INTERNATIONAL MARKETING The Scope and Challenge of International

Marketing
LESSON 1
Global Perspective: Global
Commerce causes peace, The
Internalization of US Business,
International Marketing defined,
The International Marketing
Task, Marketing decision factors,
Aspects of Domestic
Topic:
Environment, Aspects of the
foreign environment,
Environmental adaptation, Self-
reference Criterion and
Ethnocentrism: Major obstacles,
Developing a Global awareness,
Stages of International Marketing
About the Lesson
The globalization of markets and competition
necessitates that all managers pay attention to
the global environment.
International marketingis defined as the
performance of business activities, including
pricing, promotion, product, and distribution
decisions, across national borders.
- The international marketing task is made
more daunting because environmental factors
such as laws, customs, and cultures vary
from country to country.
- These environmental differences must be
taken into account if firms are to market
products and services at a profit in other
countries.   Key obstacles facing international
marketers are not limited to environmental
issues. Just as important are difficulties
associated with the marketer’s own self-
reference criteria and ethnocentrism.
Both limit the international marketer’s abilities
to understand and adapt to differences
prevalent in foreign markets.
 At the turn of the century, some major events
that helped shape our world and influence
international marketing include the following:
- The technological bubble bust of 2001
- Terrorism on 9/11
- The Afghanistan and Iraq wars
- The Indian Ocean Tsunami in December
2004
- Prince of oil at 100 dollars a barrel
- NASA budget cuts threaten the demise of the
space shuttle program
* Even with all the events at the turn of the
century, the consumer continued to spend
despite the layoffs at United Airlines and Being
and the tough job market
* This was only the beginning of the slowdown
in the economy which began in the housing
market, where loans were given out to people
who could not afford homes and were
mortgaging homes on an Adjustable Rate
Mortgage (ARM)
* The Federal Reserve raised the interest
rates, causing mortgage interest rates to go
up, which raised mortgage payments, thereby
ending in nationwide foreclosures.
* Banks stopped giving credit.
International trade tensions continue to rise
from newcomers in the market: China, Brazil
and India.
The Internationalization of US Business

Global awareness and sensitivity are the

best solutions to these problems, and they
should be nurtured in international marketing
organizations.
 The only difference between the definitions
of domestic marketing and international
marketing is the “environment.”
That is, in international marketing, activities
take place in more than one country. This
difference in environment accounts for the
complexity and diversity found in
international marketing operations.
The complexities include competition, legal
restraints, government controls, weather, fickle
consumers, economic conditions, technological
Current interest in international marketing can constraints, infrastructure concerns, culture,
be explained by changing competitive and political situations.
structures, coupled with shifts in demand
characteristics in markets throughout the
world. With the increasing globalization of
markets, companies find they are unavoidably
enmeshed with foreign customers,
competitors, and suppliers, even within their
own borders. They face competition on all
fronts—from domestic firms and from
foreign firms.
A huge portion of all consumer products—from
CD players to dinnerware—sold in the United
States is foreign made.
Sony, Norelco, Samsung, Toyota, and
Nescafé are familiar brands in the United
States, and for U.S. industry, they are
formidable opponents in a competitive struggle
for U.S. and world markets.  Many familiar U.S.
companies are now foreign-controlled or
headed in that direction.
Exhibit 1.3 illustrates the task of international
What is INTERNATIONAL MARKETING?
marketer: the international marketing
-is defined as the performance of business environment.
activities designed to plan, price, promote,
- the inner-circle depicts the controllable
and direct the flow of a company’s goods
elements that constitute a marketer’s decision
and services to consumers or users in
area
more than one nation for a profit.
- the second circle encompasses those
environmental elements at home that have
some effect on foreign-operation decisions
- the outer circles represent the elements of
the foreign environment for each foreign
market within which the marketer operates.
As the outer circles illustrate, each foreign
market in which the company does business
can (and usually does) present separate
problems involving some or all of the
uncontrollable elements.
The International Marketing Task

