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Cultural Elements & Their Impact on International Business

Prepared byMaleeha Tarannum

Cultural Elements & Their Impact on International Business

Table of Contents
1. INTRODUCTION ......................................................................................................................................... 5 2. Cultural Elements & Impact of those on International Business .............................................................. 5 4.1 A Brief Overview on Elements of Culture: .......................................................................................... 5 4.1.1 Material Life: ............................................................................................................................ 6 4.1. 2. Social Dimension: ................................................................................................................. 6 4.2. Aesthetics & Implication on International Business: ......................................................................... 7 4.2.1 Color: A Crucial Player in International Business ........................................................... 7 4.2.2. Power of Music: ..................................................................................................................... 8 4.2.3 Concept of Taste varies across Globe: ........................................................................... 8 4.3 Language: ............................................................................................................................................ 9 4.3.1 Verbal Communication Vs Body Language:................................................................. 9 4.3.2. Language: Underestimation of Power of Language can lead to Fiasco ............ 9 4.3.3 Implication: Low Context Vs High Context Culture:................................................... 10 4.4 Ethics & International Business: ....................................................................................................... 10 4.5. How Religion & Religious Attitude influence International Business: ............................................. 11 4.5.1 Case Study: 1 Nike & Puma Controversy: ..................................................................... 11 4.5.2 Implication of Religious Belief in Business: ..................................................................... 12 4.6 Time Orientation & Culture: Public Relation in different Culture: ................................................... 12 4.7 Implication of Material Life in International Business: ..................................................................... 13 4.7.1. Scenario Analysis: ................................................................................................................... 13 4.7.2. Traditional Vs Industrialized Pole: .................................................................................... 13 4.7.3 Case Study: Wal-Mart Failure in Germany.................................................................... 14 4.8 Social Interaction .............................................................................................................................. 15

Cultural Elements & Their Impact on International Business


4.8.1. Social Role : .......................................................................................................................... 15 4.8.2. Socialization: ........................................................................................................................ 15 4.8.3 Implication of Norms: .......................................................................................................... 16 4.9 Pride and Prejudice: .......................................................................................................................... 16 4.9.1 Pride & Prejudices across Culture: .................................................................................. 16 4.9.2 Implication: ............................................................................................................................ 16 3. CONCLUSION ........................................................................................................................................... 17

Cultural Elements & Their Impact on International Business

Cultural Elements & Their Impact on International Business

1. INTRODUCTION:
According to the dictionary, culture means the arts and other manifestations of human intellectual achievement regarded collectively. To be present a more detailed definition of culture, we can say that Culture is a learned pattern of behavior, and is a way in which a person lives his life. It is an integral part of every society, and creates a feeling of belonging and togetherness among the people of that society. Culture encompasses various aspects of communication, attitude, etiquette, beliefs, values, customs, norms, food, art, jewelry, clothing styles, etc. Every society has a different culture, which gives it an identity and uniqueness. According to Philip Bock, Culture is what makes you a stranger when you're away from home. Culture is a unique characteristics that varies from society to society. Culture shapes and defines a persons characteristics, a persons thought process. So in every field of life, even in Business, underlying implication and direct application of understanding the culture is immense.

2. Cultural Elements & Impact of those on International Business


4.1 A Brief Overview on Elements of Culture:
Being a complex and vague concept, culture always makes it difficult to identify what its elements should be.
Material Life Social Dimension

Even, elements that should be considered as a part of culture vary from country to country, from region to region within a country and even from family to family.

To make the discussion to-the-point we have selected some broad area of culture which further can be subcategorized. We should consider that all three dimensions are interrelated. That indicates, all the elements under these 3 broad areas are overlapping and interrelated. So it is important to clarify that how we have defined these 3 broad areas.

Cultural Elements & Their Impact on International Business


4.1.1 Material Life:

Material life mostly talks about the standard of living and

technological advancement. How will be the standard of living is determined by economical activities, distribution and consumption of wealth. Also, the

Material Life Social Dimension

Standard of living technological advancement Covers aspects that stem from social view

idea of living standard comes from technological know how. This is because how people in a particular area earn their livelihood is dependent on education. At the same time, living standard is a factor that parents consider while deciding the educational detail of their children. So, major 3 interrelated elements of material life are: economics, technology, education.
4.1. 2. Social Dimension:

Social dimension covers all to those elements that actually build up the social context. Some elements like value, norm in a particular group of people sh apes that group as society. Thus, mail elements of culture from social dimension are:

Aesthetics

Social Interaction

Time Orientation

Language

Pride & Prejudices

Culture

Religion & Belief

Cultural Elements & Their Impact on International Business


Further categorization of these elements is listed in the figure below: Aesthetic Color Specification Art Music Architectural Orientation Verbal Communication Body Language Value Norm Social Role

