Socio-Cultural Environment

UNIT 4 SOCIO-CULTURAL ENVIRONMENT

Learning Outcomes
After going through this unit, you should be able to:
 understand the role of socio-cultural environment in impacting international
marketing.
 describe the components that make up culture.
 explain cultural analysis.
 perform a cross-cultural analysis of international markets.

Structure

4.1 Introduction
4.2 Concept of Culture
4.3 Elements of Socio-Cultural Environment
4.4 Cultural Analysis
4.5 Cross-Cultural Analysis
4.6 Cultural Influence on Business Negotiations
4.7 Summary
4.8 Self-Assessment Questions
4.9 Further Readings

4.1 INTRODUCTION
Depending on their sociocultural characteristics, people behave and react differently in
various situations, contexts, brands, and policies. Sociocultural traits have an impact
on how people perceive the world and other people. One of the crucial aspects of the
international marketing environment, along with political, economic, legal, technological,
geographic, etc., is the cultural environment. It has significant impact on all facets of
customer behaviour and permeates every part of marketing, including product design,
packaging, pricing, promotion, distribution, and communication. It is obvious that the
marketer needs to be familiar with the cultural dimensions of various countries and
cultures in order to understand consumer behaviour in target markets, develop effective
international marketing strategies, and comprehend their implications for particular
marketing functions. In this unit, we will have an in-depth understanding of the various
dimensions of the social and cultural environment in global marketing.

4.2 CONCEPT OF CULTURE

Culture is the entire set of social norms shaping human behaviour. Culture is not
embedded in human beings by at birth. However, it starts getting inculcated at the time
of birth and starts residing in the subconscious of a person’s thoughts without his being
aware of the learning process. The culture is shared by people belonging to a group
and enables the members of the group to communicate with each other. Culture guides
people of a group to decide what should be done and what should not be done. 69
International Marketing There is no single definition that accurately or precisely describes the term “culture.”
Environment Analysis
Culture varies from country to country. If you talk about a nation’s culture, there are
often prejudices involved. Whichever definition or explanation is chosen, they all have
one thing in common. This is because they are all based on personal experiences.
Culture can be defined as the “sum total of person’s knowledge, beliefs, art, morals,
laws, customs, and any other capabilities and habits acquired by person as a member
of society.” It is a group of people’s distinct way of life, their entire plan for living.
Culture thus refers to person’s entire social heritage: the distinctive life-style of a society
and its total value system, which is intricately related to the consumption pattern of the
people.
Cultural Dynamics
A person uses the medium of culture in adapting to the physical, biological, psychological,
social, anthropological, and historical components of human existence. Each culture
evolves its own modes and norms to solve problems created by person’s existence in
society. Accidental solutions were found for some problems, and inventions and
innovations have provided solutions to other problems. But more commonly, a society
finds answers to most of its problems through direct or indirect interaction with and
borrowing from other cultures. Inter-cultural borrowing is a significant phenomenon in
cultural dynamics. What a culture adopts from another culture becomes adapted to its
needs over time, and once the adaptation becomes assimilated, it is passed on as the
cultural heritage of that society. In other words, culture is a living and dynamic
phenomenon that keeps on constantly interacting with other cultures and passes through
the continuing process of adopting, adapting, and assimilating. A significant characteristic
of human society is that the culture is passed on to succeeding generations, which
constantly build upon and expand the inherited culture, from which man learns a wide
range of behaviours that are relevant to marketing.
Cultural Similarities
Sometimes apparent similarities in certain features of culture create the illusion of
“oneness” in different national cultures. For example, several nationalities may speak
the same language or have similarities in religious or racial features, but it does not
necessarily follow that these similarities exist in other respects as well, nor does it
follow that a product or a promotional message adaptable to one culture would be
readily acceptable by another. Even when two or more nationalities use the same
language, there will be differences in the interpretation of a word or phrase, giving it
different connotations.
Sub-cultural patterns
Within each culture, there are many subcultures that can have marketing significance.
For instance, in a country like the United States, distinct subcultures prevail in the
south, north, and mid-west. Similarly, the general similarities of Indian culture are evident
throughout the country, but regional differences do exist in the cultural features that are
of marketing importance. Subcultures are found in all national cultures, and failure to
recognize them may create the impression of oneness, which in reality may not exist. A
single national and political boundary does not necessarily mean a single cultural entity.
Canada, for example, is culturally divided between its French and English heritages,
although politically the country is one. Because of this distinctive cultural division, a
successful marketing strategy among the French Canadians may not effectively work
70 among the English Canadians, or vice versa. It is, therefore, important to explore the
possibility of more than one distinct culture in a country, as well as the characteristics of Socio-Cultural Environment
subcultures, before marketing plans are formulated.
Activity-1
How does the study of culture influence the marketing programme? Discuss with the
help of examples.
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4.3 ELEMENTS OF SOCIO-CULTURAL

