Chapter 5 Culture, Management Style, and Business Systems

1. International Marketing 15th edition Chapter 5 Culture, Management Style, and Business Systems Philip R. Cateora, Mary C. Gilly, and John L. Graham

2. Imperatives, Electives, and Exclusives • Cultural imperatives - Business customs and expectations that must be met and conformed to or avoided if relationships are to be successful • In some cultures a person’s demeanor is more critical than in others • Imperatives vary from culture to culture • Cultural electives - Relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required • A cultural elective in one county may be an imperative in another • Cultural exclusives - Customs or behavior patterns reserved exclusively for the locals Roy Philip

3. The Impact of American Culture on Management Style • “Master of destiny” viewpoint • Independent enterprise as the instrument of social action • Personnel selection and reward based on merit • Decisions based on objective analysis • Wide sharing in decision making • Never-ending quest for improvement • Competition producing efficiency Roy Philip

4. Authority and Decision Making • Influencers of the authority structure of business: • High PDI Countries • Mexico, Malaysia • Low PDI Countries • Denmark, Israel • Three typical authority patterns: • Top-level management decisions • Decentralized decisions • Committee or group decisions Roy Philip

5. Formality and Tempo • Breezy informality and haste characterize American business relationships • Europeans not necessarily “Americanized” • Higher on Hofstede’s Power Distance Index (PDI) • May lead to business misunderstandings • Haste and impatience most common mistakes made by Americans in the Middle East • For maximum success marketers must deal with foreign executives in acceptable ways Roy Philip

6. Contextual Background of Various Countries Exhibit 5.2 Roy Philip

7. P-Time versus M-Time • 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 • Most cultures offer a mix of P-time and M-time behavior • As global markets expand more businesspeople from P-time cultures are adapting to M-time. Roy Philip

8. Marketing Orientation • The extent of a company’s market orientation has been shown to relate positively to profits • Firms in other countries have not been able to move from the traditional production, product, and sales orientation to the marketing orientation • Research has shown that sometimes in can be difficult to encourage a marketing orientation across diverse business units in global companies Roy Philip

9. Business EthicsCorruption • What is Corruption? • Profits (Marxism) • Individualism (Japan) • Rampant consumerism (India) • Missionaries (China) • Intellectual property laws (Sub-Sahara Africa) • Currency speculation ( Southeast Asia) • Criticisms of Mattel and Barbie • Sales of Barbie declined worldwide after the global standardization • Parents and government did react • Mattel’s strategy boosted sales of its competition Roy Philip

10. The Western Focus on Bribery • In the 1970s, bribery became a national issue with public disclosure of political payoffs to foreign recipients by U.S. firms • The decision to pay a bribe creates a major conflict between what is ethical and proper and what is profitable and sometimes necessary for business • The Organization for Economic Corporation and Development (OECD) and Transparency International (TI) are combating the bribery of foreign public officials in international business transactions Roy Philip

11. Transparency International Corruption Perception Index Exhibit 5.5 Roy Philip

12. Bribery – Variations on a Theme (1 of 2) • Bribery and Extortion • Bribery is voluntary offered payment by someone seeking unlawful advantage is bribery • Extortion takes place only if payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to • Subornation and Lubrication • Lubrication involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law • Subornation involves giving large sums of money, frequently not properly accounted for, designed to entice an official to commit an illegal act on behalf of the one offering the bribe Roy Philip

13. Bribery – Variations on a Theme (2 of 2) • Agent’s Fees • When a businessperson is uncertain of a country’s rules and regulations, an agent may be hired to represent the company in that country • The Foreign Corrupt Practices Act (FCPA) • Change will come only from more ethically and socially responsible decisions by both buyers and sellers and by governments willing to take a stand • Since 1994, US businesses have bowed out of 294 major overseas commercial contracts valued at $145 billion rather than paying bribes

14. Ethical and Socially Responsible Decisions • Difficulties arise in making decisions, establishing policies, and engaging in business operations in five broad areas • Employment practices and policies • Consumer protection • Environmental protection • Political payments and involvement in political affairs of the country • Basic human rights and fundamental freedoms • Laws are the markers of past behavior that society has deemed unethical or socially irresponsible • Ethical principles to help the marketer distinguish between right and wrong, determine what ought to be done, and justify actions • Utilitarian Ethics (Does it achieve a common good?) • Rights of the Parties (Does the actions involve the rights of the individual?) • Justice or Fairness (Does the action represent fairness for all?) Roy Philip

15. Dimensions of Culture – A Synthesis Exhibit 5.7 Roy Philip