Language Social Interaction

4.2. Aesthetics & Implication on International Business:


Aesthetics is the combination of all those aspects of the society that convey the concept of beauty and expression revered in a culture.
4.2.1 Color: A Crucial Player in International Business

4.2.1. i) Difference in Color Specification across Globe:

In different countries and cultures, colors have many different meanings. Just one color blunder could turn an entire country away from a specific product. A cultures distaste for a particular product due to its package can also lead to the consumers dissatisfaction with the company itself. Packaging professionals need to concentrate on this aspect even more now. works well in middle east doesn't work well in China & France doesn't work well in Egypt ;Country's national color means inferior in quality in Hong Kong symbolizes sadness specially death in West

Green Black White

symbolizes 'peace' & 'festive mood' in West; Bride's Gown symbolizes both 'peace' & 'mourn' in Bangladesh

Cultural Elements & Their Impact on International Business

4.2.1.ii) Case Study: Orange, Telecom Company

During its 1994 launch campaign, the telecom company Orange had to change its ads in Northern Ireland. The futures brightthe futures Orange. That campaign is an advertising legend. However, in the North the term Orange suggests the Orange Order. The implied message that the future is bright, the future is Protestant, loyalist didnt sit well with the Catholic Irish population.
4.2.2. Power of Music:

4.2.2. i) Case Study: McDonald

In the midst of the Intifada movement, McDonalds in Egypt responded by adding McFalafel to its menu. This was clearly in an attempt to attract local customers and boost sales. The company also hired an Egyptian singer; whose nationalistic song I hate Israel topped the charts for months, to promote the sandwich. Similarly, in an effort to further ingratiate itself with Arab consumers and avert a massive boycott, Coca Cola signed partnerships with a Saudi singer.
4.2.3 Concept of Taste varies across Globe:

In March 2002, McDonalds decided to emphasize a new corporate brand name in Egypt (Manfoods), in an attempt to dodge corporations perceived identity of being pro -Israel (Al-Quds Al-Arabi 2002). In March 2003, while the US-led coalition forces were invading Iraq, McDonald's introduced a product in the Middle East - the McArabia. The chicken sandwich, on Arabian-style bread mixed with aromatic black seeds, was intended to ''re-launch McDonald's in the Muslim world. "The idea was to launch something for the local taste. There were so many options of what to call it, but the best was McArabia," said George Khawam, Kuwait marketing director for McDonald's, which has more than 30 restaurants in the emirate.

Cultural Elements & Their Impact on International Business

4.3 Language:
4.3.1 Verbal Communication Vs Body Language:

We explicitly communicate using language in verbal communication. On the contrary, Body language is the mean of non-verbal communication. Body language reveals the truth always. We can fake our speech; but we can not cover our body language. So it is easier to understand others psychological state through a good inspection of her/his body language. Because body language silently reveals our truth, we better call it Silent Language.
4.3.2. Language: Underestimation of Power of Language can lead to Fiasco

W
grave.

hen Pepsi expanded their market to China, they launched with the slogan, "Pepsi brings you back

to life." What they didnt realize is that the phrase translated to Pepsi brings your ancestors back from the

oca-Cola name in China was first read as Kekoukela, meaning Bite the Wax Tadpole or Female Horse Stuffed with Wax, depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent kokoukole, translating into Happiness in the

Mouth.

eneral Motorss Chevrolet Nova car in Spanish in Central and South America: No va, It Doesnt Go; General Motors Corp. will rename its Buick LaCrosse in Canada because the name for the car is slang for masturbation in Quebec, embarrassed officials with the U.S.

automaker said on Thursday. GM officials, who declined to be named, said it had been unaware that LaCrosse was a term for self-gratification among teenagers in French-speaking Quebec.

Cultural Elements & Their Impact on International Business

erber, the name of the famous baby food maker, is also the French word for vomiting. It becomes a bit limiting when you go global Gerber is therefore not in France, and

although Gerber has a French Canadian web page, it says Les aliments pour ba bas Gerber ne sont disponibles pour linstant quaux a tats-Unis (French for: The baby food is not here, try the U.S.)Irish Mist Liqueur CaseD. Fleming reported that Irish Mist didnt do well in Germany either. Other sources claimed it was marketed with the semi-Germanized Irischer Mist, which would translate back to English as Irish dung.

raficante is an Italian brand of mineral water. In Spanish, it means drug dealer. Volkswagen named the sedan version of Golf the Jetta. However, the letter J doesnt exist in the Italian alphabet, so Jetta is pronounced Ietta, which means Misfortune.

