GLS University Faculty of Business Administration Sem III Past Paper PDF

GLS University’s Faculty of Business Administration Sem III (Regular) Core Course : Cross-Cultural Management Unit IV : Marketing and Human Resource Management Across Cultures  Unit 4: Marketing and Human Resource Management Across Cultures Mark...

GLS University’s Faculty of Business Administration Sem III (Regular) Core Course : Cross-Cultural Management Unit IV : Marketing and Human Resource Management Across Cultures  Unit 4: Marketing and Human Resource Management Across Cultures Marketing in a cross-cultural environment Since the new approach to marketing is seen as the most appropriate and effective way of dealing with consumers within the expanding and increasingly integrated market, there are several problems which marketers must face with cross-border markets. The question of adapting products and marketing strategies to suit the needs and wishes of the consumer lies at the heart of the intercultural marketing approach. Marketing is an integral part of a company’s activities. It tries to balance customer needs with the aims and resources of the organisation. Wall and Rees (2004) separate out marketing activities as follows: 1. Market analysis with at least three elements: environment analysis: this involves making an inventory of the risks and opportunities in the company’s environment; buyer behaviour: the company needs to establish the profile of its (potential) customers and to know how and why they buy; market research: this is the way information concerning the company’s customers and environment is collected. 2. Marketing strategy. Once a market has been scanned using the above tools, the company has to develop a strategy to give a meaning and direction to its marketing activities. Th e following strategies are often used: market segmentation: taking a group of (potential) customers who share certain characteristics (such as age or income range or occupational profile); marketing mix: comprising, apart from the product itself, price, promotional activities and place. The various marketing activities are integrated into the organisation through planning and management itself. Through planning, market opportunities can be evaluated in relation to the resources of the enterprise with a view to attaining its goals. Management is intent on running the whole process effectively so that the customers’ needs and wishes are met. However, this classification of marketing activities in terms of market, strategy, planning and management, as well as the strategy of the marketing mix, has its critics. Some experts see these approaches as being traditional ones that no longer meet present-day needs. Traditional view and new ideas and concepts As Welford et al. (2008) note, experts are increasingly questioning the effectiveness of the marketing mix approach. They argue that market-driven management should be more than a succession of ‘ordered functions’. They see a modern concept of marketing with a stronger customer focus, one that entails not only the notion of anticipating and responding to customer needs, but also that of defining and delivering customer value through a market-oriented business strategy. Th is means that the whole marketing function of a company should no longer be a separate unit; the function should be seen as a collective one whereby departments link up to perform various tasks and processes. This prescription is, according to Welford et al. (2008), closely linked to the development of relationship marketing. Here, too, the focus is less on the marketing mix and more on the development of relationships that firmly link the company to the market. Th ese relationships comprise not just personal and organisational ones, but also the creation of networks that the authors defi ne as ‘sets of relationships and interactions performed within specific relationships’. Relationship marketing management is essentially about connecting with customers through continual transactions and exchanges whereby the expectations of customers are not only met but also, if possible, exceeded. When looking for ways of establishing sustainable relations with and between consumers, companies are turning more and more to social media for marketing purposes. In fact, according to marketers worldwide, social network applications now receive priority over digital advertising and e-mail marketing. Enterprises are now setting up marketing strategies that bring not only change to corporate communication and marketing but also a real cultural revolution to the whole company. Th e switch from the ‘mass media’ to ‘relational media’ encourages companies to listen to consumers and to enter into dialogue with them. International marketing According to Wall and Rees (2004: 306), ‘international marketing can be simply defi ned as marketing activities that cross national borders’. They do add, however, that these activities occur at three levels in line with the focus of a company’s operations: Companies whose sales for the most part are made in the domestic market and consider exports to be less important. Multinational companies selling throughout the world that consider their country of origin or host country in the same way as the other market environments in which they are involved. Those companies – usually multinationals – that want to adopt a global marketing strategy by identifying products or services with certain similarities in certain markets, and pursuing a single, global marketing strategy for them (Coca-Cola being an obvious example). Consumer products as well as industrial products are all potential candidates for the global market, particularly when there is little or no need to adapt them for local consumption (telecommunications and pharmaceuticals are examples). The application of