ENVIRONMENT
The term “socio-cultural environment” describes patterns and advancements in societal
attitudes, behaviour, and beliefs. Population, way of life, culture, preferences, habits,
and traditions are all intimately intertwined. These elements are produced by the
community and frequently inherited from one generation to the next. Due to its close
connections to consumer interests, preferences, habits, lifestyles, and traditions, it has
an impact on business decision-making. These originate in a society and are transmitted
from one generation to another. The cultural and social elements that influence the
operations and outputs of a business enterprise are thus influenced by the socio-cultural
environment. Every business organization operates under a particular socio-cultural
environment and is bound to consider it while making decisions.
Culture includes all facets of life. In order to obtain a clear understanding of culture, it
is necessary to investigate its all aspects. To facilitate an accurate study of culture, the
anthropologists have evolved “cultural scheme” that embodies the various elements of
culture. The main elements included within the meaning of the term “culture” are:
1. Material Culture
 Technology
 Economics
2. Social Institutions
 Social organization
 Education
 Political structures
3. Man and the Universe
 Belief systems
4. Aesthetics
 Arts, Folklore
 Music, drama and the dance
5. Language 71
International Marketing These five broad dimensions of culture embrace all the major aspects of human social
Environment Analysis
heritage. They serve as a framework for the analysis of cultural ramifications. A foreign
marketer may find such a “cultural scheme” a useful instrument in assessing the potential
and intricacies of a foreign market. Each of these elements of culture has some influence
on the marketing process, and they differ from culture to culture. It is, therefore,
necessary to study the implications of these differences when analysing specific foreign
markets.
A brief analysis of the elements of the “cultural scheme” of a society will illustrate the
ways in which culture and marketing are interlinked.
Material Culture
Material culture can be classified into two parts: technology and economics. Technology
includes the ways and means applied in making material goods; it is the technical know-
how possessed by people in a society. “Economic” refers to the manner in which the
people of a society employ their resources and capabilities to generate social welfare
and benefits. Economics includes activities like the production and distribution of goods
and services, the function of consumption, the means of exchange, and the generation
of income derived from the creation of utilities and similar activities. Material culture
thus influences the level of demand, type, and quality of goods, as well as their
consumption pattern in a society. The marketing implications of the material culture of
a society are many. The goods and services that are acceptable in one market may not
be acceptable in another market because of differences in the material cultures of the
two societies. For example, sophisticated electronic appliances, widely in demand in
the technologically and economically advanced Western countries, may not find a market
in the less developed countries of Asia, Africa, or Latin America.
Social Institutions
Social institutions existing in a society affect marketing systems in a variety of ways.
Social organizations, educational systems, and political structures shape the patterns
of living and interpersonal relationships of people in a society. These institutions
collectively influence the behavioural norms, codes of social conduct, value systems,
etc., and thereby affect the entire consumption pattern of a society, which is of direct
relevance to marketing.
Educational systems affect not only the level of literacy but also the development of
various mental faculties and skills. In countries where the literacy rate is low, for instance,
the conventional forms of printed communication will not work.
Similarly, certain types of political institutions influence the growth of marketing
organisations and several marketing functions and business systems.
Social institutions thus exert notable influence on all aspects of marketing, including
product formulation and design, pricing structure, distribution network, promotional
methods, and the like.
Man and the Universe
Man, and the universe have a relationship that generally results in religious beliefs and
related power structures. Religions are a major determinant of moral and ethical values
and influence people’s attitudes, habits, and outlook on life, which are reflected in their
consumption patterns. Dr. Ernest Dichter found: “In Puritanical cultures, it is customary
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to think of cleanliness as being next to godliness.” But in Catholic and Latin countries, Socio-Cultural Environment

