Culture and International Business

Hofstede's five Cultural Dimensions





          - Power distance : This concerns the extent to which less powerful members of organizations within a country expect and accept that power is distributed unequally. In general, Hofstede found that Latin American and Latin European(France and Spain) countries had higher power distance scores.

          - Uncertainty avoidance : This concerns the extent to which the members of a society feel threatened by uncertain arid unknown situations. Jamaica and Singapore were relatively low uncertainty avoidance cultures  where precision and punctuality are less important, innovation is encouraged and people are motivated by being esteemed by, or belonging to, others above other things.

          - Individualism vs Collectivism : In an individualist business, employment contracts based on hiring and firing. Two examples of countries with high scores on individualism were Australia and Canada. In a collective society, people are more concerned for others and the culture is based around more cohesive groups such as the family which offer protection in exchange for loyalty. Ecuador, China and Indonesia are the examples of more collective societies.

          - Masculinity vs Femininity : This refers to the degree to which gender roles are distinct and adhered to within a society. In high femininity societies, social gender roles overlap, with both men valuing feminine qualities such as modesty, intuition and quality of life above the more traditionally masculine qualities of aggression and competition. Denmark and the Netherlands were more feminine cultures  while many other Western countries exhibited more masculine values. Japan, the UK and West Germany scored highly on masculine values.

          - Long Term vs Short Term Orientation : This refers to the degree to which the country orients and focuses for people's efforts more more to the future or present. Korea and Japan are the examples long term orientation countries, while Mexico and Jamaica are short term orientation countries.

          - Indulgence vs Restraint : Indulgence society is freely satisfied by basic needs and behavior, and enjoys moment rather than using time to compare with others. The USA and Canada can be an indulgence society. Restraint society will be suppressed and regulated, which ends with feeling threatened. China and some south eastern Asia can be the example of restraint society.

6. Market Research Company

Company : Samsung 




Samsung is one of the largest and efficient companies that is originated from South Korea, the best semiconductor making company in the world. Samsung provides diverse services such as electronic devices, insurance, construction, etc. They slowly expanded the area of service in order to approach to customers more often and repetitively. Samsung approaches to various of people, but especially to business workers because their products and services are mostly specialized to the age from 20~50 or even less than 20.
Samsung promotes their company by making a continuous advertisement and approaching to people by providing many after services and solid economic policies.

11. International Marketing

Why do companies expand internationally?      

          - Expanded markets and increased sales mean more profits. Profits mean success for a business. They also mean that a business can make contributions to causes that they believe in.

          - Saturated home markets forces the companies to shift to other countries and make more profits.

          - Spreading risks between different markets: selling cars in China was easier than in the UK because of the difference of GDP.

          - Comparing to the trading conditions in other countries, which is better than their home country, led the expansion of international business.

What considerations must a company have in these areas when undertaking international marketing?

 Political differences : Changes of governments can cause instability in some countries and this can increase the risk of doing business. Such as terrorism or threats of civil violence will disable the companies to work fluently.

Economic differences : The difference in GDP rates around the world will be the most difficult thing for the international companies to handle.

Social differences : The role of women and the importance of marriage in society vary substantially too and these an other social factors may have a considerable impact on the products to be sold and the marketing strategies used to sell them.

Legal differences : Some goods, such as guns, can be sold in the USA, but it will be impossible to be sold in other countries because it might be illegal in certain countries.

Cultural differences : Failure to recognize cultual and language differences can have a disastrous effect on a firm's marketing strategy. The use of male and female models in advertisements would not be acceptable in some countries with strong religious traditions.

Differences in business practices : Accounting standards and rules can vary in different parts of the world. The ease of setting up a limited company varies widely- it can take a few days in the UK, yet the formalities and form filling can exceed one year in Sierra Leone.

10. Distribution Arrangement

Types of distribution arrangement


Intensive - Intensive Distribution takes place when suppliers sell through as many retailers as possible. This arrangement usually maximizes suppliers' sales, and it enables retailers to offer many brands and product versions.

Exclusive - Exclusive distribution is a situation where suppliers and distributors enter into an exclusive agreement that only allows the named distributor to sell a specific product. For example, Apple had an exclusive distribution deal with AT&T to provide the iPhone to consumers.