international marketing depends not only on the target market but also on the marketing orientation of the company. There are five common marketing orientations: production, customer, strategic marketing, sales and social marketing. Th e last two are described below. Companies with a sales orientation try to sell the same product domestically and in a large number of countries where consumer characteristics are similar and, as Daniels et al. (2011: 640) point out, ‘where there is also a great deal of spillover’ between countries when it comes to product information. Increasingly, however, exporting companies are having to adopt a social marketing orientation. Th is entails not only knowing how a product is bought, but also how it is disposed of, not only knowing why a product is bought, but also how it could be modified in some way to make it more socially desirable. Furthermore, for their international marketing to succeed, these companies have to take into account the effect of their products on all stakeholders – such as consumer associations – so that they have regard for the concept of social responsibility. A change in orientation may be necessary because of legal, cultural or even economic reasons. Such a change may compel the enterprise to modify its products to meet the needs of local consumers. Th e real reason for a change in orientation is oft en a cultural one. A switch from one product to another, a change in colour preferences or choice of materials is diffi cult to predict. Marketers just cannot determine in advance what the consumer is going to buy – not even when they are surveying their home country. Making such predictions in foreign markets is as diffi cult, if not more so, when it comes to selling new products, or at least products that are unknown to the consumers there. Human Resource Management Across Cultures Staffing for Global Operations The staffing function in International Human Resource Management (IHRM) is critical in ensuring that organizations effectively manage their global workforce. This function involves the strategic process of recruiting, selecting, and positioning employees across various international locations. It requires a deep understanding of cultural differences, local labor laws, and global talent pools to match the right candidates with the right roles. IHRM staffing aims to balance the needs of the organization with those of its employees, ensuring compliance with diverse regulations while fostering a cohesive and productive international team. This involves not only hiring expatriates but also integrating local employees and managing international assignments to support organizational goals. Thus, in international operations, there are certain choices available, when it comes to filling up vacancies. 1. Host Country Nationals (HCNs): HCNs are employees who are citizens of the country where a foreign subsidiary is located. For instance, if a U.S.-based company opens a branch in Germany, German employees hired to work at this branch are considered HCNs. Advantages: Cultural Familiarity: HCNs understand the local culture, customs, and business practices, which can enhance communication and smooth business operations. Cost Efficiency: Employing HCNs can be more cost-effective, as it eliminates relocation and repatriation expenses. Local Compliance: HCNs are well-versed in local labor laws and regulations, reducing the risk of legal issues. Community Relations: Hiring locals can improve the company's image and relations within the host community, fostering goodwill and support. Disadvantages: Limited Corporate Alignment: HCNs may not be as familiar with the parent company's culture, practices, and objectives, potentially leading to misalignment. Training Costs: Significant training may be required to align HCNs with the company's global standards and policies. Career Path Limitations: HCNs might see fewer opportunities for advancement within the global company structure, which can affect motivation and retention. 2. Parent Country Nationals (PCNs): PCNs are employees who are citizens of the country where the multinational company's headquarters are located. For example, if the same U.S.-based company sends American managers to oversee the German subsidiary, those managers are PCNs. Advantages: Corporate Culture Consistency: PCNs can help maintain the parent company's culture, values, and business practices across international subsidiaries. Control and Coordination: PCNs facilitate effective communication and coordination between the headquarters and the foreign subsidiary. Leadership Development: Assigning PCNs to international roles can be part of their career development, preparing them for higher leadership positions within the company. Disadvantages: High Costs: Relocating PCNs can be expensive due to relocation allowances, housing, and other expatriation benefits. Cultural Adjustment: PCNs may face challenges adjusting to the host country’s culture and work environment, potentially impacting their effectiveness. Host Country Resentment: The presence of PCNs might lead to resentment or a perception of favoritism among local employees, potentially affecting team dynamics. 3. Third Country Nationals (TCNs): TCNs are employees who are citizens of a country different from both the host and parent countries. For instance, if the U.S.