Chap 003

Chapter 03 - Differences in Culture

Differences in Culture

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Learning objectives

Know what is meant by the culture of a society.

Identify the sources that lead to differences in social culture.

Identify the business and economic implications of differences in culture.

Understand how differences in social culture influence values in the work place.

Develop an appreciation for the economic and business implications of cultural change.

This chapter explores the role of culture in international business: how differences in culture across and within countries can affect the practice of business.

The discussion then addresses the major questions of the chapter: What is culture? How does it play itself out in social

structures, religious and ethical systems, language, and education? The need for cross-cultural literacy and an appreciation of the impact of culture on competitive advantage are all addressed.

The opening case is explores Wal-Mart’s international expansion efforts. The closing case, examines the practice of guanxi and its implications for doing business in China.

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OUTLINE OF CHAPTER 3: DIFFERENCES IN CULTURE

Opening Case: Wal-Mart’s Foreign Expansion

Introduction

What Is Culture?Values and NormsCulture, Society, and the Nation-StateThe Determinants of Culture

Social StructureIndividuals and GroupsSocial Stratification

Religious and Ethical SystemsChristianityIslamHinduismBuddhismConfucianism

Country Focus: Islamic Capitalism in Turkey

Management Focus: McDonald’s and Hindu Culture

LanguageSpoken LanguageUnspoken Language

Education

Culture and the Workplace

Cultural Change

Implications for ManagersCross-Cultural LiteracyCulture and Competitive AdvantageCulture and Business Ethics

Management Focus: Cross-Cultural Illiteracy

Chapter Summary

Critical Thinking and Discussion Questions

Closing Case: DMG-Shanghai

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CLASSROOM DISCUSSION POINT

Ask students about what they might expect in the way of cultural differences if they were to go to Saudi Arabia. What might they expect if they were to go to France, Brazil, or South Korea?

Next, ask students what they think students from Saudi Arabia, France, South Korea, or Brazil might expect from American culture. As students respond, jot their ideas on the board and try to develop categories similar to the elements of culture discussed in the text.

Then, discuss why these elements of culture exist, and why they differ between countries. Finally, ask students to consider what they mean for international companies.

If there are foreign students in the class, draw on their special expertise by asking what differences they experiences when they first came to the United States.

OPENING CASE: Wal-Mart’s Foreign Expansion

Summary

The opening case explores the international expansion of Wal-Mart, the world’s largest retailer. Wal-Mart began its international expansion in the early 1990s in an effort to continue its growth. The company began with a joint venture in Mexico with local retailer, Cifra. Initially, the company tried to implement strategies similar to those that had proved so successful in the United States, however Wal-Mart quickly realized that to succeed, it would have to adapt to local demands. The company hired local managers who understood the Mexican culture and buying preferences, and changed its strategies accordingly. Wal-Mart continued its international expansion by establishing operations in Europe and South Korea, but in these markets, the company had less success. Not only did Wal-Mart compete head-to-head with established retailers, but its product offerings did not match the needs of consumers. Wal-Mart has had much greater success in China where it has found some parallels between the shopping habits of Chinese and Americans. Wal-Mart has also adapted its strategy to fit the local market and now not only allows unions, but is also selling a product mix designed to meet the demands of China. Discussion of the case can revolve around the following questions:

1. What did Wal-Mart learn from its experiences in Mexico? How, if at all, did Wal-Mart apply those lessons to its expansion in Europe and China?

2. Why has Wal-Mart been so successful in China? How have similarities between American shopping habits and Chinese shopping habits facilitated its success there?

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3. Describe Wal-Mart’s efforts in Europe. In your opinion, why has Wal-Mart run into roadblocks? How might the company change its strategy to better succeed?

Another Perspective: To explore Wal-Mart’s foreign operations in greater detail, go to the company’s web site at {http://www.walmart.com}. LECTURE OUTLINE

This lecture outline follows the Power Point Presentation (PPT) provided along with this instructor’s manual. The PPT slides include additional notes that can be viewed by clicking on “view”, then on “notes”. The following provides a brief overview of each Power Point slide along with teaching tips, and additional perspectives.

Slides 3-3-3-4 What is Culture?Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.

