Comments on Chapters 3 and 4
Culture is the basis over which human society is developed. However, in every sphere of human activity, culture acquires its own meaning that, although connected to the traditional one, has some peculiarities. Chapter 3 of the book by Keegan (2002) focuses on these peculiarities in the area of marketing and global trade management uniting them under the joint name of Social and Cultural Environment. In particular, Chapter 3 provides insights into the understanding of culture as a vitally important element of international trade relations, not just as music, literature, etc (Keegan, 2002, p. 67).
Further on, in Chapter 3 Keegan (2002) considers the anthropological view of culture as a phenomenon that makes traders consider the local peculiarities of every single market they operate in (p. 71). At the same time, Keegan (2002) addresses the theory of low- and high-context cultures expressed by Hall in respect of the role of verbal communication in conveying a message (pp. 71 – 72). As well, Chapter 3 addresses the issues of communicational and social behavioral patterns, Maslow’s hierarchy of needs, and Hofstede’s cultural typology theories.
Chapter 4 of the book by Keegan (2002) moves on to discuss the political, legal, and regulatory environments that characterize global marketing (p. 91). The political environment, according to Keegan (2002, p. 92), determines the need to respect the national sovereignty of every country where global marketers carry out their activities. Apart from other issues, this environment is associated with political risk, i. e. the situation when the governmental directions change and the global marketers do not fit with their practices in the newly emerged governmental regulations (p. 93).
The legal environment deals with the legislations of the countries in which global traders operate. This environment includes taxes and laws regulating the economic and business activities in those countries. As well, Keegan (2002) argues that sidestepping, jurisdiction, and intellectual property relations are also essential for understanding the cultural and legal peculiarities of global markets (pp. 98, 100). Finally, Keegan (2002, p. 96) stresses the importance of the international law in regard to the global marketing.
The regulatory environment, as Chapter 4 presents it, includes such aspects as antitrust regulations, policies regarding licensing and trade secrets, and bribery and corruption in international marketing practices (pp. 103 – 105). All these points allow assessing Chapters 3 and 4 as highly informative writings, with Chapter 4 developing the ideas started in Chapter 3. Thus, both chapters can be viewed as parts of a single whole that allows studying the cultural, political, legal, and regulatory peculiarities of global marketing.
Hofstede’s Cultural Typologies
Geert Hofstede is rightfully considered to be the Guru of organizational and conflict management, because his cultural typology allows marketers and managers all over the world to adjust to the local peculiarities of every single market they operate in. Accordingly, the mentioned cultural typology includes four major concepts, or dimensions:
- Power distance;
- Individualism/Collectivism;
- Masculinity/Femininity;
- Uncertainty avoidance.
One cannot but see that these dimensions are vital for global marketers, first of all because they allow analyzing cultural peculiarities of every market. Such an analysis, in its turn, helps marketers decide how to act in this or that market, what is acceptable in it, and what will be perceived hostilely by both customers and workers of this particular market.
Low-context and High-context Cultures
The theory of low- and high-context cultures was first formulated by Edward Hall in 1976 (Hofstede, 2001, p. 212). According to it, low-context cultures are those where the bulk of the message’s meaning is conveyed verbally and the context plays a small role in people’s actions. The high-context cultures, on the contrary, attribute more importance to the context of the activity rather than to its verbal expression (Hofstede, 2001, p. 212; Keegan, 2002, pp. 71 – 72). Hofstede (2001, p. 212) also refers to low-context cultures as the individualist ones, while high-context cultures are viewed as collectivist societies.
Accordingly, the examples of both types of cultures can be Japan and the United States of America. The former is obviously a high-context culture because the power of unwritten traditions and the context is rather high there. The USA, on the other hand, is a low-context individualist culture in which verbal, or written agreements, mean more than implicit ideas or traditions (Hofstede, 2001, p. 213). The marketing implications of this division into low- and high-context cultures are obvious. Marketers should be aware of the culture type, to which the country they plan to work in belongs. This will facilitate the work’s success and help to avoid various cross-cultural misunderstandings.
Bribery and Extortion in Marketing
Theory
Bribery and extortion are the two of the most important issues that characterize global marketing. Although forbidden by numerous legal acts, these practices still take place. Drawing from this, a marketer’s participation in any of the activities of the kind will definitely be considered a violation of law and will involve legal and financial sanctions to both this marketer and his/her company (Hadjidakis & Katsioloudes, 2007, p. 118).
Accordingly, if there is a situation when a marketer has to pay $1,000 to speed up the border control procedure, complying with such a “suggestion” will be illegal and will violate the Foreign Corrupt Practices Act of 1977, irrespective of the sum you are asked to pay (Onkvisit, 2004, p. 132; Paul, 2006, p. 192). The best way for a marketer to act in such a case is to report the attempt of extortion and, as the flight will anyway be missed, to assure that the extorter faces legal responsibility for his/her actions.
Coca-Cola Case Study
The international strategy of Coca-Cola is to provide the beverage of the highest quality to its consumers all over the world. The company understands that an average person consumes about 64 ounces per day, and works for those 64 ounces to be produced by Coca-Cola. As well, the company invests in newly emerging markets, and operates there both directly and through independent bottlers (Keegan, 2002, pp. 124 – 125).
Coca-Cola has competitive advantages over Pepsi, Co. First, Coca-Cola spent $1.3 billion on advertising, while Pepsi spent over $1.8 billion. However, Coca-Cola’s sales overseas are three times as large as Pepsi’s (Keegan, 2002, pp. 125, 130). Coca-Cola’s beverage operating margin is 23%, compared to 10% in Pepsi. Coca-Cola controls 41% of the US retail market, while Pepsi owns only 31%. So, Coca-Cola dominates the global beverage market.
Accordingly, Coca-Cola needs to expand internationally. Investing in Indian and Chinese markets will allow the company to establish its domination in the two fastest-growing world markets and promises huge income in future. At the same time, political instability and high rates of poverty and unemployment are the main drawbacks of investing in these markets. Considering both the pros and cons of such investments, Coca-Cola should proceed in investing in Indian and Chinese economies. Although current conditions in these countries are problematic, the future of these two large markets promises huge benefits. Anyway, even in case of failure, Coca-Cola’s global credibility and the positive image would allow the company to recover from it within a short period.
Works Cited
Hadjidakis, Spyros & Katsioloudes, Marios I. International business: a global perspective. Oxford: Butterworth-Heinemann, 2007. Print.
Hofstede, Geert. Culture’s consequences: comparing values, behaviors, institutions, and organizations across nations. California: SAGE, 2001. Print.
Keegan, Warren. The Global Marketing Management. California: Prentice Hall, 2002. Print.
Onkvisit, Sak. International marketing: analysis and strategy. NY: Routledge, 2004. Print.
Paul, Justin. International Marketing: Text and Cases. New York: Tata McGraw-Hill, 2006. Print.