Selective - Selective distribution is a type of product distribution that lies between intensive distribution and exclusive distribution, and in which only a few retail outlets cover a specific geographical are. Considered more suitable for high-end items such as 'designer' or prestige goods.

Integrated marketing - Integrated marketing is a strategy aimed at unifying different marketing methods such as mass marketing, one-to-one marketing, and direct marketing. Its objective is to complement and reinforce the market impact of each method, and to employ the market data generated by these efforts in product development, pricing, distribution, customer service, etc.




Why is the choice of distribution channel so important?
- Consumers may need easy access to a firm's products to allow them to see and try them before they but, to make purchasing easy and to allow for the return of goods.
- Manufacturers need outlets for their products that give as wide a market coverage as possible, but with the desired image of the product appropriately promoted.
- Retailers will sell producers' goods but will demand a mark-up to cover their costs and make a profit, so, if price is very important, using few or no intermediaries would be an advantage.




What issues must be considered when choosing a distribution channel?

- Nature of market : Choice of suitable channel of distribution also depends on the nature of market. Location a buying habits of buyers are also analyzed.
- Nature of product : Nature of product has influence on the selection of a channel or distribution. In the case of industrial goods like machinery and equipment. The manufacturer sells directly to industrial user, but in the case of tools, sales take place through middlemen.
- Distribution expenses : If the producer makes direct selling, he will have to spend on distribution. So, if the product gets good response from the dealers, a producer prefers to sell through them to reduce his distribution expenses.
- Mutual cooperation : Choice of channel of distribution depends on the mutual cooperation between the manufacturer and the dealers.




What are some of the things you must consider about selecting a channel partner?

- The type of channel you choose will depend on what it is you are selling. If you are selling a software product, system, or chip that can be held in inventory, then you will want a partner who can stock your product for ready distribution. If your end customers are businesses, then you will want a distributor who focuses on B to B sales. If your end customers are consumers, then your channel will be stores such as web-based retailers.

9. Promotional Mix vs Product Life Cycle

What is Promotional Mix?
          - Promotional Mix is the combination of promotional techniques that a firm uses to communicate the benefits of its product to customers.

8 Stages in deciding on a promotional mix:

1. Decide on the image of the product.
2. Develop a profile of the target market.
3. Decide on the messages to communicate.
4. Set an appropriate budget.
5. Decide on how the message should be communicated.
6. Establish how the success of the promotional mix is to be assessed.
7. Undertake the promotional plan and the mix elements.
8. Measure its success.

Product life cycle: 

Introduction
Growth
Maturity
Decline
(extension strategies to prolong maturity or limit decline)


How would the promotional mix change at different stages of the product life cycle?

Introduction
          - Informative advertisement to make consumers aware of the product.
               - Sales promotion offering free samples or trial periods to attract the buyers.
Growth
               - Focus shifts to 'brand' building and persuasive advertising. 
               - Sales promotion to have a repetitive purchase.
               - Try to develop brand loyalty.
Maturity
               - Advertise in order to show the difference between the product from their company and other competing companies 
               - Sales promotion incentives to encourage brand development and loyalty
Decline - assuming no extension strategy  
               - Minimal advertising
               - Sales promotion : little additional support for the product if the intention is to withdraw it

8. Promotion Case Studies

Choose four of the case studies to analyze.  Briefly explain why the promotion was successful - what was it about this promotion that made it appealing to potential customers


1. The Arizona Department of Health Services wanted to generate community awareness of the risks of second-hand smoke, particularly as it affects children. The campaign, first introduced with TV spots and brochures in the surrounding Phoenix area, got a PR boost when it generated newspaper articles. Additional exposure was achieved through the distribution of two ingenious promotional items.
First, restaurants who supported a non-smoking policy received baby bibs to present to diners who came in with infant children. The bibs bore a custom imprint phrase, "I am in a designated non-smoking area." In addition, bottles of soap bubbles were distributed at community events, such as fairs, workshops and women's expose. A message on the bottle label made humorous reference to the Surgeon General's tobacco warning. "My Cause: Joy, Laughter, Smiles and Excitement; Not: Asthma, Pneumonia or Cancer." The program received tremendous support and sent a valuable message about the dangers of second-hand smoke. In a follow-up evaluation of the program, it was determined that the important message reached more than 100,000 local residents.

