Chapter 4
Social and Cultural
Environments
4-1
Preferential Trade Agreements
Many countries seek to lower barriers to
trade within their regions
–
–
–
–
Free Trade Areas
Customs Unions
Common Market
Economic Unions
4-2
1. Free Trade Areas
Two or more countries agree to abolish all
internal barriers to trade amongst
themselves
It is the second stage of economic
integration
Countries continue independent trade
policies with countries outside agreement
4-3
2. Customs Unions
Evolution of Free Trade Area
Includes the elimination of internal barriers
to trade (as in FTA) AND
Establishes common external barriers to
trade
4-4
3. Common Market
Includes the elimination of internal barriers
to trade (as in free trade area) AND
Establishes common external barriers to
trade (as in customs union) AND
Allows for the free movement of factors of
production, such as labor, capital, and
information
4-5
4. Economic Unions
Includes the elimination of internal barriers to
trade (as in free trade area) AND
Establishes common external barriers to trade (as
in customs union) AND
Allows for the free movement of factors of
production, such as labor, capital, and information
(as in common market) AND
Coordinates and harmonizes economic and social
policy within the union
4-6
Economic Unions
Full evolution of economic union
– creation of unified central bank
– use of single currency
– common policies on issues ranging from
agriculture to taxation
– requires extensive political unity
4-7
Economic Integration
in the Americas
The North American Free Trade Agreement (NAFTA)
created the world’s largest free market.
– 390 million U.S., Canadian, and Mexican consumers
The three countries have pursued different trade policies
with non-members (for example, Mexico has signed FTAs
with more than 40 countries in 12 agreements), making the
possibility of creating a customs union hard to accomplish
4-8
EU
4-9
Is the world all the same?
4-10
World Hunger Facts
Worldwide, over
800 million people
(one in seven) are
undernourished
– Don’t get enough
calories each day
– Susceptible to illness
– Unable to lead
productive lives
4-11
World Hunger Facts
Over 20,000 people die
each day due to causes
related to undernutrition
¾ of these are children
under the age of 5
– About 6 million/year
http://news.bbc.co.uk/olmedia/1555000/images/_1556880_baby150.jpg
4-12
Undernutrition and Child Death
ftp://ftp.fao.org/docrep/fao/008/a0200e/a0199e.pdf
4-13
Common Scenario
Mother
– Poorly educated
– Food is scarce
– Several children
Youngest child
–
–
–
–
–
undernourished
Disease resistance low
Drinks unsanitary water
Develops diarrhea
Loses interest in eating
4-14
Common Scenario
Mother removes solids
from child’s diet
– Not enough nourishment
to fight disease
– Diarrhea continues
Mother removes liquids
– Dehydration
– Death
4-15
Causes of Hunger
Poverty
– 2.8 billion people
earn less than
$2/day
4-16
Causes of Hunger
Extreme Poverty
– 1.2 Billion people earn
less than $1/day
– 75% of these live in rural
areas
• many unable to own land
– Worst in Sub-Saharan
Africa
4-17
World Hunger Map
www.feedingminds.org/ img/map_world.jpg
4-18
4-19
Sub-Saharan Africa
4-20
WFP
4-21
What else?