-based company hires an Indian national to work in its German subsidiary, that employee is a TCN. Advantages:  Global Expertise: TCNs often bring unique skills, knowledge, and perspectives that are valuable in a globalized business environment. Flexibility: TCNs can be deployed to various locations based on their expertise and experience, providing flexibility in global operations. Cost and Availability: TCNs might be available at lower costs compared to PCNs or might possess specialized skills not available locally. Disadvantages: Complex Legalities: Hiring TCNs can involve navigating complex immigration laws and work permits, which can be time-consuming and costly. Cultural Integration: Like PCNs, TCNs might face challenges in adapting to the host country’s culture and work environment. Organizational Fit: Ensuring that TCNs align with both the parent company’s and host country’s organizational culture can be challenging, requiring extensive integration efforts. Each staffing option has its unique set of advantages and challenges, and organizations must carefully assess their strategic needs, operational goals, and the specific context of the host country to determine the most appropriate staffing strategy. Organizations, in reality, go for a combination of these options. Some vacancies might be filled with HCNs, some with PCNs and some with TCNs. But irrespective of the country of origin of these candidates, organizations need to ensure that all of them possess cultural sensitivity and empathy, in addition to culture- savviness, to work in a multi-cultural environment. When an organization goes with PCNs or TCNs as international staffing options, the candidates are called expatriates. An expatriate, commonly known as an "expat," is an employee who is temporarily or permanently relocated to a country other than their home country for work purposes. Expatriates are typically sent by their employers to international branches, subsidiaries, or projects to fill strategic roles, transfer knowledge, or manage operations in the host country. Problems Associated with Expatriation 1. Cultural Adjustment: Expatriates often face challenges in adjusting to the cultural differences of the host country. This includes adapting to new social norms, business practices, and everyday lifestyle changes, which can lead to culture shock. 2. Family Adjustment: The expatriate’s family members may also struggle with adjusting to the new environment. Spouses might face difficulties finding employment, and children might need to adapt to new schools and social  circles. These challenges can cause significant stress and affect the expatriate’s focus and performance at work. 3. Language Barriers: Language differences can pose a significant challenge for expatriates, affecting their ability to communicate effectively with local colleagues, clients, and within the community, leading to misunderstandings and reduced productivity. 4. Isolation and Loneliness: Being away from their home country, family, and friends can lead to feelings of isolation and loneliness. This can impact the mental well-being of expatriates and potentially lead to decreased job satisfaction and performance. 5. Career Development: Expatriates may face uncertainties regarding their career progression. There might be concerns about their position and role upon returning to the home country, and whether the international experience will positively impact their career trajectory. 6. Legal and Administrative Issues: Navigating the legal and administrative requirements in the host country, such as obtaining work permits, visas, and complying with local labor laws, can be complex and time-consuming. Failure to comply can result in legal complications and penalties. 7. Cost of Living and Compensation: The cost of living in the host country might be significantly different from the home country, impacting the expatriate’s financial situation. Employers often need to provide comprehensive compensation packages, including housing allowances, schooling for children, and other benefits, to address these differences, which can be costly. 8. Repatriation Challenges: Upon returning to their home country, expatriates often face challenges in readjusting to the home culture and reintegrating into the corporate environment. This process, known as reverse culture shock, can be just as challenging as the initial expatriation. 9. Performance Management: Monitoring and evaluating the performance of expatriates can be difficult due to the geographical distance and differing  performance metrics between the home and host countries. Ensuring consistent feedback and support is crucial for expatriate success. Which of the above problems have their origin in culture and cultural differences? Overall, successful expatriation requires comprehensive support systems, including pre-departure training, ongoing cultural support, clear career development plans, and robust repatriation processes to address these challenges and ensure a positive experience for both the expatriate and the organization. When your workforce is culturally diverse and employees from one cultural background move to another, either temporarily or permanently, they have to deal with culture- shocks. Culture shock refers to the feelings of disorientation, confusion, and anxiety that individuals experience when they encounter a culture vastly different from their own. This phenomenon is common among expatriates, international students, and travelers who move to a new country. Culture shock typically occurs in several stages: honeymoon, frustration, adjustment, and acceptance. Example: Imagine an American expatriate named John who moves to Japan for a work assignment. Initially, John is excited about the new environment, enjoying the novelty of Japanese cuisine, architecture, and customs (honeymoon stage). However, as time passes, he begins to struggle with everyday activities. He finds it challenging to understand and use the Japanese language, misinterprets social cues, and feels isolated because of the different work culture that emphasizes hierarchy and indirect communication (frustration stage). Over time, John starts learning the language, builds relationships with local colleagues, and becomes more comfortable with the cultural norms (adjustment