Values are abstract ideas about what a society believes to be good, right, and desirable. Norms are social rules and guidelines that prescribe the appropriate behavior in particular situations. Business success requires cross-cultural literacy. Managers need an understanding of the culture, or cultures, that prevail in the countries where they do business.

The cost of doing business in a country is influenced by culture – different cultures are more or less supportive of the capitalist approach to production. Culture is dynamic.

Slide 3-5 Values and NormsValues and norms are the basic components of culture. Norms can be further divided into folkways and mores.

Values include attitudes towards concepts like freedom, honesty, loyalty, justice, responsibility, and personal relations including marriage. Norms shape the actions of people towards one another. Norms can be divided into folkways and mores.

Slide 3-7 Culture, Society and Nation StateWhile it is possible for a nation-state to have a uniform culture, this is not always the case. Within a nation-state multiple cultures can exist, and cultures can also cut across national borders.

Slide 3-8 The Determinants of CultureCulture is an evolutionary product of a number of factors.

Political philosophy, economic philosophy, education, dominant language, social structure, and dominant religion are all determinants of culture.

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http://www.walmart.com/


Slide 3-9 Social StructureThe social structure of a country can be described along two major dimensions: individualism vs. group, and degree of stratification into classes or castes.

Slides 3-11-3-13 Individuals and Groups A focus on the individual and individual achievement is common in many Western societies. An emphasis on individual achievement has positive and negative implications.

On the positive side, the dynamism of the United States’ economy owes much to people like Sam Walton, Steve Jobs, and Bill Gates - people who took chances, tried new things, succeeded, and encouraged others to do likewise. On the other hand, individualism can lead to a lack of company loyalty and failure to gain company-specific knowledge, competition between individuals in a company rather than team building, and limitation of people's ability to develop a strong network of contacts within a firm.

In sharp contrast to the Western emphasis on the individual, in many Asian societies the group is the primary unit of social organization.

While this emphasis on the group may discourage job switching between firms, encourage lifetime employment systems, and lead to cooperation in solving business problems, it tends to suppress individual creativity and initiative.

Slides 3-16-3-18 Social StratificationAll societies have some sort of stratification, where individuals in higher strata or castes are likely to have a better education, standard of living, and work opportunities.

Social structure is linked to the ease with which an individual can move between strata. Additionally, the social structure created by the strata levels and the social significances of each strata level can have implications for the way business is conducted.

The significance of the social strata can have important implications for the management and organization of businesses.

In cultures where there is a great deal of consciousness over the class of others, the way individuals from different classes work together (i.e. management and labor) may be very prescribed and strained in some cultures, or have almost no significance in others.

Slides 3-19,-3-20 Religious and Ethical SystemsReligion can be defined as a system of shared beliefs and rituals that are concerned with the realm of the sacred.

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Ethical systems refer to a set of moral principles, or values, that are used to guide and shape behavior. The ethical practices of individuals within a culture are often closely intertwined with their religion.

Another Perspective: Duke University's Department of Religion sponsors a web site that offers links to and brief descriptions of four of the most comprehensive sites for religion on the Internet. These are excellent sites that provide a broad array of information to augment the information about religion provided in the textbook. The site is available at {http://www.duke.edu/religion/main/links.html}.

Slide 3-21 ChristianityChristianity, the largest religion, is common throughout Europe, the Americas, and other countries settled by Europeans and has three major branches: Protestant, Roman Catholic, and Eastern Orthodox.

The "Protestant work ethic" – a focus on hard work, wealth creation, and frugality - is considered the driving force of capitalism. In the workplace this work ethic translates into a significant emphasis on quality and productivity.

Slide 3-22 IslamIslam has the same underlying roots of Christianity (Christ is viewed as a prophet), and suggests many of the same underlying societal mores. Islam, however, extends this to more of an all-embracing way of life that governs one's being. Islam also prescribes many more rules by which people should act and live.

In Islam people do not own property, but only act as stewards for God and thus must take care of that with which they have been entrusted. They must use property in a righteous, socially beneficial, and prudent manner; not exploit others for their own benefit; and they have obligations to help the disadvantaged. Thus, while Islam is supportive of business, the way business is practiced is strictly prescribed. For instance, no interest may be paid on business loans.