to fool too much with one’s body, to overindulge in bathing or toiletries, has the opposite
meaning. “It is that type of behaviour that is considered immoral and improper.” The
religious faith and belief thus affect people’s consumption habits and their attitudes
toward goods and services, as well as promotional messages, which should be in
consonance with the religious faith to be acceptable.
Aesthetics
The man expresses his inner urge for creativity through aesthetics, i.e., the arts, folklore,
music, drama, dance, and the like. The aesthetics of a particular society are embedded
in its culture and expressed through various symbols and forms. Aesthetics are of
special interest to marketers because of their role in interpreting the symbolic meanings
of the various methods of creative expression, colours, and norms of beauty in a
particular culture. In the absence of a culturally correct interpretation of a society’s
aesthetic values, product styling or promotional messages, for instance, would seldom
be successful. It is, therefore, essential for the international marketer to be sensitive to
the aesthetics of a society and their symbolic expressions through signs, colours, shapes,
and forms in order to make the product and the message as well as marketing
communication effective.
Language
Language is an important element of culture. Language is a set of symbols used to
assign and communicate meaning. It is through language that most marketing
communications take place. It enables us to name or label the things in our world so
we can think about them and communicate about them. An international marketer
should have a thorough understanding of the language of the market, particularly the
semantic differences and idiomatic nuances, which are essential characteristics of all
languages around the world. For example, the dictionary translations could be quite
different from the idiomatic interpretation of the language. When literal translations of
brand names or advertising messages are made from one language to another by people
who know the language but not the culture, serious mistakes may occur. When General
Motors of the United States literally translated its marketing phrase “Body by Fisher”
into Flemish, it meant “Corpse by Fisher.” The phrase “come alive with Pepsi” faced
problems when it was translated into German advertisements as “come alive out of the
grave” or in Chinese as “Pepsi brings your ancestors from the grave.” When the
American car called “Nova” was introduced in Puerto Rico, sales were poor until the
company realised that the word “Nova” was pronounced as “Nova,” which literally
means “doesn’t go.” Sales improved when the name was changed to “Caribe.” Similar
errors in the use of translated language in international marketing communication are
fairly common, owing to a lack of familiarity with the semantics and idioms in their
cultural context.

4.4 CULTURAL ANALYSIS

A Manager’s Perspective
The successful implementation of a marketing plan in country X does not necessarily
guarantee its success in country Y, because non-economic factors influence the demand
function in addition to economic criteria. Culture represents one of the most important
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International Marketing non-economic factors influencing the demand function. For a manager to understand
Environment Analysis
culture and its orientation, a cultural analysis becomes imperative. Thus, cultural analysis
is the study and categorization of non-economic parameters. Its influence may be through
the concept, method, or format in which goods are marketed for a stated purpose in
the desired market.
To be able to operate in a multi-cultural environment, it is important to knowthe cultural
differences and peculiarities. It is obviously not enough to categorise Italians as people
who spend most of their time in the sun while eating pizza and drinking wine. There is
more that has to be learned to become successful in a foreign market. A major challenge
for managers is to overcome the myopia. It takes time to develop an open attitude and
cultural sensitivity, which enables managers to look carefully at the foreign market and
point out the customers’ needs there instead of transferring the domestic market’s
needs. James Lee calls it self-reference criteria (SRC).
A bad example of what management can do wrong if it does not look specifically at the
foreign market is Euro Disney in Paris, France. The Disney management definitely
ignored many basic questions they should have asked themselves before launching this
project. One of their mistakes was related to a cultural aspect, e.g., Euro Disney
prohibited drinking alcohol inside the park. The French visitors, in particular, were
embarrassed because drinking wine with a meal is part of French culture.
To avoid those mistakes about cultural differences, or at least to minimise them, the
four-step approach of Lee (1966) can be used:
a) Determining the problem or goal in terms of home country culture, habits, and
norms.
b) Determining the same problem or goal in terms of host country culture, habits,
and norms.
c) Isolating the SRC’s influence on the problem and how it complicates the issue.
d) Redefining the problem without the SRC’s influence and solving it according
to the specific foreign market situation.
The cultural indicators may then be subdivided under four headings.
 De facto indicators;
 Traditional indicators;
 Legal indicators;
 Marketing mix indicators.
De facto Indicators
These include factors like climate, terrain, and the basic infrastructural facilities. The
impact of these indicators on product construction and marketing is majorly facilities
available. Thus, while marketing motor vehicles globally, the firm should keep the climatic
conditions, terrain conditions, and infrastructural conditions in mind. It should adapt
the car body for both warm and cold climates. In fact, not providing anti-skid tyres
may very well make their product unattractive in cold countries. The availability of fuel,
its types, and its quality will have an impact on the engine design.
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Traditional Indicators Socio-Cultural Environment

