A2 Economics and Business - PowerPoint Presentation

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A2 Economics and BusinessSocial and cultural differences in doing businessUnit 3

By Mrs Hilton forSlide2

Lesson Objectives

To be able to discuss different promotional message for different countriesTo be able to identify specific examples where companies have got it wrongTo be able to discuss Social / cultural differences in trading internationally

To be able to discuss

joint ventures

as a way of getting it right

To be able to discuss the use of agents when trading internationally Slide3

From the specSlide4

Starter

List as many cultural differences that might have an impact when doing business as you can think of (you may want to share ideas in pairs or small groups)...Shock factor article to promote discussion

http://

www.dailymail.co.uk/news/article-2720671/Bat-wings-snake-meat-roasted-rats-Inside-Indonesian-market-packed-gruesome-local-delicacies.htmlSlide5

Possible answers to starter

Time differences In some countries it may be expected to call people by their first namesGive gifts: bigger gifts for senior members, equal gifts for employeesColor implication: Black/white not used in business; Red means luck (red letter day)

Holidays: these may be at a different time of the year

Language barriers

Local knowledge

Cultural differences (UK

vs

German sense of humor)

Body languageSlide6

Oops!Coors

Brewing slogan “Turn it loose” when converted to Spanish means “Suffer from diarrhoea” — erg no thanks!Slide7

Clairol

launched a curling iron called “Mist Stick” in Germany. Mist in German is slang for manure. It turns out manure sticks aren’t very popular in Germany.Slide8

Pepsi

in China translated their slogan, “Pepsi Brings You Back to Life.” The slogan in Chinese literally means, “Pepsi Brings Your Ancestors Back from the Dead.”Slide9

Parker Pen in Mexico wanted its advertisements to say “It won’t leak in your pocket and embarrass you.” Instead, the company thought that the word “

embarazar” (to impregnate) meant to embarrass, so the ad read: “It won’t leak in your pocket and make you pregnant.” I guess it all depends on what you want out of a pen.Slide10

Pepsi

lost market share in Southeast Asia when it change its vending machines from deep blue to light blue. Light blue is a symbol of death and mourning in Southeast Asia. Slide11

Lost in translation

Watch out for marketing on an international scale – what can go wrong...Slide12

MR2 in France is the MR – why?

A vacation in France for Americans who have a zippy Toyota MR2 roadster back home provides a rare opportunity to feel smug around the French. After all, French drivers are still poking along in the MR model while we're driving the undoubtedly superior next-generation MR2, right? Not quite. Or, rather, it doesn't sound like "M-R-deux

"--which, when spoken with a breezy French accent, sounds a lot like ????Slide13

GST is not liked in Canada – why?

Mercedes-Benz shortened the name of its Grand Sports Tourer, which launched in 2005, to the sleek, succinct GST. The French, presumably, don't have a problem with those initials, but in Canada

GST

is the acronym for the widely loathed goods and services tax, also known as the "gouge and screw tax.”Slide14

Ikea – one of many

Ikea has yet to issue explanations for a workbench called Fartfull Slide15

Chevy Nova? Sounds OK?

The supposed howlers include the Chevy Nova's flop in Latin America because "no va" means "won't go”Slide16

Coca cola in ChinaCoca-Cola's misbegotten attempt to render its name in Chinese characters, which came off as "Bite the Wax Tadpole." Slide17

The power of words"Language is in many respects such a silly little thing, but it has the power to bring marketing directors to their knees. That's where the terror lies." Slide18
Slide19
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Careful how you say it!Slide21

Talk to your translation departmentCould it have been checked BEFORE it was painted onto the side of a fleet of aircraft?Slide22

When it can be a benefit...An Australian company called Golden Circle has long manufactured a caramel-

flavored Sarsaparilla drink, the abbreviated product name of which is “Sars.” Believe it or not, when the SARS outbreak of 2003 hit, sales of

Sars

went up: its value as a novelty item apparently outweighed the negative associations. Slide23

When it goes wrong

http://www.inc.com/ss/geoffrey-james/top-9-brand-blunders-all-time#9

Entertaining top 9 brand blunders of all time

70-odd years ago, Procter and Gamble changed its new soap brand from

Dreck

to Drift when it realised the former title sounded like German and Yiddish words for waste and garbage. Slide24

Lots of examples

Lost in translation:https://www.facebook.com/media/set/?set=a.425097661741.212424.235374096741Slide25

Kraft again

The name that Kraft Foods Inc. chose for its global snack spinoff —

Mondelez

International

— has sparked plenty comment.