Slide 3-23 HinduismHinduism, practiced primarily on the Indian sub-continent, focuses on the importance of achieving spiritual growth and development, which may require material and physical self-denial.

Since Hindus are valued by their spiritual rather than material achievements, there is not the same work ethic or focus on entrepreneurship found in some other religions. Likewise, promotion and adding new responsibilities may not be the goal of an employee,

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http://www.duke.edu/religion/main/links.html


Slide 3-24 BuddhismBuddhists also stress spiritual growth and the afterlife, rather than achievement while in this world. Buddhism, practiced mainly in Southeast Asia, does not support the caste system, however, so individuals do have some mobility not found in Hinduism, and can work with individuals from different classes.

Slide 3-25 ConfucianismConfucianism, practiced mainly in China, teaches the importance of attaining personal salvation through right action. Unlike religions, Confucianism is not concerned with the supernatural and has little to say about the concept of a supreme being or an afterlife. The needs for high moral and ethical conduct and loyalty to others are central in Confucianism. Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies.

Slide 3-27 LanguageLanguage refers to the spoken and unspoken means of communication, and is one of the defining characteristics of culture.

Slide 3-28 Spoken LanguageWhile English is clearly the language of international business, knowing at least some of the local language can greatly help when working in another country.

In some situations knowing even a bit of the local language can be critical for business success. Such knowledge may be understood as a sign that the businessperson is willing to learn from the local firm

Slide 3-29 Unspoken Language

Unspoken language refers to nonverbal communication such as facial expressions, personal space, and hand gestures. Managers that fail to understand the nonverbal cues of another culture may experience a breakdown in communication.

Slide 3-31 EducationFormal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society. Education is part of the social structure of a country, and is instrumental in shaping many cultural values and norms. The knowledge base, training, and educational opportunities available to a country's citizens can contribute to a competitive advantage in the marketplace.

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Slides 3-32-3-35 Culture in the WorkplaceGeert Hofstede conducted what is probably the most famous study about the connection between culture and values in the workplace. Hofstede made a study of IBM employees worldwide, and identified four dimensions to describe cultures: power distance, individualism vs. collectivism, uncertainty avoidance, and masculinity vs. femininity.

Power distance focuses on how a society deals with the fact that people are unequal in physical and intellectual capabilities. Individualism versus collectivism focuses on the relationship between the individual and his or her fellows. Uncertainty avoidance measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity. Masculinity versus femininity looks at the relationship between gender and work roles.

Hofstede later expanded his study to include a fifth dimension called Confucian dynamism which captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.

Slide 3-37 Cultural ChangeCulture is not a constant, but evolves over time. As countries become economically stronger, cultural change is particularly common.

Slide 3-38 Implications for ManagersManagers need to be aware that societies differ because their cultures vary, and cultures vary because of profound differences in social structure, religion, language, education, economic philosophy, and political philosophy.

There are three important implications that flow from these differences:1) The need to develop cross-cultural literacy2) There is a connection between culture and national competitive advantage3) There is a connection between culture and ethics in decision making

Slide 3-39 Cross-Cultural LiteracyIndividuals and firms must develop cross-cultural literacy. International businesses that are ill informed about the practices of another culture are unlikely to succeed in that culture. One way to develop cross-cultural literacy is to regularly rotate and transfer people internationally.

Managers need to be aware of ethnocentric behavior, or a belief in the superiority of their own culture.

Another Perspective: To give students an opportunity to “experience” cultural differences create a mock business meeting. Executive Planet maintains a web site, {http://www.executiveplanet.com/index.php?title=Main_Page}, with guidelines for doing business in different countries. The site allows visitors to explore relevant issues in a variety of cultures.

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http://www.executiveplanet.com/index.php?title=Main_Page


Slide 3-340 Culture and Competitive Advantage The connection between culture and competitive advantage is important because it suggests which countries are likely to produce the most viable competitors, and it has implications for the choice of countries in which to locate production facilities and do business.

CRITICAL THINKING AND DISCUSSION QUESTIONS

QUESTION 1: Outline why the culture of a country influences the costs of doing business in that country. Illustrate your answer with examples.

