Cultural Distance How Is it Measured and How Does it Impact on Global Marketing Operations

Cultural Distance: How Is it Measured, And How it Impact on Global Marketing Operations

The persistence of cultural distances is relevant for the global multinational marketing operations exposed to multiple cultures in their everyday activities. This indicates that marketing across border introduces complexities because it forces global marketers to tailor their approaches and practices to each cultural context they carry out their business activities. As a result, this paper will discuss concepts applicable to different aspects of cross-border operations. The primary focus of the paper is on multinational business corporations (Baumann, 2007).

This study shows how Hofstede's model is still the most relevant piece of reference for a successive cross-cultural analysis despite it being a widely criticized. The paper compares and contrasts Hofstede's famous concepts with Turner and Schwartz, Trompenaars and Hampden's valued inventory. It will attempt to provide empirical evidence of how cultural diversity influences the global markets by giving illustrations of various cultural conflicts of famous companies. At the end, the paper will discuss various business implications and offers suggestions on how global corporations can manage adaptation to cultural distances (Sarstedt, Schwaiger & Taylor, 2011). This study eventually confirms that cultural distance is an essential factor of success in an organization. Any business entity that takes into account all or many aspects relating to culture are bound to have stress-free business operations because cultural conflicts are reduced.

Hofstede's model

Hofstede's model in cultural dimensions was the first methodology introduced to measure cultural distance. Its development in the late 1970s came after an alternative investigation of work related problems in the IBM workforce across forty countries (Mooij, 2010). As the pioneering model, all subsequent investigations are linked to it, by comparing, evaluating, criticizing, and analyzing. For instance, the Hofstede's model of national cultural distances and its impacts may be considered as a failure of analysis but a triumph of faith. In all relationships with this model, the criticizing draws the attention of individuals who approached the Hofstede's study. However, a few scholars have taken Hofstede's side, thereby questioning the fallacious presuppositions of MacSweeny (Voich, 2013). The scholars have done this through conducting a thorough analysis of his work and pinpointing the profound misunderstandings.

Regardless of being subjected to pure criticism, Hofstede's model remains perhaps the widely accepted and used cross cultural analysis approach. Hofstede's model is still considered the easiest to understand and exhaustive study of cultural diversity. Culture, in its simplest form, is a broad concept and its definition varies based on the context it is related (Sarstedt, Schwaiger & Taylor, 2011). In fact, conceptualizing such a broad topic and applying it to each random context may be perceived presumptuous and awry as a milder effort to measure the immeasurable. Hofstede's study has been accused of only being conducted in one field and within a non-market sector whereby the test individuals of IBM were not investigated as negotiators, consumers, or market intermediaries. As a result, because its collection of data dates back to the late 1970s, it has been claimed impossible of implementing in the plausible current market environment (Hofstede, 2011). Therefore, it has been considered because outdated because the society has changed.

Limitations of Hofstede's Cultural Model

Although Hofstede's method remains the most widely utilized approach to the group and compares national cultures, it has some shortcomings impediments. An evident shortcoming is that the information is old and may not completely catch emerging changes in the political environment or the workplace in spite of the study's replications. Moreover, Hofstede's study was confined to information from a solitary organization. Generalization of national cultural attributes based upon the investigation of a minor subset of cultural parts relies on the untenable suspicion that every country comprises of a uniform national culture and that information from a segment of Toyota employees might be illustrative of the supposed national consistency (Cavusgil & Ghauri, 2009).

The cultural values of Hofstede have additionally been utilized to register total cultural separations between nations along these four measurements to quantify cultural contrasts between nations. Although these cultural separation scores have been used to clarify diverse phenomena in global business, like entry mode decision, worldwide expansion, and performance of multinational firms, this approach has likewise been intensely criticized. First, the calculation of distances based on Hofstede's scores recommends that the distances are symmetric (Baumann, 2007). At the end of the day, a Swedish firm investing in Asia is thought to face precisely the same cultural separation as a U.S. firm investing in Sweden, a presumption that has however been given minimal support.