4-22
4-23
Global summary of the HIV/AIDS
epidemic, December 2003
Number of people living with HIV/AIDS
Total
Adults
Women
Children under 15 years
37.8 million
35.7 million
17.0 million
2.1 million
People newly infected with HIV in 2003
Total
Adults
Children under 15 years
4.8 million
4.1 million
630 000
AIDS deaths in 2003
Total
Adults
Children under 15 years
2.9 million
2.4 million
490 000
4-24
4-25
Estimated number of people living with HIV and adult HIV
prevalence
Global HIV epidemic, 1990‒2005*
Number of people
living with HIV (millions)
HIV epidemic in sub-Saharan Africa,
1985‒2005*
% HIV prevalence,
adult (15‒49)
50
5.0
40
4.0
30
3.0
20
Number of people
living with HIV (millions)
% HIV prevalence,
adult (15‒49)
30
15.0
25
12.5
20
10.0
15
7.5
10
5.0
5
2.5
0
0.0
2.0
10
1.0
0
0.0
1990
1995
2000
2005
1985
1990
1995
2000
2005
Number of people living with HIV
% HIV prevalence, adult (15-49)
This bar indicates the range around the estimate
*Even though the HIV prevalence rates have stabilized in sub-Saharan Africa, the actual number of people infected
continues to grow
Because of population growth. Applying the same prevalence rate to a growing population will result in increasing numbers
of people living with HIV
4-26
A global view of HIV infection
38.6 million people [33.4‒46.0 million] living with HIV, 2005
4-27
Estimated Prevalence of HIV Infection and Number of
People Living with HIV Infection or AIDS, End of 2001
Field, M. G. N Engl J Med 2004;351:117-120
4-28
HIV infections newly diagnosed per million population
1994-2002, selected countries, eastern Europe
Cases
per million
1000
800
Estonia
600
Update at 30 June 2003
400
Russian Federation
Latvia
Ukraine
Lithuania
Belarus
200
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year of report
EuroHIV
4-29
Rapid HIV spread among IDUs
Prevalence quickly rising to 40% or more
Myanmar
60
Manipur &
Yunnan
Edinburgh
40
Ho Chi Minh
City
Bangkok
20
1995
1993
1991
1989
1987
1985
Odessa
1983
HIV prevalence (%)
80
HIV/AIDS
4-31
At the same time in other countries…
Other health problems related to nutrition…
4-32
4-33
meanwhile, as worldwide hunger
rates drop,
age
June 2002. Agency for Healthcare Research and Quality and the
Centers for Disease Control. http://www.ahrq.gov/ppip/activity.htm
4-34
Who are western countries?
Who are third world countries?
Family size?
Life expectancy?
4-35
Hans Rosling
Hans Rosling is professor of international
health at Sweden's world-renowned
Karolinska Institute, and founder of
Gapminder, a non-profit that brings vital
global data to life. With the drama and
urgency of a sportscaster, he debunks a few
myths about the "developing" world.
(Recorded February, 2006 in Monterey,
CA.)
4-36
Task of Global Marketers
Study and understand the country
cultures in which they will be doing
business
Incorporate this understanding into the
marketing planning process
4-37
Introduction
“It is not just speaking a
common language. It
is sharing a culture
and understanding
friendships in the
same way”
Juan Villanonga –
Former Chairman of
Telefonica
4-38
Society, Culture, and
Global Consumer Culture
Culture – Ways of living, built up by a
group of human beings, that are transmitted
from one generation to another
Culture is acted out in social institutions
Culture has both conscious and unconscious
values, ideas and attitudes
Culture is both material and nonmaterial
4-39
Society, Culture, and
Global Consumer Culture
“Culture is the collective
programming of the
mind that
distinguishes the
members of one
category of people
from those of
another.”
- Geert Hofstede
4-40
Society, Culture, and
Global Consumer Culture
Global consumer cultures are emerging
– Persons who share meaningful sets of
consumption-related symbols
– Pop culture; coffee culture; fast-food culture
Primary the product of an interconnected
world
4-41
Attitudes, Beliefs and Values
Attitudes - learned tendency to respond in a
consistent way to a given object or entity
Belief - an organized pattern of knowledge that an
individual holds to be true about the world
Value - enduring belief or feeling that a specific
mode of conduct is personally or socially
preferable to another mode of conduct
4-42
Case: Who will go to Saudi
Arabia?
Two senior vice presidents, Robert , VP of international
sales, and Kate, VP of personnel, disagree on whom to
send to Saudi Arabia to negotiate the sale of two major
computer installations worth approximately 35$ million.
CC company has an excellent products and enjoys a good
reputation in the area. With effective negotiation they are
certain they can make a profitable sale. There are two
candidates for the job, Jane and Bill.
4-43
Jane: MBA degree, 6 years’ international experience with
CC company, has successfully negotiated two major
sales to firms in Norway and Sweden.
Bill: has an excellent reputation and has a broad
understanding of the product line just as Jane. His only
international experience was two years ago ,when he
accompanied a senior executive to Japan to help negotiate
a major sale, and he did a crucial role in the negotiation..
