Global Marketing Management Culture & Management Style

1. Global Marketing ManagementCulture & Management Style MKTG 3215-001 Spring 2013 Mrs. Tamara L. Cohen Class # 5

2. Group Project • Project Proposal due on Wednesday, Feb.13 • What do you need to do? • Choose your group 5-6 students in each group • Choose your country 1 group per country • Choose your product / brand - NOT marketed in that country yet - real or imagined • Let me know - your group, country, product / brand / service Countries taken: • BRAZIL

3. Case #1: Starbucksdue Feb.4 HARD COPY of write-up due at beginningof class (no folders please) Requirements for each Partnership Case Write-up: 4 - 6 pages, typed and double-spaced Exhibits / Appendices / Resources in addition to 4-6 pages You and your partner should submit one write-up together. Use the article (reading #11 in Course Pack), PLUS use other sources that you will find yourselves. Your Case Write-up must include: Executive Summary (1 paragraph on 1st page) Background (brief summary of case as you see it) Problems (be incisive & comprehensive) Courses of action (address every problem identified) Recommendations (most important problem(s) & its/their solutions) Conclusions (short & sweet) Exhibits / Appendices / Resources e.g. web sites, books, charts. Remember to acknowledge all sources, including reading #11. Use headings. Pay attention to weighting of each section.

4. Culture & Management Style Reading for this class: #3 Paul Midler Poorly Made in China Homework: Summarize ‘Poorly Made’ reading

5. KEY TERMS • Hofstede’s dimensions of culture in international business: • individualism vs collectivism • power distance • uncertainty avoidance • masculine vs feminine (achievement vs nurturing) • long-term orientation

6. KEY CONCEPTS • why accommodate cultural differences • how & why management styles vary around the world • knowledge of prevailing management style in country = business culture, management values, business methods & behaviors, & willingness to accommodate differences asuccess in international market arena

7. What is CULTURE? = set of values, beliefs, rules, & institutions held by a specific group of people People are at center of all business activity. People bring different backgrounds, assumptions, expectations, ways of communicating. This is CULTURE.

8. Global Perspective of CULTURE Culture, including all its elements, profoundly affects management style & overall business systems - Max Weber (1930) • Americans • individualists • Japanese • consensus-oriented & committed to group • Central & Southern Europeans • elitists & rank conscious

9. Foundations for developing cultural awareness GOOD BAD Ethnocentricity Belief that one’s own ethnic group or culture is superior to that of others Cultural literacy • Detailed knowledge of a culture that enables a person to function effectively within it X √

10. Geert Hofstede “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." • Hofstede studied > 110,000 people working in IBM subsidiaries in 40 countries • Framework examines cultural differences using 5 dimensions • All aspects of consumer behavior are rooted in culture.

11. Hofstede Framework Dimensions Individualism versus Collectivism Power Distance Long-Term Orientation Uncertainty Avoidance Achievement versus Nurturing

12. Individualism versus Collectivism IDV = degree to which individuals are integrated into groups Individualist societies • everyone expected to take care of him/herself & his/her immediate family • value hard work, entrepreneurism, individual responsibility Collectivist societies • cohesive groups; often extended families; protection & loyalty • goal of group harmony in families • group responsibility for members, actions, success & failure

13. Power Distance PDI = extent to which less powerful members of society/institutions accept & expect unequal distribution of power • represents inequality of members by members • accepting social inequality tantamount to endorsing it • high PDI means big gap between superiors & subordinates; more hierarchical management • low PDI suggests greater equality; power from hard work, seen as more legitimate

14. Uncertainty avoidance UAI = society’s tolerance for uncertainty & ambiguity • how comfortable are people with unfamiliar situations? High UAI • spur people to minimize uncertainty by erecting strict laws, rules, consequences for deviation • often more emotional, anxious, fear change Low UAI • societies more tolerant of different opinions & practices • open to change, new ideas, more entrepreneurial

15. Achievement versus Nurturing MAS = Masculinity (achievement) versus Femininity (nurturing) • distribution of roles between genders • values vary less among societies than • values range from assertive & competitive to modest & caring • culture’s value of personal achievement & materialism (often translating into entrepreneurial drive) versus relationships & quality of life (usually more relaxed lifestyles)

16. Long-Term Orientation LTO = society’s time perspective • essence of differences between Eastern & Western cultures High LTO • tradition is adaptable: cultural change is quicker because tradition & commitment are not obstacles to change • save & invest, thrift, perseverance, humility • strong work ethic due to expectation of pay-off from hard work • status upheld in relationships Low LTO (= high SHORT-term orientation) • individual stability, protect reputation • high respect for tradition, fulfill social obligations • prefer quick results

17. Collect-ivism 4 Individualism versus Collectivism LOW Power HIGH Power 2 Power Distance Individ-ualism

18. LOW Uncert-ainty Uncertainty Avoidance 4 1 Power Distance LOW Power HIGH Power 2 HIGH Uncert-ainty

19. Brazil • UAI high • IDV higher than most Latin cultures

20. Switzerland • MAS is highest dimension • IDV is high too • PDI is low • UAI is low

21. China • PDI high • IDV very low • LTO very high

22. Adaptationis key! • Essential to effective adaptation: • awareness of own culture • recognition that differences in others can cause anxiety, frustration & misunderstanding of host’s intentions • Self-reference criterion (SRC) is especially operative in business customs • Key to adaptation is to remain true to oneself, but to develop understanding of & willingness to accommodate differences