These include the systems, attitudes, and value systems that exist within a market.
When a marketer seeks knowledge about these indicators, he begins by taking into
account the historic demand for goods, the attitude of the consumers, and the mechanics
of the market, such as the credit facilities that have existed. It involves an analysis of the
tradition and background of the market system as they exist and its interlinkages with
other market systems and manufacturing countries. Thus, hoping to market a high-
value item in a country where the money market is not developed and where credit
facilities are erratic may not be possible.
Legal Indicators
The law reflects the problems that have been faced by a particular society over a
period of time, but what influences a marketer most are the laws relating to the
manufacturing a product, its safety, and environmental laws. In European countries,
the safety laws are very strict. A pharmaceutical product banned in these countries is
often marketed in third-world countries. This is because the Third World cannot “afford”
to make such laws. Another fact that must be kept in mind while marketing the product
is that laws have to be met in their entirety.
Marketing Mix Indicators
How a customer is presented with the product is a function of how the marketing mix
has been designed. Indicators with reference to the marketing mix refer to indicators
on price, product, promotion, and distribution. The implications for marketing are very
clear when a person enters a new environment. The laws in the United States regarding
advertising require that the advertiser be able to back up claim. The use of aspirational
advertising and the influence of this law can create a problem. While this gives an idea
of the culture, the study of the orientation of the culture also has equal importance. The
orientation of a culture can be understood through Edward Hall’s technique of high-
and low-context cultures. While the technique itself may not be understood, it becomes
necessary to understand the orientation of a culture with reference to the following
variables:
1) TIME
The perception of time varies from culture to culture. Time is one of the fundamental
bases on which all cultures rest and around which all activities revolve. There are
differences in how cultures handle time. In earlier times, time was measured in terms of
seasons, darkness, and daylight. Nowadays, time is more important and complex than
in the past. For businesses, managing their time is seen as an ongoing challenge that
must be met and solved. There is also a cultural difference in how they deal with time.
In some cultures, it is not necessary to be precisely on time for appointments. Sometimes,
delays in appointments are expected, tolerated, or at least taken into account. But in
Germany, Finland, the USA, and China, time has a high value and has to be precisely
organised to keep businesses running. Any delay or disturbance in time (management)
will influence the whole schedule of a manager. It might be helpful for the person waiting
to get informed about any delay. In France, punctuality depends on the importance of
the person. If the delay is not more than 15 minutes, it is acceptable to wait. Time
constraints can cause stress– people become ill and unproductive.
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International Marketing 2) SPACE
Environment Analysis
Every human being has his/her own demand for space to protect his/her cover from
external influences of the environment, and the space between two people has a cultural
dimension. To create, find, and define this boundary between oneself and the outside is
essential. In some countries, particularly in the West, men avoid excessive touching,
whereas in Asian and Latin American countries, people tend to get too physically close
to one another when conversing. Therefore, it is important to know, or at least to
estimate, someone’s boundary correctly. There are different points when describing
space. One point is that people trace out their own territories, which they will protect
and defend if necessary. This point, which is influenced by someone’s cultural origin, is
well developed in Germany and the USA. Americans have distinctive places that they
call “mine” and don’t want them to be “disturbed.” Germans may have an even stronger
feeling about their territories. Personal items, particularly cars, should not be “touched”
without permission or treated differently than the owner would. The same counts for
houses, grounds, and offices. They shouldn’t be accessed without a detailed or explicit
allowance. The size and location of offices are also both considered to be important
because they expressstatus and power. like a corner office or one without walls. But
the power has a higher value in Germany than in the USA. Whereas in France the top
management of a company is commonly placed in the middle of the building,
corresponding to their way of doing something, “everything” has to be centralized. The
central position is a key position in France because all information and decisions can
be controlled from the central point. Like already mentioned, there are different
categories of space. The other one is personal space, which is another form of territory.
First of all, personal space depends on the relationships people have, their emotions,
and their cultural background. Every culture has its own demand for personal space.
Not paying attention to that can cause an immediate loss of business relationship because
you are invading and not respecting someone’s demand for space.
3) FRIENDSHIP
The meaning of friendship and the obligations involved in it vary from culture to culture.