4.3.3 Implication: Low Context Vs High Context Culture:

Low context culture oriented society believes in speech. Whatever they say, they mean it. There is no room for intrigues or misunderstanding or misconception. On the contrary, in low context culture speech expresses 50% of actual intention. Here, understanding silent language plays a crucial role.

4.4 Ethics & International Business:


Kuwait Food Co. (Americana), that holds 13 franchises and 543 outlets for fast food chains like KFC, Pizza Hut, Hardee's, Subway, and Baskin Robbins in 11 Arab countries, suffered a slump as a result of boycott calls. It was alleged to support the Israel. The company launched a multimillion dollar advertising campaign accentuating it was 100 percent Arab owned and operated. The campaign slogan was: "Americana 100% Arab (Al-Sharq Al-Awsat 2002). Similarly, to counter rumors that it was somehow Jewish or supportive of Israel, Sainsbury replaced the soft, soothing music played in its stores with Quran recitations. When Amazon.com discovered that Jerusalem Post was donating its slice of the profits derived from its partnership to Israeli soldiers (to which consumers in the Middle East objected), the internet bookstore terminated its association with the newspaper. It also asked the newspaper

Cultural Elements & Their Impact on International Business


to remove the ads that linked purchases at Amazon.com to supporting Israel. Patty Smith of Amazon told BBC News Online, "We have asked them to take it down and if any sales are made through them they won't receive any commissions"

4.5. How Religion & Religious Attitude influence International Business:


4.5.1 Case Study: 1 Nike & Puma Controversy:

When Nike launched their new Shoe design in April 1997, world got stunned. Not because it was a great pair of shoes but it had ALLAH written on it! The Controversy began when CAIR objected to a shoe with a design on the heel analogous to the Arabic word for God or Allah.

Many

people

protested against Nike and pressurized them to withdraw their product from the market or they will ban the entire product line of Nike. According to Muslims Nike tried to abuse Islam by putting Allahs name on their shoes.

Puma shoe came out in the market with a similar case to Nike. In this image, the word on the shoe might not be an Arabic word but can be of English saying cool. Just below the blue circle is the word youre. In that case, the word cool has an open O just like the word cool has.

Bottom line:

Cultural Elements & Their Impact on International Business


No matter if you really intended to offend a particular religion or religious group, once they are offended you have to loss some goodwill and reputation. So better check the religious aspect of different religion.
4.5.2 Implication of Religious Belief in Business:

Business Day:

Because Muslims need to say Jummah prayer on Friday, Friday is holiday in most Muslim countries. However, the Christians have to attend church on Sunday. Hence, their public holiday is on Sunday.

Selection of Products to be marketed:

Muslims do not eat pork and Hinduism does not allow eating beef. So pork selling in a Muslim country is not a bright idea. At the same time, selling beef in countries like India is not a logical business idea.
Selection of Services to be offered:

Islam does not allow granting loan in exchange of interest. Hence, a different Islamic institutes Islami Banks is quite common in Muslim countries running besides the mainstream bank. In such Islami banks dividend is paid instead.

4.6 Time Orientation & Culture: Public Relation in different Culture:


Time orientation is very crucial in developing public relations in foreign countries. When a USA based company opens branch in Bangladesh, the Bangladeshi employees should consider the time orientation of their employer. When someone from Bangladesh has fixed an appointment with individual from UK, she/he should be aware of the time of appointment lest she/he should miss the appointment.

Cultural Elements & Their Impact on International Business


4.7 Implication of Material Life in International Business:

Scenario: 1
Bangladesh is continuously growing in garment and
apparel export. The growth rate is also rapid. Once, our main export product was jute. Then at one point the major portion of national export started to come from prawn export. But now the major contribution to national export is garments. The fact that

4.7.1. Scenario Analysis:

If any foreign company in this situation wants to invest in mining industry to exploit the cheap labor available in

Bangladesh, they might make a fiasco. This is because existing human resource is skilled in garment manufacturing. Garment manufacturing is less arduous than working in mine. As a result, surplus human resource exists in garment industry but this surplus resource might not be interested

contributes to this rapid growth of garment industry in country is our cheap labor. Most of these laborers engaged in garment industry are illiterate or halfliterate.

to work in mining industry. So, the trend of economical activity of a country, being a part of material life should be taken into consideration in case of international business.
4.7.2. Traditional Vs Industrialized Pole:

An agro-based country will fall into the category of traditional pole if large proportion of population is engaged in agriculture, agricultural operations are mainly performed by manual labor; mechanization of agriculture is Brazil and Pakistan are both developing countries, but the study of material life in the two countries would show that Brazil is ahead of Pakistan, offering market opportunities for electrical appliances, stereos, and television sets. In Pakistan, which is still emerging from total dependence on farming, agricultural

unknown; and modern techniques of

tools would be more important.

