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INTERNATIONALINTERNATIONAL MARKETINGMARKETING ENVIRONMENTENVIRONMENT
INTERNATIONALINTERNATIONAL
MARKETINGMARKETING
ENVIRONMENTENVIRONMENT

Copyright© 2002 Pearson Education Australia Pty Ltd

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InternationalInternational MarketingMarketing EnvironmentEnvironment 1. Economical Environment 2. Political Environment
InternationalInternational MarketingMarketing EnvironmentEnvironment
1. Economical Environment
2. Political Environment
3. Cultural Environment
4. Technological Environment
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1.1. EconomicalEconomical EnvironmentEnvironment WHAT WE NEED TO KNOW? 1. Population 2. Income 3. Trading environment
1.1. EconomicalEconomical EnvironmentEnvironment
WHAT WE NEED TO KNOW?
1. Population
2. Income
3. Trading environment
4. GDP & GNP
5. Inflation – Interest rate – Exchange rate
6. Infrastructure
7. Level of urbanization
8. Member of any international organization
9. Trade barriers
EconomicalEconomical EnvironmentEnvironment
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1.1. EconomicalEconomical EnvironmentEnvironment  It is estimated that 1/5 of the world’s population lives <
1.1. EconomicalEconomical EnvironmentEnvironment
 It is estimated that 1/5 of the world’s population
lives < $1 a day.
 High income and developed market only takes
15% of the world
 Developing countries are finding it easier to
compete in international markets, but still face
higher barriers to entry than more developed
economies.
EconomicalEconomical EnvironmentEnvironment
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ConsumptionConsumption PatternsPatterns Both income and population impact on consumption patterns. Engle’s law states
ConsumptionConsumption PatternsPatterns
Both income and population impact on consumption
patterns. Engle’s law states that as income rises
above a certain minimum, expenditure on food as a
percentage of total income decreases.
Another issue is that product saturation levels
increase as per capita national income increases.
EconomicalEconomical EnvironmentEnvironment
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TradingTrading environmentenvironment  Regulated by Governments  Governments desire to control trade flows tends
TradingTrading environmentenvironment
 Regulated by Governments
 Governments desire to control trade flows tends to
be motivated by:
 Financial issues
 Security issues
 Safety issues
 Health issues
 Protectionist issues
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MeasuringMeasuring Markets:Markets: IncomeIncome Countries are often classified according to levels of income and
MeasuringMeasuring Markets:Markets: IncomeIncome
Countries are often classified according to levels of
income and measured by GNP per head:
 Low-income countries <US$755 per head
 Lower-middle-income countries US$756–$2,995
per head
 Upper-middle-income countries US$2,996–$9,265
per head
 High-income countries >US$9,266 per head
EconomicalEconomical EnvironmentEnvironment
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MeasuringMeasuring Markets:Markets: PopulationPopulation The fact is: the larger the population, the more attractive the
MeasuringMeasuring Markets:Markets: PopulationPopulation
The fact is: the larger the population, the more
attractive the market is in terms of potential.
Distribution of population is significant in terms of:
 Age
 Location
EconomicalEconomical EnvironmentEnvironment
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MeasuringMeasuring Markets:Markets: PhysicalPhysical QualityQuality ofof lifelife Economic advancement is usually
MeasuringMeasuring Markets:Markets:
PhysicalPhysical QualityQuality ofof lifelife
Economic advancement is usually accompanied by a
price tag.
While wealthy countries have the luxury of being able
to trade off development for quality of life, this luxury
eludes many less developed countries.
EconomicalEconomical EnvironmentEnvironment
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MeasuringMeasuring Markets:Markets: InfrastructureInfrastructure Infrastructure in very general terms refers to: 
MeasuringMeasuring Markets:Markets: InfrastructureInfrastructure
Infrastructure in very general terms refers to:
 Facilities and services necessary for functioning of
the economy.
 Transport and communications.
 Commercial and financial services.
Infrastructure impacts on physical distribution as well
as on the ability of firms to supply international
markets.
EconomicalEconomical EnvironmentEnvironment
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MeasuringMeasuring Markets:Markets: DebtDebt Debt is another key indicator of economic difference between countries. In
MeasuringMeasuring Markets:Markets: DebtDebt
Debt is another key indicator of economic difference
between countries.
