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Cultural Factors Affecting Business Development

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As with most international products and services decisions an organisation can either adapt or standardise their promotional strategy and message. Basic marketing concepts inform businesses that they will sell more of a product if they aim to meet the needs of their target market. In international markets, consideration of the consumers cultural background, buying habits, levels of personal disposable income etc in order to deliver a tailored marketing mix program to suit their needs.

This report will consider the Cultural factors affecting transnational business development if TK Maxx was to enter Japan.

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In today’s global world, where consumers travel more, watch television, communicate and shop internationally over the internet, the world seems to be becoming a lot smaller. Brands such as Coca-Cola, MTV, Nike and Levis are all successful global brands where they have a standardised approach to their marketing mix; all these products are targeted at similar groups globally.

In many circumstances a company will have to adapt their product and marketing mix strategy to meet local needs, wants and cultural factors that cannot be changed.

Due to such rapid and large-scale expansion of global businesss the world is continuously being assimilated and homogenized, and yet at the same time, uncovering more about its cultural diversity. Every day in and outside of global corporations different cultures, norms, and standards meet and interact. (Black & Mendenhall, 1990; Zonis et al. , 2005; Collins, 2008).

Different cultures breed different socio-politico-economic systems and paradigms. This means that economic systems and policies, market mechanisms, financial institutions, corporate systems and governance are all inherently culture-bound. Therefore, understanding different cultures is critical in understanding different systems. Today managers, shareholders, employees, business partners, and other corporate stakeholders make decisions and choices that draw upon different cultural background and perspectives (Thomas & Ely, 1996; Adler, 2002; Gannon, 2004; Gitman & McDaniel, 2008).

Without comprehension of cultural diversity, the solutions for global business issues will not be complete. The Effects of Culture on Business Development Terpstran (1987) has defined culture as follows: “The integrated sum total of learned behavioural traits that are manifest and shared by members of society” Culture, therefore, according to this definition, is not transmitted genealogically. It is not, also innate, but learned. As with all international product decisions, an organisation can either adapt or standardise their promotional strategy and message.

Traditional international business research has been concerned with economic/legal issues and organizational forms and structures, the importance of national culture – broadly defined as values, beliefs, norms, and behavioural patterns of a national group – has become increasingly important in the last two decades, largely as a result of the classic work of Hofstede (1980). National culture has been shown to impact on major business activities, from capital structure (Chui et al. , 2002) to group performance (Gibson,1999). Accoring to Hofstede (1980), Countries in Asia have generally low uncertainty avoidance (Figure 1).

Therefore it is a society that is less concerned about ambiguity and uncertainty and has more tolerance towards variety and experimentation. Such a society is less rule-orientated, readily accepts change and is willing to take risks. Figure 1 Cultural advantages can arise from different cultural values and ways of seeing the world. To realize competitive advantages from them, it is first necessary to try to understand them. For cultural differences to be lower these should be managed. According to Hoecklin (1994) there are four strategies for managing cultural differences: 1) Building a strong corporate culture internationally ) Developing a common technical or professional culture worldwide

3) Relying on strong financial or planning systems. 4) Leaving each culture alone According to Ball et al. (1996), doing business with another culture is not an easy task and to be successful, every foreign company should be aware and follow some rules that make their business activity more compatible. They state that there are six rules of thumb for doing business in another culture. Even if these can be important when doing business in the home country, they become more crucial when going abroad. These rules consists of: ? Being prepared ? Slow down Establish trust ? Understand importance of language ? Respect the culture ? Understand components of culture Figure 3 is a comparison of Japan and the UK using an up to date Hofstede’s model directly from his official website. Figure 3 Power Distance (PDI) Japan is a mildly hierarchical society. Japanese are always conscious of their hierarchical position in any social setting and act accordingly. However, it is not as hierarchical as most of the other Asian cultures. Slow decision making process shows that in Japanese society there is no one top person who can take decision, like in more hierarchical societies.

Another example of not so high power distance is that Japan has always been a meritocratic society. There is a strong notion in the Japanese education system that everybody is born equal and anyone can get ahead and become anything if he works hard enough. (Hofstede, 2010, Online edition). Individualism (IDV) Japanese society shows many of the characteristics of a collectivistic society: such as putting harmony of group above the expression of individual opinions and people have strong senses of shame for losing face. However, it is not as collectivistic as most of its Asian neighbours.

The Japanese are famous for their loyalty to their companies however; company loyalty is something which people have chosen for themselves, which is an individualistic thing to do. While in more collectivistic culture, people are loyal to their inner group by birth, such as their extended family and their local community. (VentreJapan, Doig 2003) Japanese are experienced as collectivistic by Western standards and experienced as individualistic by Asian standards. They are more private and reserved than most other Asians. Masculinity / Femininity (MAS) Japan is one of the most masculine societies in the world.

In corporate Japan, you see that employees are most motivated when they are fighting in a winning team against their competitors. What you also see as an expression of masculinity in Japan is the drive for excellence and perfection in their material production and in material services (hotels and restaurants) and presentation (gift wrapping and food presentation) in every aspect of life. Notorious Japanese workaholism is another expression of their masculinity. It is still hard for women to climb up the corporate ladders in Japan with their masculine norm of hard and long working hours.