In the USA, the concept of friendship is fragile; it is hard to say at which point friendship
gives way to business opportunism. Friendships do not form quickly in Eastern countries,
but when they do, they are much deeper, last longer, and involve real obligations.
Chinese place a high value on the relationships they form with their partners. Strict
regulations or norms would offend or insult the partner because they would get the
idea that they aren’t trustworthy and are cheaters. In negotiations, the Chinese will
spend a lot of time building up a relationship with their business partners, so the actual
negotiation will be at the end of the meeting. Friends and relatives in several cultures
represent a sort of social insurance, helping each other in difficult times and getting
things done without expectation of reciprocity. Attitudes toward friendships and inter-
personal relationships are cultural aspects that play a subtle role in the development of
international business relations.
4) STATUS
Status is used in different ways in different cultures and has different meanings. What
someone DOES or IS can be the fundamental. There are big differences in how societies
respect or focus on someone’s status. In the USA, Germany, and Finland, people are
viewed by how successful they are in their jobs and by what an individual has done. A
related issue is material possessions. These are used in different ways in different cultures
and have different meanings. Americans are considered highly materialistic, projecting
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their socio-economic status through material possessions. The Japanese take pride in Socio-Cultural Environment
the often inexpensive but artistic and tasteful arrangements that are used to produce a
proper emotional setting. The French, Germans, and English attach great value to
traditional and historical things. In the Middle East, people would not like to be judged
solely by their material possessions but by their family connections and friendships.
Thus, material possessions have different meanings in different cultures and have an
impact on business attitudes and relationships.
BUSINESS AGREEMENTS
While it is important for international businessmen to understand the symbolic meanings
and cultural implications of friendship, language, time, space, status, and material
possessions, it is equally important to know the guiding principles of and attitudes
towards negotiating business agreements in different countries. The basic rules for
negotiating agreements vary from country to country and can be classified into three
broad types:
 Rules that are spelled out technically as law or regulation;
 Moral practises that are mutually agreed on and taught to the young as a set
of principles;
 Informal customs to which everyone conforms without being able to state the
exact rules.
The application of such rules varies by society, depending on culture. Generalizations
are difficult, however. While the Americans consider the negotiating process to have
ended when the agreement is signed, for the Greeks, the agreement is nothing more
than a charter for serious negotiations that ends only when the job is satisfactorily
completed. In the Arab world, once a verbal word is given, it becomes as binding as
any written agreement. Few Americans, on the other hand, will conduct any business
without some kind of agreement or contract.
Informal patterns and unstated agreements often lead to innumerable difficulties and
confusion in the cross-cultural negotiating process. All agreements have certain
obligations and codes attached to them, whether in writing or by implication. The
norms and codes are primarily of cultural origin and therefore become a way of social
and cultural life. The people of each country may think that their own code is the only
acceptable one and that everything else is irrelevant. It is not so. Each code is different,
and people’s business behaviour and agreements are greatly influenced by these codes
and practices.
It is therefore important for the international marketer to understand and appreciate
the differences in the cultural dimensions of international business so that he can adopt
and adapt his business strategies to the cultural requirements of a country.
Once the manager has undertaken the cultural analysis, he must decide on a marketing
strategy encompassing the cultural element. Depending on his market screening process,
he has three options. If he decides to undertake marketing in a market where the
cultural variables are the same in all the markets, then he is undertaking a culturally
congruent strategy. But what if he finds that the culture is not conducive to the marketing
of his product? In that case, he can either start marketing and hope that the culture will
change or he may himself decide to influence the culture to the extent that it allows him
to market the product.
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International Marketing In the former case, he is undertaking the strategy of unplanned change; in the latter
Environment Analysis
case, he is undertaking the strategy of planned change. The importance that cultures
bears on the demand function of the product will in effect be responsible for the choice
of strategy adopted by the management.
Dr. Geert Hofstede conducted perhaps the most comprehensive study of how values
in the workplace are influenced by culture. From 1967 to 1973, while working at IBM
as a psychologist, he collected and analysed data of over 100,000 individuals from
forty countries. Checklist exhibited in Table 4. 1 is based on his research.
Table 4.1: Checklist for conducting business in select countries