In many developing countries, interest on debt
consumes a major percentage of export receipts.
EconomicalEconomical EnvironmentEnvironment
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MeasuringMeasuring Markets:Markets: ResourcesResources Resource endowment varies from country to country Resource
MeasuringMeasuring Markets:Markets: ResourcesResources
Resource endowment varies from country to country
Resource is the indicator of wealth
Resource identify the product or service of exports
In some countries the wealth is almost totally
dependent on a single resource (e.g. oil)
EconomicalEconomical EnvironmentEnvironment
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ForeignForeign ExchangeExchange Issues:Issues: DynamicsDynamics  One of the problems which faces international
ForeignForeign ExchangeExchange Issues:Issues: DynamicsDynamics
 One of the problems which faces international
business is the fluctuations that occur in exchange
rates.
 The sometimes extreme fluctuation in rates has,
and will continue to have, an effect on profits of
large global firms.
EconomicalEconomical EnvironmentEnvironment
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ForeignForeign ExchangeExchange Issues:Issues: ForecastingForecasting There are a number of factors that influence the
ForeignForeign ExchangeExchange Issues:Issues: ForecastingForecasting
There are a number of factors that influence the
forecasting of exchange rates.
 Economic factors: these factors are policy and
performance, real interest rates and the importance of the
currency in the world’s financial system.
 Political factors: are important in the value attributed to a
currency. These include, party philosophy, stability of
governments, nature of underpinning power, sources of
impending change and the nature of government.
EconomicalEconomical EnvironmentEnvironment
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FinancialFinancial Management:Management: TypesTypes ofof FinancialFinancial RiskRisk There are a number of different
FinancialFinancial Management:Management:
TypesTypes ofof FinancialFinancial RiskRisk
There are a number of different sources of
financial risk, including:
 Commercial risk
 Political risk
 Foreign exchange risk
EconomicalEconomical EnvironmentEnvironment
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FinancialFinancial Management:Management: CopingCoping withwith RecessionRecession Kotabe and Helsen (2000) propose
FinancialFinancial Management:Management:
CopingCoping withwith RecessionRecession
Kotabe and Helsen (2000) propose eight strategies:
 Pull out
 Emphasis a product’s value
 Change the product mix
 Repackage goods
 Maintain stricter inventory
 Look outside the region for expansion opportunities
 Increase advertising in region
 Increase local procurement
EconomicalEconomical EnvironmentEnvironment
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WorldWorld’’ss 100100 LargestLargest IndustrialIndustrial CorporationsCorporations (Annual(Annual Revenues)Revenues)
WorldWorld’’ss 100100 LargestLargest IndustrialIndustrial
CorporationsCorporations (Annual(Annual Revenues)Revenues)
EconomicalEconomical EnvironmentEnvironment
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MarketingMarketing implicationimplication  Need to monitor the economic environment on both a global and individual
MarketingMarketing implicationimplication
 Need to monitor the economic environment on
both a global and individual country basis
 Provides knowledge:
 To target specific markets
 Nature of customers and demand
 Most important segments
 Entry strategy
 Marketing mix
 Market potential
EconomicalEconomical EnvironmentEnvironment
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MarketMarket implicationimplication  Need to know the resources of funds when doing business overseas 
MarketMarket implicationimplication
 Need to know the resources of funds when doing
business overseas
 Need to monitor the financial situation in the
economy of the overseas country
 Provides an indication of the likely stability of the
exchange rate, availability of funds, and the cost of
funds
 Mechanisms exist to assess and minimize financial
risks
EconomicalEconomical EnvironmentEnvironment
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InternationalInternational MarketingMarketing EnvironmentEnvironment 1. Economical Environment 2. Political Environment
InternationalInternational MarketingMarketing EnvironmentEnvironment
1. Economical Environment
2. Political Environment
3. Cultural Environment
4. Technological Environment
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TheThe RoleRole ofof GovernmentGovernment inin thethe EconomyEconomy An extreme form of involvement is a state-
TheThe RoleRole ofof GovernmentGovernment
inin thethe EconomyEconomy
An extreme form of involvement is a state-
trading company which is a common
 Participator:
feature of a commercial environment in
current and former communist countries.
