Hallo, hier kunnen jullie zien wat ik zo een beetje allemaal zie in het van International Marketing. De delen hieronder zijn zelfgeschreven of kopie van het boek + dia of kopie van het internet. Mijn excuses daarvoor, maar zo leer ik nu eenmaal.
Het boek wat we gebruiken is: International Marketing, 17th Edition, Philip R. Cateora, Mary C. Gilly and John L. Graham, McGrawhill/Irwin, 2016.
INTERNATIONAL MARKETING: CHAPTER 1: THE SCOPE AND CHALLENGE OF INTERNATIONAL MARKETING
|Read chapter 1 in book|
Major trends affecting business
What are the major trends affecting business to do international marketing?
- Acceptance of free market system among developing countries (in Latin America, Asia and Eastern Europe): Supply and demand
- Internet & global media: Global technology: the business got more transparent and the people got more individuals because they can search everything. E.g.: In the past in Russia, they had an ad with a line of people waiting for the basic supplies. The government said in this ad that the Americans also had to stand in line for their basics. In fact, that wasn’t true, and the picture was made in front of the store Delia with the most delicious bread ever. So now, it is more transparent.
- Management of the Environment: The mandate to properly manage the resources and global environment for the generations to come. (Het mandaat om de hulpbronnen en de wereldwijde omgeving te beheren voor de volgende generaties)
- World Trade Organization: They bring governments together with a free trade agreement. There is a rapid growth of the WTO, NAFTA, EU and regional trade areas. The intellectual property rights came and the ownership. E.g.: In 2001: China joined a world trade organization. E.g.: Jordan joined a world trade organization and it became really good in trade and protection. E.g.: Because the of the fast growth of the WTO and Mexico became a part of it. Mexico increased their export and direct form of investment. They are the 13thlargest country when it comes to export.
What is international marketing
Give the definition of international marketing:
International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company’s goods and services to consumers or users in more than one nation to achieve a satisfying exchange relationship (more than profit).
What do you mean with business activities?
The activities have to be in a dynamic environment. This means, before going to make your marketingmix, you have to do some research about the DESTEP and culture.
What is the most important thing to keep in mind?
Your consumers: you need to know their needs, desires and wants.
What is the international marketing task?
It is more complicated than the domestic marketer because the international marketer must deal with at least two levels of uncontrollable uncertainty instead of one. Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds its own unique set of uncontrollable factors.
What are the marketing decision factors?
The successful manager constructs a marketing program designed for optimal adjustment to the uncertainty of the business climate. The inner circle in the picture below represents the area under the control of the marketing manager. Assuming the necessary overall corporate resources, structures, and competencies that can limit or promote strategic choice, the marketing manager blends price, product, promotion, channels-of-distribution, and research activities to capitalize on anticipated demand. The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives.
What are the aspects of domestic environment?
The second circle in picture below represents the aspects of the domestic environment uncontrollables. These include home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition.
What can the political decision do?
A political decision involving foreign policy can have a direct effect on a firm’s international marketing success.
Gove some examples of political decisions:
- The U.S. government placed a total ban on trade with Libya to condemn Libyan support for terrorist attacks, imposed restrictions on trade with South Africa to protest apartheid, and placed a total ban on trade with Iraq, whose actions were believed to constitute a threat to the national security of the United States and its allies.
- More recently, trade sanctions have been leveled against both Russia and Iran. In each case, the international marketing programs of U.S. companies, whether IBM, Exxon, or Hawg Heaven Bait Company, were restricted by these political decisions.
- The U.S. government has the constitutional right to restrict foreign trade when such trade adversely affects the security or economy of the country or when such trade is in conflict with U.S. foreign policy.
- Conversely, positive effects occur when changes in foreign policy offer countries favored treatment. Such were the cases when South Africa abolished apartheid and the embargo was lifted and when the U.S. government decided to uncouple human rights issues from foreign trade policy and grant permanently normalized trade relations (PNTR) status to China, paving the way for its entry into the World Trade Organization (WTO). In both cases, opportunities were created for U.S. companies.
- Finally, note that on occasion, companies can exercise a controversially high degree of influence over such legislation in the United States. Recall that it is Congress’s responsibility to regulate business, not vice versa. Indeed, in the case of PNTR for China, companies with substantial interests there, such as Boeing and Motorola, lobbied hard for the easing of trade restrictions.
What can the economic decision do?
It has far-reaching effects on a company’s competitive position in foreign markets. The capacity to invest in plants and facilities, either in domestic or foreign markets, is to a large extent a function of domestic economic vitality. It is generally true that capital tends to flow toward optimum uses; however, capital must be generated before it can have mobility. Furthermore, if internal economic conditions deteriorate, restrictions against foreign investment and purchasing may be imposed to strengthen the domestic economy.
What can the competition do?
Competition within the home country can also have a profound effect on the international marketer’s task.
Give an example about the competition:
For more than a century, Eastman Kodak dominated the U.S. film market and could depend on achieving profit goals that provided capital to invest in foreign markets. Without having to worry about the company’s lucrative base, management had the time and resources to devise aggressive international marketing programs. However, the competitive structure changed when Fuji Photo Film became a formidable competitor by lowering film prices in the United States, opening a $300 million plant, and soon gaining 12 percent of the U.S. market. Since then, the acceptance of digital photography, with Canon, from Japan, leading the market, has further disrupted Kodak’s domestic business. Even though Kodak redirected its energy and resources back into the United States, it was not able to avoid filing for Chapter 11 bankruptcy protection in 2012. Fujifilm has managed to survive the digital onslaught by broadening its strategic portfolio, away from film and toward pharmaceuticals and liquid-crystal displays. Competition within its home country affects a company’s domestic as well as international plans.
What are the aspects of the foreign environment?
A business operating in its home country undoubtedly feels comfortable forecasting the business climate and adjusting business decisions to these elements. The process of evaluating the uncontrollable elements in an international marketing program, however, often involves substantial doses of cultural, political, and economic shock. The more significant elements in the uncontrollable international environment, shown in the outer circles of the picture below, include political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. These forces constitute the principal elements of uncertainty an international marketer must cope with in designing a marketing program. Keep in mind that political/legal forces and technology are the uncontrollable nature of the foreign environment.
Give an example of the foreign environment:
A case in point is China, which has moved from a communist legal system in which all business was done with the state to a transitional period while a commercial legal system develops. In this transitional phase, new laws are passed but left to be interpreted by local authorities, and confusion often prevails (= overhand) about which rules are still in force and which rules are no longer applicable.
For example, commercial contracts can be entered into with a Chinese company or individual only if that company or person is considered a “legal person.” To be a legal person in China, the company or person must have registered as such with the Chinese government. To complicate matters further, binding negotiations may take place only with “legal representatives” of the “legal person.” So if your company enters into negotiations with a Chinese company or person, you must ask for signed legal documents establishing the right to do business. The formalities of the signature must also be considered. Will a signature on a contract be binding, or is it necessary to place a traditional Chinese seal on the document? Even when all is done properly, the government still might change its mind.
Coca-Cola had won approval for its plan to build a new facility to increase production for its increasing Chinese market share. But before construction began, the Chinese parliament objected that Coca-Cola appeared to be too successful in China, so negotiations continued delaying the project. Such are the uncertainties of the uncontrollable political and legal factors of international business.
Explain the level of technology:
The level of technology is an uncontrollable element that can often be misread because of the vast differences that may exist between developed and developing countries. A marketer cannot assume that an understanding of the concept of preventive maintenance for machinery is the same in other countries as in the United States. Technical expertise may not be available at a level necessary for product support, and the general population may not have an adequate level of technical knowledge to maintain equipment properly. In such situations, a marketer will have to take extra steps to make sure that the importance of routine maintenance is understood and carried out. Furthermore, if technical support is not readily available, local people will have to be specially trained, or the company will have to provide support.
|Political and legal issues face a business, whether it operates at home or in a foreign country. However, the issues abroad are often amplified (= versterkte) by the “alien status” of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate.|
What is the alien status?
– The alien status of a foreign business has two dimensions: It is alien in that foreigners control the business and in that the culture of the host country is alien to management.
– The alien status of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Political activists can rally support by advocating the expulsion of the “foreign exploiters,” often with the open or tacit approval of authorities.
Give an example of the alien status:
The Indian government, for example, gave Coca-Cola the choice of either revealing its secret formula or leaving the country. The company chose to leave. When it was welcomed back several years later, it faced harassment and constant interference in its operations from political activists, often inspired by competing soft drink companies.
Explain the picture below:
You see the total environment of an international marketer. The inner circle depicts the controllable elements that constitute a marketer’s decision area. The second circle encompasses (omvat) those environmental elements at home that have some effect on foreign-operation decisions, and 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. Thus, the more foreign markets in which a company operates, the greater is the possible variety of foreign environmental factors with which to contend. Frequently, a solution to a problem in country A is not applicable to a problem in country market B.
Explain the story of Walmart with the international marketing task:
Walmart wanted to go overseas. They tried it in a lot of countries like Germany and Brazil. Walmart was forgotten to do research about the cultures of the different countries. In Germany, they German people felt harassed by the overfriendly behavior of the Walmart-stores. In Brazil, they didn’t do any research about the culture there and their competitors. Carrefour was already in that country and had done his research, so they adapted the store with the local products. Brazilian people love their local products. Walmart reacted with setting up lower prices. But it failed.
What is the most important uncontrollable for a foreign environment that you need to keep in mind?
The culture of the country: believes, values, symbols, hero’s, rituals, etc.
Explain symbolic meaning:
- Not in every country they use the same actions. E.g.: When you are in Belgium and put your thumbs up: it means that you did a good job. In China it is a harassment when you put your thumbs up.
- Defining a color. E.g.: In the Netherlands white would mean purely, clean, business. When you use white in Asia, it is associated with death.
- Different meaning of worth’s. E.g.: Puke in Hawaiian means book, but in the other parts of the United States, it means the private part of a male. E..g: You use the word fag in Denmark when you want a cigarette, but in other parts of the world it would mean decisions.
- Dinning customs and rituals. E.g.: In Japan, you need to do slurping after you ate your meal. It means that you liked your meal. But in other parts of the world, it is an insult. E.g.: In Greece, it is normal that one-person orders for everyone. E.g.: In Hawaii, you have to eat your whole meal, otherwise it is an insult.
- Rituals in general. E.g.: In Japan you have “The Japanese Bathing Ritual”. This means that they are filling the bath until the top and then wash themselves out of the bath.
What is the most important thing that you have to keep in mind with doing marketing?
Your consumers. You have the get feedback from your consumers and adapt your product to their needs and desires.
Give a good example of a company who keep their consumers in mind:
Haier is a Chinese manufacturer of washing machines. It is the largest manufacturer of washing machines in the world. They are really good in listening to their consumers and really want to get feedback. They adapt their products to their demands. There was a time that a lot of washing machines didn’t work anymore in a country and they asked to that country what is going on. The tubes were filled up with dirt. After getting feedback from their consumers, they found out that this country uses the washing machine also for washing potatoes. So, they adapted their washing machines and also made a program for potatoes.
What do you have to do when you want to go to foreign countries?
You have to do the same as much as possible but adapt where you need to.
Give some examples:
- Time-conscious Americans are not culturally prepared to understand the culturally nuanced meaning of time to Latin Americans. Such a difference must be learned to avoid misunderstandings that can lead to marketing failures. Such a failure occurs every time sales are lost when a “long waiting period” in the outer office of a Latin American customer is misinterpreted by an American sales executive.
- Cross-cultural misunderstandings can also occur when a simple hand gesture has a number of different meanings in different parts of the world. When wanting to signify something is fine, many people in the United States raise a hand and make a circle with the thumb and forefinger. However, this same hand gesture means “zero” or “worthless” to the French, “money” to the Japanese, and a general sexual insult in Sardinia and Greece.
- A U.S. president sent an unintentional message to some Australian protesters when he held up his first two fingers with the back of his hand to the protesters. Meaning to give the “victory” sign, he was unaware that in Australia, the same hand gesture is equivalent to holding up the middle finger in the United States.
What is the key to success in international marketing?
It is adaption to environmental differences from one market to another.
What is adaptation?
Adaptation is a conscious (= bewust) 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.
Tell the story about Campbell soup company:
They wanted to internationalize, so they went to other countries. In the beginning it was hard, because they just put the same flavors into another country. After a while, they researched, and they concluded that they had to adapt, to fit into another country. For example: In Italy, they had made soup with spaghetti inside it.
Who is Edward T. Hall?
He was an American anthropologist and cross-cultural researcher. He is remembered for developing the concept of proxemics and exploring cultural and social cohesion(= samenhang), and describing how people behave and react in different types of culturally defined personal space. Hall was an influential colleague of Marshall McLuhan and Buckminster Fuller.
—> Sorry, Wikipedia moest komen, want ik nog niet volgen in de les
What are the differences between monochronic and polychronic?
Monochronic cultures like to do just one thing at a time. They value a certain orderliness and sense of there being an appropriate time and place for everything. They do not value interruptions. They like to concentrate on the job at hand and take time commitments very seriously.