ANSWER 1: This question has be explored throughout the chapter, and since there can be numerous reasons and examples of how culture influences the costs of doing business, there is no single acceptable response to the question. Several are highlighted below, but there could be numerous others. When there are simply different norms between how individuals from different countries interact, the costs of doing business rise as people grapple with unfamiliar ways of doing business. For example, while in the US people get down to business first, and then get to know each other socially later, in many South American countries it is important develop a good social relationship before trying to discuss business issues. Different class structures and social mobility also raise the costs of doing business, for if there are inhibitions against working with people from different classes, then the efficiency with which information can flow may be limited and the cost of running a business increased. A country's religion can also affect the costs of business, as religious values can affect attitudes towards work, entrepreneurship, honesty, fairness, and social responsibility. In Hindu societies where the pursuit of material well-being can be viewed as making spiritual well being less likely, worker productivity may be lower than in nations with other religious beliefs. Finally, a country's education system can have important implications for the costs of business. In countries where workers receive excellent training and are highly literate, the need for specific worker training programs are decreased and the hiring of additional employees is facilitated. QUESTION 2: Do you think that business practices in an Islamic country are likely to differ from business practices in the United States? If so how?

ANSWER 2: The cultural differences between a Muslim country and the US will cause business practices to differ dramatically. The public role women can take, appropriate etiquette (including simple things like not passing objects with the left hand), holidays, and wining and dining all differ from patterns in the US. But beyond these, the underlying ideal and understanding of the role of business differs. Since Muslims are stewards of property for God, rather than owners, they are more likely to use their resources carefully and may be less likely to give up or sell something to a person who may not practice the same stewardship. The importance of fairness to all parties in all relations means that over-aggressiveness and self-interest may not be well received, and breaking an agreement, even if technically/legally permissible, may be viewed as inappropriate and the sign of a huge character flaw. Finally, the prohibitions on interest

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payments in some Muslim countries means that the wording of the terms of an agreement must be careful so that "fair profits" are not construed as being "interest payments."

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QUESTION 3: What are the implications for international business of differences in the dominant or ethical system of a country?

ANSWER 3: Differences in the dominant religion of a country affect relationships, attitudes toward business, and overall economic development. First, differences in religion require inter-cultural sensitivity. This sensitivity requires things like simply knowing the religious holidays, accepting that some unexpected things may happen "because of Allah's will," or understanding how interpersonal relationships may be different between "believers" and "non-believers." (Hence non-believers may be treated differently.) Second, religious beliefs can significantly affect a country’s attitude toward business, work, and entrepreneurship. In one country successfully beating a competitor may be considered a great achievement while in another it may be thought of as showing a lack of compassion, or disruptive to the society and persons involved, both attitudes that may be derived from underlying religious beliefs. Likewise, hard work may be either rewarded positively or viewed as something of secondary importance to spiritual peace and harmony. Third, different dominant religions may affect the overall competitiveness and potential for economic growth of a nation, and hence attractiveness of a country for international business.

Basic, unarticulated assumptions about what has value, what is right and wrong, and what constitutes good are embedded in our religions. Should rules or laws apply to all people all the time (in the US, the answer here is probably yes); or should they change depending on the circumstances of the particular situation (in Asia, the answer would be, of course)? Religion plays a basic, influential role in our most fundamental values and the norms that arise from them. So if an international business venture faces a different dominant religion in its foreign market, managers there will have to make special efforts to understand what is really underlying practice differences.

QUESTION 4: Choose two countries that appear to be culturally diverse. Compare the culture of those countries and then indicate how cultural differences influence (a) the costs of doing business in each country, (b) the likely future economic development of that country, and (c) business practices.

ANSWER 4: Responses to this question will obviously vary based on the countries chosen by students, and their knowledge of the countries. Hopefully, students can present some information on the dimensions of culture including values, norms, social structure, religion, language, and education of the countries and also describe the key differences and similarities of the countries along these dimensions. Relating the differences between the countries along these dimensions to differences in the costs of doing business, the potential for economic development, and business practices would fully answer the question. (While it may be more difficult for students to come up with really good examples relative to business practices, the costs and prospects for economic development should be quite feasible.)

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Another Perspective: The US CIA website is a good place for introductory-level information (economic, demographic, climate, background) on countries. The site is available at {http://www.cia.gov/cia/publications/factbook}.