4.5 CROSS-CULTURAL ANALYSIS

International marketers require the appropriate frameworks to allow comparisons,and
78 similarities to be created across cross-cultural groupings. Let us look at Hofstede’s
(2010) approaches to understand how these concepts may be used by firms in their Socio-Cultural Environment
attempts to analyse consumer behaviour across cultural boundaries.Individualism, power
distance, uncertainty avoidance, masculinity, and Confucianism are the five cultural
dimensions that Hofstede identified. He asserted that these aspects substantially account
for cross-cultural variances in people’s belief structures and behavioural tendencies
internationally.
Individualism (IDV): The interaction between a person and other people in a society
is referred to as individualism (IDV). It shows up in how individuals coexist, such as in
nuclear families, extended families, or tribes, and has a wide range of value implications.
Power Distance (PDI): The concept of power distance (PDI) deals with how societies
handle disparity among people. People have different physical and mental abilities,
which some civilizations allow to develop into disparities in money and power. Other
societies, on the other hand, downplay such inequities. However, some societies are
more unequal than others.
Uncertainty Avoidance (UA): describes how a society responds to future uncertainty,
which is a necessary component of human existence.
Masculinity (MAS): The concept of masculinity (MAS) examines how much society
conforms to the prevalent gender and male stereotypes. Making money and pursuing
observable accomplishments are values that men place a strong emphasis on.
Confucian Dynamism: The Confucian dynamic dimension rates cultures based on
how universalistic or particularistic they are. Cultures that subscribe to universalism
hold that what is right and true can be identified, defined, and applied universally.
Particularistic cultures develop in which “special relationships and situations are more
essential elements in defining what is right and good than abstract norms.”
Figure 4.1 exhibits Power distance/individualism dimensions across culture of selected
countries.It is clear that the United States, the United Kingdom, and the Netherlands
are among the nations with the highest levels of individualism. Colombia, Pakistan, and
Taiwan were collectivist nations. Countries like Japan, India, Austria, and Spain fall
into the mid-range. Power distance ratings are comparatively high for the Philippines,
India, and France. The PDI scores of Austria, Israel, Denmark, and Sweden are
relatively low, and the USA is somewhat below the midway. In the UA, Denmark,
Sweden, and Hong Kong all received low ratings. Strong UA societies, on the other
hand, encourage the need to attempt to beat the future, which leads to increased anxiety,
aggression, and emotional stress. Belgium, Japan, and France all scored over average
in the UA, but the USA’s score was somewhat below average.
According to Hofstede’s research, Japan, Austria, Venezuela, and Italy had the highest
MAS scores among his sample countries. Among the societies Hofstede researched,
Sweden, Norway, the Netherlands, and Denmark rate among the most feminine. On
the MAS dimension, the USA scored fairly well, placing it close to the top third. In
contrast to Denmark’s more feminine culture, Austria has a very masculine society that
would be more accepting of an aggressive salesperson. Chinese culture has historically
been influenced by Confucian philosophy. Its main traits are a strong preference for
obedience, the significance of rank and hierarchies, and the requirement for cordial
social relationships. The four fundamental relationships in Confucian ethics were those
between the ruler and those who were being governed, father and son, husband and
wife, and friend and friend. 79
International Marketing Figure 4.1: Power distance/individualism dimensions across culture of selected
Environment Analysis
countries

Source: Hofstede, G., Hofstede, G.J. and Minkov, M. (2010) Cultures and Organizations: Software
for the Mind: Intercultural Cooperation and Its Importance for Survival, 3rd edition. McGraw Hill.