In addition, monochronic people tend to show a great deal of respect for private property and are reluctant to be either a lender or a borrower. This is part of a general tendency to follow rules of privacy and consideration as well as adhere religiously to plans.
Polychronic cultures like to do multiple things at the same time. A manager’s office in a polychronic culture typically has an open door, a ringing phone and a meeting all going on at the same time. Though they can be easily distracted they also tend to manage interruptions well with a willingness (= bereidwilligheid)to change plans often and easily. People are their main concern (particularly those closely related to them or their function) and they tend (= de neiging hebben)to build lifetime relationships. Issues such as promptness are firmly based on the relationship rather than the task and objectives are more like desirable outcomes than must do’s.
What is ethnocentrism?
Your home country is superior. The needs of home country are most relevant. You will take care of your own country first, before you internationalize. You will think for example: when you internationalize you might lose your brand image. There will be any adaptations. You think that your way, the only way is. This is not the best way to do it.
What are the primary obstacles to success in international marketing?
- A person’s self-reference criterion (SRC)
- The associated ethnocentrism
What is the Self-Reference Criterion?
The unintentional referencing of one’s own culture standards (values, experiences & knowledge) when evaluating others. The SRC is an unconscious (= bewusteloos) reference to one’s own cultural values, experiences, and knowledge as a basis for decisions.
What is closely connected to SRC?
What is ethnocentrism?
It is the notion (= begrip)that people in one’s own company, culture, or country know best how to do things.
Why are the ethnocentrism and the SRC bad?
When you are confronted with some set of facts in another country, and you are working with ethnocentrism and your SRC, you’re only look at your own culture and forget the culture of the other country. Our reaction is then based on meanings, values, symbols and behavior that are relevant for our own country and it is usually different in those of another country. These decisions aren’t good ones.
What do you have when you use SRC?
- Impedes (= belemmeren) ability to assess foreign markets/business in their true light
- Reactions to cultural dimension different from those are foreign
- SRC can result in an unsuccessful marketing program
Give an example of SRC:
- To illustrate the impact of the SRC, consider misunderstandings that can occur about personal space between people of different cultures. In the United States, unrelated individuals keep a certain physical distance between themselves and others when talking or in groups. We do not consciously think about that distance. We just know what feels right without thinking. When someone is too close or too far away, we feel uncomfortable and either move farther away or get closer to correct the distance. In doing so, we are relying on our SRC. In some cultures, the acceptable distance between individuals is substantially less than that which is comfortable for Americans. When someone from another culture approaches an American too closely, the American, unaware of that culture’s acceptable distance, unconsciously reacts by backing away to restore the proper distance (i.e., proper by American standards), and confusion results for both parties. Americans assume foreigners are pushy, while foreigners assume Americans are unfriendly and literally “standoffish.” Both react according to the values of their own SRCs, making both victims of a cultural misunderstanding.
- Women’s clothing maker Zara headquartered in Spain fixed things much faster. They had offered online a striped blouse with a yellow six-pointed star emblazoned across the heart. For Jews, it was reminiscent of World War II con- centration camp uniforms. Consumers complained, and Zara took the product off the market immediately. Damage was still done.
|The most effective way to control the influence of ethnocentrism and the SRC is to recognize their effects on our behavior. Although learning every culture in depth and being aware of every important difference is obviously humanly impossible, an awareness of the need to be sensitive to differences and to ask questions when doing business in another culture can help you avoid many of the mistakes possible in international marketing. Asking the appropriate question helped a lot.|
How can you avoid the SRC?
- Define the business problem or goal in home-country cultural traits, habits or norms.
- Define the business problem or goal in foreign-country cultural traits, habits, or norms. Make no value judgement.
- Isolate the SRC Influence in the problem and examine it carefully to see how it complicates the problem.
- Redefine the problem without the SRC influence and solve the optimum business goal situation.
Stages of International Marketing Involvement
Which are the stages of International Marketing Involvement?
- No direct Foreign marketing
- Infrequent Foreign marketing
- Regular Foreign marketing
- International marketing
- Global marketing
What is the No direct Foreign marketing?
A company in this stage does not actively cultivate customers outside national boundaries. This company’s products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who directly contact the firm. Or products may reach foreign markets via domestic wholesalers or distributors who sell abroad without the explicit encouragement or even knowledge of the producer. As companies develop websites, many receive orders from international Internet users. Often an unsolicited order from a foreign buyer is what piques the interest of a company to seek additional international sales.
What is the infrequent foreign marketing?
- Temporary surpluses (=overschotten) caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature. Therefore, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. As domestic demand increases and absorbs surpluses, foreign sales activity is reduced or even withdrawn. In this stage, little or no change is seen in the company organization or product lines. However, few companies fit this model today because customers around the world increasingly seek long-term commercial relationships. Furthermore, evidence suggests that financial returns from such short-term international expansions are limited.(Tijdelijke overschotten veroorzaakt door variaties in productieniveaus of vraag kunnen ertoe leiden dat er in het buitenland zelden wordt verkocht. De overschotten worden gekenmerkt door hun tijdelijke aard. Daarom worden verkopen aan buitenlandse markten gemaakt naarmate goederen beschikbaar komen, met weinig of geen intentie om een continue marktvertegenwoordiging te handhaven. Naarmate de binnenlandse vraag toeneemt en de overschotten worden geabsorbeerd, wordt de buitenlandse verkoopactiviteit verminderd of zelfs ingetrokken. In deze fase wordt weinig of geen verandering gezien in de bedrijfsorganisatie of productlijnen. Er zijn echter maar weinig bedrijven die op dit model van toepassing zijn, omdat klanten over de hele wereld steeds vaker op lange termijn commerciële relaties zoeken. Verder wijst het bewijs erop dat het financiële rendement van dergelijke korte internationale uitbreidingen beperkt is.)
- They use this concept also as a protection for their brand. They will open sometimes pop-up stores around the world, so their brand will keep protected.
What is Regular Foreign Marketing?
The firm has permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets. A firm may employ foreign or domestic overseas intermediaries, or it may have its own sales force or sales subsidiaries in important foreign markets. The primary focus of operations and production is to service domestic market needs. However, as overseas demand grows, production is allocated for foreign markets, and products may be adapted to meet the needs of individual foreign markets. Profit expectations from foreign markets move from being seen as a bonus in addition to regular domestic profits to a position in which the company becomes dependent on foreign sales and profits to meet its goals. The production is still at home, but the distributors are abroad. (Het bedrijf heeft een permanente productiecapaciteit die is toegewijd aan de productie van goederen en diensten die op buitenlandse markten worden verhandeld. Een bedrijf kan buitenlandse of binnenlandse intermediairs overzee in dienst nemen, of het kan zijn eigen verkoopsteam of verkoopfilialen hebben op belangrijke buitenlandse markten. De primaire focus van operaties en productie is om tegemoet te komen aan de behoeften van de binnenlandse markt. Naarmate de buitenlandse vraag groeit, wordt de productie toegewezen aan buitenlandse markten en kunnen producten worden aangepast aan de behoeften van afzonderlijke buitenlandse markten. Winstverwachtingen van buitenlandse markten verplaatsen zich van het worden gezien als een bonus naast reguliere binnenlandse winsten naar een positie waarin het bedrijf afhankelijk wordt van buitenlandse verkopen en winsten om zijn doelen te bereiken.)
What is international marketing?
It is the same as Host country Orientation or polycentric. It means the same as multidomestic. Each country is unique and should be targeted differently. You can invest in joint-ventures, franchise, etc. You will deal with the lack of knowledge and segment every country with his own marketingmix.
What is geocentric (World Orientation)?
This means global marketing. You will make global product concepts with local adaptations. You think global but act local. You see the world as one market. You will standardize as far as possible, adapt where necessary. You develop product and marketing strategies for world markets.
Give some examples of companies who do geocentric:
- Apple: every product is the same but there is a language adaptation. They launch each product on a keynote speech in the United States over the world and will not launched it with different speakers for the different languages or countries.
- Mc Donalds: They use in every country the same concept but with adaptations to that country. For example, you have in India Rise burgers, in the Netherlands the Mc Kroket, in Belgium the Belgo Burger. They use an universal platform within some adaptations to a certain country.
Who are the companies that are going most of the time internationalize?
- Companies with either high technology and/or marketing-based resources appear to be better equipped to internationalize than more traditional manufacturing kinds of companies
- Smaller home markets and larger production capacities appear to favor internationalization
- Firms with key managers well networked internationally are able to accelerate the internationalization process.
Segmentation Variables for Consumer Markets
Give the segmentation variables:
Which variables are there by demographic segmentation?
- Occupation (= bezetting)
- Family size
- Family life cycle
- Social class
Which variables are there by psychographic segmentation?
- Personality attributes
Which variables are there by geographic segmentation?
- Urban, suburban, rural
- City size
- Country size
- State size
- Market density (= dichtheid)
NTERNATIONAL MARKETING: CHAPTER 3: HISTORY AND GEOGRAPHY: THE FOUNDATIONS OF CULTURE
Historical Perspective in Global Business
What is culture?
A society’s accepted basis for responding to external and internal events.
It has to deal with the origins: so, geography (climate, topography, flora, fauna, microbiology), the history, technology and politic, social institutions (family, religion, school, media, government, corporations), that will go into peers and translated in the elements of culture (values, rituals, symbols, beliefs, thoughts processes).
What are the consequences of the elements of culture?
- Consumptions decisions and behaviors (contemporary behavior = gelijktijdige gedrag)
- Management style
What do you need to know before you market over there?
- You must know a society’s actions and its point of view.
- You must have an appreciation for the influence of historical event and the geographical uniqueness to which a culture has had to adapt.
When do you really know the culture?
When you are deep inside the culture.
Historical Perspective in Global Business: History and Contemporary Behavior History of Japan
Explain the Feudal Japan.
- Around 1 400 till 1 600 you had in Feudal Japan the emperors (= Keizer).They were divine rulers (goddelijke heersers).They were the highest in rank.
- The Daimy reported to the Shogun. They did it more out of a political and military necessity than out of loyalty. The Shogan became the most dominant feudal lord by subduing (= onderwerpen)the other Daimy and receiving the impressive title from the emperor.
- Than you also had the Samurai warriors, also named Bushid. It was more than a job, it was a way of life. They were focused on duty before fail. They would kill themselves before fail.
- After that you had the Hyakusho. These were the farmers and fisherman
- Than you have the Ko. These are the artisans (= ambachtslieden)
- The next class is Sho. These are the merchants (= kooplieden)and shopkeepers
- The last class wat the Eta. These were the Unclean.
What is the bushid?
It is all about duty and obligation. They were young men that would leave their families to protect the country. They would rather kill themselves than fail in a fight. When other countries captured them, they would capture them in a way that they couldn’t kill themselves.
What is a zaibatsu?
It is a large company that has a lot of companies under them with different specifications, for example: cars, insurances, houses estates, etc. They are all owned by the same family. When you have a car from that company you also have to buy there the insurance and so on, otherwise you get a lot of high bills from them, etc. So, you will start and stay with the same company for everything. (Keiretsu)
Give an example of the zaibatsu:
|Historically, loyalty and service, a sense of responsibility, and respect for discipline, training, and artistry were stressed to maintain stability and order. Confucian philosophy, taught throughout Japan’s history, emphasizes the basic virtue of loyalty “of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord,” that is, to country. A fundamental premise of Japanese ideology reflects the importance of cooperation for the collective good. Japanese achieve consensus by agreeing that all will unite against outside pressures that threaten the collective good. A historical perspective gives the foreigner in Japan a basis on which to begin developing cultural sensitivity and a better understanding of contemporary Japanese behavior.|
|With the history in mind do you know understand that the Japanese people are loyal to family, to country, to company, and to social groups and the strong drive to cooperate, to work together for a common cause, permeate (= doordringen)many facets of Japanese behavior and have historical roots that date back thousands of years.|
How did the Japanese people really get their own contemporary behavior?
- Their own race
The country is surrounded by sea, so for decades they only improved their own culture on their own without the interfering of other cultures.
- They have a national identity
The people have similar characteristics, habits, connections. They experience approximately (= ongeveer) the same experiences in life. This all is there origins.
Geography and Global Markets
What do we need to study?
- Climate and Topography
- Earth’s surface (= aardoppervlak)
- Resources (= bronnen)
- Geography, Nature, and Economic Growth
- Social Responsibility and Environmental Management
How do we achieve economic growth?
- Economic infrastructures
- Transports infrastructures
- Human capital
Give an example where you could see the economic growth:
In Denmark and Sweden, they built a bridge that connect each other. In this bridge is also a tunnel. Thanks to the bridge, the logistics were improved triple times than before the bridge. The economic and human interfaces (= menselijke interacties)went triple up. There was more freight moving from Sweden to Germany through Denmark. Thanks to the bridge, the jobs also increased.
How did Ikea overcome the geographic barrier with the bridge?
