Culture 

is the way that we do things around here. Culture could relate to a country (national culture), a distinct section
of the community (sub-culture), or an organization (corporate culture). You are not born with a culture, and that it is
learned. So, culture includes all that we have learned in relation to values and norms, customs and traditions, beliefs
and religions and rituals.
 International business needs to take into account the local culture of the country in which you wish to market.

MAIN PROPOSITIONS ABOUT CULTURE

 
-          Culture is learned
-          Culture is structured
-          It is divided into aspects
-          Culture is dynamic
-          Culture derives from the biological, environmental, psychological, and historical components of human existence
-          Culture is variable
-          Culture exhibits regularities that permits its scientific analysis

Cultural Framework
 
It uses eight categories in its analysis. The Eight categories are Language, Religion, Values and Attitudes, Education,
Social Organizations, Technology and Material Culture, Law and Politics and Aesthetics.

Language

With language one should consider whether or not the national culture is predominantly a high context culture or a low
context culture (Hall and Hall 1986). The concept relates to the balance between the verbal and the non-verbal
communication.
In a low context culture spoken language carries the emphasis of the communication i.e. what is said is what is meant.
Examples include Australia and the Netherlands.
In a high context culture verbal communications tend not to carry a direct message i.e. what is said may not be what is
meant. So with a high context culture hidden cultural meaning needs to be considered, as does body language.
Examples of a high context cultures include Japan and some Arabic nations.

Religion

The nature and complexity of the different religions an international marketer could encounter is pretty diverse. The
organization needs to make sure that their products and services are not offensive, unlawful or distasteful to the local
nation. This includes marketing promotion and branding.

 In China in 2007 (which was the year of the pig) all advertising which included pictures of pigs was banned.
This was to maintain harmony with the country's Muslim population of around 2%. The ban included pictures of
sausages that contained pork, and even advertising that included an animated (cartoon) pig.
 In 2005 France's Catholic Church won a court injunction to ban a clothing advertisement (by clothing
designers Marithe and Francois Girbaud) based upon Leonardo da Vinci's Christ's Last Supper.

 
Values and Attitudes

Values and attitudes vary between nations, and even vary within nations. So if you are planning to take a product or
service overseas make sure that you have a good grasp the locality before you enter the market. This could mean
altering promotional material or subtle branding messages. There may also be an issue when managing local
employees. For example, in France workers tend to take vacations for the whole of August, whilst in the United States
employees may only take a couple of week's vacation in an entire year.

Education
The level and nature of education in each international market will vary. This may impact the type of message or even
the medium that you employ. For example, in countries with low literacy levels, advertisers would avoid
communications which depended upon written copy, and would favor radio advertising with an audio message or visual
media such as billboards. The labeling of products may also be an issue.

Social Organizations
 
This aspect of Cultural Framework relates to how a national society is organized. For example, what is the role of
women in a society? How is the country governed - centralized or devolved? The level influence of class or casts upon a
society needs to be considered. For example, India has an established caste system - and many Western countries still
have an embedded class system. So social mobility could be restricted where caste and class systems are in place.
Whether or not there are strong trade unions will impact upon management decisions if you employ local workers.

Technology and Material Culture

Technology is a term that includes many other elements. It includes questions such as is there energy to power our
products? Is there a transport infrastructure to distribute our goods to consumers? Does the local port have large
enough cranes to offload containers from ships? How quickly does innovation diffuse? Also of key importance, do
consumers actually buy material goods i.e. are they materialistic?

Law and Politics

The underpinning social culture will drive the political and legal landscape. The political ideology on which the society is
based will impact upon your decision to market there. For example, the United Kingdom has a largely market-driven,
democratic society with laws based upon precedent and legislation, whilst Iran has a political and legal system based
upon the teachings and principles Islam and a Sharia tradition.

Aesthetics

Aesthetics relate to your senses, and the appreciation of the artistic nature of something, including its smell, taste or
ambience. For example, is something beautiful? Does it have a fashionable design? Was an advert delivered in good
taste? Do you find the color, music or architecture relating to an experience pleasing? Is everything relating to branding
aesthetically pleasing?

Cultural Attitude and International Business

 
Cross cultural literacy

Individuals and firms must develop cross-cultural literacy. International businesses that are ill informed about the
practices of another culture are unlikely to succeed in that culture. One way to develop cross-cultural literacy is to
regularly rotate and transfer people internationally.
Dressing habits, living styles, eating habits and other consumption patterns, priority of needs are dictated/influenced by
culture. Some Thai and Chinese and most of the Indians do not consume beef. Thailand Chinese believe that
consumption of beef is improper and Indians (particularly Hindus) believe that eating beef is a sin as they believe cow
is sacred. The eating habits vary widely. Chinese cat fish stomachs, and bird’s nest soup, Japanese eat uncooked sea
food, Iraqis eat dried, salted locusts and snakes while drinking. The French eat snails, Americans and Europeans eat
mostly nonvegetarian food. Indians eat mostly vegetarian food. It was surprising to the rest of the world to know that
there were pure vegetarians
in India. Similarly, dressing habits also vary from country to country based on their culture. We observe different dress
styles of West, Middle East, India, and Pacific etc. Wearing ‘saree’ by Indian women is a peculiar dressing habit, which
is influenced by the culture. Similarly, wearing ‘burka/ parcia’ by the women of Middle East is another example for the
influence of culture on the dressing.

