Culture and Business

Prof. Atul Tandan

Essec, France
7/7/06
Director, MICA
 Cultural Environment
An Understanding of Culture & its Impact on Business

Essec, France
7/7/06
 Flow of Thought

☼ Need for Understanding Culture…

☼ Standardisation V/s Adaptation – The Classical Dilemma
☼ What is Culture?
☼ Approaches to the study of Culture
☼ Applications of Cultural Insights to Marketing
☼ Summary

Essec, France
7/7/06
 Need for Understanding Culture

“Similar Surfaces; Dissimilar Roots” ===> CULTURAL MYOPIA

Essec, France
7/7/06
 Standardisation V/s Adaptation
- The Classical Dilemma

☼ Universal Values v/s Local Values

☼ Nature of the Product (Consumer Products v/s B2B)

Essec, France
7/7/06
 The Search for Cultural Universals

☼ Universal = Mode of behaviour existing in all cultures

☼ Universal aspects = opportunities to standardize some or all
elements of a marketing program

Essec, France
7/7/06
 Universals v/s Local Differences

UNIVERSAL TRENDS shaping Youth attitudes about Cool Globally

☼ Option Overload – More Discerning, More Brand Savvy.

☼ Metopia – Freedom of Choice & Increased Sense of Control   
Individualistic “Me-First” Culture
☼ Fully Loaded Living – Multi-tasking, part time jobs, work hard & party
harder. Stress  A Status Symbol
☼ Future Digested – Expecting & looking forward to tremendous change,
not deterred by the pace of innovation

- Sources of Cool, MTV - Brand Equity Youth Forum

Essec, France
7/7/06
 Universals v/s Local Differences

LOCAL CONNOTATIONS - What youth across the world think is COOL

USA – Different & Effortless

CHINA – Knowing your own taste

INDIA – Being first with new things; Different within Reason

BRAZIL – Right Look, Laid Back

- Sources of Cool, MTV - Brand Equity Youth Forum

Essec, France
7/7/06
 What IS Culture ?

“The integrated sum total of learned behavioural traits that are

manifest & shared by members of society”

OR
The way in which people in a society collectively attach meanings to
concepts & contexts around them & respond on the basis of those
meanings

Essec, France
7/7/06
 What IS Culture ?

☼ Culture as “ways of living”

☼ Conscious and unconscious values, ideas, attitudes, and symbols that
shape human behaviour
☼ Culture is learned, not innate
☼ Culture defines the boundaries between different groups
☼ All facets of culture are interrelated

Essec, France
7/7/06
 Components of Culture
social interactions among people; nuclear
family, extended family; reference groups
Social
technologies that Interaction language has
are used to two parts: the
produce, distribute, Material Life Language
spoken and the
and consume silent language
goods and services
Components
of culture ideas and
Value System Aesthetics
perceptions
that a culture
upholds in
values shape terms of
people’s norms Education Religion
beauty and
and standards good taste
community’s set of
One of the major vehicles beliefs that relate to a
to channel from one reality that cannot be
generation to the next verified empirically
Essec, France
7/7/06
 Approaches to the study of Culture

High & Low Context Cultures

LOW-CONTEXT CULTURE
☼ Messages are explicit
☼ Words carry most of the information in communication
☼ United States, Switzerland, Germany

HIGH-CONTEXT CULTURE
☼ Less information is contained in the verbal part of the message
☼ More information resides in the context of communication
(background, associations, basic values of communicators)
☼ Japan, China, South Korea, Mexico

Essec, France
7/7/06
 Approaches to the study of Culture

High & Low Context Cultures

Factors Low-Context High-

Context USA, Germany
Japan, Mexico
Lawyers - very important - less important
A person’s word - ‘get it in writing’ - his/ her bond
Time - ‘Time is money’ -
everything is
dealt with its
own time
Negotiations - quick - lengthy
Competitive Bidding - frequent - infrequent
Essec, France
7/7/06
 Approaches to the study of Culture

Sources of Culture

Material Culture – Tools, Artefacts, Technology, Infrastructure

Language – Reflects the nature & Values of Society

Aesthetics – Expressions of Art  Music, Drama, Dancing, Colour & Form

Education - often means common interests and outlook

Religion, Attitudes & Values

Social Organisation – Way people relate to each other (Extended families, units, kinship)

Essec, France
7/7/06
 Approaches to the study of Culture

Hofstede’s Model
Symbols

Heroes

Rituals

Values Practices

Expressions of culture at
different levels of depth
Essec, France
7/7/06
 Approaches to the study of Culture

Hofstede’s Cultural Typology

‘Culture’  A better indicator than “Material & Structural Conditions” of

Cultural Attributes.