The Swedish company Ikea went to Germany. They had to deal with the fact
that Germany was already a mature market for their stuff. The German people
like to buy their furniture by the local stores. They also had high costs of transportation, because there wasn’t a bridge, and everything had to come by boat or plane. So, in the stores of Ikea, the employers had to say to their consumers that they had to wait for the furniture. After the building of the bridge, the sales went up, because Ikea could have everything in stock. So, thanks to the bridge, the supply challenge went down.
How did Jacob Kongsbak Lassen overcome the geographic barrier with the bridge?
Jacob Kongsbak Lassen is a company that deals with fresh fish. The problem that this company had, was that they had to ferry everything over. So, that had problems with the schedule of the ferry. After the building of the bridge, the sales went up.
What is the geographic challenge of China?
In China they have to deal with the earth’s surface and climate. In China, you have a lot of different vegetation types and the dessert is increasing. The dessert is growing between the 20 – 30% a year. Also they have to deal with the industries that put dirt and pollution. For example, the industries outside of Beijing are throwing a lot of pollution into the area of Beijing. When the wind is blowing in Beijing, you are inhaling 40 cigarettes a day because of the pollution. To change this, they are making a great green wall into the dessert. So, they plant trees to stop the dessert growing.
Which resources do we have in China?
- Distribution infrastructures
- Human skills
Why do you have to think twice before you internationalize, explain with an example:
In China, it was not common to drink or eat dairy products. But Frontier foods saw an opportunity in the market and went there for a challenge to change the behavior of the Chinese consumer. The Frontier foods kept their values and only served dairy products. It slowly became common to drink or eat dairy products. When they had a refrigerator, it became easier, but there was still a long way to go. After a while, the American and European stores/restaurants make their entrances in China. Because he was the only company that sold dairy products in China and already had gain some brand awareness, the companies wanted to work with this company.
What does the social responsibility & environmental management do?
- Social responsibility
Social responsibility means that individuals and companies have a duty to act in the best interests of their environments and society as a whole. Social responsibility, as it applies to business, is known as corporate social responsibility (CSR). Many companies, such as those with “green” policies, have made social responsibility an integral part of their business models.
Environmental management system (EMS) refers to the management of an organization’s environmental programs in a comprehensive, systematic, planned and documented manner. It includes the organizational structure, planning and resources for developing, implementing and maintaining policy for environmental protection.
Give some examples of companies that already implement the social responsibility & environmental management?
China: in the last couple years, China did a lot of pollution with their industries and didn’t think about the consequences. But now, they are very aware of the consequences and want to be sustainable and recover.
Peugeot: they wanted to build sustainable cars. They have improved the electric cars, so the cars are more sustain, with more specific and better materials.
How is the social responsibility & environmental management in India?
It isn’t good. Because the industry is growing. They people over there don’t want to sustain.
Dynamics of Global Population Trends
What are the dynamics of global population trends?
- Rural and urban migration
- Population decline and aging
- Worker shortage (= tekort)and immigration
Dynamics of Global Population Trends: Rural and urban migration
How many people live in cities?
4.2 billion of people
How many people live worldwide?
|1.7 billion living in cities of over one million|
What are the most crowded cities?
- In the past
- New York
- New Deli
What are the main things in cities:
- 70 – 80% of carbon emission
- 75% of wood use
- 60% of water use
What are the main concerns with living in the city like New Deli?
- Residents are choking (= stikken)
- 55% live in slums (= sloppenwijken)
- Trains designed for 1 700 but used by 5000+
So, as a company, you need to keep that in mind, because every day there will be dead’s in the train, and it can be one of your employees.
- 3 million commute from suburbs (= 3 miljoen pendelen van buitenwijken)
- There are too many people in the city, and there are not enough jobs
|MUM AIRPORT GETS TO BUSY
Hours spent circling at airport
New airport questionable
What is the urban migration growth in Asia?
What is the urban migration growth in China?
What want the government of China achieve with this urban growth?
They want that the farmers are moving to the big cities. On the one hand, because the want to plant grass, trees, plants… On the other hand, they want that the farmers don’t make their own food anymore but get into the economy of the city. So, that they are going to stores, buying cars and spending their money for making the economy better. So, the government want to change the rural people into urban people. There are already placed 250 000 000 people, who are most farmers into new city spaces.
How do they deal with the homeless people then?
Sometimes the homeless people get money or a place to life.
What is the urban migration growth in Africa?
It has the highest annual urban growth rates.
Dynamics of Global Population Trends: Population Decline and Aging
|Older population overtakes younger (0-14)|
What is the replacement rate?
How many people you need to have replace. The number is always 2.1.
What is the total fertility rate?
It is the rate of the average burns of a woman in a country.
What do you know when you compare these?
If it is possible for you to fit your company in that country. You have to keep the the education, infrastructure, economy in mind. If there to many births, maybe the transport can’t handle it, but for example if there is lesser births than the replacement rate, then there aren’t enough people to cover the jobs.
What did some countries do?
- Honeymoon packages: the country had to less births, so they offered to just married couples to get money for making baby’s.
- (Sommige mannen hadden hun penis moeten laten besnijden zodat ze geen baby’s meer konden krijgen omdat er te veel geboortes waren in dat land.)
Explain: Singapore’s population declines and ages:
The population is shrinking and aging. There are less skilled jobs and they are aging. The president made a little immigrant’s law, so that he welcome immigrants so go to Singapore. It is the hey to the society, but the local people don’t like it. The president also said that the women can have more children, so that they have to start early.
How does BMW deals with the aging workforce?
Germany: 2017 – 1.45
The younger population is shrinking, but the companies are proactive.
Dynamics of Global Population Trends: Worker Shortage and Immigration
|For most countries, mass immigration is not well received by the resident population. However, a recent report from the United Nations makes the strongest argument for change in immigration laws as a viable solution. The free flow of immigration will help ameliorate the dual problems of explosive population expansion in less developed countries and worker shortage in industrialized regions. Europe is the region of the world most affected by aging and thus by a steadily decreasing worker-to-retiree ratio. The proportion of older persons will increase from 20 percent in 1998 to 35 percent in 2050. The country with the largest share of old people will be Spain, closely followed by Italy.
Recognizing the problem, Spain has changed immigration laws to open its borders to all South Americans of Spanish descent. To keep the worker-to-retiree ratio from fall- ing, Europe will need 1.4 billion immigrants over the next 50 years, while Japan and the United States will need 600 million immigrants between now and 2050. Immigration will not help ameliorate the problem though if political and cultural opposition to immigration cannot be overcome.
The trends of increasing population in the developing world, with substantial shifts from rural to urban areas, declining birthrates in the industrialized world, and global population aging, will have profound effects on the state of world business and world economic conditions. Without successful adjustments to these trends, many countries will experience slower economic growth, serious financial problems for senior retirement programs, and further deterioration of public and social services, leading to possible social unrest.
|– More jobs, less workers
– Loss of a large# of small medium size organization
– The relocation of companies to offshore locations
– Contention amongst the business community
Teaching your workers, but after that the worker will go to the competitor.
INTERNATIONAL MARKETING: CHAPTER 4: CULTURAL DYNAMICS IN ASSESSING GLOBAL MARKETS
Origins, elements and consequences of culture
The importance of culture to an international marketer
How do we get the marketing concept?
By doing a marketing research.
|All marketing activates must be market driven.|
What do you want with your marketingmix?
The satisfaction of consumer needs and wants at a profit.
When you are going abroad or in your own country, what do you
need to know?
The culture of the country.
Give an example:
- When a promotional message is written, symbols recognizable and meaningful to the market (the culture) must be used.
- When designing a product, the style, uses, and other related marketing activities must be made culturally acceptable (i.e., acceptable to the present society) if they are to be operative and meaningful.
Is culture pervasive in all marketing activities?
Yes, in pricing, research, promotion, channels of distribution, product, packaging, and styling. The marketer’s efforts actually become a part of the fabric of culture. How such efforts interact with a culture determines the degree of success or failure of the marketing effort.
|The manner in and amount which people consume, the priority of needs and wants they attempt to satisfy, and the manner in which they satisfy them are functions of their culture that temper, mold, and dictate their style of living.|
What is culture?
Culture is the humanmade part of human environment. It is the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society.
Are markets always the same?
No, markets constantly change. They are not static but evolve, expand, and contract in response to marketing effort, economic conditions, and other cultural influences. Markets and market behavior are part of a country’s culture. One cannot truly understand how markets evolve or how they react to a marketer’s effort without appreciating that markets are a result of culture. Markets are the result of the three-way interaction of a marketer’s efforts, economic conditions, and all other elements of the culture.
What must marketers do?
Marketers are constantly adjusting their efforts to cultural demands of the market, but they also are acting as agents of change whenever the product or idea being marketed is innovative. Whatever the degree of acceptance, the use of something new is the beginning of cultural change, and the marketer becomes a change agent.
Culture’s Pervasive Impact (= Imperventie van de cultuur)
What affects culture?
Culture affects every part of our lives, every day, from birth to death, and everything in between. It affects how we spend money and how we consume in general.
Give an example about that culture affects our live:
- Spaniards sleep less than other Europeans, and Japanese children often sleep with their parents.
- Birthrate in China and Japan with the Fire Horse.
When will there be a change in values?
As countries move from agricultural to industrial to services economies, birthrates decline and global changes in values are occurring.
What are the consequences of the cultural impact?
- Birth rates
E.g.: Japan: Year of the Dragon and Year of the Fire Horse)
- Consumption patterns
E.g.: Alcohol and Tobacco
- Consumptions consequences
E.g.: Life Expectancy, stomach cancer
What must marketers do?
It is imperative for foreign marketers to learn to appreciate the intricacies (= fijne kneepjes)of cultures different from their own if there are to effective in foreign markets.
Elements of Culture
What are the elements of culture?
- Thought processes
What is the Hinoe-Uma?
Hinoe-Uma is a calendar event that occurs every 60 years. The last was in 1966 and the next will be in 2026. As with the astrological birth signs of the West, the Japanese use modified Chinese astrology; a 12-year cycle of astrological beasts. 1966 was the Year of the Horse, but it was a special kind of rather nasty horse; a Fire Horse, or hinoe-uma in Japanese.
What is the Fire Horse Women?
Girls born in that year became known as ‘Fire Horse Women’ and are reputed to be dangerous, headstrong and generally bad luck for any husband. In 1966, a baby’s sex couldn’t be reliably detected before birth; hence there was a large increase of induced abortions and a sharp decrease in the birth rate in 1966.
What is the Fire horse?
The Chinese use a cycle to measure their years. On the mats in Chinese restaurants it looks like a 12-year cycle built around animals, but these animals are matched with five elements – metal, wood, fire, water, and earth creating 60-year cycles. So you are not just born in the year of the Horse, but in the year of the Earth Horse or Water Horse…or Fire Horse.
What are the characteristics of the Fire Horse?
- Impossible to contain
In some countries, is it allowed to be a Fire Horse?
No, in some countries, women with these characteristics don’t fit in the society.
What do you need to be in some societies as a women?
- Not ambitious
- Not headstrong
Definitions of the Origin of Cultures
Give the definition 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.
- “Software of the mind” culture is a guide for humans on how to think and behave; it is a problem-solving tool (Hofstede)
- An invisible barrier… a completely different way of organizing life, of think and conceiving the underlying assumptions about the family and the state, the economic system and even Man himself (Hall)
- A “thicket” (U.S. Ambassador Hodgson)
It holds hope for struggling international marketers. According to the ambassador, thickets are tough to get through, but effort and patience often lead to successes. (= Het heeft hoop voor worstelende internationale marketeers. Volgens de ambassadeur zijn struikgewas lastig om er doorheen te komen, maar inspanning en geduld leiden vaak tot successen.)It is a bunch of trees that stick together, and you put them off layer for layer.
|Simply stated, humans make adaptations to changing environments through innovation. Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers. Finally, people make decisions about consumption and production through application of their cultural-based knowledge|
Elements of culture
What are the elements of culture?
- Cultural values
- Thought processes
The elements of culture are implemented by the consumer. How?
- How he thinks
- How he behaves
- How he problem solves
Which indexes are there? (Hofstede)
- Individualism/Collectivism Index (ICI)
- Power Distance Index (PDI)
- Uncertainty Avoidance Index (UAI)
- Masculine/Feminine Index (MFI)
What is the Individualism/Collectivism Index?
The degree of individual or group orientation.
What is individualism?
- Refers to the attitude of valuing ourselves as separate individuals with responsibility for our own destinies and our own actions.
- Proponents of individualism believe that self-interest is an appropriate goal.
- It is the I approach
- A youngster in an individualisticculture is learned by parents/education to think for him/herself.
What is collectivism?
- Common interests
- It is the we approach.
- A youngster in a collectivisticculture is learned by parents/education to do what is best for the family.
- Collectivism: China and the Philippines
- China: Hierarchy is very important. There are large social groups and big families
- Group harmony, reputation, social order, everyone should enjoy are important
- Individualism: United States and Australia
- Canada and the Netherlands are also a part of this
- They value things more. They want to choose by their own. They believe that they are responsible for their own success. They are protective for their family and education.
- Japan is in between: you need to do more research.
- Smaller groups
- The company goes from father to oldest son. The other son needs to search something for him own.
