International Marketing (mid ex)
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ipptchap003.pptxHistory and Geography: The Foundations of Culture
Chapter 3
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
LO1 The importance of history and geography in understanding international markets
LO2 The effects of history on a country’s culture
LO3 How culture interprets events through its own eyes
LO4 How long-past U.S. international policies still affect customer attitudes abroad
LO5 The effect of geographic diversity on economic profiles of a country
LO6 Why marketers need to be responsive to the geography of a country
LO7 The economic effects of controlling population growth and aging populations
LO8 Communication infrastructures are an integral part of international commerce
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History & Contemporary Behavior
Historical events between nations influence business and history
Any nation’s business and political culture is shaped by history
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History has a lot to do with modern day relationships between countries. The historical development of trade in China along the silk road certainly had an impact on trade between China and the rest of the world. The cold war with the former U.S.S.R. still impacts relationships with the U.S. even long after the break up of the former Soviet Union.
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Case in Point: Japan
Why do the Japanese have such strong loyalty toward their companies?
Why is a distribution system so difficult for an outsider to develop?
Why are decisions made by consensus?
Why are they loyal to family, to country, to company, and to social group?
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Japanese culture is based primarily on Confucian philosophy, taught throughout Japan’s history. It emphasizes the basic virtue of loyalty “of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord,” that is, to country. A fundamental premise of Japanese ideology reflects the importance of cooperation for the collective good.
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Manifest Destiny
Manifest Destiny and Monroe Doctrine were the basis of U.S. foreign policy in the 19th and 20th centuries
Manifest Destiny meant that Americans were a chosen people ordained by God to create a model society. It referred to the territorial expansion of the United States from the Atlantic to the Pacific
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This was followed by the Roosevelt Corollary, which stated that not only would the U.S. prohibit European intervention in Latin America, but would monitor Latin America to see that the countries in the region met their international obligations. This corollary was used to justify American intervention in Latin America including the Dominican Republic and the acquisition of the Panama Canal from Columbia.
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Geography and Global Markets
Geography, Nature & Economic Growth
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Geography is one of the uncontrollable elements that international marketers have to deal with. Geography has three major components, Climate and Topography, Economic Growth and Development and Natural Resources.
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Climate and Topography
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The weather, terrain, humidity, altitudes and temperature affect a firm’s operations in a country and requires product adaptation. For example in countries with high humidity levels, corrugated paper or cardboard packaging would be ineffective. Wal-Mart tried to sell the same tennis balls in Mexico City that were used in other places in North America but realized that they needed to make special kinds of tennis balls because of the higher elevations in Mexico City. Even within the United States, there is a need for different or adapted products, for example, snow tires or chains for tires are not generally available in Southern States. Monsoons that are seasonal in countries like India affect transportation and purchase behavior.
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Knowledge about geography, the climate and physical terrain when appraising a market
Influences marketing from product adaptation to the development of marketing systems
Climatic features affect uses and functions of products and equipment
Climate and Topography
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The weather, terrain, humidity, altitudes and temperature affect a firm’s operations in a country and requires product adaptation. For example in countries with high humidity levels, corrugated paper or cardboard packaging would be ineffective. Wal-Mart tried to sell the same tennis balls in Mexico City that were used in other places in North America but realized that they needed to make special kinds of tennis balls because of the higher elevations in Mexico City. Even within the United States, there is a need for different or adapted products, for example, snow tires or chains for tires are not generally available in Southern States. Monsoons that are seasonal in countries like India affect transportation and purchase behavior.
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Products may require special cooling or lubrication to function adequately in tropical zones
Climate differences in Europe caused Bosch-Siemens to alter its washing machines
Geographic terrain such as mountain ranges in a country can influence transportation of products.
Geography, Nature & Economic Growth
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Climate and topography coupled with civil wars, poor environmental policies, and natural disasters push these countries further into economic stagnation. The recent multiple earthquakes in caused by climate have had a ripple effect on recovery and economic development of an already poor country. Bangladesh is a country constantly plagued by floods because of it’s vulnerability to many monsoons because of its landscape and location. Every time a country tries to rebuild from one disaster, it is struck by another and has weakened its economy.
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Linkage exists between geographic location and economic growth Association between landlocked countries and level of economic development
Countries with hostile climates associated with economic stagnation Countries that suffer the most from major calamities are among the poorest in the world, which influences ability to market products
Social Responsibility & Environmental Management
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Climate and topography coupled with civil wars, poor environmental policies, and natural disasters push these countries further into economic stagnation. The recent multiple earthquakes in caused by climate have had a ripple effect on recovery and economic development of an already poor country. Bangladesh is a country constantly plagued by floods because of it’s vulnerability to many monsoons because of its landscape and location. Every time a country tries to rebuild from one disaster, it is struck by another and has weakened its economy.
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Environmental protection is not an optional extra; it is an essential part of the complex process of doing business. Of special concern to governments and businesses are ways to stem the tide of pollution and to clean up decades of neglect.
Many governments are drafting new regulations and enforcing existing ones. A strong motivator is the realization that pollution is on the verge of getting completely out of control.
Resources
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Natural resources are an important part of geography. However, natural resources are depleting and firms should use them responsibly and have a plan to replenish depleting resources. We have seen the price of oil and gas increase steadily as these resources are heavily used especially by the developed world.
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Importance of natural resources especially to manufacturing of products; Supply of natural resources not endless
Human labor provides the preponderance of energy in many countries
Importance of oil and gas in world energy consumption
Global Population Trends
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World Population statistics and growth rate:
1800= 1 billion
1900=2 billion
1960=3 billion
1974=4 billion
1986=5 billion
1999=6 billion
2011=7 billion
It used to take 100 years to add 1 billion to the world population, now it takes about 12-13 years.
World population is to reach nearly 9 billion by 2050.
14% in the developed world are over 65. Special problems arise with the increasing number of elderly such as need for healthcare and retirement facilities. The majority of the people are over 65 or under 15 in the U.S., Europe and Japan. As a result there is a worker shortage and immigration from neighboring highly populated countries with a younger population. For example, Mexican immigration into North America and Polish immigration into Western Europe.
The population is shifting from rural to urban. Over 40% of the world lives in urban areas. By 2025 this number is expected to increase to 60%.
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Important to know about current population trends because people constitute markets for various categories of goods
Necessary to know about:
rural/urban population shifts
rates of growth
age levels
population control
population decline and aging
worker shortage and immigration
Exhibit 3.5 Source: World Population Prospects, The 2011 Revision, United Nations Economic and Social Affairs, www.unpopulation.org. 2012.
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By 2050, 86% of the world population will be in Asia, Latin America and Africa. 98% of growth will happen in less developed regions. Industrialized countries will add less than 100 million.
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Population Control Issues
Adequate Incomes
High literacy levels
Education for women
Health care
Family planning
Cultural attitudes
Political reasons
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The problems related to an increasing population in urban areas and in less developed countries are lowered income levels, the less literate have more children and hence education becomes a priority. Educating women on the benefits of a smaller family helps in population control, of course religion is a big factor. Health care availability becomes a challenge and a need as the world population explodes. Family planning is related to cultural and religious attitudes. Some countries for political reasons believe in strength in numbers and therefore ignore the impact of a large population on economic development.
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World Trade Routes & Communication Links
Knowledge about trade routes over land, sea, and air important in making marketing decisions
The majority of world trade is among the most industrialized and industrializing countries of Europe, North America, and Asia
Need to be aware about communication links—the underpinning of all commerce
Impact of the Internet revolution especially for global marketing of products
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