International Business and Trade

14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham

History and Geography:

The Foundations
of Culture
PRELIM Period

McGraw-Hill/Irwin
International Marketing 14/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 What Should You Learn?
• The importance of history and geography in
the understanding of international markets
• The effects of history on a country’s culture
• How culture interprets events through its
own eyes
• How the United States moved west and how this
more affected attitudes

3-2
 What Should You Learn?
• The effect of geographic diversity on economic
profiles of a country
• Why markets need to be responsive to
geography of a country
• Economic effects of controlling population
growth versus aging population
• Communications are an integral part of
international commerce

3-3
 Global Perspective
Birth of a Nation – Panama in 67 Hours
• To understand a society’s actions and its
points of view, you need to appreciate:
– The influence of historical events
– The geographical uniqueness to which a culture has had to
adapt
• To interpret a culture’s behavior and
attitudes, a marketer must have some idea of
a country’s history and geography

3-4
 History Perspective
in Global Business
• History helps define a nation’s mission
– How it perceives its neighbors
– How it perceives itself
– Its place in the world
• Insights into history are important for
understanding current attitudes
• It is necessary to study culture as it is now as
well as to understand culture as it was
– A country’s history

3-5
History and Contemporary Behavior
• Japanese history
– Seven centuries under the shogun feudal system
– The isolation before the coming of Admiral Perry in 1853
– Threat of domination by colonial powers
– Rise of new social classes
– Western influences
– Humiliation of World War II
– Involvement in the international community
• Historically, loyalty and service, a sense of responsibility, and
respect for discipline, training, and artistry were stressed to
maintain stability and order
• A historical perspective gives the foreigner a basis on which
to begin developing cultural sensitivity and a better
understanding of contemporary Japanese behavior

3-6
 History is Subjective
• Historical events always are viewed from
one’s own biases and SRC
• A crucial element in understanding any
nation’s business and political culture is
the subjective perception of its history
– Relationship between U.S. and Mexico
► Monroe Doctrine

3-7
 Territorial Expansion
of United States from 1783
Exhibit 3.1

3-8
 Manifest Destiny
and the Monroe Doctrine
• Both accepted as the basis for U.S. foreign policy during
much of the 19th and 20th centuries
• Manifest Destiny justified U.S. expansion
– Annexation of Texas, Oregon, New Mexico, and California
– U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines
• Three basic dicta of the Monroe Doctrine
– No further European colonization in the New World
– Abstention of the U.S. from European political affairs
– Nonintervention of European governments in the governments of the
Western Hemisphere
• Change in the Monroe Doctrine
– 1881 – Roosevelt Corollary

3-9
 U.S. Intervention
in Latin America Since 1945
Exhibit 3.2

3-10
Geography and Global Markets
• Geography – an element of the uncontrollable
environment that confronts every marketer
– Affects a society’s culture and economy
– Physical makeup limits a nation’s ability to supply its people’s
needs

3-11
 Climate and Topography
• Altitude, humidity, and temperature extremes
– South America
– British resistance of the English Channel
– Trade through the Alps

3-12
 Geography, Nature
and Economic Growth
• As countries prosper, natural barriers are
overcome
• Environmental issues
– Disruption of ecosystems
– Relocation of people
– Inadequate hazardous waste management
– Industrial pollution

3-13
 Social Responsibility
and Environmental Management
• Environmental protection is not an optional extra
• Pollution is on the verge of getting completely out of
control
• China has 16 of the world’s 20 most polluted cities
• Critical issue: the disposal of hazardous waste
• Sustainable development

3-14
 Resources
• The availability of minerals and the ability to
generate energy are the foundations of modern
technology
• The principal supplements to human energy
– Animals
– Wood
– Fossil fuel
– Nuclear power
– Ocean tides
– Geothermal power
– The sun

3-15
 Resources
• United States in perspective
– 1942 – nearly self-sufficient
– 1950 – major importer
– 1973-2000 – increased dependency from 36% to 66%
– Mid-2000’s – predicted to be importing more than 70% of needs
• The location, quality, and availability of
resources will affect the pattern of world
economic development and trade well into the
21st century

3-16
 World Energy Consumption
Exhibit 3.3a

3-17
 World Energy Consumption
Exhibit 3.3b

3-18
Dynamics of Population Trends
• Global population trends determine today’s
demand for goods
– Rural/urban population shifts
– Rates of growth
– Age levels
– Population control
• Changes in population will profoundly affect
future demand
• The most important deterrent to population
control is cultural attitudes about the importance
of large families