stage). Eventually, John fully embraces Japanese culture, integrating it into his daily life and feeling at ease (acceptance stage). But let us not assume that such shocks are experienced only when individuals move from one country to another country. Let us look at another example. Example: Consider a software engineer named Priya, who relocates from a major metropolitan city in India, Mumbai, to a smaller, rural town say Porbander, in the same country for a new job. While she is still within her home country, Priya experiences sub-culture shock due to the stark differences in lifestyle, pace of life, and social norms. In Mumbai, Priya was used to a fast-paced, cosmopolitan environment with diverse social interactions and modern amenities. However, in the rural town, she faces slower-paced life, limited access to urban conveniences, and a community with traditional customs and values that are unfamiliar to her. Priya struggles with the different dialect spoken (even if she is a Gujarathi), and the close-knit community dynamics where everyone knows each other’s business.  This phenomenon is known as a ‘sub-culture shock’. Sub-culture shock occurs when individuals encounter a sub-culture within their own country or within a broader cultural context that is significantly different from what they are accustomed to. This can happen when moving to a different region within the same country, joining a new social group, or entering a specific professional or organizational culture. In both the examples given above, individuals must go through an adaptation process to overcome the initial shock and successfully integrate into their new cultural or sub- cultural environments. Support systems such as cultural training, mentorship, and open communication can significantly aid in this transition. Intercultural marketing The question of adapting products and marketing strategies to suit the needs and wishes of the consumer lies at the heart of the intercultural marketing approach. According to Usunier and Lee (2005), intercultural marketing is as much to do with localising as with globalising. The intercultural marketing approach takes account of criteria related to geography and nationality while, at the same time, using criteria to do with consumer attitudes, preferences and lifestyles related to age, class and ethnicity, as well as to occupation. Intercultural marketing is made easier if the conditions for identification with the products are present in the target market. If consumers are to buy a certain product they need to identify with it in some way. Usunier and Lee (2005: 232) also maintain that consumers: buy the meaning that they find in products for the purpose of cultural identification, based on the desire for assimilation in a certain civilization. The elements involved in the process of cultural identification are, according to the authors, twofold: the notion of identity (the need to reproduce the national culture such as it is, the desire to feel at home); the notion of exoticism (the desire to escape from one’s culture and to experience other values, other ways of living). These notions are closely interlinked in a rather ambiguous way in the identification process, so a straightforward description of the approach is difficult to make. That is why it is preferable to make clusters of countries or consumers who share ‘meaningful cultural characteristics’. Cross-cultural consumer behaviour A consumer’s level of exposure towards foreign goods or lifestyles may influence his buying decisions and preferences. Consumers tend to have an attitude when it comes to a particular product being made in a particular country. This attitude might be positive, negative, and neutral. Cross-cultural consumer analysis is defined as the effort to determine to what extent the consumers of two or more nations are similar or different. A major objective of cross-cultural consumer analysis is to determine how consumers in two or more societies are similar and how they are different. Such an understanding of the similarities and differences that exist between nations is critical to the multinational marketer, who must devise appropriate strategies to reach consumers in specific foreign markets. The greater the similarity between nations, the more feasible it is to use relatively similar strategies in each nation. If they differ in many aspects, then a highly individualized marketing strategy is indicated. The success of marketing and servicing in foreign countries is likely to be influenced by beliefs, values, and customs. Problems with cross-border market research Language barriers. Language poses a real problem when it comes to identifying behaviours common to different nationalities. Translating from one language to  another is one problem, but also assessing the differences between countries when it comes to the meaning of the translated words. Sensitivity of questioning. Europeans show differences in the information they choose to communicate. The Greeks, for example, may not be worried about revealing information on their income, whereas the British are. Research techniques. Most of marketing research techniques emanate from the US. They focus on the ability of individuals to express their sentiments and feelings. Some customers, whether in Europe or Asia, are reluctant to talk openly about such matters and prefer instead to be asked questions on more practical issues. Cultural differences. When surveys are being carried out across cultures about the way people live, behave and think, it is important to take into account the cultural context when responses to questionnaires are being analysed. If this is not done, the research findings may be misinterpreted and the real meanings undiscovered. Suspicion. People in certain countries are becoming increasingly suspicious about