PoliticalPolitical EnvironmentEnvironment
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TheThe RoleRole ofof GovernmentGovernment inin thethe EconomyEconomy • Governments often attract new foreign
TheThe RoleRole ofof GovernmentGovernment
inin thethe EconomyEconomy
• Governments often attract new foreign
investment and technology by providing a
 Facilitator
range of concessions such as tax
holidays, duty-free import privileges, etc.
• Governments can also set up export
processing zones to attract international
manufacturing activity to generate exports.
PoliticalPolitical EnvironmentEnvironment
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TheThe RoleRole ofof GovernmentGovernment inin thethe EconomyEconomy Government regulatory activities are often 
TheThe RoleRole ofof GovernmentGovernment
inin thethe EconomyEconomy
Government regulatory activities are often
 Regulator
tied in with government planning activities.
There are several areas where the
government acts as a regulator including:
 Import duties
 Licensing fees
 Repatriation of profits, dividends and
royalties
PoliticalPolitical EnvironmentEnvironment
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PoliticalPolitical StabilityStability andand RiskRisk To assess political stability in a target international market,
PoliticalPolitical StabilityStability andand RiskRisk
To assess political stability in a target international
market, the firm should be aware of indicators of
political instability. These indicators include:
 The degree of social unrest that is caused by underlying
conditions
 The frequency of changes in the regime - because these
can mean changes in the attitude towards business
 The extent to which the country is divided culturally
 Religious division
 Linguistic diversity
PoliticalPolitical EnvironmentEnvironment
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NatureNature ofof PoliticalPolitical RiskRisk The four main types of political risk:  General instability risk
NatureNature ofof PoliticalPolitical RiskRisk
The four main types of political risk:
 General instability risk
 Ownership risk
 Operating risk
 Transfer risk
PoliticalPolitical EnvironmentEnvironment
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TheThe AssessmentAssessment ofof PoliticalPolitical RiskRisk Any appraisal of a firm’s exposure to political risk in
TheThe AssessmentAssessment ofof PoliticalPolitical RiskRisk
Any appraisal of a firm’s exposure to political risk
in an overseas country should at least cover three
factors:
1. Product-related factors
2. External factors
3. Company factors
PoliticalPolitical EnvironmentEnvironment
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ManagingManaging thethe InternationalInternational PoliticalPolitical EnvironmentEnvironment Firm can take a number of
ManagingManaging thethe InternationalInternational PoliticalPolitical
EnvironmentEnvironment
Firm can take a number of measures to minimize
potential political problems, these include:
 Company behavior
 Home government actions
 Contribution to the host country
 Localization of operations
 Globalization
 Political risk insurance
PoliticalPolitical EnvironmentEnvironment
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CompanyCompany BehaviorBehavior Political neutrality  companies should be conscious of which political labels are
CompanyCompany BehaviorBehavior
Political neutrality
 companies should be conscious of which political
labels are acceptable and which are not
Combination investment/civic projects
 awareness of impact of a firm’s operations on
alternative government’s policies
 contributions to local infrastructure development are
likely to benefit not only the community but also the
company
PoliticalPolitical EnvironmentEnvironment
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HomeHome GGovernmentovernment AActionsctions Actions by a home country government or its representatives towards an
HomeHome GGovernmentovernment AActionsctions
Actions by a home country government or its
representatives towards an international country can
either enhance or retard the position of the firm in
that country
 e.g. Enhancement through:
• Giving aid
• Providing financial rescue packages
• According diplomatic recognition
PoliticalPolitical EnvironmentEnvironment
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ContributionContribution toto thethe HHostost CCountryountry  Buying local products whenever possible  Using the
ContributionContribution toto thethe HHostost CCountryountry
 Buying local products whenever possible
 Using the operation to generate exports
 Establishing training programmes for local
employees
 Demonstrably upgrading technology levels
PoliticalPolitical EnvironmentEnvironment
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LocalizationLocalization ofof OOperationsperations  Forming alliances or joint ventures with local firms 
LocalizationLocalization ofof OOperationsperations
 Forming alliances or joint ventures with local firms
 Recruiting locals to occupy senior management
positions
 Local borrowing or investment minimisation
PoliticalPolitical EnvironmentEnvironment
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InternationalInternational LawLaw International law grows out of the agreement of two or more nations and
InternationalInternational LawLaw
International law grows out of the agreement of two
or more nations and implies a desire to lessen
differences in the way countries treat legal
problems.