- They are very loyal to the company and most of the time stay with the same company for their whole life.
What do you need to do when you are going as an individualism company to a collectivism company?
You shouldn’t send just one person, you should send a number of persons. Because how more people you send, the more abelites it. So more people means that your product or service is better.
What is the Power Distance Index (PDI)?
- The level of preference (expect or accept) for equality or inequality within groups.
- Is concerned with INEQUALITY within a society and how the country distinguishes between inequalities.
- The inequalitycan be: power, wealth, status, social position as well as physical and intellectual differences.
- In the business world, it concerns whether the employee and the boss prefer a dependent or independent relationship with each other.
- Hofstedesays that the index measures the extent to which the weaker members expect and accept the unequal distribution of power.
- High Power Distance: Philippines and China
- Everyone need to be told what to do
- Huge distance between boss and employee.
- It is very formal
- Less interaction
- Low Power Distance: United States and Denmark
- It is informal
- Boss can be your friend
- Liberty and justice are key
- You can make independent decisions and showing your critical thinking.
- Denmark: 40% of the manager positions must be owned by women.
- In the middle: Japan
- Everyone is born equal and HE is …
- Consensus for decision
What do you need to do when you with low power distance goes to a high power distance country?
- You need to send some equal in status or higher for negotiations, otherwise the person will feel himself under warded.
- You don’t put the superior on a lower floor than the function. So, how higher your functions, the higher you should put him in the building.
What is the Uncertainty Avoidance Index?
- The preference for risk versus structure.
- Measures the threat of ambiguity and unknown situations.
- Does a person embrace the unknown or does he or she become anxious concerning the unknown?
- Hostede says:
- Countries in which people have a strong uncertainty avoidance index tend to have a lot of laws and rules specifying correct behavior.
- As opposed to the countries with weak uncertainty avoidance behavior in which people only want rules when they are absolutely necessary.
- The world says:
- That uncertainty avoidance was defined as the tendency toward orderliness, consistency, structure and regulation.
- The study found that uncertainty avoidance may be related to societal, economic and organizational values such as: innovation, perception of risk, cash holdings and growth.
- Higher uncertainty avoidance values were found where there was: higher team orientation, human orientation, self-protective leadership and lower charismatic leadership values.
- High Uncertainty Avoidance Index: Japan and France
- Strategic context
- Everything is planned and rules
- Low uncertainty Avoidance Index: United States and Denmark
- Try new things
What is the Masculinity/Femininity Index?
- Being the best versus liking what you do.
- This index concerns how a society views assertiveness versus modesty.
- It is a relative construct rather than a biological distinction being made between countries.
- Hofstedesays that although they are derived from what is considered important in life to two gamblers, the country’s dimensional position and the equality of the genders in the workplace have no relationship.
- He says that what is important in life to the two genders is positioned as:
- Masculineincludes: earnings, recognition, advancement and challenge.
- Feminineincludes: manager, cooperation, living area and employment security.
- High Masculinity: Japan and United States
- Runs more flood between men
- Being the best
- Achievement, success and being the best are the most important factors
- Low masculinity = Femininity: France and Denmark
- France: best for real estate
- Denmark: best working conditions
- Doing what you like
- To take care of people
What are symbols?
Symbols may be verbal [= woorden (en/of geluiden)]and nonverbal (= lichaamstaal).
Give some examples why symbols are important:
- American Flag:
- Stands for liberty
- Stands for America
- Stands for the 50 states
- The color green:
- Stands for hope in some countries
- Stands for nature
- Stands for money
- Sometimes very helpful as background
- Chinese symbol for horse
- Tai Mahal (architecture)
- Gerber (logos)
- In Africa: because they say a baby logo on the products, they thought that there were baby bones inside. They take pictures literally.
Give some examples of mistakes with symbols:
- Toyota: MZ2, was wrong pronounced in France. They couldn’t say it.
- Numbers: E.g.: 4 is some countries for unlucky, they don’t want it in their phone numbers; goodluck/badluck
- Coca Cola: they translated their name in Japanese, but it sounds totally wrong.
|Equivalent to Japanese Spam||Liver Putty|
|Toilet Paper||My fanny brand|
|Ready to eat pancakes||Strawberry crap dessert|
|Antifreeze spray||Hot piss brand|
What are rituals?
Patterns of behavior and interactions that are learned and repeated.
Give some examples of rituals:
- Henna before marriage: futility and health; when you have a good portion and it stays longer on your arms than the men, the women gets a better life than an average person.
- Postcards: In Japan you must look at the postcards they are given to you. You must put them in a nice cardholder. You must give you postcard with both hands and make a little bending.
In china you only use both hands to give the postcard.
In the U.S. and Japan, all your functions stand on the postcard.
You give your postcard with the right hand, your use your left hand in the bathroom.
- First birthday: in some countries they are spending thousands and thousands of euros, dollars for the party. Because in history it was a wonder when children survived their first year and celebrated this then.
What are beliefs?
Beliefs are products of religion and experience.
Which difference are there?
Attention and perception differences.
- How do they do it?
- What are they doing?
Is there a line between religion and super natural?
No, there is no fine line when religion ends and super natural begins.
What are thought process?
A thought process in which ideas (words or images) suggest other ideas in a sequence. The way in which your mind works, or the process of thinking about something.
What is the Eastern and Western difference in thinking?
- Feel, relationships
- Where first `
- Individual parts
Which cultural changes were there in the world? Give some examples:
- 9/11: first, you could go with your family to the gate. But after 9/11, you only can go to the gate when you are the leaving person and the ID-security went up.
- Humanitarian suffering: tsunami, hurricanes, etc. The infrastructure needs some changes. For example, after the hurricane, the people took their work to their home, because it was unsafe to go to the office.
Is every product forced to do adaptations?
No, some are forced but others are adapted naturally.
Give some examples:
- Starbucks was forced to do adaptations in the Netherlands. We didn’t like to drink out of carton. So, for us, they made coffee cups we could buy and re-use.
- Adapted natural:
- Sushi in California. They don’t have California rolls in Japan, but they natural adapted that because the people liked it.
Similarities: An illusion
|It is nothing more than an illusion.|
Give an example why it is nothing more than an illusion:
- When you for are a McDonalds for example. You will go to the McDonalds for getting the American way of life experience. But it is just an illusion. The burgers are quiet the same, nut the experience isn’t. In Boston, the men will take the women on its first or second date to McDonalds. In Beijing, McDonalds would be considered as a snack. So, that’s already two different experiences. Also, the teacher spoke to a woman in the McDonalds and her experience was to try for the first time the modern way of life.
- A pen lay down on the streets. We pass by it, because it isn’t something special for us. In Africa, they will take it off the ground, because it would be defined as a gift from the gods.
- 45 minutes: some people find it rude to wait for 45 minutes, others find it quite normal.
- Puke: in Philippines it means book, in Hawaiian it is a dish
- English word American Equivalent
Let Rent (lease)
INTERNATIONAL MARKETING: CHAPTER 5: CULTURE, MANAGEMENT STYLE AND BUSINESS SYSTEMS
Business customs are they because of …
Origins and culture.
Which characteristics do you need to have when you are going to do business abroad?
- Open tolerance
Develop the ability: do they treat people as equal but with different thoughts.
- Ability to adjust to varying tempos
- Knowledge of the country
This is key. Where are you going to work, try not to use the SFR. You need to have the knowledge of your own country as well as the one abroad.
- Liking for others
- Ability to command respect
- Ability to integrate oneself into the environment
There is a case to made for nonadaptation
Russia, there was no place for adaptation. They didn’t want that the US, UK, and other countries come to their country. Russia just observe all the countries and took each best part of each country to Russia and let it fit in the Russia’s culture.
Cultural Imperatives, Elective and Exclusives
What are cultural imperatives?
Most recognize and accommodate to be successful. You must adapt them to do business.
Give an example of cultural imperatives:
- In Japan and Colombia white means morning, yellow in Malaysia is especially used for the royalty.
- Passing business card: Japan: you do not enforce to give things.
What are cultural electives?
Aliens may wish to conform to or participate.
Give an example of cultural electives:
- Morning greetings
- The horse in Japan (women), men driven, risk of working with new people
She studied the work relations of the country: credibility, group harmony, communication and leaders were very important. She knows they appreciate high contacts, they were polycentric. So, she said that the staff would greet her when she walked in and she would get the center seat. When she walks in, the staff stand up and everyone is sitting back at the same time.
What are cultural exclusives?
Customs or behavior patterns reserved for the locals
Give an example for cultural exclusive:
- Japan: tattoos aren’t allowed in the spa.
Management styles around the world
What are the cross-cultural differences that influence management styles?
- Authority and Decision Making
- Management Objectives and Aspirations
- Communication styles
- Formality and Tempo
- Negotiations Emphasis
Where are the management styles around the world coming from?
Culture -> origins
Communication styles: Field of dependency
Explain the field of dependency:
Hall places 11 cultures along a high-context/low-context continuum. Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication, whereas the low-context culture depends more on explicit, verbally expressed communications. It measures how much a society depends on something other than verbal communication.
What will people ask with high context implicit?
- What is better?
- Give me?
- Not direct speaking
You don’t have to ………
What will people ask with low context explicit?
- Say what you mean. “Don’t beat around the bush and get to the point”.
- Straight to the point
- Shut the door!
|There is no comprehension, it is just a way of culture life with high or low communication. And this the high and low communication tool.|
Communication styles: M-time versus P-time
What is the difference between monochronic and polychronic?
- M-time or monochronic
M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians. These Western cultures tend to concentrate on one thing at a time. They divide time into small units and are concerned with promptness. M-time is used in a linearway, and it is experienced as almost tangible, in that one saves time, wastes time, bides time, spends time, and loses time. Most low-context cultures operate on M-time. They are scheduled,mentalize.
Focus on 1 thing at a time. They don’t like to alter. The natural classification system for ordering time in their life. People believed that they were born with it. But this isn’t true -> origins.
Industrial period: bells and horologes.
- P-time or polychronic
P-time, or polychronic time, is more dominant in high-context cultures, where the completion of a human transaction is emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence of many things and by “a great involvement with people.” P-time allows for relationships to buildand context to be absorbed as parts of high-context cultures. It is higher based on relations. You have priority over some.
E.g.: Mexico: talking to people and even drink a coffee instead going to the meeting
Some societies are both, like Japan, explain:
Japan is very competitive in business and technology. Here they are monochronic. But in the business and personal life they are polychronic.
Formality & Tempo
|The breezy informality and haste that seem to characterize American business relationships appear to be American exclusives that businesspeople from other countries not only fail to share but also fail to appreciate. A German executive commented that he was taken aback when employees of his Indiana client called him by his first name. He noted, “In Germany you don’t do that until you know someone for 10 years—and never if you are at a lower rank.” This apparent informality, however, does not indicate a lack of commitment to the job. Comparing British and American business managers, an English executive commented about the American manager’s compelling involvement in business: “At a cocktail party or a dinner, the American is still on duty.”
Even though Northern Europeans seem to have picked up some American attitudes in recent years, do not count on them being “Americanized.” As one writer says, “While using first names in business encounters is regarded as an American vice in many countries, nowhere is it found more offensive than in France,” where formality still reigns. Those who work side by side for years still address one another with formal pronouns. France is higher on Hofstede’s Power Distance Index (PDI) than the United States, and such differences can lead to cultural misunderstandings. For example, the formalities of French business practices as opposed to Americans’ casual manners are symbols of the French need to show rank and Americans’ tendency to downplay it. Thus, the French are dubbed snobbish by Americans, while the French consider Americans crude and unsophisticated.
Haste and impatience are probably the most common mistakes of North Americans attempting to trade in the Middle East. Most Arabs do not like to embark on serious business discussions until after two or three opportunities to meet the individual they are dealing with; negotiations are likely to be prolonged. Arabs may make rapid decisions once they are prepared to do so, but they do not like to be rushed, and they do not like deadlines. The managing partner of the Kuwait office of KPMG Peat Marwick says of the “fly-in visit” approach of many American businesspeople, “What in the West might be regarded as dynamic activity—the ‘I’ve only got a day here’ approach—may well be regarded here as merely rude.”
Marketers who expect maximum success have to deal with foreign executives in ways that are acceptable to the foreigner. Latin Americans depend greatly on friendships but establish these friendships only in the South American way: slowly, over a considerable period of time. A typical Latin American is highly formal until a genuine relationship of respect and friendship is established. Even then, the Latin American is slow to get down to business and will not be pushed. In keeping with the culture, manana (tomorrow) is good enough. How people perceive time helps explain some of the differences between U.S. managers and those from other cultures.
Gender Bias (= vooroordeel) in International Business
What are the gender bias in international business?
- The gender bias against women managers exists in some countries
E.g.: United States
- Women are not accepted in upper management roles in Asian, Middle Eastern and Latin America
- Gender bias poses significant challenges in cross-cultural negotiations.
|Japan there is a work aging, so now the women are increasing the DMP. The young people will close the gender group, because the young women believe that they are widened different and when they have children, that they still would work or after they got children.|
What is business ethics?
Business ethics is complex in the international marketplace because value judgements differ widely among culturally diverse groups.