4-44
Religion
Religion is one important
source of society’s
beliefs, attitudes, and
values. The world’s
major religions
include: Buddhism,
Hinduism, Islam,
Judaism, and
Christianity.
4-45
4-46
4-47
4-48
4-49
JC Penny 1928
4-50
Religion
4-51
Playground
Outdoor
Equipment
Store
4-52
4-53
Aesthetics
The sense of what is
beautiful and what is
not beautiful
What represents good
taste as opposed to
tastelessness or even
obscenity
Visual – embodied in
the color or shape of a
product, label, or
package
Styles – various
degrees of complexity,
for example are
perceived differently
around the world
4-54
Dietary Preferences
Would you eat…..
– Kimchi – (Korea) – is a traditional Korean dish of
fermented vegetables seasoned with chili peppers and
salt.
– Blood sausage (Germany) -is a
sausage made by cooking
animal blood with a filler until it is
thick enough to congeal when
cooled.
4-55
Dietary Preferences
Would you eat…..
– Pickled eggs – (USA) –
– Pigs blood with eggs – (Hungary)– Breast Milk - (China)
– Fried Crickets – (Philippines)
4-56
Sayings
Together we plan, together we act for a better
community lifestyle.
(Chinese Saying)
4-57
“Kwen-chan-ah,” in Korean
– “It’s okay” or “It’s not a problem” actually means,
– “I have no relationship with it” or “I have nothing
to do with it.”
Class of 2002
– In USA vs Korea
4-58
Referring People
family name vs first name
In Korea: A woman with a child named
Kildong would be ‘Kildong’s mom’
In Arab states: Ummu Gulsum – Abu Bekir
Korean language does not strictly
distinguish singular and plural forms “I” vs
“We”.
4-59
Addresses in Korea
A typical mailing address in America takes
the form of “John Doe, 123 Main Street,
Anycity, Anystate,”
which will be exactly reversed in Korea to
“Anystate, Anycity, Main Street 123, Doe
John.”
4-60
4-61
Language and Communication
Linguistic Category
Language Example
Syntax
English has relatively fixed word order;
Russian has relatively free word order
Semantics
Japanese words convey nuances of feeling
for which other languages lack exact
correlations; ‘yes’ and ‘no’ can be
interpreted differently than in other
languages.
Phonology
Japanese does not distinguish between the
sounds ‘l’ and ‘r’; English and Russian both
have ‘l’ and ‘r’ sounds.
Morphology
Russian is a highly inflected language, with
six different case endings for nouns and
adjectives; English ahs fewer inflections.
4-62
Pepsi in China
"Come Alive: You're in the Pepsi Generation"
"Pepsi brings your ancestors back from the
dead."
4-64
Motorola in India
Hellomoto
Hello Fatty!
4-65
Coors in Spanish
"Turn it loose"
"Suffer from diarrhea"
4-66
Few Others
Kentucky Fried Chicken in China
– "finger-lickin' good"
– "eat your fingers off".
Salem cigarettes in Japan
– "Salem-Feeling Free",
– "When smoking Salem, you will feel so
refreshed that your mind seems to be free and
empty".
Schweppes in Italy
– Schweppes Tonic Water
– "Schweppes Toilet Water".
4-67
Language and Communication
Verbal Cues
Nonverbal cues or body language
– Shrug
– Head wobble - In Western countries, "Yes,
definitely!" is communicated by nodding the
head multiple times. In South Asia, it is
communicated by a single strong head-wobble.
4-68
Showing the thumb
held upwards in Latin
America, especially
Brazil, means
"everything's ok",
while it is understood
in some Islamic
countries as a rude
sexual sign.
4-69
4-70
Hook 'em Horns salute or …
George W. Bush gives
the Hook 'em Horns
salute to the Texas
Longhorns marching
band at his second
inauguration.
Devlet Bahceli gives the
salute to the crowd
4-71
Laughing is connoted in most countries with
happiness - in Japan it is often a sign of confusion,
insecureness and embarrassment.
In Africa, avoiding eye contact or looking at the
ground when talking to one's parents, an elder, or
someone of higher social status is a sign of
respect. In contrast, these same actions are signals
of deception or shame (on the part of the doer) in
North America and most of Europe.