Environmental Adaptation  SELF-REFERENCE CRITERION (SRC)
To be successful in the international
marketplace, marketers must be able to
effectively interpret the influence and
impact of each of the uncontrollable
environmental elements on the marketing
plan for each foreign market in which they
hope to do business.
Cultural Adjustment - The most challenging
and important adaptation international
marketers must make.
- Because judgments are derived from
experience that is the result of acculturation in
the home countryy.
Marketers must have two strategies:
- establish frames of reference and “culture
conditioning.” Once a frame of reference is
established, it becomes an important factor in
determining or modifying a marketer’s reaction
to situations—social and even nonsocial.
For example, “time” is not valued the same
way in many countries. Also hand gestures
vary between countries.
Cultural conditioning is like an iceberg- we
are not aware of nine-tenths of it. In any study
of the market systems of different peoples,
their political and economic structures,
religions, and other elements of culture, foreign
marketers must constantly guard against
measuring and assessing the markets against
the fixed values and assumptions of their own
cultures.
The key to successful international
marketing is adaptation to the
environmental differences from one market
to another.
Adaptation is a conscious effort on the part of
the international marketer to anticipate the
influences of both the foreign and domestic
uncontrollable factors on a marketing mix and
then to adjust the marketing mix to minimize
the effects.
Two primary obstacles to success in
international marketing are Self-Reference
Criterion (SRC) and Ethnocentrism.
-is an unconscious reference to one’s own
cultural values, experiences, and knowledge
as a basis for decisions.
The risks of SRC are great.
SRC can prevent marketing managers from
being aware of cultural differences or from
recognizing the importance of those
differences. Result in firms:
- Failing to recognize the need to take action
- Discounting the cultural differences that exist
among countries
- Reacting to a situation in a way offensive to
your hosts.
* A common mistake made by Americans is to
refuse food or drink when offered.
In the United States, a polite refusal is
certainly acceptable, but in Asia or the Middle
East, a host is offended if you refuse
hospitality.
Although you do not have to eat or drink much,
you do have to accept the offering of
hospitality. Also, SRC influences the evaluation
of the appropriateness of a domestically
designed marketing mix for a foreign market.
ETHNOCENTRISM
– the notion that people in one’s own company,
culture, or country know best how to do things.
-Ethnocentrism is generally a problem when
managers from affluent countries work with
managers and markets in less affluent
countries.
-The risk of ethnocentrism is that it impedes
the ability to assess a foreign market in its true
light.
The most effective way to control the
influence of SRC and ethnocentrism is to
recognize their effects on our behavior.
In order to avoid many of the mistakes possible
in international marketing, it is important to
have an awareness of the need to be
sensitive to differences and to ask
questions when doing business in another
culture.
For example, asking the appropriate question
helped the Vicks Company avoid making a
mistake in Germany. It discovered that in
German “Vicks” sounds like the crudest slang
equivalent of “intercourse,” so they changed
the name to “Wicks” before introducing the
product. Another way to control the influence of
SRC and ethnocentrism is to recognize that
there may be more similarities than differences
between countries. For example, McVitie’s
chocolate biscuits are sold in the same
package in the U.S. as in the United Kingdom.
Finally, international marketing must conduct a
cross-cultural analysis.
Cross-Cultural Analysis
1. Define business problem or goal in home-
country cultural traits, habits, or norms.
2. Define business problem or goal in foreign-
country cultural traits, habits, or norms through
consultation with natives of target country
3. Isolate the SRC influence and examine it
carefully to see how it complicates the problem
4. Redefine the problems without SRC
influence and solve for the optimum business
goal situation
Opportunities in global business abound for
those who are prepared to confront myriad
obstacles with optimism and a willingness to
continue learning new ways. The successful
businessperson in the 21st century will have
global awareness and a frame of reference
that goes beyond a region or even a country
and encompasses the world.
- To be globally aware is to have tolerance
of cultural differences (You do not have to
accept as your own the cultural ways of
another, but you must allow others to be
different and equal) and knowledge of
cultures, history, world market potential,
and global economic, social, and political
trends (the former republics of the Soviet
Union, along with Russia, Eastern Europe,
China, India, Africa, and Latin America are
undergoing economic, political, and social
changes that have already influenced their
status in world business).
Once a company has decided to go
international, it has to decide the degree of
marketing involvement and commitment it is
willing to make.
- In general, one of five (sometimes
overlapping) stages can describe the
international marketing involvement and
commitment of a company.
These include No direct foreign marketing,
Infrequent foreign marketing, Regular
foreign marketing, International marketing,
and Global marketing.
REACTIVE
No direct foreign marketing
Infrequent foreign marketing
PROACTIVE
Regular foreign marketing
International marketing
Global marketing.
- Rather than progressing from one stage to
another; a firm may begin its international
involvement at any one stage or be in more
than one stage simultaneously.
For example, because of a short product life
cycle and a thin but widespread market for
many technology products, many high-tech
companies large and small see the entire
world, including their home market, as a single
market and strive to reach all possible
customers as rapidly as possible.
LESSON 2
A.    Historical Perspective
in Global Business
B.    Geography and Global
Markets
Topic:
C.   Dynamics of Global
Population Trends
D.   World Trade Routes
E.    Communication Links
1. Explain the Historical Perspective in Global
Business
2. Recognize the Global Markets
3. Identify World Trade Routes and
Communication Links
Introduction:
Understanding the geography and history of
a country can help a marketer have a better
appreciation for many of the characteristics of
its culture. A culture of people evolves in
response to the environment which it
confronts.
The geography of a country, its topography,
climate, physical position relative to other
countries affect a culture’s evolution including
its marketing and distribution systems.
It is important for a marketer to understand that
geography plays an important role in the
economy of a country and its marketing
system.
Lesson Proper:
“History helps define a nation’s “mission,”
how it perceives its neighbors, how it sees its
place in the world, and how it sees itself.”
Importance of History
The history of a country is important
in understanding many aspects of a culture.
Without a historical perspective - one
cannot fully understand how business people
negotiate, how they conduct business, their
attitudes toward foreign investment, the legal
system, and other aspects of the
market/business system.
Historical perspective- helps prepare an
international marketer for many of the cultural
differences that often cause
misunderstandings and in many cases,
mistakes. \
- While a marketer may not be able to change
a person’s attitude or behavior, if you have a
historical perspective of why they react as they
do, you can gain insights that can possibly
make it easier to adapt your strategies for a
successful outcome.
1. Attitudes about the role of government and
business
2. RelationsbetweenManagersand
Subordinates
3. Sources of Management Authority
4. Attitudes toward Foreign Corporations
History and Contemporary Behavior
“To understand, explain, and appreciate a
people’s image of itself and the attitudes and
unconscious fears that reflected in its view of
foreign cultures, it is necessary to study the
culture as it is now as well as to understand
the culture as it was—that is, a country’s
history”
Loyalty to family, to country, to company, and
to social groups and the strong drive to
cooperate, to work together for a common
cause, permeate many facets of Japanese
behavior and have historical roots that date
back thousands of years.
Understanding of history:-Helps an
international marketer
To understand, explain, and appreciate a
people’s image of itself and the fundamental
attitudes and unconscious fears that are often
reflected in its view of foreign cultures, it is
necessary to study the culture as it is now as
well as to understand culture as it was, that is,
a country’s history.
- An awareness of the history of a country is
particularly effective for understanding
attitudes about the role of government and
business, the relations between managers and
the managed, the sources of management
authority, and attitudes toward foreign MNC’s.
- History is what helps define a nation’s
“mission,” how it perceives its neighbors, and
how it sees its place in the world.
- To understand a country’s attitudes,
prejudices, and fears it is necessary to look
beyond the surface of current events to the
inner refinement of the country’s entire past for
clues.
Geography and International Marketing
“Geography is a study of the physical
characteristics of a particular region of the
earth. Involved in this study are climate,
topography, and population.
- The interaction of the physical
characteristics is one of the principal
determinants of a country’s customs, products,
industries, needs, and methods of satisfying
those needs”.
Marketing is concerned with satisfying the
needs of people. International marketing seeks
out the whole world as its marketplace.
Therefore, for an international marketer to
know how to satisfy the needs of the
international market, he must be familiar
enough with geography to know what the
various causal factors of the people’s needs
are.
The international marketer must know that
various climates and topographies do exist
and that they are vital in shaping the
marketing plans that an international
marketer must make. As an example, a
producer selling machinery in the tropics would
have to realize that special protection is
needed to keep a machine running properly in
hot and humid climates.
-The study of geography is important in the
evaluation of markets.
- Need to be knowledgeable about the effects