- Corruption varying defined from culture to culture
- Existence of different levels of corruption
- The Foreign corrupt Practices Act
1977: Imprisonment for bribery (= omkoperij)
What is bribery (= omkoperij)?
Voluntarily offered payment by someone seeking unlawful advantage.
What is extortion (= afpersing, chantage)?
Payments are extracted under duress by someone in authority from a person seeking only what they are lawfully entitled. It is forced.
E.g.: contractor -> country -> give you a house, give me that otherwise …
What can happen with the 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. You can be punished by law if you pay them to do bribery or extortion.
What is lubrication (= geld smeren)?
It is the same as griecing. A small sum of cash, a gift or service that facilitates or expedites the normal, lawful performance of a duty that is ethical or legal.
Give an example of lubrication:
You pay the ship to take you stuff off faster than normal. So you will pay additional fees.
What are the organizations that take check everything?
1970: Investigations by the U.S. Securities and Exchange Commission in the mid-1970s revealed that over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties.
Regulation with the same purpose: economic growth and social growth. They have a forum. Higher stronger countries express and discuss the policies on a global level. They will pass the regulation and control corruption and try to minimize it.
These are the watch dogs and they are led by non-government beating corruption. They do a huge survey. Transparency International is the global civil society organization leading the fight against corruption. They have The global perceptions of corruption survey.
What is the Corruption Perceptions Index?
Till 2012 they scanned it from 0 – 10. When you have a high score, you are less corrupt, when you have a low score you are corrupt as hell. Now they measure it till 100.
How can the become the Corruption Perceptions Index?
They ask/interview business in and outside the countries.
What is the bribe payers index?
Some of the world’s richest countries turn a blind eye to corruption. When their companies use bribes to win business abroad and are allowed to get away with it, governments are effectively complicit in exporting corruption.
Our Bribe Payers Index ranks the world’s wealthiest countries by the propensity of their firms to bribe abroad and looks at which industrial sectors are the worst offenders. The index is based on the views of thousands of senior business executives from developed and developing countries.
First countries; Top export where law is strong involved.
INTERNATIONAL MARKETING: CHAPTER 6: THE POLITICAL ENVIRONMENT: A CRITICAL CONCERN
The Sovereignty of Nations
What is a sovereign state in the context of international law?
- Is independent and free from all external control
- Enjoys full legal equality with other states
- Governs its own territory
- Selects its own political, economic, and social systems
- Has the power to enter into agreements with other nations
|Soevereiniteit = hoogste en onafhankelijke macht van een politiek lichaam om wetten te maken en toe te passen binnen zijn eigen grenzen en om international betrekkingen te onderhouden.|
Where does sovereignty refers to?
To the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members.
|A state sets requirements for citizenship, defines geographical boundaries, and controls trade and the movement of people and goods across its borders.|
Is a citizen subject to the state’s law even when beyond national borders?
|Nations can and do abridge specific aspects of their sovereign rights to coexist with other nations. (= Naties kunnen en zullen bepaalde aspecten van hun soevereine rechten verslaan om samen te leven met andere naties.)|
Give some examples of nations voluntarily agreeing to give op some of their sovereign rights to participate with member nations for a common, mutually beneficial goal:
- The European Union
- North American Free Trade Agreement (NAFTA)
- North Atlantic Treaty Organization (NATO)
- World Trade Organization (WTO)
What will happen to countries that given of some of their sovereignty?
Countries that agree to relinquish some of their sovereignty often are subject to a nagging fear that too much has been given away.
E.g.: Greece with the austerity (= bezuinigingsmaatregelen)
E.g.: The WTO is considered by some as the biggest threat so far to national sovereignty. . Adherence to the WTO inevitably means the loss of some degree of national sovereignty, because the member nations have pledged to abide by international covenants and arbitration procedures that can override national laws and have far-reaching ramifications for citizens. (= De WTO wordt door sommigen echter beschouwd als de grootste bedreiging tot nu toe voor de nationale soevereiniteit. Het naleven van de WTO betekent onvermijdelijk dat een zekere mate van nationale soevereiniteit verloren gaat, omdat de lidstaten zich verbonden hebben zich te houden aan internationale convenanten en arbitrageprocedures die de nationale wetten kunnen overschrijven en verregaande consequenties voor de burgers hebben.)
Political risks: Confiscation, expropriation and domestication
What is confiscation?
The most severe political risk is confiscation, that is, the seizing of a company’s assets without payment. Confiscation was most prevalent in the 1950s and 1960s when many underdeveloped countries saw confiscation, albeit ineffective, as a means of economic growth. (= Het grootste politieke risico is confiscatie, dat wil zeggen, beslag leggen op de activa van een bedrijf zonder betaling. Confiscatie kwam het meest voor in de jaren vijftig en zestig, toen veel onderontwikkelde landen confiscatie zagen, hoewel ineffectief, als middel tot economische groei.)
|Confiscatie = Confiscatie is een algemene term voor een gerechtelijke inbeslagneming. De gemene deler van deze rechtsfiguren is dat de benadeelde als gevolg van een rechterlijke beslissing de eigendom over bepaalde goederen of delen daarvan verliest aan de staat.Confiscatie wordt toegepast op goederen waarmee een strafbaar feit is begaan.|
Give an example of confiscation:
Two notable confiscations of U.S. property occurred when Fidel Castro became the leader in Cuba and later when the Shah of Iran was overthrown.
What is expropriation?
It is less drastic, but still severe, is expropriation, where the government seizes an investment but makes some reimbursement for the assets. (= Het is minder ingrijpend, maar nog steeds ernstig, is onteigening, waarbij de overheid een belegging in beslag neemt maar enige vergoeding voor de activa maakt.)
|Onteigening = Onteigening houdt in dat eigendom, meestal onroerend goed, door de overheid in bezit wordt genomen.|
Give an example of expropriation:
In 2008 the Chavez regime in Venezuela expropriated Mexico’s CEMEX operations, paying a negotiated price. Often the expropriated investment is nationalized; that is, it becomes a government-run entity.
What is domestication?
It occurs when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees that mandate local ownership and greater national involvement in a company’s management. The ultimate goal of domestication is to force foreign investors to share more of the ownership, management, and profits with nationals than was the case before domestication. (= Het komt voor wanneer ontvangende landen geleidelijk de overdracht van buitenlandse investeringen naar nationale controle en eigendom veroorzaken door middel van een reeks regeringsdecreten die het lokale eigendom en een grotere nationale betrokkenheid bij het management van een bedrijf verplichten. Het uiteindelijke doel van domesticatie is buitenlandse investeerders te dwingen om meer van de eigendom, het management en de winst te delen met onderdanen dan het geval was vóór domesticatie.)
INTERNATIONAL MARKETING: CHAPTER 7: THE INTERNATIONAL LEGAL ENVIRONMENT: PLAYING BY THE RULES
Legal Systems of the world
Which legal systems do we have in the world?
- Common Law
- Civil/Code Law
- Islamic Law
- Social Law (1970: based in Russia)
|Even though a country’s laws may be based on the doctrine of one of the four legal systems, its individual interpretation may vary significantly.|
Which forms of law do we have?
|Nobody uses Common Law and Code Law in their purest form.|
Give an example how you can measure of the importance of the legal system in each country?
Attorneys (= advocaten)per capita
What are the bases of common law/
- The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings.
- Based on a legal tradition of precedent
Where can you find Common Law?
- United States
50 States: 49 states use common law, Louisiana uses Civil Law.
|It is about the ruled before but when they have some cases that didn’t happen before, the judge can make their own rules, but afterward it can be overruled.|
How is the protection of intellectual property in Common Law?
Ownership is established by use. The same agreement may be binding so long as proof of the agreement can be established.
Code Law/Civil Law
What is Code Law?
- Code Law/Civil Law is based on an all-inclusive system of written rules (codes) of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal.
- Judges are charged with “matching” specific laws to situations.
Where can you find the Code Law/Civil Law?
- Latin American countries
How is the protection of intellectual property in Civil Law?
Ownership is determined by registration. In some code-law countries, certain agreements may not be enforceable unless properly notarized or registered
Act of God – force majeure (pay attention!)
What is Act of God?
An event that directly and exclusively results from the occurrence of natural causes that could not have been prevented by the exercise of foresight or caution; an inevitable accident. (= Een gebeurtenis die direct en uitsluitend het gevolg is van het optreden van natuurlijke oorzaken die niet voorkomen hadden kunnen worden door vooruitziendheid of voorzichtigheid; een onvermijdelijk ongeluk.)There are different interpretation, menaing under different legal systems.
What means the act of God in Common Law?
Under Common Law the Act of God doesn’t cover everything. It just cover the natural disasters (e.g.: floods, lightning, earthquakes, and similar events are generally considered acts of God).
What means the act of God in Civil law?
- Under Civil Law the Acts of God are not limited solely to acts of nature but are extended to include “unavoidable interference with performance, whether resulting from forces of nature or unforeseeable human acts,” including such things as labor strikes and riots. (= onder de civil law handelingen van God zijn niet alleen beperkt tot daden van de natuur, maar worden uitgebreid met “onvermijdelijke inmenging in de uitvoering, hetzij als gevolg van natuurkrachten of onvoorzienbare menselijke handelingen”, inclusief zaken als arbeidsstakingen en rellen).
- Disaster, rights and strikes (= stakingen)
Why is the act of God important?
- For the havoc and damage they wreak (= voor de ravage en de schade die zij aanrichten)
- Because often contracts state that “acts of God” are an excuse for delay or failure to fulfill a commitment or to complete a construction project. (= omdat vaak contracten aangeven dat “daden van God” een excuus zijn voor vertraging of het niet nakomen van een verbintenis of voor het voltooien van een bouwproject.)
A contract was entered into to deliver a specific quantity of cloth. In one case, before the seller could make delivery, an earthquake caused the destruction of the cloth and compliance was then impossible. Were the parties in this case absolved of their obligations under the contract because of the impossibility of delivery?
- The answer depends on the system of law invoked.
- The earthquake would be considered an act of God under both common and code law, and impossibility of performance would excuse compliance under the contract.
A contract was entered into to deliver a specific quantity of cloth. Pipes in the sprinkler system where the material was stored froze and broke, spilling water on the cloth and destroying it. Were the parties in this case absolved of their obligations under the contract because of the impossibility of delivery?
- The answer depends on the system of law invoked.
- Common Law:
Courts in common-law countries would probably rule that the bursting of the water pipes did not constitute an act of God if it happened in a climate where freezing could be expected. Therefore, impossibility of delivery would not necessarily excuse compliance with the provisions of the contract. (= rechtbanken in common law-landen zouden waarschijnlijk beslissen dat het uiteenspatten van de waterleidingen geen daad van God was als het gebeurde in een klimaat waarin bevriezing te verwachten viel. Onmogelijkheid van levering zou daarom niet noodzakelijkerwijs een excuus vormen voor de naleving van de bepalingen van het contract.)
- Code Law:
The scope of impossibility of performance is extended considerably, the destruction might very well be ruled an act of God, and thus, release from compliance with the contract could be obtained. (= De reikwijdte van de onmogelijkheid van uitvoering wordt aanzienlijk uitgebreid, de vernietiging kan heel goed als een daad van God worden geregeerd, en dus kan vrijstelling van naleving van het contract worden verkregen.)
Where can you find Islamic Law?
- Saudi Arabia
- Other Islamic stares
Give another word for Islamic Law:
What is Shari’ah law?
- The basis of this law is the interpretation of the Koran. It encompasses religious duties and obligations, as well as the secular aspect of law regulating human acts. Broadly speaking, Islamic law defines a complete system that prescribes specific patterns of social and economic behavior for all individuals. It includes issues such as property rights, economic decision making, and types of economic freedom. The overriding objective of the Islamic system is social justice.
- Islamic law contains both legal and moral mandates.
What is the riba?
It is one unique aspect of Islamic law. It is the prohibition against the payment of interest. So, people are prohibited to pay interest (= intrest).Prohibition against the payment of interest affects banking and business practices.
Give an example that is very difficult to deal with the riba when you do business:
- Certain acceptable practices adhere to Islamic law and permit the transaction of business. Mortgages for property are difficult because payment of interest is forbidden under Islamic law. Buyers of real property have to use a financier, who buys the property and then sells it to them in return for repayments of the capital. Instead of charging interest, a financier either sells the property at a higher price or sells it at the same price and takes additional payments to cover what would have been interest. (= Bepaalde aanvaardbare praktijken houden zich aan de islamitische wetgeving en staan de transactie van het bedrijfsleven toe. Hypotheken voor onroerend goed zijn moeilijk omdat betaling van rente volgens de islamitische wet verboden is. Kopers van onroerend goed moeten een financier gebruiken, die het onroerend goed koopt en het vervolgens aan hen verkoopt in ruil voor terugbetalingen van het kapitaal. In plaats van rente in rekening te brengen, verkoopt een financier het onroerend goed tegen een hogere prijs of verkoopt het voor dezelfde prijs en neemt het extra betalingen om te dekken wat rente zou zijn geweest.)