3-19
 World Population by Region – 2005-2050
Life Expectancy at Birth – 2005-2010 (millions)
Exhibit 3.4

3-20
 Rural/Urban Migration
• Result of a desire for greater access to:
– Sources of education
– Health care
– Improved job opportunities

3-21
 Population Decline and Aging
• Population growth in many countries has
dropped below the rate necessary to maintain
present levels
• A nation needs a fertility rate of about 2.1
children per woman
• Not one major country has sufficient internal
population growth to maintain itself

3-22
 Age Density for World
and Selected Countries
Exhibit 3.5

3-23
Worker Shortage and Immigration
• The free flow of immigration will help to
ameliorate the dual problems of explosive
population expansion in less-developed
countries and worker shortage in
industrialized regions
• Europe will need 1.4 billion immigrants over
the next 50 years
• Japan and the U.S. will need 600 million
immigrants between now and 2050

3-24
 500 Years of Trade
Exhibit 3.6a

3-25
 500 Years of Trade
Exhibit 3.6b

3-26
 World Trade Routes
• Progression of trade routes
– Overland
– Sea routes
– Air routes
– The Internet
• Trade routes bind world together, minimizing:
– Distance
– Natural barriers
– Lack of resources
– Fundamental differences between and economies
• Trade routes represent attempts to overcome
influence of geography
– Causing economic and social imbalances

3-27
 Communication Links
• Telegraph
• Telephone
• Television
• Satellites
• Computer
• Internet

3-28
Global Perspective Equities and eBay –
Culture Gets in the Way
• Culture deals with a group’s design for living
• The successful marketer clearly must be a
student of culture
• Markets are the result of the three-way
interaction of a marketer’s
– Economic conditions
– Efforts
– All other elements of culture
• The use of something new is the beginning of
cultural change
– The marketer becomes a change agent

4-29
 Culture’s Pervasive Impact
• Culture affects every part of our lives, every day,
from birth to death, and everything in between
– Japan – the year of the Fire Horse
• As countries move from agricultural to industrial to
services economies’ birthrates decline
• Consequences of consumption
– Tobacco
• Culture not only affects consumption, it also affects
production
– Stomach cancer in Japan

4-30
 Birthrates (per 1000 women)
Exhibit 4.1

4-31
 Patterns of Consumption
(annual per capita)
Exhibit 4.2

4-32
 Consequences of Consumption
Exhibit 4.3

4-33
Human Universals – Myth of Diversity
• Use metaphors
• Have a system of status
and roles
• Are ethnocentric
• Create art
• Conceive of success and
failure
• Create groups antagonistic to
outsiders
• Imitate outside influences
• Resist outside influences
• Consider aspects of sexuality
private
• Express emotions with face
• Reciprocate
• Use mood altering drugs
• Overestimate objectivity of
thought
• Fear of snakes
• Recognize economic
obligations in exchanges of
goods and services
• Trade and transport of goods
4-34
Definitions and Origins of Culture
• Traditional definition of culture
– Culture is the sum of the values, rituals, symbols, beliefs, and
thought processes that are learned, shared by a group of people,
and transmitted from generation to generation
• Humans make adaptations to changing
environments through innovation
• Individuals learn culture from social institutions
– Socialization (growing up)
– Acculturation (adjusting to a new culture)
– Application (decisions about consumption and production)

4-35
 Origins, Elements,
and Consequences of Culture
Exhibit 4.4

4-36
 Geography
• Exercises a profound control
– Includes climate, topography, flora, fauna, and microbiology
– Influenced history, technology, economics, social institutions and
way of thinking
• The ideas of Jared Diamond and Philip Parker
– Jared Diamond
► Historically innovations spread faster east to west than north to south
– Philip Parker
► Reports strong correlations between latitude (climate) and per capita GDP
► Empirical data supports climate’s apparent influence on workers’ wages
► Explain social phenomena using principles of physiology

4-37
 We All Love Flowers – Why?
• Geography
• History
• Technology and economics
• Social institutions
• Cultural values
• Aesthetics as symbols

4-38
 History, the Political Economy,
and Technology
• History
– Impact of specific events can be seen reflected in technology, social
institutions, cultural values, and even consumer behavior
► Tobacco was the original source of the Virginia colony’s economic survival in the 1600s