of geographic diversity on the economic
profiles of various nations
- Climate and topography are examined as
facets of the broader and more important
elements of geography
- Knowledge about geography, the climate,
and physical terrain when appraising a market
- Influences marketing from product
adaptation to more profound influences on the
development of marketing systems
- Climatic features affect the uses and
functions of products and equipment
Geography, Nature, and Economic Growth
- Linkage exists between geographic location
and economic growth
- Association between landlocked countries
and the level of economic development
- Countries with unfriendly climates associated
with economic stagnation
- Countries that suffer the most from major
calamities are among the poorest in the world,
which influences the ability to market products
Social Responsibility & Environmental
Management
- Firms required to be socially responsible
especially in foreign markets
- Firms should comply with regulations against
environmental pollution and  disposal of
hazardous waste
- Economic development and protection for the
environment can coexist
- Sustainable development guides many
governments and multinational companies
today
Global environment
Many view the problem as a global issue rather
than a national one. One report on the global
environment stressed . . . “it is quite clear that
a number of critical problems—the threat to the
ozone layer, the greenhouse effect, the loss of
biodiversity, and ocean pollution—can not be
addressed by nations in isolation.”
Companies looking to build manufacturing
plants in countries with more liberal
pollution regulations than they have at home
are finding that regulations everywhere are
becoming stricter. Many Asian governments
are drafting new regulations and strictly
enforcing existing ones. A strong motivator
for Asia and the rest of the world is the
realization that pollution is on the verge of
getting completely out of control.
Neither Western Europe nor the rest of the
industrialized world is free of environmental
damage; rivers are polluted and the
atmosphere in many major urban areas is far
from clean. The very process of controlling
industrial wastes leads to another and perhaps
equally critical issue:
- disposal of hazardous waste
- by-product of pollution control
Estimates of hazardous wastes collected
annually exceed 300 million tons; the critical
question is disposal that does not move the
problem elsewhere.
The business community is responding
positively to the notion that the focus must be
on the global environment rather than “the
quality of the air, land, and water in our own
backyards.”
An International Chamber of Commerce
Industry Forum on the environment reflected
a shift in company attitudes toward
environmental issues away from a reactive and
largely defensive stance to a proactive and
constructive approach. Some disbelievers may
dismiss such statements as “window dressing”
and they could be, but the beginning of change
is awareness.
Responsibility for cleaning up the environment
does not rest solely with governments,
businesses, or activist groups. Each citizen
has social and moral responsibility to include
environmental protection among his/her
highest goals.
SustainableDevelopment:Key Propositions
- There is a crucial and potentially positive link
between economic development and the
environment
- The costs of inappropriate economic policies
on the environment are very high
- Addressing environmental problems requires
that poverty be reduced
- Economic growth must be guided by prices
that incorporate environmental values
- Since environment problems pay no respect
to borders, global and regional collaboration is
sometimes needed to complement national
and regional regions
Natural Resources
- Importance of natural resources especially to
the manufacturing of products
- Supply of natural resources not endless
- Human labor provides the preponderance of
energy in many countries
- Importance of oil and gas in world energy
consumption
Global Population Trends
Important to know about current population
trends because people constitute markets for
various categories of goods
Necessary to know about:
(1) rural/urban population shifts
(2) rates of growth
(3) age levels, and
(4) population control
(5) rural-urban migration of world population
 (6) population decline and aging
(7) worker shortage and immigration
The world population pattern trend is
shifting from rural to urban areas:
Implications for the international marketer
- The world market is becoming more unified
in location. Thus, it is becoming easier to reach
a larger segment of the market by just
marketing in the urban population centers.
- The types of products marketed will also
change with this population shift. For
example, food might become a more important
product in international marketing with few
people raising their own.
- These shifts will result in greater
industrialization in countries with presently
low levels of industrialization. This again
implies marketing changes that might affect the
world marketer, increased sales of capital
goods.
- In summary, people living in cities have
different needs than those living in the country.
Thus, the shift from country to the city means
that the world marketer has a different market
to serve with different characteristics.
Basis of world trade
Differences in skills:The basis for world trade
is the differences between countries. One of
these differences is the difference between
people. Different heritages have resulted in the
development of certain unique skills in the
people of a country.
Differences in economies: Another difference
is one of differing stages of economic
development existing in the world today. Some
countries are highly developed and
industrialized. These nations, such as the
United States and France, might be trading in
luxuries, whereas an underdeveloped nation,
such as Kenya, might be forced to trade only in
essential capital goods.
Differences in national resources: A third
difference in countries serving as a basis for
world trade is the availability of natural
resources. Great Britain, poor in mineral
resources, imports petroleum, where West
Germany, rich in mineral resources but not
food, imports large amounts of fruits and
vegetables.
World Trade Routes and Communication
Links
- Knowledge about trade routes over land, sea,
and air important in making marketing
decisions
- The majority of world trade is among the most
industrialized and industrializing countries of
Europe, North America, and Asia
- Need to be aware of communication links—
the underpinning of all commerce
- Impact of the Internet revolution especially for
global marketing of products
“World trade routes bind the world
together”. This statement means that world
trade routes serve as avenues of minimizing
differences between countries. Without
these routes, countries would stand-alone –
each different from the rest in resources,
economy, and people. The trade routes allow
both people and products to flow, making more
of a unified, balanced world. The physical
imbalances overcome, also smooth, cultural,
and economic differences through the
exchange of ideas as well as products.
Impact of the telegraph, telephone, television,
satellites, computer, and the Internet on
international business
An underpinning of all commerce is effective
communications, knowledge of where goods
and services exist, and where they are
needed, and the ability to communicate
instantaneously across vast distances.
Facilitating the expansion of trade have been
continuous improvements in electronic
communications.
First came the telegraph, then the
telephone, television, satellites, the
computer, and the Internet. Each revolution
in electronic technology has had a profound
effect on human conditions, economic
growth, and the manner in which commerce
functions.
As each “new” communications technology
has had its impact, new business models
have been spawned and some existing
businesses re-invented to adapt to the new
technology while other businesses have failed
to respond and thus ceased to exist.
The Internet revolution will be no different;
it too affects human conditions, economic
growth, and the manner in which commerce
operates. The Internet has already begun to
shape how international business is managed.
However, as the Internet permeates the fabric
of the world’s cultures, the biggest changes are
yet to come!
Interpretation of Manifest Destiny and the
Monroe Doctrine
- Manifest Destiny and the Monroe Doctrine
were accepted basis for U.S. foreign policy
during much of the 19th and 20th centuries.
“Manifest Destiny, in its broadest
interpretation, meant that Americans were a
chosen people ordained by God to create a
model society”.
More specifically, it referred to the desires of
American expansionists in the 1840s to extend
the U.S. boundaries from the Atlantic to the
Pacific
- the idea of “Manifest Destiny” was used to
justify U.S. annexation of Texas, Oregon,
New Mexico, and California; and later, U.S.
involvement in Cuba, Alaska, Hawaii, and
the Philippines.
The Monroe Doctrine, a cornerstone of U.S.
foreign policy, was enunciated by President
James Monroe in a public statement
proclaiming three basis:
- no further European colonization in the New
World,
- the abstention of the U.S. from European
political affairs,
- nonintervention of European governments in
the governments of the Western Hemisphere.
LESSON 3
A.    Culture’s Pervasive
Impact
Topic:
B.    Elements of Culture
C.   Cultural Change
1. Explain the Pervasive Impact of Culture
2. Recognize the Cultural Change
3. Identify the Elements of Culture
Cultural Dynamics 
- is the human-made part of human-
environment – the sum total of knowledge,
beliefs, arts, laws, morals, customs, and any
other capabilities and habits acquired by
humans as members of society. Culture is the
“software of the mind”. It provides a guide for
humans on how to think and behave.
What is Culture?
“Culture” refers to the human-made part of
human-environment—the sum total of
knowledge, beliefs, art, morals, laws,
customs, and any other capabilities and
habits acquired by humans as members of
society”
- Culture is the integrated sum total of
learned behavioral traits that are shared by
members of society.
- 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 non-material
 Culture’s Pervasive Impact
- Culture influences every part of our lives
- Cultures impact on birth rates in Taiwan,
Japan, and Singapore
- Birthrates have implications for sellers of
diapers, toys, schools, and colleges
- Consumption of different types of food
influence is culture: Chocolate by Swiss,
seafood by Japanese preference, beef by
British, wines by France and Italy
- Even diseases are influenced by culture:
stomach cancer in Japan, and lung cancer in
Spain

