Merken exportation project.

Case 1

Does Culture Matter: A Cross-Cultural Study of Executives Choice, Decisiveness, and Risk Adjustment in International Marketing

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Iván Gatica

18.639.087-3

Short Summary:

Nowadays, we live in a world were cultures are interacting way more than before, companies are expanding their limits to different countries so therefore interaction and adaptation to different contexts is mandatory for international marketing. The case is centered in the investigation of the impact that cultural differences may cause to international marketing decisions for their external operations, and also for the internal conduct of multinational firms.  To accomplish this, the author uses a statistical approach with four different business scenarios, expecting different behaviors from the three different cultures examined. The three different cultures are; representing the western culture, Canadian executives as one pole, the two other cultures are both Chinese, but Hong Kong, has had a lot of western interaction in doing business in the past decades, so it is expected that its behavior resembles a little bit more of the western culture, proving this way the effects of globalization, with a combination of its Chinese origins, and lastly for the other pole, People’s Republic of China executives are going to be the third culture, this culture has had little to no interaction with the western world as far as marketing and business decisions concern, so it is expected for this culture to take decisions in a different way than the other two. In order to obtain significant results, the author offers four hypothetical marketing situations. The prime outcome variables are choice, decisiveness, and adjustment of the decision environment, by doing this the author expects different behaviors and hopes to make a decisive comparison into how home cultural values affect managerial decisions and risky situations.  Regarding the hypothesis for the case, some comparative studies suggests that Chinese and North American cultures have several distinctive general norms that are dominant in one culture and absent in the other, hence it is possible to find differences among societies with the same ethnicity but different culture, such is the case of PRC and Hong Kong. Some main subjects will include Face Saving, Repayment of “Dues” and Attitude toward competition, Participation in decision making, and pan-ethical versus utilitarian approach.  The basic hypothesis of this study is that general cultural differences significantly affect marketing decision making. So it is hypothesized that the choices adopted by the western culture and the eastern culture would differ in several ways, for example PRC executives would choose decisions alternatives involving greater face saving, longer term repayment of obligations, more authoritarian and less consensual decision processes, and greater focus on pan-ethical viewpoint. Therefore, the decision making of PRC executives is slower when reaching a decision, explained as a result of their indecisiveness or the consulting to the superiors. And for Hong Kong and Canadians it is expected to be a more fluent process, with more autonomy and decisiveness. And also, it is expected that PRC executives would be less risk lovers when defining strategies and making decisions, in contrast with Hong Kong and Canadian executives.

The result of this investigation is fundamental for international marketing, because the results will guide companies in respect to how to do business abroad, and defining this frame will contribute into a more successful marketing plan, and will also help when creating strategies for the different scenarios regarding customers, products, competitions, and all the variables involved in the marketing point of view.

Describe the 4 marketing situations:

First of all, in order to contextualize, an in-basket instrument format was used to ascertain how executives in risky marketing situations behave. This method has been used in studies of decision making and other managerial topics.

The executives were asked to play the role of a newly promoted vice-president of a large multinational corporation based in their home country (Shenzhen, Hong Kong and Toronto).

The first marketing situation was: Continue or drop an unprofitable product line. The cultural norm investigated is Face Saving, and it is expected that PRC executives would continue with an unprofitable product, the Canadians would eliminate the product, and the Hong Kong executives would choose to do something in between the answers of the both previously mentioned.

The second marketing situation is to enter a new market alone or through a joint venture with a competitor who is in trouble. The cultural norm investigated is the Repayment of “dues”, and it is expected that PRC executives will enter with a joint venture regardless of the competitors’ trouble, for the Canadian executives it is expected that they will enter alone, and for the Hong Kong executives an intermediate response between both previously mentioned.

The third marketing situation is whether to adopt a new product design or use a current one without subordinate’s consensus. The cultural norm investigated is Leader authority, and it is expected that PRC executives will have a preference for authoritarian decision styles, whereas Canadians would prefer a participative management, and Hong Kong executives would have an answer in between those two.

The fourth marketing situation is recall a malfunctioning product or send warning letters to buyers of the product. It is expected that PRC executives will recall the product; Canadians will only send a reminder due to a utilitarian point of view. And HK executives would answer in between those two as well. This situation emphasizes in the pan-ethical approach.

Marketing Process of launching a new product in Chile endeavored by a Chinese corporation

First of all, the results show that Chinese executives are more risk averse than the other cultures.  They are also more inclined to maintain long-term exchange relationships with joint ventures.  Also their preference when making decisions is more authoritarian style. They are also more inclined to follow a pan-ethical approach to problems and take complete remedial actions.  They are also more decisive that others, which implies a tendency to resolve ambiguity quickly. And also they are less likely to try to adjust their environment.

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