The Arizona Department of Health Services did give an awareness of the risks of second-hand smoke by giving logical reasons and examples to persuade the people.

2. An unusual product requires an unusual promotion. Culturelle, a company that makes dietary supplements that aid  digestive health and immune-system functioning, was looking to promote its brand in a quirky way. The company's products are 'pro biotics' - healthy bacteria that aid digestion - which might confuse the average consumer who associates bacteria with disease or things unhealthy.

With this in mind, Culturelle devised the "I Love Bacteria" campaign. The company gave away T-shirts imprinted with the classic "I ♥" icon to curious customers who saw an ad for it. After an extremely successful test-run of the campaign, Culturelle widened the promotion, tying it into its print and television advertising campaigns, both of which featured someone wearing the "I ♥Bacteria" T-shirt.

The promotion was successful because the company grew their consumer database substantially, increased their out-of-home branding since their logo was on the back of the shirts, and even used the shirts as a giveaway that bloggers used to kick-start a program which educated consumers about Culturelle and probiotics.

3. Producers of The Mechanic, an action thriller starring Jason Statham as a hit man, needed a unique promotion to stand out amid the din of the movie madness bombarding the media and consumers today. They were thinking T-shirts, but some creative thinking brought a variation of that theme to mind. 

Pre-release marketing to the press is critical to success in the movie business. Rather than giving traditional T-shirts to members of the press covering the movie, as well as to other potential moviegoers, the movie's marketers had the shirts shrink-wrapped and compressed into the shape of guns, playing into the movie's theme to make a bigger impact on T-shirt recipients.

The promotion has certainly helped to garner a wealth of media attention for the film's release.

4. At Massey Energy's 15 different coal mining sites, safety is a moment-by-moment concern. A recent campaign had the objectives of increasing awareness of safety habits in the workplace, improving workforce safety performance and reducing absenteeism.

This year-long campaign served as a constant reminder to work safely and develop safety-conscious work habits. The campaign kicked off with the posting of a banner at each mine, the distribution of compressed t-shirts and the presentation of "Masseyopoly," a Massey-customized version of the board game, Monopoly. This last item made a huge splash with the workforce. The campaign also introduced the character of "Raymond," a safety mascot who appreas on all of the program's communication pieces and promotional items. Every month, the mine sites received a new and different item, among them, beverage insulators, hats, emergency flipper kit, pocket watches and hard hat decals. A new banner arrived every quarter to keep the program fresh and safety awareness foremost in the minds of employees.

During the program, the company saw its Loss Time Accident Ratio decrease by 47%, recording the two safest years in the company's 90 year history.

7. Marketing - Advertising Techniques

1. Slogan

Definition - Identifies product or service with an idea

Example: I'm Lovin It from Mc Donald


2. Logo


Definition - Identifies product or service with a symbol

Example: Huge M shape in Mc Donald


3. Snob Appeal

Definition - Associates product or service with a personality or lifestyle

Example: A company giving the impression that using their product will give more benefits while others don't get any benefits.(Dougherty, Brian) 

4. Glittering Generality

Definition - The viewer is given a general feeling about the product, but not much else.

Example: The man uses the laptop in cafe, but only that.

5. Sex Appeal

Definition - The product will enhance your sexual attractiveness.

Example: A sexy female model with sexy dress drinks a water made by a company


6. Plain Folks

Definition : The advertiser tries to identify its product with an easy words and explanation so that many people will be able to understand and be friendly.

Example : Some random kid is walking down the street and everyone is laughing at him because he has really bad acne. All the sudden, an acne bottle pops into his hand. he goes to the nearest bathroom and tries it. Out of nowhere, his acne is gone. He goes outside and starts to get some girls, smiles at the camera and says - 'acne-b-gone; it really works!' 

7. Wit and Humor

Definition : Customers are attracted to products that divert the audience by giving viewers a reason to laugh or to be entertained by clever use of visuals or language.

Example : The man uses a glue instead of a chopstick.

8. Testimonial

Definition : Someone endorses the product.

Example : A dentist insists that the tooth paste works really well, which gives a confirmation of a good product.

