Culture &

Environment
of Global
Markets
GIM | PGDM 20-21 | TERM V

Sangram Sinha
Culture
Culture

• Competitive
• Political & Legal Position
Environment

Price Promotion

MARKET

Product Place
• Economic
• Infrastructure
Systems

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Culture

Culture represents the beliefs, customs, and attitudes of a distinct group of people.

Elements of Culture

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Culture and Values

The five main features of

values are
• concepts or beliefs
Values : The standards what
• about desirable end states or
people have about what is behaviors
good & bad (Macionis & • that transcend specific situations,
Plummer, 2007) • guide the selection or evaluation of
persons, behavior, and events
• and are ordered by relative
importance.

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How Do Cultures Differ in Value ?

Asian Values European Values

 Hard Work  Enlightenment
 Savings  Rationality, Science, Progress
 Family  Secularism
 Education  Hierarchy
- Estate
- Monarchy

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Mores & Folkways

MORES
▪ Society’s standard of proper moral conduct
▪ Distinguish between right & wrong
▪ Essential to maintain ways of life
▪ People develop emotional attachment to mores
& defend them publicly

FOLKWAYS
▪ Society’s customs for routine, casual interaction
▪ Distinguish between right & rude
Subculture &
Counter- culture
 Sub-culture : culture pattern that
makes some people different from
the race

 Counter-culture :cultural patterns

which strongly oppose accepted
cultural patterns:

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Symbols - Jeans

18th and 19th century: California gold miners and workers wore jeans because the
material was very strong and did not wear out easily.

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Symbols - Jeans
1930S WESTERNS—COWBOYS MADE JEANS POPULAR
Symbols -
Jeans
 1950s: symbol of the
teenage rebel.
 Some schools in USA banned
students from wearing
denim

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Symbols -
Jeans
 1960s & 70s: Hippies and
the Cold War
 Working class association
of jeans made them
popular among affluent
students who wanted to
look different.
 In many non-western
countries, jeans became
symbol of ‘western
decadence’ and very hard
to get
Symbols -
Jeans
1980S: ‘DESIGNER JEANS’
BECOME HIGH-PRICED ‘STATUS
SYMBOLS’.

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Symbols - Jeans

 1990s: move away from traditional

jeans style that parents were
wearing.
 Aged, authentic vintage jeans in
second-hand stores and thrift
shops (not conventional jeans
stores)

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Foundation of Culture
 History & Geography
 National Culture
 Common characteristics that emerge as a culture develops over time.

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 Language : “a system of symbols that allows members of a society to
communicate with one another “ (Macionis & Plummer, 2007)
Language &
Culture  Form is written or spoken words - main form of cultural
reproduction
 6500 spoken languages – long tail
 Literature / Culture / Rituals / Background
 Culture shapes Language and Language is the medium of culture
 Immigrants language
 “Private” does not exist as a word in many languages
 Eskimos: 24 words for snow
Conviviality - friendliness

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  Filotimo is a noun - translates literally as "A friend
Φιλότιμο of honour" or a "Lover of honour“

(Filotimo) : The  Broken into two parts it is: “Filos"- Friend and
Most Esteemed "Timi"- Honour.

Virtue of  Filotimo, the highest of Greek virtues, is

Greeks, Lost in an amalgam of virtues;

Translation  Honor, Integrity, Duty, Pride, Dignity, Courage.

British Proverbs - Values

 Absence makes the heart grow fonder

 A journey of a thousand miles begins with a single step
 A watched pot never boils
 Beauty is in the eye of the beholder
 Don’t bite the hand that feeds you
 Don’t count your chickens before they hatch.
 Don’t judge a book by its cover
 Don’t put all of your eggs in one basket
 Easy come, easy go

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Cultural dynamics in assessing global markets :
Hofstede’s Cultural Dimensions

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 https://www.hofstede-
insights.com/product/compare-countries/

DEN, ISR, AU, NZ <- > SA, MAL ,CH, PH, PAN

PAK, COL, VEN, PAN <- > UK, US, AUS, NLD, NZ,
IT

SCAN , NDL, SLOV <- > JAP, HUN, AU, VEN, IT

SN, JAM, DEN, SW, HK, UK<- > POR, GUA,

CHILE, UKR, SA

NG, GH, PH, ZAM <- > CH, HK, TAI, JAP, KOR,

CH, RUS, IND <- > US, CAN, LALAM, AUS

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Culture in Management Style & Business

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Culture and Behaviors

 Cultural Imperatives : business customs and expectations that must be met and
conformed to or avoided to be successful in business.

 Cultural Electives : Cultural electives relate to areas of behavior or to customs

that cultural aliens may wish to, but are not required to, conform to or participate
in.

 Cultural Exclusives : Customs or behavior patterns reserved exclusively for the

locals and from which the foreigner is barred are cultural exclusives.

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Culture and Purchasing Behavior

 Aesthetics

 Religion

 Subcultures & Countercultures

 Cultural Change

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Global
Dietary
Restrictions

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International Barriers
The most commonly cited barriers to communication in international
marketing and promotions include
 Language and slang,
 Directness of address,
 Eye contact,
 Ethnocentrism,
 Stereotyping,
 Differences in the meanings of nonverbal cues,
 Personal space issues, and
 Use of symbols and Cultural icons.

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High- and Low-Context Culture
 Low-context cultures are characterized by explicit verbal messages.
 The meaning of a message is mainly contained in the words used.
 Germany, Switzerland, and the United States are examples.