what happens to information gathered through marketing surveys. They are increasingly reluctant, therefore, to participate in such surveys. Statistical comparisons. Cross-country comparisons of statistics are difficult to perform since the data is established locally and is based on practices that differ between countries. Demographic information, educational qualifications and social groupings may be different, as well as the relative amounts spent on promotion and advertising. Fragmentation. Many multinational concerns have decentralised structures whereby operating companies enjoy considerable autonomy. Research done by a local company across different countries and markets may lack a consistent method, be fragmented and inconclusive. Brands and national images As we have seen, the brand name can provoke associations of ideas and emotions in such a way that consumers are not just buying a product but also the image it conveys. In terms of a consumer’s purchase criteria, image is an important facet of the product, along with quality, innovation, design, and ease of use as well, of course, as price. In terms of international marketing, how do consumers perceive products from countries other than their own? What is the relationship between the nationality of a product and the image it evokes? A number of authors, including Usunier and Lee (2005) see this relationship as a very important one, not only in terms of the ‘made in’ label, but also in terms of other elements that contribute to the consumer’s perception of product nationality. These include: the image of national products as compared with imported or international products; national images of generic products; the national image of the manufacturing company; the image diff used by the brand name. Such elements are not necessarily related to one country (e.g. pasta to Italy), but to several countries (e.g. wine), or even to a geographical area (yoghurt to the Balkans). Moreover, there are many perceptions of products which are not shared by consumers from different national cultures; consumers from one country do not always have the same image of a product from their own country as do consumers from another country. Impact of culture on advertising Culture shapes the perception of the audience and hence it impacts their interpretation of ads and how they are remembered. Ads, designed to appeal to the culture of the target market and society, are more likely to be memorable and effective than ads that are tone-deaf to cultural norms and expectations. Culture plays a significant role in shaping TV commercials. It affects the choice of themes, language, symbols, and visual elements used in advertisements. Cultural factors such as diversity, heritage, norms, values, and identity influence the creation of commercials that resonate with the target audience To communicate with the customer and the outside world – whether the focus is on the organisation in question or on its products – marketing uses advertising as its principal channel. Internet technology offers a number of opportunities for international marketing. Being on the Web, however, also creates a number of strategic challenges for global companies. Company websites allow not only information to be given about the products or services sold, but also online advertising and sales promotion worldwide. However, despite these advantages, dealing in the same way with all the markets and consumers in different countries still remains a difficult task. Advertising is oft en defined as the channel of communication used not only to inform the public, but also to persuade the consumer to buy a product or service. Some consider advertising as a universal phenomenon, an indispensable part of everyday life; others focus on its power, the power not only to persuade people to buy, but also to create a need. In any case, advertising in its simplest form is information intended to create a link between the producer and consumer. But there is clearly a purpose behind this, namely to sell! Its essential purpose is to publicise a product and so create a demand for it. And when a product has become known, advertising maintains the recognition and reputation it has acquired while maintaining the consumer’s wish to buy the product. The meaning of brands and messages across cultures Incorporating understanding of a consumer’s culture takes into account the emotional element, necessary if a product is to be successfully launched in a new market. As Hoecklin (1995) observes, companies operating internationally are managing the meaning of brands across cultures while building the strength of their brand and extending the number of markets in which they are selling and promoting their brand. Their attempts to adapt to the cultural differences in communication and product use have reached a sophisticated level: companies are increasingly intent on making sure that the intended meaning of the brand coincides with the perceived meaning of the message. This approach underlines the importance of the notion of perception. In psychological terms, perception is a complex act whereby the individual is not just observing but also reconstructing his environment. He is not just discovering, but also interpreting it by applying shapes or patterns. If cognitive theories of perception are applied to advertising, they indicate that a product must always involve the receiver to a sufficient degree. If this does not happen, the information given will not retain the consumer’s attention, even if the information is considered shocking. Generally speaking, consumers will avoid everything that contradicts their system of thought, or will reduce its importance when interpreting it. One can deduce from this that differences in cultural systems also determine what is seen and how it is perceived.