L2 - The IM Environment – Macro Overview
Part 1
Learning Outcomes
 Define culture and its elements,
 Discuss the ‘4+1’ dimensions of Hofstede’s model,
 Discuss whether the world’s cultures are converging or diverging.
 Discuss how the Political and Legal environment will affect the attractiveness of a
potential foreign market,
 Explain the steps in Political risk analysis,
 Discuss how the Socio-cultural environment will affect IM strategies,
Apply a few of the outcomes to the assignment?
Overview of macro environment when conducting international marketing
World Trade Centre – Philippines: 2 minutes
What’s going on there: US doesn’t want to take part.
 Google it
 Marketers: we need to meet the demands and needs for different segments, while
having the principle that we have to offer VALUE to consumers
 Consumers buy value not products and services, differentiate how consumers see
value, driven by the culture they reside in.
 Differentiated customer needs
International Marketing Environment (IME): 3:50 minutes
Culture
Companies in
International
Markets
Economic
Political/Legal
Environment
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Things outside our control, we acknowledge them and try to manage them using the
4 Ps
We try to operate the 4Ps within this international marketing environment
Trying to make convergence happen while
About convergence and uniting the two perspectives
Culture: various perspectives.....: 5 minutes
The ways things should be done
 Culture being viewed broadly as values, beliefs, norms and behavioural
patterns....(Leung et al., 2005)
 House et al. (2004) define culture in terms of embedded values and practice in
society....
1. Hofstede’s (2001) views culture as the software of the mind or collective
programming of the mind... (in: Soares et al., 2007).
2. “that complex whole which includes knowledge, belief, art, morals, law,
custom and any other capabilities and habits acquired by man as a member
of society” (Nakata and Huang, 2002).
a. Culture is a holistic system of relationships (organisation, institution
etc)
Combination of the two perspectives is what we’re focusing on ^
How consumer needs are actually communicated on a sub individual level in different
nations
Layers of Culture: 8 minutes
(Leung et al. 2005; House et al. 2004; Hollensen,
2017)
 All feed into how we behave as individuals
 Nation culture: Expressions of shared
beliefs, affects how we behave and make
decisions
o CULTURE IS NOT INNATE, it is
learned
o Through that learning process that
our decision is influenced by the
contextual environment
o Culture evolves, NOT STATIC
 Experiences change
everyday
 Business and industry: How that industry
is being run/conducted in that nation. Varies across nations.
 Company culture:
We react to different situations based on our experiences.
The Visible & Invisible parts of culture (Hollensen, 2017): 11:30 minutes
 Visible: Tangible, you can see it
 If you get the left diagram right you’ll be successful
 MUST GET TANGIBLE FACTORS CORRECT
 HAVE TO ALSO GET INTANGIBLE FACTORS RIGHT
o Norms
o Values
o Beliefs etc
 Bicultural identity: Develop on the continuing 13:52?? Re listen for definition
o The more that increases within a nation, the more we have bi
multiculturalism
o This then influences legislation, how we operate within its framework
o More policies are changed, takes account all of these things
Culture, consists of.....15:20 minutes
 Language (verbal/non-verbal; spoken/written),
o 4 distinct roles verbal language plays in international marketing: Re listen
 Translation?
 See as a indicator of how serious a business is about
conducting business in a foreign marketing
 Communication?
 Values and beliefs (in tradition bound societies change is viewed with great
suspicion, especially if it comes from a foreign
entity!),
o Our feelings in relation to risk
o How we respond to things that are
unknown to us
 Material elements (results from technology),
 Aesthetics (relates to what is meant by good
taste in art, music, drama etc. Influences package
designs),
 Education (transmitting skills, ideas & attitude
 as well as training & academia),
 Manners and customs,
 Religion,
o How you dress: Different dress codes
o Schedules: praying times etc
o Food productivity: Halal
o Ramadan: Fasting, energy levels affected
o How to meet and greet
 Social institutions.
o Family
o
o
o
o
Religious
Schools
Media
Government
 Affect how people relate/live in harmony with one another
 How you educate others to carry themselves within a specific society
All these things affect how we conduct our operations
Hall (1960)....Language (non-verbal/written): 23:35 minutes
....examined cultural orientation by means of high and low-context analysis.