Constructs or Indices of Research –

• Power Distance – Social Equality or vice a versa
• Individualism – Individual Responsibility v/s Integration
• Masculinity - Emphasis on work goals, as opposed to personal goals and nurturance
• Uncertainty Avoidance – Openness or Resistance to Change
• Confucian Dynamism – Professional Hierarchy v/s Social Obligations

Essec, France
7/7/06
 Hofstede’s Cultural Factors
High Individualism : US, Australia, Great Britain, Canada
Low Individualism: Japan, Venezuela, Thailand, Japan, Mexico, China
Individualism vs
collectivism
Feminine:
High : Korea, Netherlands, France,
Power Masculinity Vs Sweden
Japan, Mexico Hofstede’s
Distance Femininity Masculine: Japan,
Low: India, Cultural
Australia, US, Mexico, Britain,
Factors
Germany Germany

Uncertainty
Long term
avoidance
orientation
High : France,
Long Term: Hong
Japan, Mexico
Kong, Japan
Low: India,
Short Term: Great
Hong Kong, US,
Britain, US, Germany
Great Britain
Essec, France
7/7/06
 Some Issues?
 Is “face” important?
 Independence or interdependence?
 Egalitarian or hierarchical?
 Task focused or relationship focused?
 How important are “connections”?
 Status, titles, and family relationships?
 Gender-based expectations?
 Attitudes towards time?
 How important is relationship building in the target culture and
how is it accomplished?
 Decision making: hierarchical or consensual?
 Negotiation tactics?
 How is conflict resolved?
Essec, France
7/7/06
 Culture and Business

Business Environment
 Internal and External factors
 JVs, M&A, Global Alliance, etc.
 Socio-Economic Organisations

Marketing Environment
 Consumption characteristics
 Buying behavior
 Access
 Distribution
 Products and Services

Essec, France
7/7/06
International Foreign Decisions made Infrastructure
Economy Intervention by competitors (transport,
communications)
International laws and Decisions made
regulations External Factors by suppliers Technology

Decisions made by customers

International Stakeholder
Impact & resources

Trade unions, trade

organizations, Markets (labor, finance)
consumer groups Company
Policy Markets (labor, material, finance)
National trade and Human Capital Monetary Machinery
economic policies
Resource
Inflation
National Laws and
regulation National Economy

Industry Culture

Community

NGOs Political Context

Factors in the Local Community
Essec, France natural
7/7/06 environment National Culture
 Culture and Marketing Mix
Product Policy:
Certain products are more culture-bound than others
e.g. Food &Beverages and Life-style products .
Pricing: Pricing policies are driven by four Cs:
•Customers
•Company (costs, objectives, strategy)
•Competition
•Collaborators (e.g., distributors)
Distribution:
Cultural variables do dictate distribution strategies.
Promotion:
Cultural influence on communication strategy
•Local cultural taboos
•Folklores, Mores and Norms
Essec, France
7/7/06
 Protocols and Relationship
Building
 Dietary and dining customs
 Gifts:
 Expected?
 What kind is appropriate?
 How does one receive gifts?
 Appropriate Dress
 Styles,
 Colors, etc.
 Current events
 Taboo subjects

Essec, France
7/7/06
 Application of cultural insights to marketing

The AXE Effect - Happy Dussera

Essec, France
7/7/06
 Application of cultural insights to marketing

Headline: -

MEXICO - Wards off hunger

INDIA - Wards off evil

HSBC
Subhead: Never underestimate the importance of local knowledge
Essec, France
7/7/06
 English for all?
Japanese hotel Taiwanese Tailor shop

Please take advantage of Ladies may have a fit upstairs

the chambermaid

“ladies are
requested not to
Norwegian
have children at
cocktail lounge
Essec, France the bar”
7/7/06
 Current Practices
 Training!!
 70% of US companies provides no cross-cultural
training.
 Employees for international assignments
 Flexible work timings
 Clear Communicators
 Comfortable in new situations
 And culturally mindful

Essec, France
7/7/06
 GLOBE (Global Leadership and
Organizational Behavior Effectiveness)

 Explores cultural values and impact on organizational

leadership
 Uncertainty avoidance, power distance, and collectivism as
in Hofstede’s constructs.
Other Dimensions :
 collectivism II

 gender egalitarianism

 assertiveness

 future orientation

 performance orientation

 humane orientation
Essec, France
7/7/06
 Ultimately

Think Globally. Act Locally.

~ Derek Torrington, 1994
Learn Globally and Deliver Locally

Essec, France
7/7/06