  Origins of Culture
Culture is the sum of the “values, rituals,
symbols, beliefs, and thought processes
that are learned, shared by a group of
people, and transmitted from generation to
generation”
Culture has been conceptualized as:
1. “Software of the mind” culture is a guide
for humans on how to think and behave; it is a
problem-solving tool (Hofstede)
2. An invisible barrier.A completely different
way of organizing life, of thinking, and of
conceiving the underlying assumptions about
the family and the state, the economic system,
and even Man himself” (Hall)
3. A “thicket”(U.S. Ambassador Hodgson)
 Origins of Culture: Geography
1. Geography, which includes climate,
topography, flora, fauna, and microbiology,
influences our social institutions
2. Two researchers suggest that geography
influences everything from history to present-
day cultural values
- First, Jared Diamond states that historically
innovations spread faster east-to-west than
north-to-south
- Second, Philip Parker reports strong
correlations between the latitude (climate) and
the per capita GDP of countries
Origins of Culture: History
- The impact of specific events in history can
be seen reflected in technology, social
institutions, cultural values, and even
consumer behavior
- For e.g., American trade policy depended on
tobacco being the original source of the
Virginia colony’s economic survival in the
1600s
- The military conflicts in the Middle East in
2003 bred new cola brands, Mecca Cola,
Muslim Up, and Arab Cola
Origins of Culture: The Political Economy
1. For most of the 20th Century three
approaches to governance competed for world
dominance:  fascism, communism, and
democracy/free enterprise
2. Necessary to appreciate the influence of the
political economy on social institutions and
cultural values and ways of thinking
 