Cultural Elements & Their Impact on International Business


farming such as use of fertilizers, pesticides, and quality seeds are unfamiliar. In such regions opportunities for multinational business in a primitive environment will be limited. People live in urban centers and have such modern amenities as television, cars, VCRs, newspapers, and so on. Money is the medium of exchange. In such a culture, business across national boundaries makes sense.
4.7.3 Case Study: Wal-Mart Failure in Germany

In January 1997, Wal-Mart had first entry in Europe market with the acquisition of Wertkauf hypermarkets in Germany. Later in that year, Wal-Mart also acquired Interspar, another German hypermarket chain.. While its first move the 1997 takeover of the 21 Wertkaufstores was indeed a shrewd one, given that companys excellent earnings, its competitive locations, and its very capable management. Wal-Marts 1998 follow-updeal with Spar for 74 hypermarkets was widely judged an ill-informed, ill-advised act, for several reasons. The biggest mistake of Wal-Mart was to ignore the local culture, local buying habits and impose an American boss on its German operations. Wal-Mart stores are designed for customers who are willing to spend lot of time shopping. But in Germany, the shopping hours are shorter: Shops close by 5 PM on weekdays, and no shopping on Sundays. This meant that customers dont have the habit of spending lots of time in a store wandering around for the things they need. Coupled with this problem, German customers do not like to be assisted by Wal-Marts friendly store assistants. Germans prefer to do their own search for bargains. Instead of understanding and adjusting to the culture of its clients, Wal-Mart tried to impose their Culture on to the Customers, which never worked out. Germans like to see the advertised discount products upfront without having to ask the store assistant. This implies that the discount products must be placed at the eye level. Instead WalMart chose to use its US style merchandise display strategy where premium priced products are kept at eye level and discount products are kept at higher shelf or in the bottom racks. This irritated the German shoppers. Wal-Mart also got its store inventory wrong, Wal-Mart stocked

Cultural Elements & Their Impact on International Business


its store with clothes, hardware, electronics and other non-food products were given much bigger floor space than food products, as a result more than 50% of the revenue was from nonfood products. But other German retailers stock more of food products. For example for Metro, food products constitute more than 75% of the revenue. Germans prefer to bag groceries themselves into reusable carriers, or at least to pay a small fee for the avoidable sin of needing a plastic bag. Germans are introvert in nature and doesnt like display of emotion in public, as they always care for their private personal space. Employees, like the reserved customers, didnt care for Wal-Marts public displays of corporate moral such as the morning cheer. The German Customers even didnt liked to be accompanied by the Cheerful employees either, as they would like to make choices by themselves. These are cultural misunderstandings as well, but one could say the cultural philosophy of Wal-Mart could not survive in the context of a German culture with a Happy Planet Index significantly higher than Americas.

4.8 Social Interaction


Social interaction basically refers to how an individual acts in the society in response with others behavior. Ones action in society also is guided by valu e and norm stemmed from as well as social role and socialization trend concealed within the society.
4.8.1. Social Role :

Social role is the role played by individual expected across the society. For example, in maledominated society the females are supposed to play the role as a homemaker whereas the males dominate the family as the bread earner.
4.8.2. Socialization:

We human being is socialized animal. Our social ethics or actions are regulated by our culture.

Cultural Elements & Their Impact on International Business


Culture reflects our individualism or collectivism nature of the society.
4.8.3 Implication of Norms:

Imperative Exclusive Adiaphora

What an outsider must or must not do What locals may do but an outsider cannot What an outsider may or may not do

4.9 Pride and Prejudice:


4.9.1 Pride & Prejudices across Culture:

Even the culture most backward in the eyes of a westerner will foster a certain pride in its people about its traits and ways.
Chinese are jealous of their cultural heritage, and they speak of it with great emotion. So do the Egyptians of their heritage

Pride

Indeed,

developing

countries

sometimes evince more pride-and prejudice countries.


4.9.2 Implication:

Many Americans express feelings of being deprived of cultural history in a country so young Prejudice and diverse by nature.

than

developed

Pride and prejudices can have various implications:

Make many nations reject foreign ideas and imported product A perception of greatness attributed to another culture may lead to the eager acceptance of things reflecting that culture.
Real Life Example: Japanese are proud of their culture and economic achievement and prefer to buy Japanese manufactures.

Cultural Elements & Their Impact on International Business


3. CONCLUSION
Cultural elements have strong impact on brand image. If cross cultural elements are not reviewed before going global, fiasco can be created. Such fiasco can destroy brand reputation. So to learn and to be conscious of different elements of culture is a must in international business.

Cultural Elements & Their Impact on International Business