years but this change is a gradual process. Any body needs some time to adjust in a new role. So, its usual to notice some resistance to change. The extent to which a change faces resistance depends and varies from one society to another. There are socieites where people readily accept new ideas and habits, geberally in the countries having high scores of high individualism( IDV), lower power distance (PDI) and uncertainity Avoidance index( UAI) like USA, there is special space for innovations. There are some other types of studies which try to find the extent of acceptance of innovation in a society. The research findings indicate that the innovations which resolve the innate needs and interests of a society are most readily acceptable. The best example is the industralization in Europe and the development of methods to make life more productive and the growth of supportive systems like fast food services to support valuable time mentality. Another case is of the rejection of genetically modified food items in Europe. The Europe saw first widespread protests against genetically modified tomatoes where as the other countries of Asia and America had it without any problems untill 2000. It was then that the people started protests and the federal government intervened to define new food standards. With time the resistance  [14]  to change fades away as people become aware for the need to change. Generally, the resistance to new ideas can be overcome in few months but for some complex ideas it may take centuries to overcome resistance. 2.6.1 Planned and Unplanned Cultural Change  [15]   In order to plan the implementation of changes, first it is necessary to identify those cultural factors which are