 Low-context: rely on spoken/written language for meaning.
 High-context: use and interpret more of the elements surrounding the message to
develop their understanding of the message; social importance and knowledge of
the person and social setting add extra information.
o 90% of meaning comes from nonverbal communication
o Communication varies across different backgrounds, power distance?
Comparative Characteristics of Culture (Hollensen, 2017) 25:50 minutes
 Slide missing?
 All of these things influence how we BUILD RELATIONSHIPS with people
 Looking at transfer of knowledge
Contextual Continuum of Differing Cultures 28:30 minutes
 Slide missing
 Building long term relationship is important and takes times
 Low context: Info from the environment?
Non-verbal Language (Hollensen, 2017) 31:40
 More important in high context
countries
 Space: How comfortable you feel
being close to someone, if you
move away when someone’s close
to you would that be perceived as
being rude
 Business agreements: A handshake?
And then later on you sign the
contract. No legal bind?
o Research, find out their
reputation/history
All of these things influence decision
making
Sensuality and touch culture in Saudi Arabian versus European advertising: 35 minutes
 Missing slide
 Differences:
o The role of the woman, the woman on left is portrayed as more of an
accessory and the woman on the right is perceived as more dominant?
Sensual?
Hofstede’s Cultural Dimensions
(Soares et al. 2007; Minkove & Hofstede, 2011).
He viewed culture as the collective programming of the mind.
 Power Distance:
o The degree of inequality between people in society, the norm, and how it’s
accepted
o High: power is within a few selected members, the subordinates accept it and
do as they are told
o Low: power is spread across members, the subordinates are expected to give
an input when making decisions

Uncertainty Avoidance
o The degree to which nationals within a country like having struct
rules/regulations
o They want to avoid risk
Power Distance
o Look at long term planning to avoid risk?

Individualism vs Collectivism
o The degree to which country nationals are self-centred vs
group orientation
o Loyalty to an organisation, consumers
Dimensions
and EMPLOYEES
o How consumers make decisions
o Looking at how employees make decisions
o Joint decision making or individual decision making
High/Low
Uncertainty
Avoidance
Individualism vs.
Collectivism
Masculinity vs.
Feminity
Long/Short Term
Orientation
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Masculinity vs Feminity
o The degree to which Masculine values override Feminine
values
o Masculinity
o Feminity:
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Long/Short Term Orientation
o Pragmatic way of looking at times in regards to rewards
o Past vs Present
o Goes with uncertainty avoidance, being risk adverse and meeting challenges.
Part 2
Managing Cultural Differences
....Self-reference criterion (SRC).....characterises our own unconscious reference to our own
cultural values.
Eliminating SRC:
1. Define the problem/goal in terms of home country culture, traits etc.
2. Define the problem/goals in terms of foreign culture, traits etc.
3. Isolate the SRC influence in the problem and examine it carefully to see how it
complicates the problem.
A. Isolate our own views
4. Redefine the problem without the SRC influence and solve for the foreign market
situation.
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Looking at culture in the context of the country that we’re entering
Perspective of the nation we are going into
Different way of doing things
Pinpoint similarity and differences once we understand the culture then look at how
to deal with differences
Culture & Ethical Decision Making....3 minutes
....fundamental determinant of ethical decision making....
Ethics: the establish of moral standards of business behaviour, affects how we make
decisions
Classification of ethical requirement that a firm must adhere to has the following issues:
1. Organisational relations – competition, strategic alliance, local sourcing,
A. How do we compete
2. Economic relations – financing, taxation, transfer prices, local investment,
3. Employee relations – compensation, safety, human rights, non-discrimination,
training, sexual harassment,
A. What type of salary should be provide
B. Working hours
C. Salary
4. Customer relations – pricing, quality, advertising,
5. Industrial relations – technology transfer, R&D, infrastructure development,
organisational stability,
A. What and how can we manufacture
B. Rules and regulations we need to adhere to?
C. Products/service guidelines
6. Political relations – legal compliance, bribery, environmental protection, political
involvement.