- Markup or cost-plus sale (murabaha)
- Leasing (ijara)
Which kinds of Islamic law do we have?
What means Qur’an?
Koran, these are the worlds of their prophet Allah.
What is the Sunnah?
- Sunnah is the body of traditional social and legal custom and practice of the Islamic community, based on the verbally transmitted record of the teachings, deeds and sayings, silent permissions (or disapprovals) of the Islamic prophet Muhammad, as well as various reports about Muhammad’s companions.
- The sunnah is also a path, a way, a manner of life. All the traditions and practices of the Islamic prophet that have become models to be followed by Muslims.
What is the Figh?
Figh is the jurisprudence of the Sharia law. It means literally to have good insights in something, to know it and to understand it so you know what it means. Figh is about the Islamic rituals as well as the Islamic law. Inside different law schools, madhhabs, can have different ideas about the same thing. An Islamic law user or jurist is a figh. (= Figh of plichtenleer wordt binnen de islam gezien als de jurisprudentie van de sharia. Letterlijk betekent dit het goede inzicht in iets hebben, het weten en het begrijpen van wat iets betekent. Fikh gaat zowel over islamistische rituelen als over het islamitisch recht. Binnen de verschillende rechtsscholen, madhhabs, kunnen verschillende ideeën over hetzelfde punt bestaan. Een islamitisch rechtsgeleerde of jurisk is een fakih.)
What is the difference between Common & Civil Law in comparison of Islamic Law?
- Common & Civil Law:
Men should create law/
- Islamic Law:
Natural law created by Allah. It should not be changed. It is legal and mandates.
What is socialist law?
- The government is always right.
- It is actually Civil Law but modified. The government is in charge and are in power.
Where can I find Socialist Law?
- North Korea
What can you do when you are in conflict with the government?
- Step out
|China and Russia differ in that each has taken a different direction in its political economic growth. Russia is moving toward a democratic system. China is attempting to activate a private sector within a multicomponent, or mixed, economy in a socialist legal framework; that is, it tries to “perform its functions according to law and contribute to the development of socialist democracy and political civilization in China.”|
China has implemented hundreds of new laws and regulations governing trade, but what?
- The process is hampered by vaguely written laws
- The lack of implementation mechanisms for the new laws
- An ineffective framework for dispute resolution and enforcement.
Russia’s experience has been similar to China’s, how?
- In that vaguely worded laws have been passed without mechanisms for implementation.
- The situation in Russia is often described as chaotic because of the laws’ lack of precision.
Jurisdiction in International Legal Disputes (= juridische geschillen)
Legal disputes can arise in three situations, which?
- Between governments -> Cour Internationale de Justice/International Court of Justice: jurisdiction
- Between a company and a government
- Between two companies
What does jurisdiction do?
Oversee the law.
Which courts cover the jurisdiction between governments?
- World Court at The Hague
The World Court can adjudicate (= berechten) disputes between governments
- The International Court of Justice, the principal judicial organ of the United Nations
Where will they handle the disputes between a company and a government and between two companies?
The two situations must be handled in the courts of the country of one of the parties involved or through arbitration.
The foreign marketer must do?
Look to the legal system of each country involved: he laws of the home country, the laws of the countries within which business is conducted, or both.
|When international commercial disputes must be settled under the laws of one of the countries concerned, the paramount question in a dispute is: Which law governs?|
Jurisdiction is generally determined in one of three ways, which?
- On the basis of jurisdictional clauses included in contracts = jurisdictional clause: -> make it all happen, both sides agreed, it is imperative (= gebiedende wijs)!
- On the basis of where a contract was entered into
- On the basis of where the provisions of the contract were performed.
That the parties hereby agree that the agreement is made in Oregon, USA, and that any questions regarding this agreement shall be governed by the law of the state of Oregon.
International dispute resolution
Which forms of international dispute resolution are there?
- Conciliation (= bemiddeling)
Most popular, most private and faster than litigation
- Litigation (= rechtsgeding)
International dispute resolution: Conciliation
What is conciliation?
A nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences.
What is the function of the mediator?
The function of the mediator is to carefully listen to each party and to explore, clarify, and discuss the various practical options and possibilities for a solution with the intent that the parties will agree on a solution.
What are the big differences between conciliation and arbitration and litigation:
- Conciliation sessions are private
- All conferences between parties
- The mediator are confidential
- The statements made by the parties may not be disclosed or used as evidence in any subsequent litigation or arbitration.
International dispute resolution: Arbitration
What is arbitration?
Selection of a disinterested and informed party to referee and make a judgement that is enforceable under law. (= Selectie van een ongeïnteresseerde en geïnformeerde partij om te arbitreren en een oordeel te vellen dat wettelijk afdwingbaar is.)
|The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor|
Arbitration has most of the time, also arbitration groups that help to facilitate the resolution of commercial disputes, how?
These groups have formal rules for the process and experienced arbitrators to assist. In most countries, decisions reached in formal arbitration are enforceable under the law.
The popularity of arbitration has led to a proliferation of arbitral centers established by countries, organizations, and institutions. All have adopted standardized rules and procedures to administer cases, and each has its strengths and weaknesses. (= Deze groepen hebben formele regels voor het proces en ervaren arbiters om te helpen. In de meeste landen zijn beslissingen die worden genomen in formele arbitrage uitvoerbaar volgens de wet.De populariteit van arbitrage heeft geleid tot een wildgroei aan arbitragecentra die zijn gevestigd door landen, organisaties en instellingen. Ze hebben allemaal gestandaardiseerde regels en procedures aangenomen voor het beheer van zaken, en elk heeft zijn sterke en zwakke punten.)
How does the International Court of Arbitration work?
The procedures used by formal arbitration organizations are similar. Arbitration under the rules of the International Chamber of Commerce (ICC) affords an excellent example of how most organizations operate. When an initial request for arbitration is received, the chamber first attempts conciliation between the disputants. If this fails, the process of arbitration is started. The plaintiff and the defendant select one person each fromamong acceptable arbitrators to defend their case, and the ICC Court of Arbitration appoints a third member, generally chosen from a list of distinguished lawyers, jurists, and professors. (= De procedures die worden gebruikt door formele arbitrageorganisaties zijn vergelijkbaar. Arbitrage volgens de regels van de Internationale Kamer van Koophandel (ICC) biedt een uitstekend voorbeeld van hoe de meeste organisaties opereren. Wanneer een eerste verzoek om arbitrage wordt ontvangen, probeert de kamer eerst bemiddeling tussen de disputanten. Als dit niet lukt, wordt het proces van arbitrage gestart. De aanklager en de gedaagde selecteren elk een persoon uit acceptabele scheidsrechters om hun zaak te verdedigen, en het ICC Hof van Arbitrage benoemt een derde lid, meestal gekozen uit een lijst van vooraanstaande advocaten, juristen en professoren.)
|“All disputes arising out of or in connection with the present contract shall be finally settles under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.|
Contracts and other legal documents should include clauses specifying the use of arbitration to settle disputes, which?
- What language we are going to use in court
- Where we are going to be in court
- Who will handle and how you want it
- Jurisdiction: who’s law are we applying
Arbitration clauses require agreement on two counts:
- The parties agree to arbitrate in the case of a dispute according to the rules and procedures of some arbitration tribunal
- They agree to abide by the awards resulting from the arbitration.
International dispute resolution: Litigation
What is litigation?
Litigation deals with filing a lawsuit to settle commercial disputes.
Do you have to use it?
No, you have to avoid it, it is very expensive, in some countries, it is not oral but all written.
Case 2-6: When international buyers and sellers disagree
|No matter what line of business you’re in, you can’t escape sex. That may have been one conclusion drawn by an American exporter of meat products after a dispute with a German customer over a shipments of pork livers. Here’s how the disagreement came about.
The American exporter was contracted to ship 30 000 lbs. of freshly frozen US pork livers, customary merchantable quality, first rate brands. The shipment had been prepared to meet the exacting standards of the American market, so the exporter expected the transaction to be completed without any problem. But when the livers arrived in Germany, the purchaser raised an objection; “We ordered pork livers of customary merchantable quality – what you sent us consisted of 40 percent sow livers.
Who cares about the sex of the pig the liver came from? The exporter asked.
We do, the German replied. Here in Germany we don’t pass off spongy sow livers as the firmer of male pigs. This shipment wasn’t merchantable at the price we expected to charge. The only way we were able to dispose of the meat without a total loss was to reduce the price. You owe us a price allowance of $1 000.
The American refused to reduce the price. The determined resistance may have been partly in reaction to the implied insult to the taste of the American consumer. If pork livers, whatever the sex of the animal, are palatable to Americans, they ought to be good enough for anyone, the American thought.
It looked as if the buyer and seller could never agree on eating habits.
What is the true issue here?
- Ethnocentrism: who cares if it is female or men pigs, we eat it, so are you.
Can they go to the WTO?
No, the WTO only covers the dispute of two governments.
What was a smart move?
Arbitration clause. -> customer merchandised quality
|– Arbitration clause
– Jurisdiction clause
Protection of Intellectual Property Rights: A special problem
Protection of Intellectual Property Rights for which things?
Name/mark that identifies and differentiate your company.
Exclusive rights, make, use, sells to their inventions .
A legal definition that are written, performed or made.
- Intangible and most important
What is brand equity?
Refers to the marketing and financial value associated with a brand’s marketing strength.
In which forms can we achieve brand equity?
- Brand name awareness
- Brand loyalty
What is Brand name awareness?
Reliable and acceptable quality
What is brand loyalty?
Visibility and reassurance to potential customers.
E.g.: they are brand loyal because you deliver what you promised.
What is Perceived brand quality?
Perceived quality” is your customers’ view of the quality of a product or service both in terms of what they expect and also in comparison with how they perceive the quality of competing offerings. That means “perceived quality is defined as a measure of belief”.
What is brand associations?
Brand association is anything which is deep seated in customer’s mind about the brand.
Trademark and registration
What is a trademark?
A legal designation indicating that the owner has exclusive rights to the use of the brand or part of the brand.
What do you have to do with a trademark?
Go to the United States Patent and Trademark Office and claim that I am the first user of it.
What is registration?
Registration and legal ownership in one country does not necessary mean ownership in another. When you have registration, you will have a greater support at court. It is common law without question.
Prior use versus registration
What do they use in common law countries?
In the United States, a common-law country, ownership of IP rights is established by prior use, whoever can establish first use is typically considered the rightful owner.
What do they use in code law countries?
In many code-law countries, however, ownership is established by registration rather than by prior use—the first to register a trademark or other property right is considered the rightful owner.
Give some examples of companies who had difficulties with the trademark and registration:
Starbucks in Russia
Who is Zukav?
He was first a car alarm salesmen and then he became a lawyer. He became rich in looking at holes in law. He just took the trademarks of other business.
World Trade Organization
What is WIPO?
World Intellectual Property Organization. It is located in Den Hague. There main purpose is to help, support and stimulate economies.
Ik weet niet meer hoe dit noemt.
E.g.: You only can say it is champagne, when the drink was made in the Champagne region in France.
What is piracy?
- It is copywriting.
- It directly inflects the revenues.
- It also inflects the tax for the government (they will be down).
- You could harm the people
- Equity (the brand loses his status)
What is counterfeiting (= namaak)?
It is a brand pattern.
US Laws Apply in Host Countries
What does the FCPA do?
Antiboycott law, it will follow you everywhere. It is extra territoriality of the law.
What is the Antitrust Division?
The United States Department of Justice Antitrust Division is a law enforcement agency responsible for enforcing the antitrust laws of the United States. It shares jurisdiction over civil antitrust cases with the Federal Trade Commission(FTC) and often works jointly with the FTC to provide regulatory guidance to businesses. However, the Antitrust Division also has the power to file criminal cases against willful violators of the antitrust laws. The Antitrust Division also works with competition regulators in other countries.
What is the Antiboycott law?
Federal anti-boycott laws were adopted to encourage U.S. companies to refuse to participate in foreign boycotts not supported by the United States. They prevent U.S. companies from being used to implement the foreign policies of other nations that conflict with U.S. policy. The provisions were first implemented in response to the Arab League Boycott of Israel, but anti-boycott restrictions can apply to other, non-U.S.–sanctioned boycotts around the world.
Which kinds of acts do we have?
- Sherman antitrust act
The Sherman Act broadly prohibits (1) anticompetitive agreements and (2) unilateral conduct that monopolizes or attempts to monopolize the relevant market.
- Clayton act
The Clayton Act sought to prevent anticompetitive practices in their incipiency.
That regime started with the Sherman Antitrust Act of 1890, the first Federal law outlawing practices considered harmful to consumers (monopolies, cartels, and trusts). The Clayton Act specified particular prohibited conduct, the three-level enforcement scheme, the exemptions, and the remedial measures. Like the Sherman Act, much of the substance of the Clayton Act has been developed and animated by the U.S. courts, particularly the Supreme Court.
- Robinson-Patman act
The Robinson–Patman Act is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination. It was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products. The law grew out of practices in which chain stores were allowed to purchase goods at lower prices than other retailers. An amendment to the Clayton Antitrust Act, it prevented unfair price discrimination for the first time, by requiring that the seller offer the same price terms to customers at a given level of trade. The Act provided for criminal penalties, but contained a specific exemption for “cooperative associations“.