Secondly, the notion of cultural diversity takes homogeneity in every country: a criticism recently voiced against Hofstede's information gathering in essence. It is important when the information is used to register distance scores between nations considering the diverse intra-cultural differences and the real physical separation between them. For instance, we might need critical contrasts for a Spanish firm investing in France depending on whether the home and host units are found in Barcelona and Perpignan, separately, or in Seville and Le Havre, individually (Cavusgil & Ghauri, 2009). This is especially important for huge and diverse nations like the BRICs (India, Russia, Brazil, and China). However, it additionally applies to smaller nations: The figured cultural separation between the Czech Republic and Slovakia, two states that imparted the same national flag for quite a while, is higher than for most other cultural sets. These not just highlights the part of intra-cultural distance, but it also raises questions over if the nation is fundamental a suitable substitute for characterizing cultural regions.

Other Cultural Models

Besides the Hofstede's work, various alternative frameworks can be sued to categorize national cultures in different dimensions. Although some dimensions portray a conceptual match with those identified by Hofstede's, some of them merit mentioning. A Dutch researcher, Fons Trompenaars, gathered the most recent information in more than forty countries. Among the dimensions mentioned, most of them concentrate on the relationship between persons while a few concentrate on a culture's and time management relationships with nature. An Israeli psychologist, Shalom Schwartz, offers another model to classify and describe national cultures (Curry, 2009). According to Schwartz, cultural values are a reflection of three fundamental issues facing societies. They include the nature of the association between the group and the individual shows guarantee to ensure responsible behavior and mechanisms to control the relationship between people to the social, and the natural world (Sarstedt, Schwaiger & Taylor, 2011).

Drawing on data from university students and schoolteachers in more than sixty countries, Schwartz obtained three dimensions representing solutions to the aforementioned issues. In the most ambitious efforts to characterize cultures, a group of international researchers focused on cultural distances in leadership. Dubbed the GLOBE study, the exploration obtained nine cultural dimensions addressing both power distance, which has been previously identified, as well as the new value categories like performance orientation. Experts suggest that we should note that the application of these cultural value dimensions comes with a vital caveat. Though the cultural dimensions are certainly important in comparing cultures, they tend to represent central tendencies at the national level rather than the description of individuals within a nation. Data pertaining to the actual behaviors and the value of an individual must also supersede the group tendency (Sarstedt, Schwaiger & Taylor, 2011).

The impact of Cultural distance on global marketing operations

Cultural diversity affects large multinational corporations that can expand horizontally and pursue great fortunes overseas. Setting up new investments in a foreign nation requires a high level of cash. This is the main reason why only great corporations will afford this treacherous move. A multinational organization can only be profitable as disadvantageous. This depends on how much the company can take cultural variables into consideration (Curry, 2009). Global and economic strategists argue that many firms are attracted by overseas markets to the extent that they underestimate the financial threat posed. In this context, it is important to highlight how the Asian culture continues to shape the business of a global company like McDonalds. The company has been forced to make changes in three different countries: China, Hong Kong, and Japan. There is a big difference between the eastern and the western culture. It is self-explanatory because the main principles differ from one country to another. The U.S. fast food firm, McDonalds had to be aware of various variables in its step towards establishing its brands in Asia (Tallman, 2007).

When individuals think about McDonalds, the first statement across their mind could be "standardization." Hofstede might have considered "organizational culture" rather. McDonalds is the significant example of an organization, which points at keeping the same level of customer service, quality, cleanliness, food value, and taste. Its principle qualities depend on quick services and standard taste of the food, and these have shown to be exceptionally beneficial in the western market. Unluckily, Asian individuals were not used to having dinner or lunch in dozens of minutes, hence McDonalds needed to contemplate a technique to get clients and make benefit. Drawing from the Hofstede's model of power Distance nations worldwide, Japan has been appraised as one of the nations with the least score. This means it would be less expected to acknowledge a higher organizational culture as McDonalds (Tallman, 2007). In any case, the popular fast food organization devised a workable plan to succeed and survive the Nippon market courtesy of some strategies.

The first issue of the company was that the Japanese social order is well-known for consuming rice throughout the day as a "filling" dish. As a result, McDonald's presented new items made of rice in the business sector, such as Chinese fried rice, curried rice with a fried egg burger and chicken. After the launching of these new items, the organization devised a workable plan to be considered from the Japanese social order (Parvis, 2007). Besides Japan, there is a hoisted feeling of commonality, something that is not incorporated into the McDonalds brand like in different nations like Italy or Spain. Regardless, the organization needed to do something to get around this cultural issue and, accordingly, it began providing its restaurants with tables and seats where the Japanese could eat and hang out as being home. Another issue emerged when the Japanese social order viewed the ordinary burger as a nibble and not overall dish. McDonalds actualized a great strategy by taking this misleading observation and transformed it into a competitive advantage to create a place suited for young individuals who need to get a quick meal and hang out for a while (Sarstedt, Schwaiger & Taylor, 2011).