A. Bribery: the ethical standards in India, acceptable to accept bribes, not
ethical anywhere else but in India is different
B. Very easy to make judgment about ethics but when they start impacting how
it gets your product to consumers your values as a organisation may differ
overtime?
Questions? 6:25 minutes
 Slide missing
 …. Is important in high-context than low-context cultures and includes space, time,
material positions, friendship patterns and business agreements
o Non-verbal communication
 What refers to attitudes towards beauty and good taste in music, the arts, and
drama?
o Tangible
o How significant is aesthetics in terms of that country we are entering the
product
 One more question missed?
The Economic Environment… 8:20 minutes
 A nation’s economic environment indicates its present and potential capacity for
consuming goods and services.
o Is our potential capacity decreasing or increasing?
 A standard of living refers to the average quality of goods and services that are
owned and consumed in a country.
o What type of products and services are consumed/purchased in that country
o Niche products?
o Does that market connect with personal/individual products
 The Gross Domestic Product (GDP) is the total value of goods and services produced
in a country in a year.
o An indication of standard of living
o Take the income of all your population/by population
o Take productivity from product and services/population
o Information of GDP in each country is available
 GDP is the most frequently used measure of a nation’s wealth because it is regularly
published and easy to calculate and compare with other nations.
Euro Monitor International…top 10 largest economies in 2020 12:40 minutes
Emerging nations
 BRICS: Brazil, Russia, India, China, South Africa
Largest economies as a % of world total GDP: 2020 (Euromonitor International) 19:50
minutes
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Rising population and household incomes: rising GDP/economy
Younger consumers will become more important: more people are exposed to
buying high cost goods
Foreign investments will continue flowing in emerging countries: foreign companies
will still face a lot of barriers when entering foreign markets
Ease of Doing Business? (World Bank Group) 22:50 minutes
NEED TO CONSIDER THIS FOR THE ASSIGNMENT
Look and the list below and see what BRICS have
done
 Dealing with construction permits,
 Getting electricity,
 Registering property,
 Getting credit,
 Protecting minority investors,
 Paying taxes,
 Trading across boarders,
 Enforcing contracts,
 Resolving insolvency.
BRICS rely a lot on the younger generations for innovation
Russia’s rise was due to oil and gas reserves
China progressed so rapidly because they invested 9% of their GDP in infrastructure, hence
it’s rapid growth.
Political/Legal Environment 25 minutes
...are an important part of the firm’s macro-environment (firm’s uncontrolled
environment)…
…a multitude of stakeholders inside, but at times also outside a country’s boarders
influences:
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Who governs the country?
o Do we have a relationship with the bank?
o Do we have special laws?
What policies the government follows?
And what legal regulations result from those policies?
(Muhlbacher et al., 2006).
In international marketing politic/legal factors are artificial because laws that are passed are
usually the result of political decisions.
Ranking (%): Investment Constrains/Changes, developing economies (MIGA-EIU Political
Risk Survey 2013) 27 minutes, re listen for more info if needed
MIGA: multi-lateral investment guarantee agency, part of the world bank
EIU: Economist intelligence unit, research and analyst at the newspaper? Re listen
Chart 1: which of the following factors in the next 3 years
will pose the greatest constraint on investment by your company in developing countries?
Chart 2: How do you expect? 28:40 minutes
Chart 3: in which country is your firm currently investing in?
China, India, Brazil, the BRICS
Part 3: Seminar
3 Types of Trade Barriers;
Tariffs (trade barrier/laws)
…..favour local firms and discriminate against global ones.
