Professional Documents
Culture Documents
1. DOMESTIC COMPANY:
The operation, mission and vision of the firm is limited to the national political
boundaries. These companies focus its view on the domestic market opportunities
domestic suppliers, domestic financial companies, domestic customers etc. It never
thinks of growing globally. If it grows, beyond it present capacity the company
selects the diversification strategy of entering into new domestic markets, new
products, technology etc. It does not select the strategy of expansion into the
international markets.
2. INTERNATIONAL COMPANY:
Some of the domestic companies which grow beyond their production / marketing
capacities think of internalizing their operations. Those companies who decide to
exploit the opportunity outside the domestic country. The focus of these
companies is domestic but extends the wings to the foreign countries.
These companies extend the domestic product, domestic price, promotion and other
business practices to the foreign markets.
3. MULTINATIONAL COMPANY:
It formulates different strategies for different markets thus the MNC operate
its offices, branches, subsidiaries in other country like domestic company. They
formulate distinct polices and strategies suitable to that country. Thus they operate
like concerned in each of their markets.
4. GLOBAL COMPANY:
A global company is the one which has either global marketing strategy or a global
sourcing strategy. Global company either produces in home country or in a
single country and focuses on marketing these products globally or
produces globally or focuses on marketing these products domestically.
5. TRANSNATIONAL COMPANY:
It produces, markets, invests and operate, across the world. It is an
integrated global enterprises which links global resources with global markets at
profit. There is no pure transnational companies satisfy many of the characteristics
of a global corporation.
The transnational companies should have the following characteristics:
Geocentric Orientation: This Company adopts global strategy but allows value
addition to the customer of a domestic country.
Scanning or information acquisition: These companies scan the environmental
information regarding economic environment, political environment, social and
cultural environment and technological environment.
Vision & Aspirations: The vision & aspiration of transnational companies are
global markets, global customers and grow ahead of global companies.
Geographic scope: They analyze the global opportunities regarding the
availability of resources customers, market, technology, research and development
etc. Similarly they also analyze the global challenge and threats like competition
from the other global companies, local companies etc.
Operating Style:The transnational companies globalize the function like R & D,
Product development, placing key human resources procurement of high valued
material etc.
Adaptation:These companies adapt their products, marketing strategies and other
functional strategies to the environment factors of the market concerned.
HRM Policy:This Company is not restricted by national political or legal constraints.
It selects the best human resources and develops them regardless of nationality,
ethnic group etc. But the international company reserves the top and key positions
for national.
Purchasing:It procures worlds class material from the best source across the
globe.
2. INTEGRATION OF ECONOMIES:
International business integrates (combines) the economies of many countries. This
is because it uses finance from one country, labour from another country, and
infrastructure from another country. It designs the product in one country, produces
its parts in many different countries and assembles the product in another country.
It sells the product in many countries, i.e. in the international market
5. KEEN COMPETITION:
International business has to face keen (too much) competition in the world market.
The competition is between unequal partners i.e. developed and developing
countries. In this keen competition, developed countries and their MNCs are in a
favourable position because they produce superior quality goods and services at
very low prices. Developed countries also have many contacts in the world market.
So, developing countries find it very difficult to face competition from developed
countries.
7. INTERNATIONAL RESTRICTIONS:
International business faces many restrictions on the inflow and outflow of capital,
technology and goods. Many governments do not allow international businesses to
enter their countries. They have many trade blocks, tariff barriers, foreign exchange
restrictions, etc. All this is harmful to international business.
8. SENSITIVE NATURE:
The international business is very sensitive in nature. Any changes in the economic
policies, technology, political environment, etc. has a huge impact on it. Therefore,
international business must conduct marketing research to find out and study these
changes. They must adjust their business activities and adapt accordingly to survive
changes
WIDER MARKET
International business widens the market and increases the market size. Therefore
the companies need not depend on the demand for the product in a single country
or customers tastes and preferences of a single country.
REDUCED RISKS
Both commercial and political risks are reduced for the companies engaged in
international business due to spread in different countries. Multinationals which
were operating in erstwhile USSR were affected only partly due to their safer
operations in other countries.
PROVIDES
THE
OPPORTUNITY
&
CHALLENGES
TO
DOMESTIC
BUSINESS
International business firms provide the opportunities to the domestic companies.
These opportunities include technology, management expertise, market
intelligence, product developments etc.
CULTURAL TRANSFORMATION
International business benefits are not purely economic or commercial they are
even social and cultural.
EXCHANGE INSTABILITY
ENTRY REQUIREMENTS
Domestic governments impose entry requirements to multinationals. Example, Joint
venture, % of FDI, tariff, quota, trade barriers etc.