 High-context cultures rely more on symbols and language with less-explicit or

spelled-out codes.
 The meaning of the message is mainly contained in the nonverbal components of the
message.
 This includes facial expressions, body language.
 For those not familiar with the symbols in a given area, the information becomes
difficult to accurately decipher.
 Many Asian cultures are high context.

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Global Population Trends
 In 1970s, average 4.5 children per
woman → by 2015, 2.5 children per
woman.
 advances in modern medicines and
improvements in living standards.
 Avg. global lifespans from 64.6 years
in ‘90s to 70.8 years today.
 2007 urban population crossed rural
population
 By 2050, about 66% of the world
population will be living in cities.
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Global Life Expectancy Trend

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Ageing Population Trends

Percentage of Population Aged 65 or

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The Middle & Affluent Consumer 32

Total Alcohol Consumption per capita in LPA1

≈780M

≈750M

≈430M

≈450M
≈500M

≈250M
≈140M

≈40M

2025 MAC ASIA 1.7 B

Population
& ROW 1.7 B
(projection)
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Environment of Global Markets
Components of International Business
Environment
 Economic Environment
 Socio-Cultural Environment
 Demographic Environment
 Political Environment
 Legal Environment
 Technological Environment
 Natural Environment
Political Environment

 Sovereignty : self determination and independence from external interference,

authority over all nationals

 Basis of international law and international relations, International trade limits

sovereignty.

 Governments can invoke sovereignty and jeopardize firm’s operations

Political Risk - International
 Risks Related to Government Trade policies:
- Tariffs,
- exchange-rate controls,
- quotas,
- export/import license requirements,
- other trade barriers (embargos, sanctions)

 Risks Related to Government Economic Policy:

- Controlling foreign investment through taxes
- transfer of assets from company to local ownership:
o Confiscation (without compensation)
o Expropriation (some reimbursement)
o Creeping expropriation (paperwork, judicial systems, regulations)
o Nationalization (local government takes over)
o Domestication (transfer to local enterprises)
Political Risk - Internal

▪ Risk related to Internal Political Situation in any country

- Risks Related to Labor and Action Groups

- Risks Related to Terrorism

▪ Internal Policy Change

▪ Country facing Internal Issues – Economic or Political

International Legal Environment

 International Laws
 Host Country Laws
 Home Country Laws
 Legal Systems:
- Common law
- Code (Civil) law
- Islamic law
Intellectual Property Rights

Intellectual property (IP) is a category of property that includes intangible creations

of the human intellect, and primarily encompasses copyrights, patents, and
trademarks. It also includes other types of rights, such as trade secrets, publicity
rights, moral rights, and rights against unfair competition.

 Violation of intellectual property rights is a significant threat to the

competitiveness of international corporations.
 Losses attributed to the violation of intellectual property rights are estimated to
be $60 billion a year. (Software $11 bn., entertainment $8 bn., Pharma $1 bn )
 There is a saying in Shanghai: “We can copy anything except your mother”
Few Important Terms

 Patent - Protection of the rights of the inventor or of the firm to use and sell
the invention for a specified period of time
 Copyright - Rights of owner of original work of art (literature, music, film,
design) to reproduce, sell, perform, or film the work.
 Trademark - Brand name, mark, symbol, motto, or slogan that identifies a
brand and distinguishes it from competitors’ brands. (E.g. Rolex, Gucci, Fendi/
Design copying without the trademark is legal)
 Trade Secret - Know-how, formulas, and special blends that are not
registered and are thus not protected by law
 Counterfeit – copy
Factors Impacting IP Violations

 Lack of appropriate legislation

 Lax enforcement
 Unavailability of authentic products
 High prices for authentic products that limit their accessibility to
local consumers
 Cultural Factors:
 Values that perceive imitation as a form of flattery
 Feelings of interpersonal distrust and not getting fair deal
 Emphasis on material wealth
 Belief that technology is common domain
Protecting Intellectual Property

 TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights,) -

member countries of the WTO , must sign the TRIPS agreement: minimum
standards for the legal protection of property rights

 International Association for the Protection of Intellectual Property (AIPPI, Estd.

1897) : limited regulatory control
- Bilateral and multilateral conventions
- Enlisting home and host-country government support

 Host country court plays critical role in a general situation

Home Country Legislation

Antitrust Legislation
- Prevent anticompetitive activities such as the creation of
monopolies and cartels.

Anti-Corruption Legislation
- Prevent multinational corporations from using unethical means
to obtain competitive advantage in a particular market
- Foreign Corrupt Practices Act makes it illegal to bribe politicians.
Cyberlaws

Cybercrime is "international" or "transnational" – there are 'no cyber-borders

between countries’.
 Various organizations and governments have already made joint efforts in
establishing global standard of legislation and law enforcement both on a
regional and on an international scale.
 Scopes are multifaceted
 IP/Trademark
 Local Regulation
 Ethical Issues
 Terrorism or Hatred
Export Restrictions

Export restrictions, or a restriction on exportation, are limitations on the quantity of

goods exported to a specific country or countries by a Government.

An export restriction may be imposed:

 To prevent a shortage of goods in the domestic market because it is more profitable
to export
 To manage the effect on the domestic market of the importing country, which may
otherwise impose antidumping duties on the imported goods
 As part of foreign policy, for example as a component of trade sanctions
 To limit or restrict arms or dual-use items that may be used in proliferation, terrorism,
or nuclear, chemical, or biological warfare.
 To limit or restrict trade to embargoed nations.