- Trying to prevent companies from monopolize their business.
|E.g.: You had the Beers and they were known for bad labor. They wanted to come to the United States, but that already knew that they weren’t allowed to practice it here. They came here under the scope of a different name. The United States let them but their expensive buildings and then came after them with the Sherman act.|
Extraterritoriality of US Laws
What is Trading with the enemy act?
The Trading with the Enemy Act is a United States federal law to restrict trade with countries hostile to the United States. The law gives the President the power to oversee or restrict any and all trade between the United States and its enemies in times of war.
WAL-MART STORES, INC. IN NIGERIA AND ANGOLA
When Wal-Mart Stores, Inc. want to expand their market to Nigeria and Angola, they have to keep the political and legal situations in mind. In the United States, they only had to deal with Common Law.
When Wal-Mart Stores, Inc. wants to expand to Nigeria, they have to keep in mind that in different parts of Nigeria have different types of Law (they have English Law, Common Law, Customary Law and Islamic Law) and the governmental form is Federal Republic. When they want to place a store in the Northern part of Nigeria, they have to deal with the Islamic Law, which means for example that they can’t get or is difficult to get mortgages for property because payment of interest is forbidden under Islamic Law (namely the Riba).
In Angola, you have to deal with a Civil legal system that is based on the Portuguese Civil Law and the governmental form is a dictatorship. When Wal-Mart Stores, Inc. wants to have its own Telecom, they have to keep the Law in mind. In Angola, it is now obligated for new investments to work with local partnerships when they are in the sectors of power & water, hotels & tourism, transport & logistics, civil construction, telecoms & IT and media. Because Wal-Mart Stores, Inc. has its own telecom system, they have to deal with this law, which means that the local partner must hold at least 35% of the share capital and must be active in the management of the company [Law 14/15 of 11 August 2015, New Private Investment Law].
Both countries have difficulties in their law system. Wal-Mart Stores, Inc. needs to find some good lawyers who has a good understanding on the legal levels of these countries to implement Wal-Mart Stores, Inc. as best they can under legal circumstances.
When they are going abroad and working with host country partners and distributors, be careful, place a jurisdictional clause in your contract and take care that everything is written down.
The political and legal situations aren’t the only uncontrollable variable that Wal-Mart Stores, Inc. has to keep in mind, they also have to look at the market and the local decisions makers itself. So, they have to look at their competitors, geography and infrastructure, distribution level as well as the cultural forces as the level of technology.
As for the competitive forces in Nigeria, they have to look at the SWOT of their competitive brands as well as their own SWOT-analysis. The competitors of Wal-Mart Stores, Inc. in Nigeria will be SPAR, Bimta Supermarkets, Best Choice Supermarket and there are many more as even the little local stores but also technology stores, furniture stores, etc. The strength that Wal-Mart Stores, Inc. has is that they don’t only sell groceries, but also furniture, technology, etc. but with market research they will find out if the Nigerian market is ready for such kind of a store.
In Angola, the competitors for doing groceries are Intermarket, Bompreço, Continente, Kero, Maxi, Megamart, Nosso Super Supermarkets, OK, Shoprite and Usave. As well as in Nigeria, you have to keep the local stores, the furniture stores, technology stores as well in mind for your competitive analysis. Even restaurants can be competitors, because Wal-Mart, Inc. resolves the same problem. Wal-Mart, Inc. strength is that he can overpower the other supermarkets because of its economies of scale and opportunity to start price wars with other supermarkets, even Shoprite, that is known for the cheapest supermarket in Angola.
Geography is also important. Nigeria is an opportunity for Wal-Mart Stores, Inc. because it has the largest population of whole Africa. The climate in Nigeria is warm desert climate, warm semi-arid desert climate, monsoon climate and tropical savannah climate. Wal-Mart Stores, Inc. can respond to this with offering the right products for each climate. Wal-Mart Stores, Inc. can sell cheap products that protects people of for the sun as even use air-conditioning in their stores. Because of Nigeria’s location, they even can import their product by using ships (airplane would be expensive). Less than 50% of the Nigerians live in rural places. Most people live in urban cities like Lagos (the capital), Kano and Calabar.
Angola has four principle regions. They have an arid coastal lowland, hills & mountains that rise inland, the high plateau and rain forest. This also can create different opportunities for Wal-Mart Stores, Inc. They can offer different types of clothes that people can wear over the different kinds of regions. Also, in Angola, they can import their products with the cheapest transport: ships.
The economy aspect is also important when Wal-Mart Stores, Inc. wants to know the market better. In Nigeria, the economy in emerging. It is primarily based on oil, but there is only one part of the population that profit about that. The living conditions are worse and every year almost 100 000 children die because of diarrhea, 112 million people don’t have access to sanitary, 63.2 million people can’t drink clean water. Most of the people live in slums and work more than 17 hours a day. The minimum wages are 24 000 NGN a month, that means 65.98301 USD or 56.86713 EUR. The strength of Wal-Mart Stores, Inc. is that they can offer cheap products and the opportunity for Wal-Mart Stores, Inc. will be to offer everyone clean and healthy water for an affordable price.
Angola is known as one of the poorest countries of whole Africa. According to history, there business was the coffee-industry, but now it is more gold, copper, iron and zinc. Because of their bad geography conditions, they don’t have a lot of places for agriculture. That is why most of the food needs to be imported from all places around the world. Wal-Mart Stores, Inc. can satisfy the people in Angola through their cheap products. Why does the products need to be cheap? The minimum wage a month in Angola is 15 003 AOA, that means 42,79 EUR or 49,66 USD.
The distribution is also important, when you want to expand your brand to another country. In Nigeria, the infrastructure is improving. They have 5 international airports: Martala Mohammed International Airport (Lagos), Nnamdi Azikiwe International Airport (Abuja), Mallam Aminu Kano International Airport (Kano), Akanu Ibiam International Airport (Enugu) and Port Harcourt International Airport (Rivers). When doing business abroad, the airplane transport is the most expensive one. For reducing the prices, Wal-Mart Stores, Inc. would better import there supplies with shipment. The shipment system in Nigeria is good. In Nigeria, they have Tin can Island port, Rivers port, Onne port, Delta port and Calabar port. They are currently ranked as 7thin West Africa in terms of “Quality of Port Infrastructure”. Nigeria also has a train system, the Nigerian Railway Corporation, where Wal-Mart Stores, Inc. could transport their supplies to the end of Nguru, Jos, Maidugur, Kaura Namoda, Kaduna and Abuja.
In Angola, they have a poor infrastructure. Transport over land is long, expensive and difficult. The rail system isn’t good at all. Angola has five ports: Luanda, Lobito, Namibe, Cabinda and Soyo and three international airports: 4 de Fevereiro International Airport (Luanda), Makanka International Airport (Lubango) and Catumbela International Airport (Benguela). Wal-Mart Stores, Inc. would better use the shipment, because it is cheaper to ship than with an airplane. The challenge for Wal-Mart Stores, Inc. would be the poor road quality and the cumbersome customs clearance procedures, limited storage in trucks and the cold chain capacity.
Another challenge would be the technology. In Nigeria, 55.6% of the population has access to electricity. Almost 83.6% of the people in urban cities has access to electricity and in rural parts only 34.4%. The challenge would be how can people keep their products cold and fresh.
In Angola, in 2012 they had 22.3% of the population that could use internet. So, it would be a waste if Wal-Mart Stores, Inc. decided to do their advertisement only on the internet. 630 000 people listen to the radio and 150 000 people watch television.
The most important part of Wal-Mart Stores, Inc. market are the cultural aspects of the market. In Nigeria, they score high on the PDI (80), which means that they accept the hierarchical order, and everybody has a place in the society. They are also collectivism (30). So, for them relationship with each other and being a member of a group is very important. Nigeria is more a masculine country than a feminine (60), which means that live in order to work and competitive. In the urban centers, they are already used to the canned, frozen and prepackaged foods, but the only issue is that the supermarkets and restaurants are too expensive for the average Nigerian. The UAI says that Nigeria is in the middle with taking or avoiding risks. For food, they have already Western influences, so if Wal-Mart Stores, Inc. introduces themselves well, they even get used to the American way of grocery shopping. Another aspect of the cultural aspects is maybe language. In Nigeria, they have 4 languages: Yoruba, Ibo, Hausa and English. An issue can be for Wal-Mart Stores, Inc. in which language they have to inform the people.
In Angola, they score high on the PDI (83), which means that they accept the hierarchical order, and everybody has a place in the society. Angola is a collectivism country, so being a member of a group and taking care of your surroundings is more important (18). Angola is also a feminine country (20), which means that they work in order to live. Because they are one of the poorest countries in Africa, they have to work for a little amount in order to survive in the bad circumstances some of them live in. The UAI is relatively high (60). Innovation may be resistant, but security and safety are more important for them.Wal-Mart Stores, Inc can give them the feeling of being safe, by selling cheap water that the people don’t have to drink dirty water anymore. The main language in Angola is Portuguese, but some people speak Bantu. A half of the population is unemployed and 70% of the people live below the poverty line. An issue for Wal-Mart Stores, Inc. can be that they have to sell it so cheap, that they can’t make any profit.
If Wal-Mart Stores, Inc. does business with host country partners and distributors in Nigeria, they have to keep in mind some business electives like:
- When you first meet someone, show your degree of education;
- Be polite, friendly and show interest in the people you meet;
- Nigerians will touch people with the same gender in their arms or back during conversations;
- Handshakes are normal, but the duration is longer than average;
- Provoke long eye-contact with someone who is higher in rank than you.
In Angola, Wal-Mart Stores, Inc. needs to keep some of these business electives in mind:
- You have to ask about the family. In the first meeting, it can be that you don’t even discuss business, but the people want to know you;
- Women should try to avoid eye contact during greetings;
- When someone is older than you, bow for them otherwise a handshake is fine.
- Do not get caught with the word yes. The word yes in Angora is just a way to show respect, it doesn’t automatically mean yes. So, write detailed contracts and let them sign it.
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INTERNATIONAL MARKETING: PHOTO BIO
My name is Mariella van der Honing. I am a visiting student from Belgium. My age is 20 years old. I live in Belgium, but originally, I am from the Netherlands. In Belgium, I study marketing with concentration in international business at PXL (Hasselt). I wanted to study abroad to gain more experiences of different cultures and also to be a better speaker and writer in English. It is my real last semester of studying marketing, so I saw that as a change to go. I already had the course International Marketing. I am very curious if the courses are the same or if I will learn a lot of new materials about International Marketing. After my bachelor’s in marketing, I want to go study Hotel Management as well.
My unique side is the diversification of characteristics. My best but also the worst one is that I am a perfectionist. On the other hand, I am social, openminded, sensitive, ambitious, eager to learn, orderly and creative.
But beside of the characteristics, how can you recognize me in the classroom? Maybe, because of my light red hair and glasses. Most of the time, I wear large earrings and colorful clothes. I love printed outfits. When I talk, you will hear a mixed accent of Dutch (Netherlands and Belgium).
INTERNATIONAL MARKETING QUIZ: CHAPTER 3
Why is knowledge regarding a society’s origins an important key factor to successful marketing efforts? Your answer must be typed and double spaced. Your answer may not exceed 150 words.
When you know the origins of a society, so the history, geography, social institutions, technology and political economy than you know why and some of which consumptions decisions and behaviors they have. When you want to market in another society, the culture might be different. You must know their actions and points of view before you market over there. Otherwise, it might fail because you didn’t implement their origins and culture in your product and it isn’t maybe necessary for them.
The origins and culture give a look how people behave. Some societies behave different than other, for instance in management.
E.g.: Swiffer wanted to market Italy. They went to Italy but didn’t do any research about the origins. They didn’t know that “la mammas” only wanted to clean with their hands and towels and not with a device. The product failed in Italy because they didn’t know the origins of Italy.
INTERNATIONAL MARKETING: INVESTIGATIVE ARTICLE 2
During Herr Schmidt’s experience doing business with the French, he made many cultural adjustments and adaptations in the moment to ensure that the interaction would go smoothly. He avoided using self-reference criterion, and also was aware of Hofstede’s cultural dimensions, and the difference in time systems between Germany and France.
The German executive was familiar with the differences in culture, and had no problem adjusting himself, and his strategies to the culture of the French. For example, when the French executive showed up late, Herr Schmidt did not panic, nor did he take offense to this. He knew this was likely to happen as the culture of the French does not value punctuality as much as the German, and if something more important comes up, the French will likely tend to that before moving on to the scheduled meeting. The meeting was longer than expected, and Herr Schmidt missed his flight home, but he did not panic about this either. Instead of being angry about not getting home on time, Herr Schmidt adapted to the Polychronic time system which the French operate on. He promised the French manager that they would meet again later that night, and once more the following day to finalize the deal. By doing these small things, he is demonstrating the ways that he did not use self-reference criterion, and how he took the difference in time systems into consideration. He saw the market and business transaction in its true light, and he adopted a “go with the flow” attitude even though it went against his own cultural norms.