23. Business Customs Cultural ImperativesEssential friendship or trusting relationship must be established before business can begin: “GUANXI”關係or关系, denotes relationships in the Chinese business world that may be leveraged regularly and voluntarily; critical to successful business endeavors; Japanese NINGEN KANKEI; Latin American COMPADRE. Cultural ElectivesBehaviors that can be conformed to, but are not absolutely required. e.g. gifts; understand importance of banquets in China; appreciate importance of Karaoke evenings in China; greeting, eating, drinking, Japanese bowing, Arab coffee, Czech aperitif, Chinese drinking at banquets Cultural ExclusivesForeigner must NEVER participate in these customs. customs only for locals, aliens barred, apologize if err, never joke about or criticize local customs. e.g. Paul Midler’s referring to China as home; non-Muslims never participate in Muslim prayer rituals

24. Trouble is (Paul Midler’s) BusinessinThe China Game “What importers needed to know before they moved their business to China was whether the economy was safe. One important contributing factor was a changing perception of China as a low-risk environment.” • Quality fade “Manufacturers that engaged in the manipulation of quality knew that if they were caught, there was an inclination to ‘work things out’” “…the entire process of solving problems in China (is) itself an enigma”

25. Business in China Americans are accustomed to getting exactly what they order. In Chinese manufacturing, the customer’s exact wishes matter only as far as necessary to capture the initial order. Cultural origins of counterfeiting No industrial revolution in China

26. Confucius:Status relationships in China • OBEDIENCE & DEFERENCE to superiors = strong values in China • Confucius’s teachings were foundation for Chinese education for 2,000 years until 1911: 5 cardinal relationships • The ruled were counseled to trade obedience & loyalty for benevolence of rulers. Strict adherence led to social harmony, the antidote to violence & civil war of Confucian times.

27. Gifts “It’s not the gift that counts but how you present it.”

28. Japan Gift protocols have prevailed in Japan for centuries: ■ types of gifts to give, ■ wrapping, ■ presentation • Gifts opened in private • Give & receive gifts with both hands • No surprises (individual / group) • Give gift at end of visit • Comment on modesty & insignific-ance of your gift (conveys humility) • Value of gift befits status • Expect & respect reciprocity • Avoid cash gifts • Avoid gifts with company logo (except souvenirs) • Avoid bows (considered unattractive) • Avoid ribbons (different colors have different meanings) • Avoid 4 of anything (“shi” = death) • NEVER give a knife (suggests suicide)

29. China Gift giving in China was once a high art form. Communist regime outlawed gift-giving to officials. Now communism is relaxing and gifts are expected. Exchanging gifts is an important part of Chinese culture because it is one way of building guanxi. Proper etiquette to refuse offer of a gift, even more than once. Giver is expected to persist. Acceptance will follow. No matter its value, the gift is referred to as “a small token” Give and receive gifts with both hands Avoid expensive gifts. Quality pen is good. No white, blue, black gifts, no red ink. No sharp objects; no handkerchiefs No clocks No flowers (only for funerals) Symbolism of numbers 2a 8a 6a 4 x

30. Middle East Gift giving is an elevated custom in personal & business relationships. Tenets: good manners are essential ingredient in person’s character, and generosity to guests is essential to good reputation Do not give gift when 1st meet someone (interpreted as bribe) Present gift in front of others (interpreted as bribe if one-on-one) Give & receive with right hand or both hands Reciprocate in kind No alcohol, no pigskin No gifts to wife of colleague

31. FLOWER POWER Avoid red roses (suggest romance), white flowers, number 13 Never wrap flowers in paper; present flowers unwrapped Yellow flowers signal grieving in Eastern Europe. Avoid chrysanthemums in Italy, France, Belgium, Spain (only for coffins or graves) Carnations are only used for funerals in Sweden, Poland & Germany Even numbers of flowers can be bad luck in Germany & Austria Europe • Business gift giving is low-key, few protocols. Often superfluous now. • UK, France, Italy: Send gift (flowers / book)after visit. • Good to bring chocolates or wine to dinner at home.

32. Bring chocolates or wine if invited to a home. Avoid bringing vodka. Bring a bouquet of flowers, but there must be an odd number of flowers. (Even numbers for funerals). From earliest childhood, Russian boys are taught the importance of giving flowers. Bring gifts for kids. Host/business associate may find it difficult to reciprocate. Strong tradition of enthusiastic giving & receiving gifts. Spontaneity fuels Russian gift-giving (rather than strict social protocols). Great honor to be invited to a Russian business associate’s home. It is also a burden for the host. Russian tradition demands that you be served a meal that far exceeds everyone’s appetite, & often the financial capabilities of the host, e.g. caviar served with large spoons. Russia

33. What do we know about Culture & Management Style? • Cultivate a global mindset: • develop cultural adaptability • bridge cultural gaps • practice openness to unfamiliar principles & practices • commit to flexibility • Business behavior derives largely from the basic cultural environment in which business operates.

34. Next class: Global Political & Legal Environment Homework: Foreign Corrupt Practices Act