D1 Cultural Factors

D1 Cultural Factors

Unit 5 - International Business

D1 - Cultural Factors

• Language

• Ethnic make-up of populations

• Social structures

• Religion; Values

• Attitudes to business, attitudes to work

• Openness

Open Ended

What are cultural factors of a country?

Cultural Factors

Cultural factors are the lifestyle, customs and values of a group of people.​

Cultural Factors (Cont.)

It is important for a business to recognise these factors when targeting markets. Without an insight and understanding it is likely that a business will fail to establish a significant presence in the market.​

Cultural Factors (Cont.)

It is essential that a business understands the requirements of the target market, whilst at the same time ensuring that it does not use inappropriate marketing, very likely innocently, to upset it.

Open Ended

What types of cultural differences can you think of?

Cultural Differences

Cultural differences occur because different types of people have different lifestyles, customs and values. Therefore, their perception of situations is different.​

Cultural differences

Language, behaviour and gestures are interpreted differently. 

This means that businesses must employ people that have an awareness of the cultures of the markets in which they are operating.​

This becomes more complex when dealing with a variety of cultures at the same time e.g. often seen in cosmopolitan centres such as London.​

Cultural Differences

Understanding other people’s behaviour, whilst being able to put forward ones own views in a respectful way, are clearly important.

Multiple Select

How many locations is Starbucks in around the world?

• 2

• 28,000

• 10,000

• 25

Multiple Select

In how many hours does a Starbucks open in China?

• 1

• 5

• 15

• 9

Open Ended

What was one of the problems that Starbucks ran into when trying to expand into Australia?

Open Ended

How did Starbucks failings in Australia impact their global brand?

Multiple Select

How big was the Coffee market in Australia in 2018?

• $1 million

• $6 billion

• $100 trillion

• $500,000

Open Ended

Which World Cultures did the Australian Café Culture come from?

Language Factors

Language barriers can cause significant issues when doing business. Often, English is seen as the business language and it is clear that many business people are happy to negotiate using English.​

However, with vast new markets, such as the BRICS countries, having opened up in the past two decades, being able to market products in other languages effectively is increasingly important.​

Language Factors

It looks unprofessional and can compromise a deal if the marketing of a product is let down by poor language.

A poor letter of application might mean not getting an interview. In the same way, poor advertising based on language can lose customers.

Multiple Select

Which Language is seen as the business language of the world?

• French

• Chinese

• English

• Spanish

Ethnic make-up of populations

Cultural diversity is the range of different peoples within a society, which may be based on ethnicity, beliefs or other similar factors.​

This means that different people hold different values and society attempts to take into account all peoples’ values in order to create a just and fair world.​

Ethnic make-up of populations

As the world becomes increasingly diverse businesses will have to take this into account. This is because groups of people across the globe have different interests and values.

Those businesses that cater for this will thrive but will struggle to identify exactly what niches in the market that they have to fill. Those who don’t are likely to lose market share. 

Ethnic make-up of populations​

Global businesses must access different ethnicities if they are to be successful in the future. 

​

This can be clearly seen in the diversity of nations that are seeing significant economic growth. China, Vietnam, India, Brazil, Nigeria, Indonesia etc. The list shows the different ethnicities that businesses must understand if they are to succeed.​

Ethnic make-up of populations​

This means that businesses must be global in nature. Making cultural diversity a key element of decision making will give the business a greater chance of succeeding in a fast changing global market.

Open Ended

Why should Global businesses access different ethnicities?

Social structures​

Social structures are the shared institutions within society where people interact and live together​

Social structures look at how society is organised based on relationships e.g. between family, in education and in the workplace​

Social Structures

The values and standards shared by people and groups within society will impact on the way that people interact with each other​

Social structures might include politics, law, religion and the family unit within a society.

These impact on how we are expected to behave

Multiple Select

What are Social structures?

• They are unshared institutions within society where people don't interact and live together.

• They are shared institutions within society where people interact and live together.​

Religion​

Religion has a significant impact on businesses looking to do business abroad​.

In many countries individuals and groups look to religion to establish what is acceptable in the business world.

Religion

For example, certain foods cannot be eaten or methods of finance differ​.

Offending different religious groups can ruin the reputation of a business, whilst ensuring products are suitable can lead to increased trade​

The sharing of a religious cultures can enhance trade, particularly as networks can be established that allow for the selling of goods and services

Open Ended

Why is understanding different religions important for International Businesses to do?

Values​

As part of these cultural differences it is apparent that people have different values. Value is subjective and is dependent on the individual.

However, upbringing and the environment in which one lives have had a significant impact on this.​

Values

This means that businesses can use their understanding of culture to help market their products.

Promoting products based on ethnicity, for example, will ensure that a marketing budget is more likely to be spent effectively.​

Values

Again, having self-awareness and an understanding of where other people are coming from, ensures that the business is likely to be more successful.

Multiple Select

Values are?

• Objective

• Subjective

• All the same

Attitudes to business and work

Attitudes to business and work vary across the globe​

The UK has some of the longest work hours in the EU, whilst countries such as France and those based in Scandinavia work less​ ‘Work to live, or live to work’ is a quote that reflects this​

Attitudes to business and work

A relaxed attitude to business and work in some countries is likely to require an informal approach to business​

This might include discussing work outside normal working environments such as the office​ Instead, contracts and other business might be discussed over a drink in the bar or whilst playing golf

Openness to change

The extent to which countries are open to change will have a big impact on exports​

Some societies remain very closed and are not prepared to tolerate major change​

Openness to Change

This can affect the sales of goods and services that deviate from the norm in these societies​

A business that exports will have to take this into account.

Understanding local markets is therefore important 

Open Ended

Why is important for International Businesses to be Important?