Origins of Culture: Technology
1. Technological innovations also impact
institutions and cultural
2. Jet aircraft, air conditioning, televisions,
computers, and the internet have all
influenced culture
3. Arguably the greatest impact is the pill that
has allowed women to have careers and
freed men to spend more time with kids
Origins of Culture: Social Institution
- Social institutions including family, religion,
school, the media, government, and
corporations all affect culture
- The family, social classes, group behavior,
age groups, and how societies define decency
and civility are interpreted differently within
every culture
(1) Family behavior varies across the world,
e.g., extended families living together to Dad
washing dishes 
(2) Religious value systems differ across the
world, e.g., Muslims not allowed eating pork to
Hindus not allowed to consume beef
(3)  School and education, and literacy rates
affect culture and economic growth
(4) Media (magazines, TV, the Internet)
influences culture and behavior
(5) Government policies influence the
thinking and behaviors citizens of adult
citizens, e.g., the French government offers
new “birth bonuses” of $800 given to women
as an incentive to increase family size
(6) Corporations influence culture via the
products they market, e.g., MTV
- The Individualism/Collective Index refers
to the preference for behavior that promotes
one’s self-interest
- High IDV cultures reflect an “I” mentality
and tend to reward and accept an individual
initiative

- Low IDV cultures reflect a “we” mentality

and generally subjugate the individual to the
 Elements of Culture group

International marketers must design - Collectivism pertains to societies in which

products, distribution systems, and people from birth onward are integrated into
promotional programs with due consideration strong, cohesive groups, which protect them in
to culture, which was defined as including five exchange for unquestioning loyalty
elements:
 

(b)   Power Distance Index (PDI), which

focuses on authority orientation

- The Power Distance Index measures power

inequality between superiors and subordinates
within a social system

- Cultures with high PDI scores tend to be

hierarchical and value power and social status

Five elements: - High PDI cultures the those who hold power
are entitled to privileges
- Cultural values
- Rituals - Cultures with low PDI scores value
- Symbols equality and reflect egalitarian views
- Beliefs, and
- Thought processes

1. Cultural Values (c)   Uncertainty Avoidance Index (UAI),

which focuses on risk orientation; 
- Differences in cultural values, which is found
to exist among countries, affect consumer
behavior - The Uncertainty Avoidance Index
measures the tolerance of uncertainty and
ambiguity among members of a society
Value - enduring belief or feeling that a specific
mode of conduct is personally or socially
preferable to another mode of conduct - High UAI cultures are highly intolerant of
ambiguity, experience anxiety and stress,
accord a high level of authority to rules as a
Hofstede, who studied over 90,000 people in
means of avoiding risk
66 countries, found that the cultures differed
along four primary dimensions:
- Low UAI cultures are associated with a low
level of anxiety and stress, tolerance of
(a)   Individualism/Collective Index (IDV),
deviance and dissent, and a willingness to take
which focuses on self-orientation
risks
(d)   Masculinity/Femininity Index (MAS),
which focuses on assertiveness and
achievement
Masculinity—Men assertive, competitive, and
concerned with material success and Women
nurturing and welfare
Femininity—social role of men and women
overlap with neither gender exhibit overly
ambitious or competitive behavior i.e. Japan
and Austria.
1. Elements of Culture: Rituals, and
Symbols 
Rituals are patterns of behavior and
interaction that are learned and repeated vary
from country to country, e.g., extended lunch
hours in Spain and Greece
Language as Symbols: the “languages” of
time, space, things, friendships, and
agreements
French attempting to preserve the purity of
their language
In Canada, language has been the focus of
political disputes including secession
Differences in language vocabulary vary widely
Aesthetics as Symbols: the arts, folklore,
music, drama, and dance of a culture
influences marketing
Fractured Translations
- English Translations made by a Japanese
firm that was added to labels to increase
prestige for their products being sold in China
2. Elements of Culture: Beliefs and
Thought Processes
Beliefs, which stem from religious training,
vary from culture to culture
Eg : The western aversion to the number 13 or
refusing to walk under a ladder
Japanese concern about Year of the Fire
Horse
The Chinese practice of Feng Shui in
designing buildings
Belief - an organized pattern of knowledge that
an individual holds to be true about the world
Thought processes also vary across cultures:
eg: “Asian and Western” thinking
In summary, marketers must consider the
larger cultural consequences of marketing
actions
 