Working hours must, in principle, not exceed 40 hours per week or eight hours per day excluding breaks. However, some businesses are permitted to have their employees work up to 44 hours per week at a maximum of eight hours per day (Japan External Trade Organsiation, 2010) unlike the UKs 48 hours per week (direct. gov. uk). Uncertainty Avoidance (UAI) At 92 Japan is one of the most uncertainty avoiding countries on earth. This is often attributed to the fact that Japan is constantly threatened by natural disasters from earthquakes, tsunamis (this is a Japanese word used internationally), typhoons to volcano eruptions.

TK Maxx must ensure they have an emergency plan and precautions for sudden natural disasters but also for every other aspects of society. In corporate Japan, a lot of time and effort is put into feasibility studies and all the risk factors must be worked out before any project can start. Managers ask for all the detailed facts and figures before taking any decision. This high need for uncertainty avoidance is one of the reasons why changes are so difficult to realize in Japan (Hofstede ,1980). As demonstrated in Figure 2, there are many cultural factors that can have a significant effect on the business development of TK Maxx

Figure 2: Cultural Factors Affcting Business Technology & Material culture Before marketing in a foreign culture it is important to assess the material culture like transportation, power, and communications and so on. Input-output tables may be useful in assessing this. All aspects of marketing are affected by material culture like sources of power for products, media availability and distribution (Rome, 1997). Japan is one of the leading markets in the world for mobile phones, TK Maxx could take advantage of this with the use of mobile apps and internet marketing. Language Language reflects the nature and values of society.

Language can cause communication problems – especially in the use of media or written material. It is best to learn the language or engage someone who understands it well. According to Tayeb (1998) language is one of the major issues when it comes to negotiations with trade partners from other cultures. Japanese is the official language of Japan and Japanese has an extensive grammatical system to express politeness and formality. The Japanese language can express differing levels in social status. The differences in social position are determined by a variety of factors including job, age, experience, or even psychological state (Rome, 1997).

Aesthetics Advertising messages in Japan will have to be adapted because of language barriers or the current message used in the national market may be offensive to overseas residents. The use of certain colours may also need to be thought about, for example, white is the colour for mourning in Japan. TK Maxx could even consider hiring a research firm to evaluate message in multiple international environments. Religion Shinto, meaning “the way of the gods”, is Japan’s indigenous religion and is practiced by about 83% of the population, Buddhism is the second most popular religion in Japan (www.

Japan-Guide. com). Religion can affect marketing in a number of ways so TK Maxx need to thoroughly consider: · Religious holidays · Consumption patterns · Economic role of women · Institution of the Shinto Shrines and Buddhist temple · Market segments · Sensitivity- to be alert to religious differences. Attitudes and values Values often have a religious foundation, and attitudes relate to economic activities. It is essential to ascertain attitudes towards marketing activities which lead to wealth or material gain, for example, though in Buddhist society these may not be relevant.

One of the reasons for the central importance and influence of the Japanese company in Japan’s social hierarchy is that despite the recession of the 1990s, Japanese business culture is still dominated by the concept of ‘lifetime employment’. A young man, entering a large corporation such as NEC immediately after graduating from university at age 22, anticipates that he will retire from that same company when he reaches age 65. Conclusion Cultural competence means understanding the cultural dynamics of cross-border interactions and adapting corporate practices and management styles to differing business arenas.

Unless and until the world is unified into a single universal culture, businesses will have to maintain a multifaceted, balanced approach compromising the interacting cultures. So, today’s business education should prepare culturally competent future corporate managers. TK Maxx would be entering Japan, where culture is very different. This paper highlights the many different factors that will influence its entry into Japan. While every culture has unique strengths and weaknesses, culture based institutions and behaviorism cannot be reformed easily or quickly.

That is because cultures, philosophies, and value systems require a long period of time not only to form and accumulate but also to change, evolve, and develop. Hence, an economic success or failure cannot be attributed solely to culture. Instead it is generally attributable to the ability of the society to build on the strengths found in the culture. Appendix The Strategic Importance of International Marketing The key difference between domestic marketing and marketing on an international scale is the multidimensionality and complexity of the many foreign country markets that a company may operate in (Isobel Doole, Robin Lowe, 2008).

In 2010 Japans total international trade was $1,404. 3 billion (CIA world fact book, 2010). In the last 30 years, Japan has come from a second-rate status to the world’s economic giant, leading the world in electronics, automobiles, steel, shipbuilding and virtually anything else to which she has set her mind. Japan has evolved into a strong competitive force in world markets and now has the second largest economy in the world; Japan is a very attractive market for TK Maxx. Figure 1. 1 Highlights the environmental influences that effect international marketing that TK Maxx need to consider.

For the Japanese, their rule seems to be “market share or die” (Coe, 1990, p. 10). The Japanese are very aggressive in pursuing long-term market share. Therefore a strong marketing strategy will be crucial for the company to remain competitive and quickly build a strong hold of the market. The impact of globalisation can benefit companies from lower costs by focusing on production in companies where they have their core competencies or to reduce marketing costs by promoting a product by a global brand.

Cite this Cultural Factors Affecting Business Development

Cultural Factors Affecting Business Development. (2016, Oct 06). Retrieved from https://graduateway.com/cultural-factors-affecting-business-development/

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