PoliticalPolitical EnvironmentEnvironment
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DifferingDiffering LegalLegal SystemsSystems && JurisdictionsJurisdictions Common law: based on tradition, past
DifferingDiffering LegalLegal SystemsSystems && JurisdictionsJurisdictions
Common law: based on tradition, past practices, legal
precedent, and interpretation via court decision
Code law: based on an all-inclusive system of written
rules of law
Islamic law: based on the Koran, and applied by
Islamic countries
Other legal codes: include tribal (or indigenous) law,
and socialist laws
PoliticalPolitical EnvironmentEnvironment
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LegalLegal JurisdictionJurisdiction A common legal problem in international business is determining which country’s
LegalLegal JurisdictionJurisdiction
A common legal problem in international business
is determining which country’s laws apply in
the event of a dispute. This is decided according
to whether the country is nominated in the
jurisdictional clause in the contract, where the
contract is entered into or where the provisions
of the contract are carried out.
PoliticalPolitical EnvironmentEnvironment
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LawLaw andand thethe MarketingMarketing MixMix The law as it applies to commercial activities varies between
LawLaw andand thethe MarketingMarketing MixMix
The law as it applies to commercial activities varies
between countries, even when countries operate
under the same legal system.
PoliticalPolitical EnvironmentEnvironment
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LawLaw andand thethe MarketingMarketing MixMix ProductProduct Both the physical and chemical aspects of a product
LawLaw andand thethe MarketingMarketing MixMix
ProductProduct
Both the physical and chemical aspects of a
product are affected by laws seeking to protect
consumers. Such laws may prescribe standards
for purity, safety and performance.
Laws also apply to packaging and may specify the
type of outer packaging material, the nature of
the container and labelling.
PoliticalPolitical EnvironmentEnvironment
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LawLaw andand thethe MarketingMarketing MixMix PricePrice The free market system does not operate in many
LawLaw andand thethe MarketingMarketing MixMix
PricePrice
The free market system does not operate in many
countries. National health laws and government
price controls can have a significant impact on
the prices that may be charged in international
markets.
Prices are also affected by taxes such as sales
tax, value added tax, import tax and port tax.
PoliticalPolitical EnvironmentEnvironment
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LawLaw andand thethe MarketingMarketing MixMix DistributionDistribution  Laws in most countries cover:  Shipping
LawLaw andand thethe MarketingMarketing MixMix
DistributionDistribution
 Laws in most countries cover:
 Shipping
 Regulation of airline services
 Rights of carriage by air and sea
 Liabilities for loss and damage to cargo
 Many countries have regulations regarding the
conditions under which a international firm might
terminate the local agency agreement.
PoliticalPolitical EnvironmentEnvironment
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LawLaw andand thethe MarketingMarketing MixMix PromotionPromotion Some of the frequent areas of regulation relating to
LawLaw andand thethe MarketingMarketing MixMix
PromotionPromotion
Some of the frequent areas of regulation relating to
promotion include:
 Trade descriptions
 Prohibitions on advertising certain products
 Prohibitions on using certain words and expressions
 Limitation on extent of promotional expenditure
 Content and style of advertisement
 Other promotional elements
PoliticalPolitical EnvironmentEnvironment
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InIn conclusion,conclusion, specificspecific MarketingMarketing LawsLaws  All countries have laws regulating marketing
InIn conclusion,conclusion, specificspecific MarketingMarketing LawsLaws
 All countries have laws regulating marketing
activities.
 Promotion
 Product development
 Labeling
 Pricing
 Channels of distribution.
 There often are vast differences in enforcement
and interpretation among countries having laws
covering the same activities.
 Censorship of advertising is a constant concern.
PoliticalPolitical EnvironmentEnvironment
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InternationalInternational MarketingMarketing EnvironmentEnvironment 1. Economical Environment 2. Political Environment
InternationalInternational MarketingMarketing EnvironmentEnvironment
1. Economical Environment
2. Political Environment
3. Cultural Environment
4. Technological Environment
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DefinitionDefinition “Culture prescribes the forms of behaviors that are acceptable to people in a specific
DefinitionDefinition
“Culture prescribes the forms of behaviors that are
acceptable to people in a specific community.”