Impact ofsociocultural environment and its changes

It takes several years for changes to manifest in a number of social factors. However,
some of them are evolving more quickly and dynamically as a result of technology
advancements.
 Sociocultural aspects are constantly evolving. This affects the opportunities
and challenges that businesses must deal with. Finally, these modifications
also influence the company’s need to decide on a strategy.
 Companies must discover more effective ways to adapt to social and cultural
change in order to stay ahead of their competitors. For instance, changes in
the distribution of ages have an impact on changes in the demand patterns for
products and services. The demand for health care and pensions rises when
the elderly population starts to predominate. Changes in the age makeup also
have an impact on recruitment practises. Businesses must deal with an ageing
workforce that is less productive.
 Business practises, policies, and operations are also influenced by several
sociocultural variables.
 Taste and lifestyle are influenced by culture. As a result, culture also affects
the kinds of goods and services that companies must provide.
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  Human resource management may also need to address hiring cultural Socio-Cultural Environment
disparities. For instance, it could be challenging for interviewers to decipher
the body language of some ethnic minorities.
 It helps a business to communicate with clients in a more reasoned manner.
 The sociocultural context has an impact on a business’s decision-making
process as well.
Thus, one of the macro environmental aspects that determines whether a company’s
strategy plan is successful or unsuccessful is the sociocultural environment.

4.6 CULTURAL INFLUENCE ON BUSINESS

NEGOTIATIONS
Anywhere in the world, business negotiations revolve around the same fundamental
topics: the product, its price and terms, related services, and, last but not least, the
relationships between suppliers and consumers. However, it’s critical to keep in mind
that negotiations are challenging and that the chance of miscommunication rises when
dealing with people from different cultural backgrounds. Each person’s attitudes are
influenced by a variety of cultural norms and practises that are frequently unknown to
the other participants and may even go unnoticed by the persons themselves. Each
negotiator’s perception and interpretation of what happens during negotiations is
influenced by his or her cultural background. When one’s self-reference criteria (SRC)
serve as the foundation for making an assessment of a situation, there is a particularly
significant risk of offending one another or misinterpreting others’ intentions. Knowing
oneself before knowing your counterpart is a common rule in negotiations. If care is
not taken, the self-reference criteria of both parties may be involved.
When it comes to whether business negotiations go well or badly, culture can play a
significant role. Indian negotiators typically engage in significantly lengthier negotiations
and exhibit higher levels of competition and tenacity while seeking to maximise their
profits. Similarly,business in Saudi Arabia may appear casual and slow-moving, a
businessman would be greatly offended if they were required to engage with a
representative rather than the senior official.
Failure to recognise cultural differences in negotiation tactics may be a major contributing
cause to negotiations going wrong. However, unless such awareness is paired with a
deeper comprehension of how culture influences every step of the negotiating process,
awareness of cultural differences might not be a crucial factor in successful negotiation.
According to Graham and Sano (1989), a negotiating process has four stages:
1 Non-task discussion
2 Task-related exchange of information
3 Persuasion
4 Concession and agreement.
Non-task discussion: The process of building rapport amongst members of the
negotiation teams is referred to as non-task discussion. For example, while US CEOs
view the delays as annoying and the money spent as wasted, Japanese negotiators will
spend a lot of time and money entertaining foreign negotiation teams in order to build a
rapport. 81
International Marketing Task-related exchange of information: Information sharing that establishes the needs
Environment Analysis
and expectations of participants is referred to as task-related exchange of information.
The majority of smaller Japanese businesses and well over 90% of all large ones follow
a decision-making procedure known as ringi. The system is founded on the idea that
choices are only taken if the negotiation team has come to an agreement. The members
of the negotiation team go around proposals so they can all give them their particular
stamp of approval. Without the group’s approval, which may take some time to get, no
plan will be accepted. US negotiators may misinterpret these Japanese decision-making
processes as delaying tactics.
Persuasion: For US executives, the persuading phase takes up the most time, whereas
for Japanese negotiators who have already taken the effort to understand one another’s
expectations, it is viewed as unnecessary. Therefore, it’s possible that Japanese
negotiators won’t say anything. It is either because they are awaiting additional
information or because negotiations are over for them as a result of an agreement that
has been reached.
Concession and agreement: The Japanese dislike formal, western-style contracts,
which is a continuation of their desire for developing close personal relationships. It is
much preferable to have a vague statement that expresses the parties’ mutual collaboration
and trust during the negotiation process. These agreements have the benefit of allowing
for a great lot of flexibility in the resolution of unforeseen issues. However, western
negotiators sometimes feel the need to continue bargaining and not consider their work
done until they have really secured a signature. An interesting review of the variations in
buyer-seller negotiating styles in several countries is provided in Table 4.2.
Table 4.2: Differences in Buyer-Seller Relationship Styles

