International Marketing Quiz 2

Political Systems

A set of formal institutions that constitute a government

With legislative bodies, political parties, lobbying groups & trade unions 

Three types:    Totalitarianism,  Socialism,  Democracy 

Totalitarianism

Gov controls all economic & political matters (dictators)

ie. Cuba, North Korea, ect

Socialism 

Gov role is to control basic means of production, distribution & commercial activity 

ie. Western Europe, Brazil, China, ect

Democracy 

Democracy requires openness, transparency & accountability 

Economic freedom & upward social mobility 

ie. USA, Australia, Canada, Japan, ect

Political systems & Economies

Totalitarianism = Command Economies

Socialism = Mixed Economies

Democracy = Market Economy

(General) Rule of Law 

Legal system is applied to all citizens equally issued via gov authorities

Economic activities suffers & uncertainty increases —> When rule of law is weak

Common Law, Civil Law, Religious Law & Mixed Law 

Common Law: Tradition, past rulings, Judges can intemperate (Flexible)

Civil Law: Laws passed by national & state (clear cut)

Religious Law: Strongly influenced by religious beliefs/ values (ie. Jewish, Hindu, Islamic law)

Mixed Law: Two or more legal systems operating together (Lebanon, Morocco Civil/religious law) 

How to manage country risks

• Diversify your business portfolio

• Alliances w/ qualified local partners 

• Strict adhere to ethical standards 

• Be ready to renegotiate 

Conciliation

Is a formal process of negotiating in very friendly manor

Arbitration 

Negotiating w/ neutral 3rd party who hears both sides & assess based on facts

Litigation 

No negotiation— Lawsuit is filed and legal action is taken (least friendly) 

Most well traveled ppl (countries) 

1. Finns

2. Americans (but only 56% of Americans have a passport)

Cross Cultural Risks 

A situation/event where a cultural miscommunication puts human value at stake 

Culture is learned (Socialization vs Acculturation) 

Socialization:The process of learning the rules & behavioral patterns appropriate to society

Acculturation: The process of adjusting and adapting to a culture other than one’s own

Culture Iceberg

Can only see so much of a culture at surface level

Once go deeper theres more traits, assumptions, attitudes, ect 

We often get more aware of our own culture when we encounter another one

Hofstede’s Cultural Dimensions

• Power Distance – How much people accept unequal power (big gap vs. more equality).

• Individualism vs. Collectivism – Focus on “me” (personal goals) vs. “we” (group goals).

• Uncertainty Avoidance – Comfort with risk/ambiguity (okay with change vs. needing rules).

• Long-term vs. Short-term Orientation – Future planning and persistence vs. quick results and traditions.

• Indulgence vs. Restraint – Free enjoyment of life and fun vs. strict self-control and duty.

The Cage (Distance Framework)

• C = Cultural Distance – Differences in language, religion, values, or social norms.

• A = Administrative Distance – Differences in laws, politics, colonial ties, or trade agreements.

• G = Geographic Distance – Physical distance, time zones, transportation, and climate.

• E = Economic Distance – Differences in wealth, income, infrastructure, and economic development.

How to deal w/ cultural differences (Ads) 

1. Don’t be insulting 

2. Avoid the “ist”s: Sexist & Racist

3. Keep it clean

Ethnocentric

• Ethnocentric – “My culture is the standard.”

Polycentric

• Polycentric – “The host country’s way is best.”

Geocentric

• Geocentric – “Blend both for a global view.”

Global leader key traits

• Deep self-awareness

• Sensitivity to cultural diversity

• Humility

• Life long curiosity

Cross cultural skills 

Avoid cultural bias & ethnocentric reactions 

Self-reference criterion: The tendency to view and judge other cultures through the lens of your own cultural values and experiences.