CORRUPTION
Corruption has become an international phenomenon. The higher rate bribes and
kickbacks discourage the foreign investor to expand their operations.
TECHNOLOGY PIRATING
Copying the original technology producing imitative products other areas of
business operations were common in Japan during 1950s and 1960s in Korea, India
etc. This practices invariably alarms the foreign companies against expansion.
HIGH COST
Internationalizing the domestic business involves market survey product
improvement quality up gradation. Managerial efficiency and the like. These
activities need larger investment and involve higher cost and risk. Hence mostof the
business houses refrain themselves from internalizing their business.
The significance of imports is obvious where the country lacks a strong resources
base but similar conditions exist even in more endowed nations. The production of
many items in India for example depends on the importation of critical raw material
and energy supplies.
TRANSFER OF TECHNOLOGY;
Even when the foreign market is serviced by producing abroad there are
advantages for domestic consumers and producers. Since both from the transfer of
products and technology among countries.
Material culture refers to tools, artifacts and technology. Before marketing in a foreign culture it
is important to assess the material culture like transportation, power, communications and so
on. Input-output tables may be useful in assessing this. All aspects of marketing are affected by
material culture like sources of power for products, media availability and distribution. For
example, refrigerated transport does not exist in many African countries. Material culture
introductions into a country may bring about cultural changes which may or may not be
desirable. (see case)
Case 3.2 Canned Drinks In Zimbabwe
Until the early 1990s, Zimbabwe did not allow both alcoholic and non alcoholic beverages to be packed in
cans. There were both economic and environmental reasons for this. Economically, Zimbabwe did not
have the production facility for canning. Environ mentally, Zimbabwe had seen the litter in Botswana,
caused by discarded empty cans. By putting a deposit on glass containers they ensured the empties
were returned to the retailer, thus avoiding a litter problem.
However, with the advent of trade liberalisation under the Structural Reform Program, the Government of
Zimbabwe decided to allow the import of some 4 million cans as an experiment, after which it would
assess the environmental impact. The result was a huge influx of canned alcoholic and other beverages
not just from nearby Botswana and South Africa but from Australia, USA and Europe
Language
Language reflects the nature and values of society. There may be many sub-cultural languages
like dialects which may have to be accounted for. Some countries have two or three languages.
In Zimbabwe there are three languages - English, Shona and Ndebele with numerous dialects.
In Nigeria, some linguistic groups have engaged in hostile activities. Language can cause
communication problems - especially in the use of media or written material. It is best to learn
the language or engage someone who understands it well.
Aesthetics
Aesthetics refer to the ideas in a culture concerning beauty and good taste as expressed in the
arts -music, art, drama and dancing and the particular appreciation of colour and form. African
music is different in form to Western music. Aesthetic differences affect design, colours,
packaging, brand names and media messages. For example, unless explained, the brand name
FAVCO would mean nothing to Western importers, in Zimbabwe most people would instantly
recognise FAVCO as the brand of horticultural produce.
Education
Education refers to the transmission of skills, ideas and attitudes as well as training in particular
disciplines. Education can transmit cultural ideas or be used for change, for example the local
university can build up an economy's performance.
The UN agency UNESCO gathers data on education information. For example it shows in
Ethiopia only 12% of the viable age group enrol at secondary school, but the figure is 97% in the
USA.
Education levels, or lack of it, affect marketers in a number of ways:
advertising programmes and labelling
girls and women excluded from formal education (literacy rates)
conducting market research
complex products with instructions
relations with distributors and,
support sources - finance, advancing agencies etc.
Religion
Religion provides the best insight into a society's behaviour and helps answer the question why
people behave rather than how they behave.
A survey in the early 1980s revealed the following religious groupings (see table 3.1)3.
Table 3.1 Religious groupings
Groups
Million
Animism
300
Buddhism
280
Christianity
1500
Hinduism
600
Islam
800
Shinto
120
market segments - Maylasia - Malay, Chinese and Indian cultures making market
segmentation
ensitivity is needed to be alert to religious differences.
Attitudes and values
Values often have a religious foundation, and attitudes relate to economic activities. It is
essential to ascertain attitudes towards marketing activities which lead to wealth or material
gain, for example, in Buddhist society these may not be relevant.
Also "change" may not be needed, or even wanted, and it may be better to relate products to
traditional values rather than just new ones. Many African societies are risk averse, therefore,
entrepreneurialism may not always be relevant. Attitudes are always precursors of human
behaviour and so it is essential that research is done carefully on these.
Social organisation
Refers to the way people relate to each other, for example, extended families, units, kinship. In
some countries kinship may be a tribe and so segmentation may have to be based on this.
Other forms of groups may be religious or political, age, caste and so on. All these groups may
affect the marketer in his planning.