QUESTION 5: Reread the Country Focus on Islamic Capitalism in Turkey. Then answer the following questions:a) Can you see anything in the value of Islam that is hostile to business?b) What does the experience of the region around Kayseri teach us about the relationship between Islam and business?c) What are the implications of Islamic values towards business for the participation of a country like Turkey in the global economy?

ANSWER 5: a) Many students will probably focus on the comment by the sugar factory manager that “if you are not a good Muslim, don’t pray five times a day and don’t have a wife who wears a headscarf, it can be difficult to do business here” when they respond to this question. Some may perceive this comment to be a gentle warning that only Muslims will be successful in Turkey. Others however, will probably perceive this comment as a reminder that companies coming into the region need to respect the local way of doing things. b) The area around Kayseri that has been growing rapidly is strongly influenced by Islam. In addition to incorporating gestures like prayer rooms, some companies are also adhering to the Islamic value of equal opportunities in business, and are now changing their strategies to create new opportunities for other companies.c) Some students might focus on the lack of competitiveness that is sometimes associated with Islam. Others might note though, that at least for Turkey, this doe not seem to be an issue. Many students will probably conclude that in this day and age of globalization and interdependency, Muslims, like other distinct groups, must find a comfortable balance between their beliefs and what is occurring around them.

QUESTION 6: Reread the case on McDonald’s and Hindu Culture that answers ha following questionsa) McDonald’s has been reasonably successful in India, despite the country’s very different food culture. Why?b) Do you think that McDonald’s could have and should have foreseen the problems it ran into in India when using beef extract in its oil? What could it have done differently?

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http://www.cia.gov/cia/publications/factbook


ANSWER 6: a) In response to the needs of the Indian market, McDonald’s changed its menu to include mutton and chicken products rather than the beef based products that are featured in its regular menu. Most students will probably suggest that even with the changes, the company remained true to its identity because it used names similar to traditional names to describe the new products, and built its restaurants following the traditional American style.b) The lawsuit against McDonald’s over the presence of beef extract in its French fries caught the company off-guard. McDonald’s quickly acknowledged its mistake, and settled the lawsuit. The company also made a public apology and vowed to be more accurate in its food labeling in the future. However, many students will probably argue that the company failed to adequately reassure consumers in India, where angry Hindus protested in the streets. Students might suggest that the company should have responded not only to the Indians located in the United States who prompted the lawsuit, but also to the citizens of India, and other Hindu customers.

CLOSING CASE: DMG - Shanghai

The closing case explores guanxi, or the relationships and connections that are so important in the Chinese business world. The notion of guanxi comes from the Confucian philosophy of valuing social hierarchy and reciprocal obligations. Dan Mintz, founder of DMG, one of China’s fastest growing advertising agencies, credits guanxi for his success. Mintz established connections with two Chinese who have access to high ranking government officials. Through these guanxiwang, or connections, Mintz has been able to get permission to shoot advertisements in locations that are usually closed to foreigners. A discussion of the case can revolve around the following questions:

QUESTION 1: Why do you that it is so important to cultivate guanxi and guanxiwang in China?

ANSWER 1: Guanxi literally means relationships, although in business settings in can better be understood as “connections.” The concept of guanxi is deeply rooted in Chinese culture and Confucianism. The Chinese will often cultivate a guanxiwang, or “relationship network,” for help. In China, there is a tacit acknowledgement that if you have the right guanxi, legal rules can be broken or bent. Mintz made connections with two Chinese men who had access to high ranking government officials. Through these men, Mintz was able to secure permission to film commercials in locations that are normally closed to outsiders.

QUESTION 2: What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all of the rules and regulations, rather than trying to find a way around them as Dan Mintz apparently does?

ANSWER 2: Personal power and relationships or connections (guanxi), rather than the rule of law, have always been the key to getting things done in China. Most students will probably agree that companies that play by the rules in China will probably find it difficult to compete.

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QUESTION 3: What are the ethical issues that might arise when drawing upon guanxiwang to get things done in China? What does this suggest about the limits of using guanxiwang for a Western business committed to high ethical standards?