9. Bandwagon

Definition : Uses peer pressure to influence the consumer. If everyone else is doing it, so should you.

Example : Everyone has an iPod, except for you! Go and buy one!

10. Emotional Appeal

Definition : Uses emotion to sell a product or service (pity, fear, patriotism, happiness, etc.)

Example : A mom holding a baby and cleans the baby with the soap that is made by a company that arranged the commercial.

5. Ethics and Marketing

What does ethics mean in relation to business?
- Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse.

Why is it important to a business?
- Lance Armstrong has been ban from the USADA and also stepped down as head of the Livestrong cancer-fighting charity due to the use of illegal drugs.

Why did Livestrong and Nike take the action they did?
- Lance Armstrong realized that the charity will no longer give a hope, especially when the head of the charity has been banned from the federation due to the illegal drug abuse. Nike as well, stopped sponsoring Lance Armstrong because he would not give any positive impressions to people.

How do they hope this action will be beneficial to their business?
- By stop being sponsored from Nike and stepping down from the head of the Livestrong charity, people will now feel less disgusted.

What do you think?
- I believe Lance Armstrong's action was brave and smart enough to save two institutions, Nike and Livestrong charity, because it lessens the damage as well as keeps the image of the institutions safe.

4. Stakeholder Conflict - TESCO

Stakeholder Conflict - Tesco

• Between which stakeholders is the conflict? There was a conflict between the internal stakeholders, employers, and the employees, such as the drivers.
• what is the nature of the conflict? The tension began when the drivers found out that their job is threatening when they heard about the plans that is used to transfer from Wincanton to other place.
• What is the adverse (negative) result that is expected to occur or has occurred with the specified stakeholder group? The adverse result that is expect to occur or has occurred was a strike(so-called boycott) which affected the supplies from TESCO.
• What would your advice be to settle the issue using a compromise (both sides gain and lose something)? The company should rearrange the payment of drivers or not being too much threatened(which makes no sense in job working area but still...)

3. Opinion of One Ethical Issue

The case : Happy Meals in McDonald's

Link : http://business-ethics.com/2011/05/31/1441-marketing-to-children-accepting-responsibility/



Summary of the article published by Gael O'Brien : McDonald's Happy Meals for children with toys has come under attack because McDonald's is attracting the kids to come and buy the foods as well as getting a toy. However, the truth is that salty fries and a hamburger with a high calories endangers the kids' health.


My opinion about the case : In my opinion, targeting kids as a consumer should not be considered as a child abuse as well as unethical policy. The reason is because kids are no different than grown up men, women, grandparents, etc; they are all same consumers. If the people restricts McDonald's to provide a toy in Happy Meals, then there will be less customers, which leads to various problems, such as unemployment due to the collapse of the company, and economic failure in the US because McDonald's is one of the most ongoing and outstanding US markets that is internationally famous.

2. Ethics of Marketing to Children

          Ethics of Marketing to Children

          Business on this days is highly concentrated towards teens and young ages.  For instance, the markets produce the products that are based on child level, which attracts thousands and millions of young consumers and makes a great profit. However, many people are tackling about the facts that targeting the young ages is not ethical, furthermore, considered as an abuse. 
          To provide the incident of a huge international company, McDonald's Happy Meals for children with toys has come under attack. San Francisco is one of the cities that has voted to ban selling toys with fast food for children that exceed certain levels of salt, fat, calories and sugar. McDonald's was accused of deceptive marketing practices to children over the lure of toys as an inducement to buy Happy Meals. To round up the facts from the article, they attracted and allured the young ages by providing a small handy toy, which put the kids in the risk of absorbing unhealthy foods that are crucial during their age. Because of the case in McDonald's, targeting the younger ages is being considered as an unethical business management. 
          However, in my opinion, targeting kids as a consumer should not be considered as a child abuse as well as unethical policy. The reason is because kids are no different than grown up men, women, grandparents, etc; they are all same consumers. If the people restricts McDonald's to provide a toy in Happy Meals, then there will be less customers, which leads to various problems, such as unemployment due to the collapse of the company, and economic failure in the US because McDonald's is one of the most ongoing and outstanding US markets that is internationally famous.
          To conclude, I believe the people, either if they are the parents of the kids or other competing companies, should not restrict what other companies are planning about targeting young ages because kids are also one of the customers and they bring a tremendous benefits to economy.