This situation slightly changed in the state of Hong Kong. Consistent with Hofstede's model of Power Distance nations, Hong Kong has been appraised a little more than Japan (68) which, as a result, portrayed this nation as extremely open to centralized organizations as the American McDonalds (Wagner, 2009). In fact, People of Hong Kong were now acquainted with a concept of a fast food market. Regardless of this, McDonalds was skeptical about spreading its organization's qualities into this Asian market. McDonalds' first move was to leave the reputation of the organization in its original language without any interpretation. Furthermore, the founder of the restaurant in Honk Hong, Daniel Ng, decided on a smart solution, which comprised of transliterating the name. Transliteration is an exceptional strategy to escape a cultural interpretation issue. It renders the English sound of the word into Chinese characters, without running into the issue of translating the importance of the statement. It might be an extreme undertaking to avoid. The strength that McDonalds utilized depended on not infringing the organization's qualities to the locals, but on molding its organizational culture with specified end goals to get approval from them (Parvis, 2007).

China, in Hofstede's Power Distance graph, has been evaluated with an exceptionally high score (80). In this way, McDonalds' issues had nothing to do with the acclimatization of an incorporated organizational culture (Curry, 2009). What happened in Beijing was the image of cultural contrast an enormous organization, like McDonalds must consider: Despite having entered the Chinese business sector, McDonalds was not ready to pass on the values of its work to the locals, and hence could not get rid of the rivalry. Although the Chinese individuals were acquainted with the fast food chain, they did not think of it as part of their cuisine culture. After years, they continued seeing it as an American brand in Chinese domain. This was not a competitive advantage whatsoever. Political, ideological, and economic distinctions were a snag for an American brand, which was operating in the Chinese market. The determination of this issue lied in the way that the organization needed to begin blending increasingly with the local culture, evading to stress its "Americanism" solidly (Curry, 2009). With this understanding, McDonalds started to present Chinese traditional foods in its menu with a defined goal to show the Chinese populace its adaptation to use and respect the regional food culture. As such, all the restaurants were decorated using Chinese paper-cuts designs. Along these lines, clients started to believe the brand and see it from an alternate point-of-view. KFC needed to follow this same way to become profitable in the current Chinese market.

Managing Adaptation to Cultural Distance

Concentrating on cultural similarities is restricted to decrease the need for variation. The simplest approach to do this is by centering operations in areas with increasingly comparative cultures. While serving members of an organization's, the host nations can ease entrance into new markets by lessening the cultural separation that must be crossed to arrive at local customers. Internally, utilizing expatriates in some defined roles additionally mirrors some focus (Young & Nie, 2006). Hiring an expatriate as a country finance director lessens the extent for potential cultural identified misconceptions around delicate financial matters and reflects the trends of trust we have explored. Externalization, such as through joint ventures, is a way that organizations can reduce the expense of adapting to local cultures. Collaborating with local firms will give access to local cultural comprehension, business systems, among others, that might be expensive and tedious for a foreign organization to advance on its own (Baumu-ller, 2007).

With the assumption that the partners can set up a viable interface to address cultural contrasts in managing the organization, an expanded cultural congruence may be enhanced. Moving past joint ventures, organizations can acquire foreign firms, gain access to local knowledge, and acquire direct managerial control. However, the demand to have companies realizes sufficient cross-cultural ability to integrate and manage acquired firms tends to be challenging. An alternate approach to minimize the need for variety is to promote a solid corporate culture (Curry, 2009). By attracting and developing representatives and clients who are attracted to a specific corporate culture, the need to react to national cultural contrasts could be diminished. In addition, it is paramount not to place a lot of certainty in a typical corporate culture overpowering national cultural distinctions. It should be remembered that Hofstede's unique investigation occurred within a single organization -- IBM -- and still uncovered expansive cultural contrasts (Marinov, M2012).