Factual versus Interpretive Cultural
Knowledge
There are two kinds of knowledge about
cultures both of which are necessary
Factual knowledge is usually obvious and
must be learned, e.g., different meanings of
colors, and different tastes; it deals with facts
about a culture.
Interpretive knowledge is the ability to
understand and appreciate the nuances of
different cultural traits and patterns, e.g., the
meaning of time, and attitudes toward people
- Interpretive knowledge requires a degree of
insight It is dependent on past experience for
interpretation It is prone to misinterpretation if
one’s SRC is used
 Cultural Change and Cultural Borrowing
- International marketers should appreciate
how cultures change and accept or reject new
ideas
- How cultures change, e.g., war (changes in
Japan after World War II) or by a natural
disaster
- Hofstede has shown that consumers’
acceptance of innovations varies across
cultures – innovation was associated with
higher individualism (IDV), and lower power
distance (PDI) and uncertainty avoidance (UAI)
- International marketers should be aware of
the extent to which cultures borrow ideas and
learn from other cultures
- Helps in the marketing of products from one
culture to a different culture
Resistance to Change  possible with existing cultural norms, thereby
Cultures change gradually with resistance to
changes. The resistance varies inversely with
the interest society has in the change. Culture
doesn’t resist change if the product is a
status-valued imported item, a fashion item, or
is given the advantage of inferior feelings
about local products. Marketers can expect
resistance to their products, with greater
resistance to those products with the greatest
deviation from the cultural norm or status quo.
Examples of cultures that resist change:  introducing an innovation and then waiting for
1. Working women in Masculine societies
like Saudi Arabia
2. Acceptance of genetically modified
foods (or “Frankenfood”) in Europe
Planned and Unplanned Cultural Change
- Cultures that are resistant to change
represent a major hurdle in marketing products
Cultural change can be accomplished by:
- First, determine which cultural factors conflict
with an innovation, thus creating resistance to
its acceptance
- Second, change those factors from
obstacles to acceptance into stimulants for
change
- Third, marketers can cause change by
introducing an idea or product and deliberately
setting about to overcome resistance and to
cause change that accelerates the rate of
acceptance
* Firms can use a strategy of planned change
by deliberately changing those aspects of the
culture offering resistance to predetermined
marketing goals, e.g., introducing western
foods and baseball into Japan
 Three cultural change strategies
There are three strategies.
(a) Culturally congruent strategy :
The culturally congruent strategy involves
marketing products similar to ones already on
the market in a manner as congruent as
minimizing resistance.
(b)  Strategy of unplanned change : 
A strategy of planned change means
deliberately setting out to change those
aspects of a culture most likely to offer
resistance to predetermined marketing goals.
(c)  Strategy of planned change : 
The strategy of unplanned change consists of
an eventful cultural change that will permit the
culture to accept the innovation.
The essence of unplanned change lies in the
fact that the marketer does nothing to
accelerate or help to bring about the necessary
change where the marketer deliberately sets
about to overcome resistance and to cause
change that will accelerate the rate of adoption
of his product or innovation.
Importance / Marketing Implications of
culture 
1. A successful marketer must be a
student of culture. Culture is pervasive in all
marketing activities— in pricing, promotion,
channels of distribution, product, packaging,
and styling
2. Understanding culture can determine
success or failure in international
marketing
3. Universal aspects of the cultural
environment represent opportunities to
standardize elements of a marketing
program
4. The importance of “cultural empathy”
to the foreign marketer is that being culturally
sensitive allows him or her to objectively see,
evaluate, and appreciate another culture. A
marketer can obtain cultural empathy by         Information resides in context
studying the culture and living with it. The
latter is not always possible, and it may be         Emphasis on background, basic values
expedient to hire natives who speak your
tongue and their own.         Less emphasis on legal paperwork
This procedure will often give you the
intuition which is necessary for success.         Focus on personal reputation
1. Markets are the result of the triune
interaction of a marketer’s efforts, economic         Saudi Arabia, Japan
conditions, and all other elements of the
culture.”: This statement emphasizes the point Low Context
that markets evolve out of the interrelationship
of three major factors. They are a marketer’s         Messages are explicit and specific
efforts, economic conditions and all the other
elements of the culture. Marketers are         Words carry all information
constantly in the process of adjusting their
efforts to cultural demands of the market, but         Reliance on legal paperwork
they are also agents of change whenever the
product or idea being marketed is innovative.         Focus on non-personal documentation of
Whatever the degree of acceptance and credibility
whatever level of culture, the use of something
new is the beginning of cultural change and the           Switzerland, US, Germany
marketer becomes a change agent. This
statement is important because it emphasizes  
the fact that the marketer is not a passive
influence in a culture and that, while the Marketer as a change agent
marketer attempts to react to cultural
Whether or not the marketer is aware of it, he
demands, in so doing the marketer also
assumes the role of a change agent when he
influences cultural change.
introduces into another culture new ideas or
new products requiring some form of change in
2. Resistance to cultural change will affect behavior for acceptance and use of the new
new product introduction in the respect that the idea or product. The international marketer
greatest resistance will confront products must concern himself with the impact of his
which are farthest from the status quo, but this actions upon the new culture.
resistance can be lowered by gaining public
interest. Lowering resistance in this situation  
means shortening the duration of the
resistance. Domestic marketing is subject to Cultural Factors of various countries
the same resistance to change. Examples of
this resistance in the domestic market are the 1. Never touch the head of a Thai or pass an
introduction of contact lenses and using object over it
motorcycles as an acceptable means of
recreation. The head is considered sacred in Thailand.