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To effectively build cross-cultural relationships, Usunier and Lee (2012) proposed Socio-Cultural Environment

following suggestions for reducing cultural impact during negotiations:

Adaptation: People who do not seem to feel the need to adjust may be viewed as
indolent in meeting with international business partners.

Interpreters: Be cautious that meaning might be influenced by interpreters. They might

translate from one language to another more effectively than the other way around. It is
important to take into account the loyalty of interpreters.

Cultural blocks: Not everything will translate accurately; it is impossible to translate

the exact meaning of every aspect of an interpretation. Some translation attempts will
be unsuccessful due to cultural factors.

The stereotype: Negative stereotyping should be avoided since it might lead to more
disagreements and difficulties during negotiations.

Intercultural preparation: To increase the effectiveness of international business,

prior preparation in intercultural awareness is a necessity.

4.7 SUMMARY
The context in which an international marketers operate is complicated by the cultural
component. They have to recognise both the overt and covert similarities and differences
as well as the boundaries between cultures. This is particularly important as previously,
business competition used to come from the firm around the corner. Today, it comes
from anywhere in the world. Knowledge of other cultures, laws, and business practises
has moved from being desirable to being essential in today’s marketplace.Cultural
influence on business negotiation is also highlighted.An international marketers must
therefore undertake a cultural analysis to understand the orientation and underlying
forces that make the culture so that he can use the information while planning and
executing his marketing programme.

4.8 SELF-ASSESSMENT QUESTIONS

1) What is culture? Is it important for international marketers to take account of it, or
is globalization going to make it a thing of the past?

2) List the components that make up culture. Why is it crucial for an international
marketing manager to understand various cultures?

3) How does language complicate the tasks of global marketers? Explain with the
help of examples.

4) How would you approach analysing a foreign market’s culture? Discuss.

5) What effects do social and cultural factors have on negotiations in international

business? Give suggestions to a business getting ready for cross-cultural negotiations
using examples.

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International Marketing
Environment Analysis 4.9 FURTHER READINGS
 Doole, Lowe and Kenyon (2019). International Marketing Strategy, Eighth Edition,
Cengage Learning
 Graham, J.L. and Sano, Y. (1989) Smart Bargaining: Doing Business with the
Japanese. Harper Business.
 Hofstede, G., Hofstede, G.J. and Minkov, M. (2010) Cultures and Organizations:
Software for the Mind: Intercultural Cooperation and Its Importance for Survival,
3rd edition. McGraw-Hill.
 Jean-Pierre Jeannet and H.David Hennessey, Global Marketing Strategies, 4th
Edn.,Houghton Mifflin, 1998
 Lewin, J.E. and Johnston, W.L. (1997) Managing the international salesforce.
Journal of Business and Industrial Marketing 12 (3/4), Emerald Insight
 Lisa Hoecklin, Managing Cultural Differences - Strategies for Competitive
Advantage
 Masaaki Kotabe and KristiaanHelsen, Global Marketing Management, 2nd Edn.,
John Wiley & Sons, 2001
 MichealCzinkota and llkkaRonkainen, International Marketing,6th Edn., Fortworth,
Harcourt College Publishers, 2001
 Onkvisist and Shaw, International Marketing: Analysis and Strategy, Prentice Hall,
India
 Usunier, J.-C. and Lee, J.A. (2012) Marketing Across Cultures. Pearson Education.
 Warren J. Keegan, Global Marketing Management, 7th Edn., Prentice Hall, India,
2002

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