France, also has a high Power-Distance Index of 68 and Germany only has an index score of 35. The French company is very formal and there is a hierarchical distance between bosses and employees. Herr Schmidt adapted to this as well. The difference in job title indicates that the German executive is higher in rank than the French manager. We can also infer that because France scores a 43 on Masculine-Feminine Index compared to Germany scoring a 66 , they value relationships and group harmony more, which is why everyone participated in the conversation about where to eat lunch. This lunch proved to be very important for the future of the business partnership, because the French value building a relationship before they engage in business deals.
By avoiding the use of self-reference criterion, Herr Schmidt was able to successfully work through cultural differences without comparing French cultural norms to the norms of his own culture. He did not reference himself and his own cultural norms, and this made the whole transaction much more fluid. By analyzing the French scores on Hofstede’s indexes, Herr Schmidt was able to determine why his interaction with the French was slightly different than business interactions in his home country. In addition to this, he took into consideration the different time systems which helped him understand the reason for the French executive’s tardiness. In conclusion, Herr Schmidt handled this interaction very well, and we can assume that the business deal turned out to be beneficial for both parties. Herr Schmidt demonstrated the ability to command respect, and he demonstrated his flexibility and knowledge of the country.
“Country Comparison.” Hofstede Insights, http://www.hofstede-insights.com/country-comparison/france,germany/.
(We hebben op bovenstaande taak geen goed punt..)
INTERNATIONAL MARKETING: INVESTIGATIVE ARTICLE 2: “SERVICE WITH A SMILE FROWNED ON BY GERMANS
Walmart expanded to Germany hoping to make sales and expand their brand. Integral to Walmart’s customer experience strategy, is the idea that the “customer is king.” Walmart trains its employees to deliver a certain customer experience, and pamper their customers, which has been received well in the United States, but was not received so well when implemented in Germany. Simple things like smiling at customers and packing their items for them during checkout, actually had an adverse effect on German shopper’s opinions of their shopping experience at Walmart. The reasons for this immense failure of Walmart in the German market go all the way back to the fundamental differences in cultural rituals between the United States and Germany.
It is clear from their failures that Walmart did not do their homework before expanding in to the German Market. Had they done research on successful retailers similar to themselves, they would have seen that the simple things, such as smiling at customers and packing their bags, really do matter, and can even go as far as offend some German shoppers. Walmart assumed that this strategy of pampering customers would be widely accepted over a variety of cultures, when in fact, this strategy was offensive to some, and annoying to others. Prior to expanding into Germany, Walmart should have taken a look at the cultural differences in consumers preferences and dislikes. Walmart’s service culture was too much for the German consumer who values their time, and wants the most efficient experience possible. Given that Germany is a more monochronic society than the United States, small talk such as “Hello, good morning” can be seen as a waste of time. Because Walmart assumed that their customer-first service strategy would be successful in Germany just because it was successful in the United States, they completely relied on their self-reference criterion. They did not adapt at all before entering the German market, nor did they adapt when they got there, causing a cultural clash between employee and consumer.
The German consumer appreciates efficiency over all, and guards their personal space along with their belongings. For these reasons, parts of Walmart’s strategy infuriated German shoppers. The German consumer wants an efficient experience where they can get what they need, and get out of the store. In the opinion of a German consumer, small talk with employees in the store takes away from their experience because it feels like a waste of time. Germans score higher on the Long-Term Orientation index than Americans. This explains the reason why Germans may feel like making small talk is a waste of time. Germans value long-term friendships and intimate conversations. They also keep their private lives completely separate from their public lives. This explains why they may be hesitant to make small talk with employees of stores where they are shopping, and would feel offended if an employee touched their belongings. We can also integrate that with the uncertainty avoidance index. For the Americans it is normal that the employee would bag their groceries for them. To an American this does not feel like a risk, but to a German, this makes them uncomfortable. Germany scores higher on the uncertainty avoidance index, telling us that they like to avoid risky situations and business deals.
Helm, Toby. “Service with a Smile Frowned on by Germans.” The Telegraph, Telegraph Media Group, 28 Oct.2000,www.telegraph.co.uk/news/worldnews/europe/germany/1372243/Service-
INTERNATIONAL MARKETING: INVESTIGATIVE ARTICLE GOPRO
GoPro is an American Technology company which was founded in 2002 by Nick Woodman. Originally founded as Woodman Labs, Inc., the company later developed into GoPro, and streamlined its focus into action cameras which are able to capture sports such as surfing, skateboarding, and skiing, up close. In 2004, GoPro CEO Nick Woodman debuted his first product the GoPro Hero at San Diego’s Action Sports Retailer trade show, resulting in $150,000 worth of products sold the first year.
The company became publicly traded in 2014, starting at only $24.00 per share. After making their debut in the public market, they saw a spike in international demand. GoPro’s marketing strategy began to shift to focus more on international markets, and they began to pursue a strategy that would make their products available to people in a multitude of countries. We believe that at this point in the company’s development (2014-2015), they were at the International Marketing level of involvement. While they produced and sold the same products in every country, GoPro tailored their advertisements and marketing strategies to fit the language and respective national borders of the countries in which they sold. As stated in Steve Symington’s article “Why GoPro, Inc. Is Expecting a Huge International Boost Soon,” GoPro “Began offering localized customer experiences in multiple languages including German, French, Portuguese, Japanese, Korean, and Chinese.” Part of these localized customer experiences included packaging in these languages, and options in GoPro’s software applications for different languages. As the company grew, so did demand for the products in other countries. It was during this period of growth that we believe GoPro’s Level of Involvement changed from International Marketing to Global Marketing.
After taking a closer look at the GoPro website, we have concluded that they sell exactly the same products in every country, with the same specifications. The GoPro website and media presence has adopted their Global Marketing strategy as well. Their website can be translated into the language of all of the countries in which their products are sold. While we know that one of the main components of a company who engages in a Global Marketing Level of Involvement is that 50% of their revenue comes from outside their home country, GoPro’s sales have shown to fluctuate in and out of that threshold. As we see in the Fortune.com article written by Tom Huddleston Jr., “GoPro boosted its first-quarter revenue by more than 50% thanks to a rush of international sales that accounted for more than half of the company’s sales.”
We also have evidence that the Company has adapted their marketing strategy into a Global Marketing strategy due to the variety of products that they sell. For example, GoPro sells cameras at different price points, which cater to different income levels, regardless of country. According to David Marino-Nachison, in his article “GoPro: CEO Wants to Grow the Business, Protect the ‘Core’, “The Fusion camera which shoots in 360 degrees, is marketed as a “prosumer” product, but that could change.” This means that the Fusion camera is the highest quality product that GoPro currently offers, and this appeals to those who shop at a higher price point, and generally those with higher income levels. This could also hint at a more frequent usage pattern; those who purchase the Fusion camera have a higher level of sophistication when using the product, and that is why they gravitate towards the highest quality product that they offer. Social media is the backbone of GoPro’s marketing strategy, and they use this in very strategic ways to advertise their products. GoPro uses user-generated content to create advertisements which are then shared in every country in which the products are sold. GoPro uses the same marketing strategy in each country, which is a quality of a global marketing strategy. As stated in the article “GoPro is Running it’s First-Ever Scripted TV ad After it’s Stock Nosedived,” by Patrick Kulp, “The spot, which makes its television debut Thursday, will run in the U.S. and several different markets around the world including Spain, Germany, France, Korea and Australia.” This further explains their Global Marketing strategy, and shows a firsthand example of how GoPro views the world as one market for their various products.
GoPro has had to deal with the competitive forces of other countries, among other foreign environment uncontrollables. For example: the story in China which we read about in the article “3 Big Problems GoPro Could Face in China,” by Leo Sun. “The biggest problem for GoPro in China will be the sea of knockoffs which are widely available all over the country.” When GoPro conducted their competition analysis, they saw that there were companies who had already produced products similar to their own. The quality of the products was found to be different, but some characteristics remained. It was also found that there was a major price difference between GoPro’s cameras and that of the competitors. These knockoffs are cheaper than GoPro, creating space for a lower-income consumer to purchase the knockoff rather than GoPro’s product. But when you perform a competition analysis, you need to look further than the companies perspective, but also look at the market perspective. They found out that Xiamo (smartphone manufacturer) is already interested in expanding their production line into action cameras. They can make the same products as GoPro (e.g.: the HERO 4 Black’s specs) and have already established brand awareness in China. When there is a lot of competition, why would another company try to enter the market? Because they also know that there are consumers in China who would rather purchase GoPro’s products for gaining social status. When a Chinese consumer purchases a GoPro, they gain a higher status, because of the higher price point of GoPro’s products. For example, in China, they sell fake or “knockoff” iPhones, but the higher social and economic classes want to buy the real iPhone to show their status. In their research, they also saw that the people in China are doing increasingly more outdoor activities and GoPro’s brand strategy associates itself with outdoor activities, and an outdoor “thriller” lifestyle. Because Chinese people are making the shift to a more active lifestyle which includes outdoor sports, GoPro appeals to them more, and makes their new active lifestyle more fun because they can film it with ease.
GoPro also found that they had some issues with handling the structure of distribution when attempting to sell their products in foreign markets. GoPro found that the best way to enter foreign markets such as those in China and India, was to find foreign distributors and forge partnerships with them to ease their entrance into the market. If they had not used this strategy, additional taxes would be added to the price of the cameras, making them too expensive and their product would not sell. We saw this as well in the article by Leo Sun. He states, “Since GoPro already sells its cameras at premium prices, it should probably sign a joint venture with a Chinese company to reduce manufacturing costs and retail prices. If GoPro simply exports cameras to China without a joint venture partner, the 17% value-added tax and additional expenses could make its cameras too expensive.” This shows us the importance of securing local partnerships before entering an already saturated market such as that of the camera market in China. It is wonderful to see that GoPro took its time to build a local partnership which helped them adapt their strategy to succeed in the Chinese market. They build brand awareness simultaneously as well, making it a smoother transition once the products hit the shelves.
We can assume that GoPro uses international marketing and global marketing strategies as well. The global marketing strategies are used in countries where the company exists already, and they are able to use the same marketing strategy for recovering the costs. When they go to a new country like China for example, they will use international marketing strategies, and work with joint ventures to get to know the market and implement their products there. They will adapt their marketing strategy as needed when they move into countries with difficult foreign environment uncontrollable forces.
Beer, Jeff. “Why GoPro Changed Its Marketing Strategy To Go Beyond The Action.” Fast Company, Fast Company, 21 Nov. 2016,www.fastcompany.com/3065745/why-
Bradshaw, Tim. “GoPro Expansion to Focus on China.” Financial Times, Financial Times, 8 Jan. 2015, http://www.ft.com/content/ee741820-9700-11e4-845a-00144feabdc0.
Huddleston, Tom. “GoPro’s Revenue Goes Wild with Strong Overseas Sales.” Fortune, Fortune, 28 Apr. 2015, fortune.com/2015/04/28/gopro-quarter-virtual-reality/.
Kulp, Patrick. “GoPro Is Running Its First-Ever Scripted TV Ad after Its Stock Nosedived.” Mashable, Mashable, 11 Nov. 2016, mashable.com/2016/11/10/gopro-first-ever-tv-ad/
Landau, Joel. “GoPro’s Viral Video Marketing Campaign Turns It into Top YouTube Brand in the World – NY Daily News.” Nydailynews.com, New York Daily News, 22 July 2014,
Marino-Nachison, David. “GoPro: CEO Wants to Grow the Business, Protect the ‘Core’.” Barron’s, Barrons, 15 May 2018,www.barrons.com/articles/gopro-ceo-wants-to-grow-the
Martin , John. “GoPro History: Evolution of the GoPro.” Bronami, 28 Apr. 2017, bronami.video/gopro-history-evolution-of-the-gopro/.
Ray, Tiernan. “GoPro Rising: There’ll Be a Recovery ‘Someday,’ Says JP Morgan.” Barron’s, Barrons, 2 Feb. 2018, www.barrons.com/articles/gopro-rising-therell-be-a-recovery-someday-says-jp-morgan-1517593234.
Stoutenberg, Kyle. “Are You A Hero? An Analysis of GoPro’s Marketing Strategy.” Modern Media Mix, 23 Feb. 2016, modernmediamix.com/are-you-a-hero-an-analysis-of-goprosmarketing-strategy/.
Sun, Leo. “3 Big Problems GoPro Could Face in China.” The Motley Fool, The Motley Fool,
16 Jan. 2015,fool.com/investing/general/2015/01/16/3-big-
Symington, Steve. “Why GoPro, Inc. Is Expecting a Huge International Boost Soon.” The Motley Fool, The Motley Fool, 7 Oct. 2016, www.fool.com/investing/2016/10/07/why-gopro-is-Expecting-a-huge-international-boost.aspx.
Wingfield, Nick. “GoPro Sees Opportunity in Its Amateur Daredevils.” The New York Times, The New York Times, 20 Dec. 2017, www.nytimes.com/2014/01/31/technology/gopro-works-on-its-brand.html.