4-72
If invited to dinner, in some Asian countries
and Central America it is well-mannered to
leave right after the dinner: the ones who
don’t leave may indicate they have not
eaten enough. In the Indian sub-continent,
European and North American countries
this is considered rude, indicating that the
guest only wanted to eat but wouldn’t enjoy
the company with the hosts.
4-73
Marketing’s Impact on Culture
Universal aspects of the cultural
environment represent opportunities to
standardize elements of a marketing
program (McDonaldization, Cocacolonization)
Improved communications have contributed
to a convergence of tastes and preferences
in a number of product categories
4-74
Marketing’s impact on culture
“I Rolexed and realized I was late?”
fridge
aspirin
kleenex
spandex
trampoline
rollerblading
xeroxing
fedexing
granola
googling
Zipper
nylon
Selpak
Orkid
The B. F. Goodrich Company
coined the name Zipper in 1923
for the line of rubber overshoes
that it made using the fastener.
4-75
Cultural imperialism
embracing of a foreign culture
the "receiving" culture but instead absorbs
the foreign culture passively through the use
of the foreign goods and services.
4-76
High- and Low-Context Cultures
High Context
– Information resides in
context
– many things are left unsaid
– Emphasis on background,
basic values
– Less emphasis on legal
paperwork
– Focus on personal
reputation
Saudi Arabia, Japan
Low Context
– Messages are explicit and
specific
– Words carry all information
– Reliance on legal
paperwork
– Focus on non-personal
documentation of
credibility
– change drastically from one
generation to the next
Switzerland, US, Germany
4-80
Contextual Background of Various Countries
Source: Hall, 1984
Japanese High
context
implicit
Arabic
Latin American
Spanish
Italian
English (UK)
French
North American (US)
Scandinavian
Low
context
explicit
German
Swiss
4-81
High- and Low-Context Cultures
Factor/Dimension
High Context
Low Context
Lawyers
Less Important
Very Important
A person’s word
Is his/her bond
Not reliable – get it in
writing
Responsibility for
Organizational
error
Taken by highest level
Pushed to the lowest level
Space
People breathe on each Private space maintained
other
Time
Polychronic
Monochronic
Competitive
Bidding
Infrequent
Common
4-82
Hofstede’s Cultural Typology
Power Distance
Individualism / Collectivism
Masculinity
Uncertainty Avoidance
Long-term Orientation
4-83
Geert Hofstede’s 5 Dimensions of
Culture
1. Power distance - The degree to which the less
powerful members of society expect there to
be differences in the levels of power.
– Latin American and Arab nations are ranked the
highest in this category; Scandinavian and
Germanic speaking countries the least. Countries
with high power distance rating are often
characterised by a high rate of political violence.
4-84
SURVEY OF HOFSTEDE’S CULTURAL
DIMENSIONS
Instructions: Rate yourself on each of the four dimensions
by circling a response. Next, rate your native culture by
drawing an X through the appropriate response.
Power distance: How readily do individuals accept the
unequal distribution of power in organizations and
institutions?
Low power distance (equality) High Power distance (rank)
1----2----3----4----5----6----7----8----9----10
4-85
2. Individualism vs. collectivism - refers to
the extent to which people are expected to
stand up for themselves, or alternatively
act predominantly as a member of the
group or organisation.
–
Latin American cultures rank the lowest in
this category, while U.S.A. is the most
individualistic culture.
4-86
SURVEY OF HOFSTEDE’S CULTURAL
DIMENSIONS
Individualism-collectivism: Are people
responsible for their own welfare within a
loosely knit social framework, or does the
group look out for individuals in exchange
for loyalty?
Personal responsibility
Collective responsibility
1----2----3----4----5----6----7----8----9----10
4-87
Cultural Dimensions
Source: Hofstede, 1980, 1991
Individualism
100
90
United States
Great Britain
Canada
80
70
Italy
France
Germany
60
50
Argentina
40
Spain
Japan
Iran
India
Russia
Brazil
Mexico
30
South Korea Singapore
China
20
10
0
20
30
40
50
60
Power Distance
70
80
90
100
4-88
3. Masculinity vs. femininity - refers to the value
placed on traditionally male or female values.