In Russia, though, it may trigger snickers.

Kraft says it chose the

mashup

to connote worldwide deliciousness. (

Monde

means "world" in French, and

delez

, with a long E in the final syllable, is a play on "delish.")

But pronounced "

mohn-dah-LEEZ

," the name means something else to Russian speakers, say those fluent in its language and slang. We were tipped off to the double entendre by a reader who braced us with a “no offense, but this is bad” before explaining the name sounds like the Russian term for an oral sex act.Slide26

High Context/Low Context

High Context Communication Needs:

Establish social trust first

Value personal relations and good will

Agreement by general trust

Negotiations slow and ritualistic

Low Context Communication Needs:

Get down to business first

Value expertise and performance

Agreement by specific, legalistic contract

Negotiations efficient as possible

94Slide27

Other Cultures – Other Worlds

Culture is the dominant set of behaviors, values, beliefs, and thinking patterns we learn as we grow and develop in our social groups.

Culture determines how we view ourselves and others, how we behave and how we perceive the world around us.

We tend to believe that our way of viewing the world is the only way, or at least the best.

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Cultural Differences in Selected

Countries and Regions

Doing Business in

China

The Chinese place values and principles above money and expediency.

Business meetings typically start with pleasantries such as tea and general conversation about the guest’s trip to the country, local accommodations, and family.

The Chinese host will give the appropriate indication for when a meeting is to begin and when the meeting is over.

Once the Chinese decide who and what is best, they tend to stick with these decisions. Although slow in formulating a plan of action, once they get started, they make fairly good progress.

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Cultural Differences in Selected

Countries and Regions

Doing Business in

Russia

Build personal relationships with partners. When there are contract disputes, there is little protection for the aggrieved party because of the time and effort needed to legally enforce the agreement.

Use local consultants. Because the rules of business have changed so much in recent years, it pays to have a local Russian consultant working with the company.

Ethical behavior in the UK is not always the same as in Russia. For example, it is traditional in Russia to give gifts to those with whom one wants to transact business.

Be patient. In order to get something done in Russia, it often takes months of waiting.Slide30

Cultural Differences in Selected

Countries and Regions

Doing business in

India

It is important to be on time for meetings.

Personal questions should not be asked unless the other individual is a friend or close associate.

Titles are important, so people who are doctors or professors should be addressed accordingly.

Public displays of affection are considered to be inappropriate, so one should refrain from backslapping or touching others.Slide31

Cultural Differences in Selected

Countries and Regions

Doing business in

France

When shaking hands with a French person, use a quick shake with some pressure in the grip.

It is extremely important to be on time for meetings and social occasions. Being

“

fashionably late

”

is frowned on.

During a meal, it is acceptable to engage in pleasant conversation, but personal questions and the subject of money are never brought up.

Visiting businesspeople should try very hard to be cultured and sophisticated.Slide32

Cultural Differences in Selected

Countries and RegionsDoing business in

Arab

countries

It is important never to display feelings of superiority, because this makes the other party feel inferior. Let one’s action speak for itself and not brag or put on a show of self-importance.

One should not take credit for joint efforts. A great deal of what is accomplished is a result of group work, and to indicate that one accomplished something alone is a mistake.

Much of what gets done is a result of going through administrative channels in the country. It often is difficult to sidestep a lot of this red tape, and efforts to do so can be regarded as disrespect for legal and governmental institutions.Slide33

From the spec

It is important to emphasise that a business person needs to know the social/cultural

differences in order to do business

in a

certain country.

Some companies prefer

to use

agents

as they have

local knowledge

and appropriate

language skills

.Slide34

Agent?