1. Corporate Social Responsibility

Businesses in modern days are highly recommended to activate CSR, a short term of Corporate Social Responsibility, to seek for responsibilities and benefits: to solve social problems as well as to imply good image, and if employees are take care of, they are happy and able to work better.

One of Samsung’s CSR commitments is to helping the social disabilities to have an equal competition with others, which is trying to reduce social problems as well as making a good image. First, Samsung has been giving a continuous help to hospitals in Hong Kong by offering digital learning tools and over 50 Samsung volunteers, bringing them new hopes to step up unto a digital education for a brighter future to children, believing that every child should have a fair learning environment. Samsung offered 47 computer equipments, including notebooks, color printers, projectors, camera, tablets personal computers and LED TV. Alex Chung, Chief Operating Officer, said, “Samsung leads the world with its latest technology and product to improve human’s life, paving ways to a brighter future.” (‘Samsung Joined Hands’)  This shows that Samsung is working forward to give a helping hand instead of government giving an aid to hospitals, which reduces the consumption of government spending and also, by helping the people that should need an aid allows the company to to get a positive perspective because of their commitment towards the society. Moreover, by helping a specific group of people in certain countries, the company will have a focus from mass medias, and by the time, the company will naturally advertise itself..  Furthermore, as an equal opportunity employer, Samsung has implemented the internship program for employees with disabilities, consisting of creating fair and open recruitment process for college students with disabilities. The the number of disabled employees that are hired in 2011 was 1193, 73.5% of total employment. Comparing to the proportion of Disabled Employees in Korea, which is 1.3%, Samsung is working hard in order to rise the proportion.(‘2012 Sustainability Report in Samsung’). This implies that Samsung has committed themselves for purifying the social problem in Korea by giving a chance to the disabled to work and prove that they work the same as other employees and allows the disabled people to socialize with others. Also, it makes sense that by showing the fair and open recruitment for college students with disabilities, it shows a good image of Samsung for building an equal society. Finally, Samsung threw themselves fervently into raising the proportion of female employment, and as a result, the proportion of female employees at Samsung has steadily increased and now they accounts for 40% of total employees in 2011(‘2012 Sustainability Report in Samsung’).  This shows that Samsung’s approach is to solve a serious social problem that are facing these days. By giving an equal opportunity to female employees, it changes certain stereotypes of people who are thinking that males have more advantages of being employed and also helps reputation.In conclusion, by giving a continuous help to hospital in Hong Kong, hiring the people with disabilities, and raising the proportion of female employment actually has reduced some of the serious social problems as well as made a good image of the company.

Corporate Social Responsibility is also necessary for the companies in order to make a good atmosphere inside the working area. If employees are taken care of, they are happy and enables to work better than before. To support the statement, Samsung allowed workers to go back to school and graduate by paying their tuitions. As a result, workers that did not graduate the University could been able to finish their studies(‘2012 Sustainability Report in Samsung’). If workers were not well educated, they would have an obstacle or limitation of working. Also, by graduating University, workers would be more educated, and as a result, they would work more fluently than before. Furthermore, for the sojourning employees, Samsung is offering several benefits to them by providing house, car, finance, tuition for children, etc(‘2012 Sustainability Report in Samsung’ ). This shows that workers in Korea would have no stress on working overseas when they get a support from their company. Also, because the company offers much of important needs, workers will think that they are treated as an important worker, and as a result, they would work better outside their country. For last, Samsung offered a variety of programs for women that prevent their career from being interrupted due to child care obligations. For example, the company supported female with children  under 12 in Korea by hiring babysitters when their mom is out for business(‘2009 Sustainability Report in Samsung’). This shows that Samsung is working hard to offer the best condition for the workers to be stabilized on working. Moreover, if the company offers a babysitting system to the female workers’ children, the female workers will feel gratitude and devote more to their company. In conclusion, Samsung is offering some systems to the workers in order to build a good working atmosphere and to treat the workers better so they feel like that are one of the important workers in the company.

To conclude, Corporate Social Responsibility is necessary to all companies in this days because CSR in the company solves or reduces the social problem as well as makes a good image, and makes a better working environment inside the company.