Masculine cultures value competitiveness,
assertiveness, ambition, and the accumulation of
wealth and material possessions, whereas
feminine cultures place more value on
relationships and quality of life.
–
Japan is considered by Hofstede to be the most
"masculine" culture, Sweden the most "feminine."
The U.S. and UK are moderately masculine.
4-89
SURVEY OF HOFSTEDE’S CULTURAL
DIMENSIONS
(continued)
Masculinity-femininity: How important are
masculine attitudes (assertiveness, money and
possessions, and performance) versus feminine
attitudes (concern for people, the quality of life, and
the environment)?
Masculine attitudes
Feminine attitudes
1----2----3----4----5----6----7----8----9----10
4-90
4. Uncertainty avoidance - reflects the extent to
which a society attempts to cope with anxiety by
minimizing uncertainty. Cultures that scored high
in uncertainty avoidance prefer rules (e.g. about
religion and food) and structured circumstances,
and employees tend to remain longer with their
present employer.
– Mediterranean cultures and Japan rank the highest in
this category.
4-91
SURVEY OF HOFSTEDE’S CULTURAL
DIMENSIONS
Uncertainty avoidance: How threatening are
uncertain and ambiguous situations, and how
important are rules, conformity, and absolute
truths?
Avoid uncertainty (rules)
(chance)
Accept uncertainty
1----2----3----4----5----6----7----8----9----10
4-92
5. Long vs. short term orientation - describes a
society's "time horizon," or the importance
attached to the future versus the past and present.
In long term oriented societies, thrift and
perseverance are valued more; in short term
oriented societies, respect for tradition and
reciprocation of gifts and favors are valued more.
–
Eastern nations tend to score especially high here,
with Western nations scoring low and the less
developed nations very low; China scored highest and
Pakistan lowest.
4-93
Cultural Dimensions
Source: Hofstede, 1980, 1991
Long-Term
120 Orientation
China
100
80
India
60
Japan
South Korea
Brazil
Singapore
40
United States
Canada
Great Britain
20
Germany
0
0
10
20
30
40
50
60
70
80
90
100
Uncertainty Avoidance
4-94
4-95
4-96
Comparison Turkey and other
Muslim Countries
PDI
IDV
MAS
UAI
PDI
IDV
MAS
UAI
4-97
4-98
4-99
Comparison China and Japan
PDI
IDV MAS UAI LTO
PDI
IDV MAS UAI LTO
4-100
Self-Reference Criterion and
Perception
Unconscious reference to one’s own cultural
values; creates cultural myopia
How to Reduce Cultural Myopia:
– Define the problem or goal in terms of home country
cultural traits
– Define the problem in terms of host-country cultural
traits; make no value judgments
– Isolate the SRC influence and examine it
– Redefine the problem without the SRC influence and
solve
4-102
For Discussion
How close is “too close” when you are
carrying on a business conversation with a
stranger?
4-103
Diffusion Theory
The Adoption Process
Characteristics of Innovations
Categories of Adopters
4-104
Marketing Implications
The topics in this chapter must be
considered when formulating a global
marketing plan
Environmental Sensitivity reflects the
extent to which products must be adapted to
the culture-specific needs of different
national markets
4-105
Environmental Sensitivity
4-106
Comparing Cultures
Aspect
Mexico
Canada/USA
Family
Family is the first priority.
Children are celebrated
and sheltered.
Wife fulfills domestic role.
Mobility is limited.
Family is usually second to
work.
Children often minimally
parented; are independent.
Wife often fulfills dual roles.
Mobility quite common.
Religion
Long Roman Catholic
Mixed religions.
tradition.
"Master of own life" outlook.
Fatalistic outlook. "As God
wills."
Education Memorization.
Emphasis on theoretical.
Rigid, broad curriculum.
Analytical approach.
Emphasis on the practical.
Narrow, in-depth
specialization.
4-107
Comparing Cultures
Aspect
Mexico
Canada/USA
Nationalism Very nationalistic.
Proud of long history and
traditions.
Reluctant to settle outside
Mexico.