ANSWER 3: Guanxiwang refers to the relationship network that many Chinese companies rely on. Because reciprocal obligations are key to the process, some students may suggest that companies could get into trouble if they are asked to return a favor to a network partner that involves unethical actions. Other students may note that in China, it is not what you know that is important, it is who you know. These students may point out that since success depends on others, firms doing business in China are not in complete control of their own destiny—a situation that could result in ethical standards being comprised.

INTEGRATING iGLOBES

There are several iGLOBE video clips that can be integrated with the material presented in this chapter. In particular, you might consider the following:

Title: Google In China Raises Censorship Issues

Background Video: Google Agrees to Censor Searches in China

The video posted on iGlobe is the discussion portion of a 2-part video series. Due to permissions requirements, McGraw-Hill can only post the discussion portion of this series. To view the background video, use the link below.

http://pbs-newshour.onstreammedia.com/cgi-bin/visearch?user=pbs-newshour&template=template.html&query=google+china&keywords=google+china&category=blank

Abstract: This video analyzes Google’s decision to censor its search engine in China in exchange for access to the second largest Internet market in the world.

Key Concepts: political economy, foreign direct investment, globalization, global economy, technological change, human rights

Notes: Google, the company with the mission to “make the world’s information universally accessible” has come under fire with its re-launch of Google-China. It seems that the lure of the second largest Internet user base in the world proved to be strong enough to get the world’s biggest media company to comprise its ideals. Google, the Internet search engine, has been the target of strong criticism after its recent decision to censor its search engine in China in exchange for access to China’s 100 million Internet users. Until now, Google has relied on an objective mathematical formula to determine the rankings of information results. Now however, the search engine is voluntarily filtering out information that has not received the stamp of approval from the Chinese

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government. Human rights activists see Google’ actions as a sell-out and have been very vocal in their condemnation of the company.

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According to Google’s critics, by agreeing to self-censorship the company is effectively perpetuating China’s repressive regime. They note for example, that any Google site in the world except for China’s will bring up 1.7 million results when searching for “Tiananmen Square,” but Google China brings up just 13,000 results, all of which ignore the horrific events of 1989. Further angering critics is the fact that Google’s censorship of its search engine is being conducted in-house, not by the Chinese. Those who oppose Google’s agreement to self-censor worry that the company will not be transparent about its actions, and that furthermore, Google’s decision effectively legitimizes censorship.

Google defends its actions in China arguing that it is only complying with Chinese laws. Indeed, Google co-founder and co-president Sergey Brinn claims that the company has not made any trade-offs, rather, the company has simply added some filtering mechanisms to its Chinese search engine. According to Google, the new filtering mechanisms will actually facilitate the search process for users by blocking sites that have already been censored by the government. In addition, Google maintains that it will alert users to fact that sites have been blocked. According to Google, the company’s mission has not changed, it still strives to be the leader in the information environment.

Discussion Questions: 1. Why did Google make the decision to block politically sensitive sites in China? Could the company have gotten access to the Chinese market without agreeing to self-censorship? How, if at all, will Google’s decision to self-censor affect its position in other markets?

2. Google has been the target of intense criticism regarding the transparency of its actions and whether users will realize the extent to which information is being blocked. What is Google’s responsibility to the Chinese population? By agreeing to block politically sensitive information, is the company actually perpetuating China’s repressive regime?

3. Critics have argued that Google’s decision to capitulate to the Chinese government’s request for censorship sets a dangerous precedent. Do you agree? Why or why not? Could Google, together with other companies, force the government to change its ways?

4. Google claims that it has not bowed to the Chinese government’s request for censorship. Instead, the company argues that its new filtering mechanisms are simply a means of improving the experience for users of its search engine. Do you agree with this claim? Why or why not?

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INTEGRATING VIDEOSThere are also several longer video clips that can be integrated with the material presented in this chapter. In particular, you might consider the following:

Title 12: Domino’s Pizza in Mexico

Summary: Domino’s began its international expansion in 1983. By 2005, the company had 3,000 stores outside the U.S. located in more than 50 different countries. Domino’s success lies in part to its product, pizza seems to be universally accepted, and to its commitment to consistency, the company wants every store to be the same regardless of its location. Still, Domino’s has had to make some adjustments to meet the needs of each market. Pizza topping and ingredients reflect local tastes and customs for instance. Delivery methods must also be adapted to individual market conditions. So, for example, in Japan pizzas are delivered via scooter by people who are very familiar with the neighborhood. Similarly, promotional materials must fit with the market. In Belgium, menus are printed in three different languages. Yet, through all of the adjustments to the marketing mix, the company is committed to its core principles.