1. Protect domestic producers – how? (see: Enderwich, 2011: Understanding the raise
of Global Protectionism). It protects domestic producers because they don’t import
anything so they don’t CHARGE customers as much money, whereas international
producers are charged tariffs.
 Specific = charged imposed by weight or volume,
 Ad Valorem = charge is a % of the
value of the goods,
 Discriminatory = charge against goods
coming from a specific country?
Quotas
…a limit on the amount (in units/weight)
of goods imported/exported during a
certain period of time.
1. Import Quotas = restricts competitive forces and helps domestic producers maintain
their market share and prices…but who wins?
A. Domestic producer = if they are sourcing everything from the UK, they will
benefit because their supply won’t change.
B. Domestic/International producer = if they are importing materials to produce
goods they will be a disadvantage because their supply is limited.
C. Consumers won’t benefit from this scenario because the prices wouldn’t be
as competitive and the supplies/goods are limited. Prices will probably rise.
BREXIT. Prices being hiked up, not being able to import to a lot of goods.
2. Export Quotas = imposed to maintain adequate supply of products in home market common among countries exporting natural resources that are essential business or
survival of the nation.
A. Restricting exports and limited
Embargo
….complete ban on trade (imports/exports)
on particular products (one or more)
 Applied to accomplish political goals,
 Can be decreed by individual nations or by
supranational organisations e.g. United Nations,
 Difficult to enforce therefore used less today
than in the past.
Local-content Laws/Requirements
….stipulates a specified amount of goods/services be supplied by producers in the domestic
market…
….forces companies from other nations to employ local resources in their production
processes – particularly labour….
….protecting domestic producers from the price advantage of companies based in other
low-waged countries….
…companies circumvent this requirement by locating production inside the nation
stipulating the requirement.
References
 Enderwick, P. (2011). Understanding the rise of global protectionism. Thunderbird
International Business Review, 53, 325-336.
 Euro Monitor International: http://blog.euromonitor.com/2010/07/special-reporttop-10-largest-economies-in-2020.html#sthash.UGbtCvHS.dpuf
 Gateora, P., and Graham, J.,(2007), International Marketing, 13the Ed. New York:
McGraw – Hill, International Edition.
 House, R., Hanges, P., Javidan, M., Dorfman, P., & Gupta, V. (Eds.). (2004). Culture,
leadership, and organizations: The GLOBE study of 62 societies. Sage publications.
 Hollensen, S., (2017), Global Marketing, 7th Ed. Pearson Publications.
 Leung, K., Bhagat, R., Buchan, N., Erez, M., & Gibson, C. (2005). Culture and
international business: recent advances and their implications for future
research. Journal of International Business Studies, 36, 357-378.
 Lindridge, A., & Dibb, S. (2003). Is ‘culture’a justifiable variable for market
segmentation? A cross‐cultural example. Journal of Consumer Behaviour, 2, 269-286.
 Muhlbacher., Helmuth, L., and Dahringer, L. (2006), International Marketing – a
global perspective., 3rd Ed. London: Thomson Learning.
 Minkov, M., and Hofstede, G. (2011), The evolution of Hofstede’s doctrine, Cross
Cultural Management: an international journal, 18, 10-20.
 Soares, A., Farhangmehr, M., & Shoham, A. (2007). Hofstede's dimensions of culture
in international marketing studies. Journal of business research,60, 277-284.
 Solberg, C. (2002), Culture and Industrial Buyer Behaviour: the Arab experience,
Paper presented at the 18th IMP conference, 1-34.
 The BRICS: Life after the boom (2013):
https://www.youtube.com/watch?v=W6TO7OS_si4
 World Bank Group (Doing Business): http://www.doingbusiness.org/rankings
 WIPR World Investment and Political Risk 2013:
http://www.miga.org/documents/WIPR13.pdf
Further Reading:
 10 Things the WTO can do:
http://www.wto.org/english/res_e/publications_e/wtocan_e.pdf
 Goldman Sachs: www.goldmansachs.com – information/predictions on trade and
investment.
Case Study: are there any cultural difference?