Importance  of Cultural and  

Ethical  Variations for Transnational Companies International Business  

INTRODUCTION............................................................................................................................   2

1  DEFINITIONS.  3

2  THE INTERNATIONAL MARKETING ENVIRONMENT - THE EXTERNAL  

ENVIRONMENT.   4

2.1  INTERNATIONAL POLITICS.  4

2.2  FOREIGN MARKET ENVIRONMENT  4

2.2.1  The Economy.  5

2.2.2  The Political and Legal Environment  5

2.3  CULTURE AND BEHAVIOUR OF PEOPLE AND THE INTERNATIONAL DIMENSIONS OF THE  

MARKETING.   6

2.3.1  Product  6

2.3.2  Distribution.  7

2.3.3  Pricing  7

2.3.4  Promotion  7

2.4  MARKET SEGMENTATION.  7

3  INTERNAL ENVIRONMENT.  8

3.1  CORPORATE CULTURE.  8

3.2  STANDARDISATION OR LOCALISATION  9

3.3  ORGANISATIONAL STRUCTURE ALTERNATIVES.  11

4  ANALYSIS OF A TRANSNATIONAL ORGANISATION BASED ON THE COMPANY  

BEAR  SYSTEMS  11

4.1  ORGANISATIONAL STRUCTURE.  12

4.1.1  Recruitment.  12

4.1.2  Difficulties of a geographic structure  13

4.2  CULTURAL PECULIARITIES  13

4.2.1  Organisation of a working day.  13

4.2.2  Official Company language  14

4.2.3  Cultural differences concerning working behaviour  14

4.3  MARKETING STRATEGIES  14

4.3.1  Product  14

4.3.2  Price  15

4.3.3  Promotion  15

4.3.4  Distribution.  16

CONCLUSION.   16

BIBLIOGRAPHICAL  REFERENCES  17

Page 1

Importance of Cultural and

Introduction

For a long time the role of culture and ethics was ignored in business. As globalisation and regionalisation have progressed people were confronted very often with cultural differences. To be aware and to understand different cultures has nowadays become inevitable, if transnationals want to be successful in a long term.

The following text deals with the importance of cultural and ethical differences for the management of transnational companies. The text is divided into four different parts. In the first we define culture and ethics. The main subject of the second part is the international marketing environment. Political and economic conditions and their cultural and ethical context are pointed out. The third part shows how the internal environment (Corporate Culture) is influenced by culture and ethics and therefore affects marketing decisions of each country market in different ways. In the last part we give an example of one transnational company called Bear Systems ¹ in order to underpin with practical experiences the cultural and ethical aspects shown above.

¹ Company’s name changed

Importance of Cultural and

1 Definitions

Culture, in anthropology, are the patterns of behaviour and thinking that people living in social groups learn, create, and share. Culture distinguishes one human group from others. It also delimits humans from other animals. A people's culture includes their beliefs, rules of behaviour, language, rituals, art, technology, styles of dress, ways of producing and cooking food, religion, and political and economic systems. Culture is the most important concept in anthropology (the study of all aspects of human life, past and present). Anthropologists commonly use the term culture to refer to a society or group in which many or all people live and think in the same ways. Likewise, any group of people who share a common culture—and in particular, common rules of behaviour and a basic form of social organisation—constitutes a society. Thus, the terms culture and society are somewhat interchangeable. However, while many animals live in societies, such as herds of elk or packs of wild dogs, only humans have culture. 2

Culture

1. "the total way of life of a people"

2. "the social legacy the individual acquires from his group"

3. "a way of thinking, feeling, and believing"

4. "an abstraction from behaviour"

5. “a theory on the part of the anthropologist about the way in which a group of people in fact behave”

6. " a storehouse of pooled learning"

7. "a set of standardised orientations to recurrent problems"

8. "learned behaviour"

9. “a mechanism for the normative regulation of behaviour”

10. "a set of techniques for adjusting both to the external environment and to other men"

11. "a precipitate of history"

12. “a behavioural map, sieve, or matrix ³ ”

Ethics (Greek ethika, from ethos, "character", "custom"), principles or standards of human conduct, sometimes called morals (Latin mores,"customs"), and, by extension, the study of such principles, sometimes called moral philosophy. This article is concerned with ethics chiefly in the latter sense and is confined to that of Western civilisation, although every culture has developed an ethic of its own. Ethics, as a branch of philosophy, is considered a normative science, because it is concerned with norms of human conduct, as distinguished from the formal sciences, such as mathematics and logic, and the empirical sciences, such as chemistry and physics. The empirical social sciences, however, including psychology, impinge to some extent on the concerns of ethics in that they study social behaviour. For example, the social sciences frequently attempt to determine the relation of particular ethical principles to social behaviour and to investigate the cultural conditions that contribute to the formation of such principles. 4

² Definition of “culture”: Encarta 98 Encyclopedia

³ Definition: UNESCO www.unesco.org

⁴ Definition of “ethics”: Encarta 98 Encyclopedia

Importance of Cultural and

2 The International Marketing Environment - The External Environment

2.1 International Politics

Politics in an individual country and political relations to other countries are founded on the general basis of ethics and culture of a society. Companies trying to access a new market or to produce in a host country are dependent on these basics. A company is defined as an economic organisation. Even if the company is not directly interested in politics it is always affected by the political development. It cannot ignore this non-economic factor, if it wants to be a successful international marketer. There are bilateral relations between countries that include political, cultural, legal and military aspects. They have to be monitored over a long period of time and can change fast or in a long timeframe. A conflict or a crisis between two countries affects the trade tremendously. One company is not able or does not want to access a market because of the circumstances. Each country has a unique relationship to other countries. ⁵ The freedom of action of a company depends on them. Another important factor for multinational companies are the multilateral relations. Military and trade-alliances are the most used instruments to reach common goals. They have a large influence on the trade and the marketing in other countries. Examples for multilateral alliances are OPEC (Organisation of Petrol Exporting Countries), UNCTAD (United Nations Conference on trade and Development), FAO (Food and Agricultural Organisation), ITU (International Telecommunications Union).

2.2 Foreign Market Environment

Each market in a foreign country is unique and is influenced by specific determinants. These determinants are the same

everywhere and influence the marketing of a company in different markets. The marketing environment of economy, law, social forces and political forces affect the application of the parts of the marketing mix - product, price, place and promotion. This principle can be used in the home country and the host country as well.

Figure 1: Marketing Mix and Environment 6

⁵ Vern Terpstra: International Dimensions of Marketing (3 ^rd Edition), 1993

⁶ Vern Terpstra: International Dimensions of Marketing (3 ^rd Edition), 1993