“Culture is the human aspect of a person’s
environment; it consists of beliefs, morals, customs,
and habits learned from others”
 Culture is learned
 Culture is subjective
CulturalCultural EnvironmentEnvironment
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ImpactImpact ofof CultureCulture onon InternationalInternational MarketingMarketing Buy understanding the culture,
ImpactImpact ofof CultureCulture onon InternationalInternational
MarketingMarketing
Buy understanding the culture, marketer can
know
 Conditions needs and wants of potential buyers
 Impacts on the way messages are received and
interpreted
 Pervades all elements of the marketing mix
CulturalCultural EnvironmentEnvironment
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CulturalCultural UniversalsUniversals Physical  desire to look beautiful, keep track of time Social  desire
CulturalCultural UniversalsUniversals
Physical
 desire to look beautiful, keep track of time
Social
 desire to co-operate, to be a member of a group,
differentiate according to status
Emotional
 such as courtship, religious observance,
mourning
CulturalCultural EnvironmentEnvironment
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ElementsElements ofof CultureCulture  Rituals  Marriage  Funerals  Symbols  Language • Linguistic
ElementsElements ofof CultureCulture
 Rituals
 Marriage
 Funerals
 Symbols
 Language
• Linguistic distance
 Aesthetics as symbols
• Insensitivity to aesthetic values can offend, create a
negative impression, and, in general, render marketing
efforts ineffective or even damaging
CulturalCultural EnvironmentEnvironment
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ElementsElements ofof CultureCulture  Beliefs  To make light of superstitions in other cultures can
ElementsElements ofof CultureCulture
 Beliefs
 To make light of superstitions in other cultures can be
an expensive mistake
 Thought processes
 Difference in perception
• Focus vs. big-picture
CulturalCultural EnvironmentEnvironment
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GlobalGlobal ComparisonsComparisons Hofstede undertook a global survey of IBM and came up with four underlying
GlobalGlobal ComparisonsComparisons
Hofstede undertook a global survey of IBM and
came up with four underlying dimensions of
culture:
 Power distance
 Uncertainty avoidance
 Individualism/collectivism
 Masculine/feminine
Further research caused a fifth dimension to be
added:
 Long-term/short-term orientation
CulturalCultural EnvironmentEnvironment
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GlobalGlobal CulturalCultural ComparisonsComparisons HofstedeHofstede StudiesStudies 1. Power distance: degree to which
GlobalGlobal CulturalCultural ComparisonsComparisons
HofstedeHofstede StudiesStudies
1. Power distance: degree to which less powerful persons in a
culture accept the existence of inequality and the unequal
distribution of power as a normal situation
2. Uncertainty avoidance: extent to which people in a culture feel
threatened by uncertain or unknown situations
3. Individualism/Collectivism: extent to which people in a culture
look after their own interests and those of their immediate family,
and where ties are loose
4. Masculine/Feminine: reflected in the different social roles for
men and women
CulturalCultural EnvironmentEnvironment
5.
Long-term vs. short-term orientations: extent to which
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3-8 HofstedeHofstedeHofstede’’’sss classificationclassificationclassification Japan North W. Europe America
3-8
HofstedeHofstedeHofstede’’’sss classificationclassificationclassification
Japan
North
W. Europe
America
(Canada, USA,
Great Britain)
Northern Continent Greece
Individualism
low
high
high
high
low
Power
high
low
low
high
high
distance
Masculinity
high
high
low
high
high
Uncertainty
high
low
low
high
high
avoidance
Context
high
low
high
low
low
Note: “Context” added.
Source: Adapted from Hofstede, 1980
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KeyKey CulturalCultural DifferencesDifferences  Time  Space  Language  Education  Familiarity 
KeyKey CulturalCultural DifferencesDifferences
 Time
 Space
 Language
 Education
 Familiarity
 Consumption patterns
 Business customs
 Social organization
CulturalCultural EnvironmentEnvironment
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PatternsPatterns ofof ConsumptionConsumption (annual(annual perper capita)capita) CulturalCultural
PatternsPatterns ofof ConsumptionConsumption
(annual(annual perper capita)capita)
CulturalCultural EnvironmentEnvironment
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WeWe AllAll LoveLove FlowersFlowers –– Why?Why?  Geography  History  Technology and economics 
WeWe AllAll LoveLove FlowersFlowers –– Why?Why?