To ensure that the company’s core principles are emphasized, Domino’s is very particular when selecting franchisees. The company only considers people who are capable of operating a business within corporate guidelines. To facilitate this process, Domino’s also provides strong support to its franchisees. In Mexico for example, the company makes a store visit every 45 days, provides all marketing materials, and provides training

Discussion Questions:

1. Domino’s has become a successful international company. Compare and contrast its strategy with that of another well-known international fast food operation, McDonald’s. What similarities do you see? Are they any significant differences between the two companies? What has led to the success of Domino’s?

2. Franchising has played a major role in Domino’s rapid expansion into foreign markets. Consider the company’s franchising strategy. How does Domino’s ensure that its corporate values and strategies are adopted by the franchise operations?

3. Reflect on the fact that while pizza appears to be universally accepted, Domino’s has had to make some adjustments to its marketing mix. Discuss the different components in the marketing mix and how the company has responded to local needs. What does your response indicate about the standardization versus globalization debate?

4. Consider the changes Domino’s made to its Mexican operation in the late 1990s. Discuss Domino’s efforts there, the economic risk the company was facing, and the strategies it used. Is Domino’s current strategy viable in the long-term? Why or why not?

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globalEDGE™ Exercise Questions

Use the globalEDGE™ site {http://globalEDGE.msu.edu/} to complete the following exercises:

Exercise 1You are preparing for a business trip to Brazil where you will need to interact extensively with local professionals. Therefore, you should consider collecting information regarding local culture and business habits prior to your departure. A colleague from Latin America recommends you visit the “Centre for Intercultural Learning” and read through the country insights provided for Brazil. Prepare a short description of the most striking cultural characteristics that may effect business interactions in this country.

Exercise 2

Typically, cultural factors drive the differences in business etiquette encountered during international business travel. In fact, Asian cultures exhibit significant differences in business etiquette when compared to Western cultures. For example, in Thailand it is considered offensive to show the sole of the shoe or foot to another. Prior to leaving for your first business trip to Asia, a colleague informed you that a guide called “Business Etiquette Around the World” may help you during your trip. Using the globalEDGE™ website, find five tips regarding business etiquette of the Asian country of your choice

Answers to Exercise Questions

Exercise 1The data can be accessed by searching for the term “Centre for Intercultural Learning” at {http://globaledge.msu.edu/ResourceDesk/}. The Centre for Intercultural Learning is the only source in this search. Go to the Country Insights link on the left side of this resource’s webpage. This resource is found under the globalEDGE category “Reference: Culture”. Be sure to check the “Resource Desk only” checkbox of the search function on the globalEDGE website.

Search Phrase: “Centre for Intercultural Learning”Resource Name: Centre for Intercultural Learning (Canada Foreign Affairs)Website: {http://www.dfait-maeci.gc.ca/cfsi-icse/cil-cai/}globalEDGE Category: “Reference: Culture”

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http://www.dfait-maeci.gc.ca/cfsi-icse/cil-cai/

http://globaledge.msu.edu/ibrd/ibrd.asp

http://globalEDGE.msu.edu/


Exercise 2The data can be accessed by searching for the term “Business Etiquette Around the World” at {http://globaledge.msu.edu/ResourceDesk/}. The Guide to Business Etiquette in Asia is a source found near the bottom of this resource’s website. You can also select the region of Asia from the map located at the top of the website. This resource is found under the globalEDGE category “Reference: Culture”. Be sure to check the “Resource Desk only” checkbox of the search function on the globalEDGE website.

Search Phrase: “Business Etiquette Around the World”globalEDGE Category: “Reference: Culture”Resource Name: Business Etiquette Around the WorldWebsite: {http://www.cyborlink.com/}

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http://www.cyborlink.com/

http://globaledge.msu.edu/ibrd/ibrd.asp

Documents

Chap 003