• Political Economy
– Three approaches to governance competed for world dominance
► Fascism
► Communism
► Democracy/free enterprise

• Technology
– Jet aircraft, air conditioning, televisions, computers, Internet, etc.
– None more important than the birth control pill

4-39
 Social Institutions
• Family
• Religion
• School
• The media
• Government
• Corporations

4-40
 Social Institutions
• Family
– Nepotism
– Role of extended family
– Favoritism of boys in some cultures
• Religion
– First institution infants are exposed to outside the home
– Impact of values systems
– Misunderstanding of beliefs
• School
– Affects all aspects of the culture, from economic development to
consumer behavior
– No country has been successful economically with less than 50%
literacy

4-41
 Social Institutions
• The media
– Media time has replaced family time
► TV
► Internet

• Government
– Influences the thinking and behaviors of adult citizens
► Propaganda
► Passage, promulgation, promotion, and enforce of laws

• Corporations
– Most innovations are introduced to societies by companies
– Spread through media
– Change agents

4-42
 Elements of Culture
• Cultural values
– Individualism/Collectivism Index
– Power Distance Index
– Uncertainty Avoidance Index
– Cultural Values and Consumer Behavior

4-43
 Hofstede’s Indexes
Language, and Linguistic Distance
Exhibit 4.5

4-44
 Elements of Culture
• Rituals
– Marriage
– Funerals
• Symbols
– Language
► Linguistic distance
– Aesthetics as symbols
► Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render
marketing efforts ineffective or even damaging

• Beliefs
– To make light of superstitions in other cultures can be an expensive
mistake
• Thought processes
– Difference in perception
► Focus vs. big-picture

4-45
 Metaphorical Journeys
through 23 Nations
Exhibit 4.6

4-46
 Cultural Knowledge
• Factual knowledge
– Has meaning as a straightforward fact about a culture
– Assumes additional significance when interpreted within the
context of the culture
► Needs to be learned

• Interpretive knowledge
– Requires a degree of insight that may best be described as a
feeling
► Most dependent of past experience for interpretation
► Most frequently prone to misinterpretation
► Requires consultation and cooperation with bilingual natives with marketing
backgrounds

4-47
Cultural Sensitivity and Tolerance
• Being attuned to the nuances of culture so that a
new culture can be viewed objectively,
evaluated and appreciated
– Cultures are not right or wrong, better or worse, they are simply
different
– The more exotic the situation, the more sensitive, tolerant, and
flexible one needs to be

4-48
 Cultural Change
• Dynamic in nature – it is a living process
• Paradoxical because culture is conservative and
resists change
– Changes caused by war or natural disasters
– Society seeking ways to solve problems created by changes in
environment
– Culture is the means used in adjusting to the environmental and
historical components of human existence

4-49
 Cultural Borrowing
• Effort to learn from others’ cultural ways in the
quest for better solutions to a society’s particular
problems
– Imitating diversity of other makes cultures unique
– Contact can make cultures grow closer or further apart
• Habits, foods, and customs are adapted to fit
each society’s needs

4-50
 Similarities – An Illusion
• A common language does not guarantee a
similar interpretation of word or phrases
– May cause lack of understanding because of apparent and
assumed similarities
• Just because something sells in one country
doesn’t mean it will sell in another
– Cultural differences among member of European Union a
product of centuries of history

4-51
 Resistance to Change
• Gradual cultural growth does not occur without
some resistance
– New methods, ideas, and products are held to be suspect before
they are accepted, if ever
• Resistance to genetically modified (GM) foods
– Resisted by Europeans
– Consumed by Asians
– Not even labeled in U.S. until 2000

4-52
 Planned and Unplanned
Cultural Change
• Determine which cultural factors conflict with an
innovation
• Change those factors from obstacles to acceptance into
stimulants for change
• Marketers have two options when introducing and
innovation to a culture
– They can wait
– They can cause change
• Cultural congruence
– Marketing products similar to ones already on the market in a
manner as congruent as possible with existing cultural norms

4-53
 Consequences of Innovation
• May inadvertently bring about change that affects very
fabric of a social system
• Consequences of diffusion of an innovation
– May be functional or dysfunctional
► Depending on whether the effects on the social system are desirable or undesirable

• Introduction of a processed feeding formula into the diet

of babies in underdeveloped countries ended up being
dysfunctional

4-54