 Geography
 History
 Technology and economics
 Social institutions
 Cultural values
 Aesthetics as symbols
CulturalCultural EnvironmentEnvironment
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HofstedeHofstede’’ss IndexesIndexes Language,Language, andand LinguisticLinguistic DistanceDistance CulturalCultural
HofstedeHofstede’’ss IndexesIndexes
Language,Language, andand LinguisticLinguistic DistanceDistance
CulturalCultural EnvironmentEnvironment
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CulturalCultural CommunicationCommunication  Verbal communication  Non-verbal communication  Cultural
CulturalCultural CommunicationCommunication
 Verbal communication
 Non-verbal communication
 Cultural adaptation and communication
CulturalCultural EnvironmentEnvironment
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NonNon--verbalverbal CommunicationCommunication Care should be taken to spot non-verbal signals, as these can supplement
NonNon--verbalverbal CommunicationCommunication
Care should be taken to spot non-verbal signals,
as these can supplement the verbal signals to yield
a more accurate picture of reality. The most
important signals according to Morris are:
 Body stress signals
 Lower body signals
 Body posture signals
 Random gestures
 Facial gestures
CulturalCultural EnvironmentEnvironment
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CulturalCultural AdaptationAdaptation && CommunicationCommunication Adaptation is an important concept in
CulturalCultural AdaptationAdaptation && CommunicationCommunication
Adaptation is an important concept in international
marketing. To understand adaptation a list of ten
basic criteria was developed by Cateora. They
are:
 Open tolerance
Flexibility
 Humility Justice/Fairness
 Adjustability to varying tempos
 Curiosity
Knowledge of the country
 Liking of others
Ability to command respect
 Ability to integrate into the environment
CulturalCultural EnvironmentEnvironment
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DegreeDegree ofof AdaptationAdaptation  Essential to effective adaptation is awareness of one’s own culture and
DegreeDegree ofof AdaptationAdaptation
 Essential to effective adaptation is awareness of
one’s own culture and the recognition that
differences in others can cause anxiety, frustration,
and misunderstanding of the host’s intentions.
 The key to adaptation is to maintain your domestic
culture but to develop an understanding of and
willingness to accommodate the differences that
exist.
CulturalCultural EnvironmentEnvironment
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AnAn orientationorientation towardtoward time:time: PP--TimeTime versusversus MM--TimeTime  Monochronic time: 
AnAn orientationorientation towardtoward time:time:
PP--TimeTime versusversus MM--TimeTime
 Monochronic time:
 Tend to concentrate on one thing at a time
 Divide time into small units and are concerned with
promptness
 Most low-context cultures operate on M-Time.
 Polychronic time:
 Dominant in high-context cultures
 Characterized by the simultaneous occurrence of many
things
 Allows for relationships to build and context to be absorbed
as parts of high-context cultures.
CulturalCultural EnvironmentEnvironment
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SocialSocial aspectsaspects ofof thethe conductconduct ofof InternationalInternational MarketingMarketing  Social
SocialSocial aspectsaspects ofof thethe
conductconduct ofof InternationalInternational MarketingMarketing
 Social sensitivity
 Good corporate citizenship
 Ethical considerations
CulturalCultural EnvironmentEnvironment
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CulturalCultural && InternationalInternational NegotiationNegotiation  Background to negotiation  The
CulturalCultural && InternationalInternational NegotiationNegotiation
 Background to negotiation
 The environment of international negotiation
 Culture and the conduct of negotiations
 Preparing for international negotiation
 Stages in international negotiation
 The atmosphere of international negotiations
 Styles of negotiation
CulturalCultural EnvironmentEnvironment
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CultureCulture && thethe conductconduct ofof NegotiationsNegotiations There are a number of culturally
CultureCulture && thethe conductconduct ofof
NegotiationsNegotiations
There are a number of culturally influenced factors
that need to be kept in mind when negotiating with
people from other countries:
 Different approaches to thinking
 Self-esteem and “face”
 Value systems
 Appropriate degree of formality
 Harmony and emotion
CulturalCultural EnvironmentEnvironment
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PreparingPreparing forfor InternationalInternational NegotiationNegotiation The key components when preparing for
PreparingPreparing forfor InternationalInternational
NegotiationNegotiation
The key components when preparing for
international negotiations are:
 Strategy
 Composition of the negotiating team
 Researching the context of negotiations
CulturalCultural EnvironmentEnvironment
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TheThe AAtmospheretmosphere ofof InternationalInternational NNegotiationsegotiations  Degree of mutual orientation
TheThe AAtmospheretmosphere ofof
InternationalInternational NNegotiationsegotiations
 Degree of mutual orientation
 Feelings towards the other party
 Openness versus secrecy
 Willingness to make cultural adjustments
CulturalCultural EnvironmentEnvironment
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InIn SummarySummary……  Businesspersons working in another country must be sensitive to the business environment
InIn SummarySummary……
 Businesspersons working in another country must
be sensitive to the business environment and must
be willing to adapt when necessary.