3. Understanding troublesome problems 2. Avoid using triangular shapes in Hong Kong,

caused by language in foreign market: Korea and Taiwan.  It is considered a negative
differences in tongues, the idiomatic shape.
interpretations mean something different 3. The number 7 is considered bad luck in
Kenya, good luck in the Czech Republic and
has a magical connotation in Benin.
4. Improved communications have
contributed to a convergence of tastes and 4. The number 10 is bad luck in Korea.
preferences in a number of product categories 5. The number 4 means death in Japan.
6. Red represents witchcraft and death in
 High Context many African countries.
7. Red is a positive color in Denmark.  and health, stronger and faster growth, etc.
Cultural analysis for a potential market:
Steps to be followed
 Material Culture
1. Technology – the techniques and “know-
how” of producing material goods.
2. Economics – the employment of capabilities
and the results.
 Social Institutions
1. Social organizations – family life, status,
age.
2. Education – literacy and intelligence and
how informed the public is.
3. Political structures – control over business.
Man and the Universe
1. Belief systems – how do these affect
product and promotional acceptance?
 Aesthetics
2. Graphic and plastic arts – degree of
modernization.
3. Folklore – superstition, tradition, etc.
4. Music, drama, and dance – promotional
possibilities.
Innovations: functional or dysfunctional.
The consequences of the diffusion of an
innovation may be functional or dysfunctional
depending on whether the effects of the social
system are desirable.  interest groups, and where and why they stand
 A dysfunctional innovation is one where the
effects within the social system are
undesirable.
A functional innovation is one where the
effects within the social system are desirable
(ie. there would be no dysfunctional
consequences).
Eg.  The introduction of condensed milk to the
diet of babies in underdeveloped countries
where protein deficiency is a health problem.
On the surface it would appear that the
consequences of the addition of condensed
milk to the diet would result in better nutrition
However, evidence tends to indicate that in at
least one situation there were dysfunctional
consequences of the innovation. Instead of
health benefits, a substantial increase in
dysentery, diarrhea, and a high infant mortality
rate resulted.
LESSON 4
Introduction:
This chapter discusses the role played by
politics in deriving solutions for environmental
issues. Virtually all environmental solutions
advances its goals and context. The way the
solutions advances its goals and expectations
and how the community or society in general
perceive the solution can result in either tough
sledding or smooth sailing for the solution
providers. Understanding this reality and
embracing the fact that politics is a tool that
governs how a democratic society works out its
conflicting interests can improve the ability of
practitioners to successfully solve
environmental problems. Politics can either act
as a significant barrier to new approaches and
significant “paradigm shifts,” or can act as the
lubricant for innovation. Understanding the
geographic forum, the legal format, the various
on different places along a set of policy
continuums, will enable a person working on
environmental solutions to engage in the
existing political process or to begin a new
one. Working with all the interest, developing
common sets of understanding, and working to
develop acceptance are necessary for long-
term acceptance of the solution. Finding the
leadership of the different interests, engaging
them early, addressing the issues in framework
in which they will be responsive to, deals with
the issues that bring them to the table as an
interested party and these are all necessary for
the success of environmental solution.
Global Perspective
A crucial reality of international business
- Both host and home governments are
integral partners.
A government controls and restricts a
company’s activities
- By encouraging and offering support
- By discouraging and banning
restricting its activities
International law recognizes the sovereign
right of nation
- To grant or withhold permission to do
business within its political boundaries.
- To control where its citizens conduct
business
The Sovereignty of Nations
A sovereign state
- Independent
- Free from all external control
Sovereignty
- Powers exercised by a state in relation to
other countries
- Supreme powers exercised over its own
members
Nations can and do abridge specific
aspects of their sovereign rights in order to
coexist with other nations
- NAFTA - North America Free Trade
Agreement
- NATO - North Atlantic Treaty
Organization
- WTO - World Trade Organization
The United States involvement in international
political affiliations is surprisingly low
The WTO is considered by some as the
biggest threat so far to national sovereignty
Stability of Government Policies
or Issues that can affect the stability of a
government
- Radical shifts in government philosophy
when an opposing political party ascends
to power
- Pressure from nationalist and self-interest
groups
- Weakened economic conditions
- Bias against foreign investment
- Conflicts between governments
Five main political causes of international
market instability
- Some forms of government seem to be
inherently unstable
- Changes in political parties during
elections can have major effects on trade
conditions
- Nationalism
- Animosity targeted toward specific
countries
- Trade disputes themselves
Forms of Governments
Circa 500 B.C - Ancient Greeks criticized three
fundamental forms of government
- Rule by one (monarchy)
- Rule by few (aristocracy)
 - Rule by many (democracy)
Iran Theocratic republic
Circa 1990 - Collapse of communism

- Free-enterprise democracy considered Libya Jamahiriya (a state of the

the best solution masses) in theory,
governed by the
200+ sovereign states on the planet populace through local
councils; in fact a military
- Almost all have at least nominally dictatorship
representatives governments with
universal suffrage for those 18 years and
older North Korea Communist state, one-
man dictatorship
- In about 10% of the states voting is
required, in the rest it is voluntary
Saudi Arabia Monarchy

A SAMPLING OF GOVERNMENT TYPES Somalia No permanent national

government; transitional,
parliamentary federal
COUNTRY GOVERNMENT TYPES government

