Here’s an interesting list of “100 Essential Cheat Sheets for Doing Business Abroad”, ranging from ‘food faux pas’ to ‘dress codes’ to ‘negotiations across cultures’. Not all of it offers the deepest insight available, but it’s definitely a good place to start.
eBay has been in several ruffles with french luxury goods maker LVHM. Recently, LVHM, that holds the rights to such well-known brands as Hennessy, Kenzo, Givenchy, Dior Perfumes, or Tag Heuer, has sued eBay over misuse of its Louis Vuitton brand. As its customers frequently misspell Vuitton, eBay has purchased keywords from search engines such as ‘Viton’, ‘Vitton’ or ‘Wuiton’ in order to channel web traffic to listings of the prestigious maker of leather goods products on its own website. Compared to earlier judicial awards LVHM won against eBay, the current one of US$ 316,500 is negligable. In 2008, it was fined 39.9 million Euros for the sale of counterfeit LVHM goods on its platform and in late 2009 it received another hefty 1.7 million Euro slap on the wrist for continuing to allow the resale of authentic LVHM perfumes on its website. With net revenues in excess of US$ 2 billion in 2009, eBay will probably be able to take the most recent blow as well. As the fight between French brands and the California-based auctioneer has long outgrown its pure business and legal nature, but has become one between two cultures, it has not hard to predict that it will continue into the future.
Cultural awareness is key in any international business activity. Cultural divides should be accounted for in marketing, negotiations, product design, and other important decisions. One must analytically consider the best way to promote a product given the target audience. It is argued that differences among cultures can be explained according to four dimensions of culture:
1. Individualism – “I” consciousness vs. “we” consciousness
2. Power Distance – levels of equality in society
3. Uncertainty Avoidance – need for formal rules and regulations
4. Masculinity – attitude toward achievement, roles of men and women
This figure shows the cultural dimension scores of 12 countries. Japan, for instance, shows the highest Uncertainty Avoidance score and thus might be receptive to such risk-reducing marketing programs as return privileges and extended warranties. Since individualism is highly regarded in the US, promotional appeals the promise empowerment might be enticing. In Arab countries where Power Distance scores are high, consumers may respond well to promotions that imply social status.
Doing business in other countries requires cognizance of the cultural divide. An international manager must think analytically to eliminate any self-reference criterion, which is the unconscious reference to one’s own cultural values. This is the root of most international business problems.
Understanding culture requires constant monitoring of changes caused by outside events and by the business entity itself. Resisting ethnocentrism – thinking one’s own cultural is superior – is also important. One must be careful not to measure other cultures with one’s own cultural barometer.
Some times a Long-Term vs. Short Term Outlook dimension also has been considered. Asian countries score highly on this dimension, while most Western countries do not. This may help explain why the Japanese tend to evaluate marketing decisions based on long-term market share rather than on short-term profit motivations.
Re-post by permission of Prof. Michael R. Czinkota. Originally posted at: http://michaelczinkota.blogspot.com/
Volvo of Sweden which has been owned by Ford for a number of years will be sold to a consortium led by Chinese carmaker Zhejiang Geely. It has been reported that the consortium is willing to pay about $2bn as it seeks to capitalize on the brands’ good reputation in the Chinese market. The first voices of concern from inside Volvo have already emerged. The head of Volvo’s engineering union expressed severe concerns about the Chinese’s ability to understand the Volvo culture – understandaby. Swedish culture is almost everything that Chinese culture is not – valuing individual initiative, egalitarian and risk-seeking. Brace for impact!
With the automotive industry in turmoil, it’s natural that the cards are being reshuffled. However, based on the mega-merger of the past decade between Daimler and Chrysler which ended in a mega-break up, what makes Fiat of Italy think that they would be able to integrate better with the American-based culture of Chrysler. They better start thinking about the compatibility of their corporate cultures quickly before I have more bad news to report in this blog….
What is it with US retailers? Did anybody notice how many retail companies headquartered in the US have failed in international markets over the past decades. After about 8 years of trying to get established, Wal-Mart left Germany in 2006, fashion retailer The Gap pulled out of Germany in 2004, and Pizza Hut defected from Austria after having failed to meet consumers’ taste there. Are these companies’ services and products a simple mismatch with local markets or are the companies too proud and too ignorant?
Starbucks leaves Australia. One of the latest international business failures comes from one of the most successful retail companies in the world. Starbucks, which operates more than 15,000 coffee shops worldwide, in July announced that it will close 61. Remaining will be only 23 stores in Sydney, Melbourne and Brisbane. What was going wrong? Many people claim that Starbucks failed to understand Australia’s very sophisticated coffee culture. Others take it a step further and accuse Starbucks of arrogance typical of US-based multinational corporations