Not that kind of agentSlide35

International Business Agent

There to make sure you don’t call your product “Barf or fartful” in their languageSlide36

Two types of commercial agent

You can use commercial agents to help sell your goods abroad. Commercial agents include export agents and overseas distributors.Slide37

1. Export agent

Watch the video and explain what an import / export agent doeshttp://www.youtube.com/watch?v=Si9JDZSppRQ

What sort of strategy is working an export agent?

http://www.youtube.com/watch?v=YlbRDYDtqI8Slide38

Export agents

Export agents act on your behalf by introducing you to overseas customers. They charge a commission - usually between 2.5% and 15% - and they’re widely used in the EU.

An

export agent

can also help:

give you information and contacts for overseas markets

identify and make the most of opportunities overseas

cut the cost of setting up your own offices overseas and recruiting and training your own employees to work there

keep more control over your product,

eg

the final price and brand image (when compared with using a distributor)Slide39

Disadvantage of Export agents

You’ll still be responsible for things like shipping, customs paperwork and tax. Your export agent may be able to help, or you can use a freight forwarder

for this.

More about this laterSlide40

Overseas distributors

Overseas distributors buy your goods from you and then sell them on in an overseas market. An overseas distributor can:take care of shipping and customs

buy your goods in bulk

warehouse your goods

market your product for you

introduce your product to new markets

Distributors may expect heavy discounts and a long period of exclusivity, so you need to research and choose one with proven experience in your target market.Slide41

Disadvantage of Overseas Distributor

You lose control over the marketing of your goods and after-sales service when using a distributor.Slide42

Joint Ventures

Is where two or more companies share the cost, responsibility and profits of a business venture

The

complexities arising from social and cultural differences persuade many businesses that it is better to work via local agents or in joint ventures with local companies, in order to gain inside information on how to operate in a country

Some

countries block foreign business so joint ventures is only optionSlide43

Advantages of joint ventures

Just as it would be easier to visit a new country with a local showing you the sights, a business may seek a partner in another country with local knowledge – many benefits:

Use local knowledge to avoid making costly mistakes

Access to supply chain through partner

Understanding of cultural differences

To gain access to a new market

To comply with local laws and regulationsSlide44

Disadvantages of Joint Ventures

Having to share profitsUnreliable partners

Clash of cultures between companies or countries

Having to establish a working relationship from a distance

There is an imbalance in levels of expertise, investment or assets brought into the venture by

the

different partners.

Different

cultures and management styles result in poor integration and co-operation.Slide45

Sample question 1

[6]Slide46
Slide47
Slide48

Answer question 1

Knowledge 2, Application 2, Analysis 2Knowledge: up to 2 marks for identifying reasons such asshared costs, local knowledge, government regulations, spread

risk.

Application: up to 2 marks

for developing the above in the

context of the project e.g. Italian firm and Spanish language,

Chilean government anxious to keep some national control, very

costly - $3.2 billion

Analysis: up to 2 marks

for developing the reasons, e.g.

preventing costly mistakes due to communication problems, easier

access to materials and supply chain because of local knowledge of

the partner

General – if only one reason, cap at 3 marksSlide49

Sample question 2

[6]Slide50
Slide51
Slide52

Answer Question 2Slide53

Sample question 3

[9]Slide54
Slide55
Slide56

How marks are awarded for Q3 [9]

Level

Mark awarded

1

1-2

Knowledge

2

3-4

Application

3

5-6

Analysis

4

7-9

EvaluationSlide57

Answer question 3

e.g. identifying what a joint venture is and/or explaining the characteristics of a joint venture, such as sharing the risks and profits of a new project e.g. potential markets mentioned in the text and connecting

Mothercare

to

joint venture partners, like

DLF

e.g. to get round government restrictions on foreign firms having sole access (such as in India and China), gain local knowledge to avoid making costly mistakes, make use of existing supply networks to help reduce unit costs, greater sales and profitability as a result of increased access to new markets etc.

e.g. a candidate balances his/her answer by pointing out that joint ventures can have drawbacks such as sharing profits, unreliable partners, clash of cultures etc. A candidate might also say the benefit might depend on the nature of

the joint

venture.Slide58

Revision Video