Economic Environment and its implications on International Business

There are four broad types of economic systems: market, command, mixed, and state-directed
.In reality almost all are mixed to some extent, for even the most market oriented systems have some governmental
controls on business and even the most command based systems either explicitly allow some free markets to exist or
have black markets for some goods and services. Yet, all countries can be considered to be at some point on a
continuum between pure market and pure command.
 
Market Economy

In a pure market economy, the goods and services that a country produces, as well as the quantity in which they are
produced, is not planned by anyone. Rather price and quantity are determined by supply and demand.

Mixed economy
 
A mixed economy includes some elements of each. In Canada, for example, while most business is privately owned and
operated under market principles, health care, electrical power, and liquor distribution are run by state owned
enterprises in most provinces.

State-directed economy
 
In a state-directed economy, the government plays a significant role in directing the investment activities of private
enterprises through “industrial policy.”  Both Japan and South Korea are often cited as examples of state-directed
economies.

Political Systems and International Business 

 
Definition: Political system refers to the system pf Government in a nation. The economic and legal systems of the
country are often shaped by its political system. There are two separate polarities to consider when discussing political
systems: collectivism vs. individualism and democracy vs. totalitarianism.

Democratic or totalitarian
 
.These two dimensions are interrelated, systems that emphasize collectivism tend to be totalitarian while, systems, that
pace a high value on individualism tend to be democratic.

Collectivism vs. individualism

 
Collectivism
 
Definition: political system that stresses the primacy of collective goals over individual goals.
The system, which advocates Collectivism, is called socialism and these activists are called socialists.

Socialism
 
Socialism roots from the intellectual lessons from Karl Marx (1818-1883). Marx’s basic argument is that in a capitalist
society where individual freedom is not restricted, the few benefit at the expense of many. Marx advocated state
ownership of the basic means of production, distribution and exchange (business). His point is that if the state owned
the means of production, the states could ensure that the workers were fully compensated for their labor.

Individualism
 
This is the opposite of collectivism.
Individualism refers to a philosophy that an individual should have the freedom in his or her economic and political
pursuits.
Individualism focuses on (1) guaranteeing individual freedom and self-expression, and (2) letting people pursue their
own economic self-interest in order to achieve the best overall good for society.
 Democracy Vs. totalitarianism
 
Democracy

Democracy refers to apolitical system in which the government is by the people, exercised either directly or through
elected representatives.

Totalitarianism
 
Totalitarianism is a form of Government in which one person or political party exercises absolute control over all
spheres of human life, and opposing political parties are prohibited.

There are four major forms of totalitarianism: communist, theocratic, tribal, right wing (often military).
 
Legal Environment and International Business 
 
Origins of International Law

 •Commercial codes date back to Egypt in 1400 B.C.

 •Early trade centered around law of the sea
 •Greek/ Roman Empires both had codes of international trade
 •Middle Ages: Lex Mercatoria (Merchant Law) –  Governed trading customs in Europe
 •Today’s codes still partially derived from early efforts

Sources of International Law

 

 •Individual countries create their own laws

 •Trade agreements between countries
 •Worldwide/regional organizations, i.e.

–United Nations
–European Union (EU)

 •No universal international court system for resolving international conflicts of businesses
 •Difficult to enforce decisions and contracts
 •Selected Organizations Affecting the International Legal Environment

International Trade Agreements

 

 •Improve economic relations of countries

 •Cover variety of commercial issues
 •Tax agreements prevent double taxation
 •Examples:

–North American Free Trade Agreement (NAFTA, 1992) Canada/US/Mexico

–General Agreement on Tariffs & Trade (GATT) replaced in 1995 by World Trade Organization (WTO)

International Dispute Resolution

 

 •Litigation
 –Differs within countries
–Complication of evidence, witnesses and documents
–Judicial system may be different from country to country
–Some courts more influenced by political pressures
–Not enforceable outside of country
–Treaties/Conventions may assist potential parties
–Contract clauses assist courts in enforcement of claims
–Usually need “minimum contacts” for jurisdiction 

Arbitration

3rd neutral party decides outcome, which is binding. Rules and regulations for arbitration laid down by International
Court of Arbitration
 
Mediation

3rd neutral party “suggests” outcome, which is not binding 

 

 •International Court of Justice (ICJ)

–Only nations have standing--not individuals

–Nations may make claims on behalf of persons
–No mandatory compliance requirement
–UN Security Council must enforce