Afghanistan Islamic republic Sudan Authoritarian regime-

ruling military junta

Belarus Republic in name, though

in fact a dictatorship United Kingdom Constitutional monarchy

Bosnia and Emerging federal United States Constitutional federal

Herzegovina democratic republic republic

Burma (Myanmar) Military Junta Uzbekistan Republic: authoritarian

presidential rule, with
little power outside the
Canada Confederation with executive branch
parliamentary democracy

Vietnam Communist state

China Communist state

Congo, Democratic Dictatorship, presumably

Republic undergoing a transition toPolitical Parties
representative
government In countries where two strong political
typically succeed one another, it is important to
know the direction each party is likely to take
Cuba Communist state
- Great Britain
 -The Labour Party vs. the
Conservative Party
Unpredictable and drastic shifts in government
policies deter investment, whatever the cause
of the shift
A current assessment of a country’s political
philosophy and attitudes is important in
gauging their stability and attractiveness in
terms of market potential
Nationalism
An intense feeling of national pride and
unity
- An awakening of a nation’s people to
pride in their country
National interest and security are more
important than international relations
Countries use nationalism to protect
themselves against intrusions
- Threats from outside forces
- Declines in the domestic economy
Nationalism comes and goes
- As conditions and attitudes change
- Foreign companies welcomed today may
be harasses tomorrow and vice versa
Targeted Fear and/or Animosity
Marketers should not confuse nationalism
with a widespread fear or animosity directed at
a particular country
- Toyota in the U.S (1980s)
- Animosity toward the United States in
France
- The unhappiness of citizens and
politicians in many other countries
concerning the war in Iraq
No nation-state, however secure, will
tolerate penetration by a foreign company
into its market and economy
- If it perceives a social, cultural, economic,
or political threat to its well-being
Political Risks of Global Business
Confiscation - the seizing of a company’s
assets without payment
Expropriation - where the government
seizes an investment but makes some
reimbursement for the assets
Domestication - when host countries
gradually cause the transfer of foreign
investment to national control and
ownership through a series of government
decrees
- Mandating local ownership
- Greater national involvement in a
company’s management
Economic Risks
Exchange controls
- Stem from shortages of foreign
exchange held by a country
Local-content laws
- Countries often require a portion of
any product sold within the country to
have local content import restrictions
- Selective restrictions on the import of
raw materials to force foreign industry
to purchase more supplies within the
host country and thereby create
markets to local industry
 Tax controls - Range from those who seek to bring
about peaceful change to those who
- A political risk when used a means of resort to violence and terrorism to effect
controlling foreign investments change

Price controls →Worldwide boycott of Nestle

products
- Essentials products that command
considerable public interest - The Internet had become an effective tool
of PSAs to spread the world
A. Pharmaceuticals\
→Protest rallies against the U/S -
B. Food Iraq war

C. Gasoline

Labor problems Nongovernmental Organizations

- Labor unions have strong Nongovernmental organization (NGOs)

government support that they use are increasingly affecting policy
effectively in obtaining special decisions made by governments
concessions from business
- Protest

- Lobbying
Political sanctions
- Collaborations with governmental
One or a group may boycott another organizations
nation
Many also are involved in mitigating
- Stopping all trade between the misery of the human misery
countries plaguing parts of the planet

- Issuing sanctions against trade of - Red Cross

specific products
- Red Crescent
→ U,S boycotts of trade with
Cuba/Iran - Amnesty International

History indicates that sanctions are - UNICEF

often unsuccessful in reaching
desired goals - Care

- Particularly when ignored by other - Habitat for Humanity

major nations’ traders

U. S State Department Travel Warnings

Political and Social Activist

- Not usually government sanctioned

- Can interrupt the normal flow of trade

 It is hard to determined if a cyber attack has
been launched

- By a rogue state

- A terrorist

- A hacker as a prank

Each wave of viruses

- Gets more damaging

Violence and Terrorism
- Spread so rapidly that considerable harm
The State Department reported 3,200 terrorist is done before it can be stopped \
incidents worldwide in 2004
Tools for cyber terrorism
Goal of terrorism against multinationals
- Can be developed to do considerable
- To embarrass a government and its damage to a company
relationship with firms
- An entire industry country’s infrastructure
- To generate funds by kidnapping
executives Mounting concern over the rash of attacks

- To use as pawns in political or social - Business leaders and government

disputes officials addressed a Group of eight
conference.
- To inflict terror within a country as did
September 11

In the past 30 years, 80% of terrorist Politically Sensitive Products and Issues
attacks against the U.S have been aimed
at American businesses Politically sensitive products

- Perceived to have an effect on the

environment, exchanges rates,
national and economic security and the
welfare of people

- Are publicly visible or subject to

public debate

Health is often the subject of public

debate, and products that affects or are
affected by health issues can be sensitive to
political concern

Cyber terrorism and Cybercrime

The internet is a vehicle for terrorist and The European Union has banned
criminal attacks to inflict damage on a hormone - treated beef for more than a
company with little chance of being caught decade

- By foreign and domestic antagonists

Forecasting Political Risk

Political risk assessment

- An attempt to forecast political

instability

- To help management identify and

evaluate political events

- To predict their potential influence on

current and future international
business decisions

Government failure is greatest risk to

international marketers

- Causing chaos in the street and

markets

Risk assessments of investments

- Used to estimate the level of a risk

is assuming

- Helps determine the amount of risk a

firm is prepared to accept

END……………………………………………..

GOOD LUCK AND GODBLESS. WE CAN DO

IT, FIGHTING!!!!!!