(U.S.)Very patriotic.
Proud of "American way of
life."
Assumes everyone shares
his/her materialistic values.
(Canadian) Less than U.S..
Often has more " World" view.
Personal
Sensitivity
Separates work from
emotions/personal
relationships.
Sensitivity seen as weakness.
Tough business front.
Has difficulty with subtlety.
Difficulty separating work
and personal relationships.
Sensitive to differences of
opinion.
Fears loss of face,
especially publicly.
Shuns confrontation.
4-108
Comparing Cultures
Aspect
Mexico
Personal
Dress and grooming are
Appearance status symbols.
Canada/USA
Appearance is secondary to
performance.
Status
Title and position more
Money is main status
important than money in eyes measure and is reward for
of society.
achievement.
Aesthetics
Aesthetic side of life is
important even at work.
Ethics
Truth is tempered by need for Direct Yes/No answers
diplomacy.
given and expected.
Truth is a relative concept.
Truth seen as absolute
value.
No time for "useless frills".
4-109
Looking Ahead to Chapter 6
Global Information Systems and Market
Research
4-110
4-111
Social Institutions
Family (cultural differences – last names, brothers
and sisters)
Education (not necessarily schooling)
Religion (not necessarily perceived the same)
Government (Autocracy, democracy …)
Business
These institutions function to reinforce cultural
norms
Return
4-112
Material and Nonmaterial
Physical components
of culture
– Objects
– Artifacts
• Clothing
• Tools
• Pictures
• Homes
Subjective or abstract
culture
– Religion
– Perceptions
– Attitudes
– Beliefs
– Values
4-113
Clothing
Hindu women, once
married, wear sindoor
Men and women of the
Western world may
wear wedding rings
Return
4-114
Aesthetics and Color
What do you associate
with Red?
– Active, hot, vibrant
– Weddings in some
Asian cultures
– Poorly received in
African countries
With white?
– Purity, cleanliness
– Death in parts of Asia
4-115
In Chinese symbolism,
red is the colour of good
luck and success, and is
used for decoration and
wedding attire (during
the traditional half of the
wedding ceremony, while
the bridal attire in the
modern half is usually
white).
4-116
In Chinese and Indian
tradition, white is the
color of mourning,
death, and ghosts. In
India white also stands
for Peace and Purity
Return
4-117
Phonology in action
Colgate is a Spanish command that means
‘go hang yourself’
Technology implications for Text messages
– 8282 means ‘hurry up’ (Korea)
– 7170 means ‘close friend’ (Korea)
– 4 5683 968 means ‘I Love You’ (Korea)
4-118
Chinese number definitions
Cantonese frequently assign the following definitions, which may
differ in other forms of Chinese:
1- 一 sure
2- 二 easy
3- 三 live
4- 四 - considered unlucky since the pronunciation of 4 ( sì ) sounds
like the word for death ( sǐ ).
5- 五 - the self, me, myself, nothing, never
6- 六 - easy and smooth
7- 七 - together
8- 八 - sudden fortune, prosperity
9- 九 - long in time
Some lucky number combinations include:
168 - road of prosperity or to be prosperous together - many premiumpay telephone numbers in China begin with this number. Many
businesses also prefer to have this number as part of their names.
518 - I will prosper,
888 - prosperity x3.
Return
4-119
The Adoption Process
The mental stages through which an individual passes from
the time of his or her first knowledge of an innovation to
the time of product adoption or purchase
–
–
–
–
–
Awareness
Interest
Evaluation
Trial
Adoption
Return
4-120
Characteristics of Innovations
Innovation is something new, five factors
that affect the rate at which innovations are
adopted include
–
–
–
–
–
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
Return
4-121
Categories of Adopters
Classifications of individuals within a market on
the basis of their innovativeness.
Five categories
1.
2.
3.
4.
Innovators – venturesome, educated, multiple info sources.
Early adopters – social leaders, popular, educated.
Early majority – deliberate, many informal social contacts.
Late majority – skeptical, traditional, lower socio-economic
status.
5. Laggards – neighbors and friends are main info sources, fear of
debt.
4-122
Categories of Adopters
Return
4-123