 Business behavior is derived in large part from the
basic cultural environment in which the business
operates and, as such, is subject to the extreme
diversity encountered among various cultures and
subcultures.
CulturalCultural EnvironmentEnvironment
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InternationalInternational MarketingMarketing EnvironmentEnvironment 1. Economical Environment 2. Political Environment
InternationalInternational MarketingMarketing EnvironmentEnvironment
1. Economical Environment
2. Political Environment
3. Cultural Environment
4. Technological Environment
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TheThe GlobalGlobal NetworkNetwork Organizations are embracing three key areas of networked enterprise:  E-learning
TheThe GlobalGlobal NetworkNetwork
Organizations are embracing three key areas of
networked enterprise:
 E-learning
 Internet commerce
 Customer support
TechnologicalTechnological EnvironmentEnvironment
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TheThe CChallengeshallenges && PPossibilitiesossibilities forfor InternationalInternational oror GlobalGlobal
TheThe CChallengeshallenges && PPossibilitiesossibilities forfor
InternationalInternational oror GlobalGlobal MarketingMarketing
 Currently 80% of websites are in English but only 20%
of the world’s population speak English.
 The level of knowledge and usage patterns are gaining
momentum despite the spectacular dot.com failures of
2000 and 2001. This early failure could be attributed
to the very limited research on the extent of business
activity from the web.
 Electronic commerce is growing at a rapid rate in
global industries.
TechnologicalTechnological EnvironmentEnvironment
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TheThe NNewew IInformationnformation IInfrastructurenfrastructure:: CConstraintsonstraints andand LLimitationsimitations
TheThe NNewew IInformationnformation IInfrastructurenfrastructure::
CConstraintsonstraints andand LLimitationsimitations
 Inefficient website search directories and processes
inhibiting ease of access;
 Slow access time and downloading of images;
 Large amounts of out-of-date information;
 Perceived lack of security;
 Uncertainty in many countries with regard to policies for
investment;
 Major corporate rivalry in the development of technology
standards within the new infrastructure;
 Resistance to implementation on cultural grounds.
TechnologicalTechnological EnvironmentEnvironment
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ImplicationsImplications forfor InternationalInternational MarketingMarketing Business customers and consumers have much
ImplicationsImplications forfor InternationalInternational
MarketingMarketing
Business customers and consumers have much
quicker and more widespread access to business
intelligence, company products and services, price,
new innovative concepts and potentially higher
levels of service.
Firms can use information and communication
technologies to access and service markets which
previously were considered too remote or too
expensive to address.
TechnologicalTechnological EnvironmentEnvironment
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InternationalInternational DiffusionDiffusion ofof InnovationInnovation The propensity of customers to adopt new
InternationalInternational DiffusionDiffusion ofof InnovationInnovation
The propensity of customers to adopt new
products varies considerably in international
markets and, according to Sheth and Sethi is a
matter of:
 Differences in cultural lifestyle
 Strategic opinion leadership
 Economic environment
 Communication
TechnologicalTechnological EnvironmentEnvironment
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SummarySummary The information and technology revolution in the new century is transforming the international business
SummarySummary
The information and technology revolution in the
new century is transforming the international
business environment.
Access to information and to the purchase of
services and certain products via the Internet or
intranet systems provides the opportunity for firms
to instantly reach and be reached by international
customers and prospects connected to these
systems.
TechnologicalTechnological EnvironmentEnvironment
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