Posted by Hilka Klinkenberg on Wed, Nov 04, 2009 @ 08:15 PM
The dollar is down, and it may continue to decline even further…by how much depends any number of different models from the Organization for Economic Cooperation and Development (OECD), the Bank of Intercontinental Settlements (BIS), The International Monetary Fund (IMF), or the IntercontinentalExchange dollar index, among others. While that may be bad news for importers into the USA, it should present a golden opportunity for American exporters.
Unfortunately, that is not always the case. Over the years, I delivered many speeches on cultural issues to trade groups, and the response was always the same: “We don’t have the time or the money for that. We have to put all our 
resources into our marketing and advertising.” But how can you create a marketing plan if you don’t know your market? You can’t do what you always did and expect the same results you always got once you enter another culture.
Before you even consider going into new markets, there are any number of issues to consider:
- Is there actually a market for your product? Price alone is not the determinant. Cultural values and tastes can be the deciding factor in whether your product…and your marketing/advertising campaign…will be successful.
- Once you have determined that your product or service is a good fit, are there any changes that need to be made, for example in sizing for the Asian market or packaging and labeling for the Canadian market? Canadian labeling laws have deterred many American companies from entering the French-Canadian market.
- What are the barriers to entry in that market…tariffs, government regulations, infrastructure and transportation, climate, political or economic issues?
- Do you need a local ‘partner’ or a local representative? If so, what is involved in finding the right contact, making the connections and developing a profitable relationship?
- How will you be paid and how can you protect yourself from further fluctuations in the exchange rate?
Some of these points are obvious; some may be handled by your lawyer or accountant…or even the Department of Commerce. It is most often the little things, the cultural things, though, that derail what should be a lucrative export venture. Jack Brown’s article on the little mistakes major advertisers have made in new markets is a beginning. Watch for future whitepapers on some of the more challenging cultural risk issues exporters confront in their marketing and advertising plans.
Posted by Hilka Klinkenberg on Fri, Aug 07, 2009 @ 10:24 AM
In an article entitled "Illuminating outline" in the July 30th edition of the Financial Times http://www.ft.com/cms/s/0/486b1160-7c83-11de-a7bf-00144feabdc0.html?nclick_check=1, Richard Milne and Andrew Ward write about the Nordic model of social capitalism. The writers describe small domestic markets driving an openness to globalization. They write of strong social protections and a deep sense of egalitarianism and equality, educational opportunities for all, and quota laws to ensure women get their fair share because "it is not who you are but what you can contribute." They go on to describe the much smaller gap between executive and worker pay and worker participation in the strategy of companies.
While this system may sound ideal to some, the autho
rs also state that this Nordic model of social capitalism is difficult to export outside of the Nordic countries. It is difficult to export precisely because it is based on a strongly-held set of values by a relatively small, homogenous population. For those fond of the Nordic model, it is unfortunate that the world is a much messier place, comprised of a multitude of cultures that hold very different values, whether based on religion, geography, economics, or history, to name but a few influences. And, when you look at heterogeneous countries like the U.S.A., or even Canada, China or India with multiple cultural influences, the Nordic model becomes even more unsustainable.
Even in the Nordic countries, as our team confirmed when we were working in Sweden last autumn, the Nordic model is losing ground. An aging population is putting a strain on the social services available and creating a shortage of working-age contributors to the tax base without immigration. Meanwhile, immigration is eroding the homogenous values of these countries while raising their social costs, and suddenly you have the local population reexamining their attitudes to that Nordic model of social capitalism.
Consequently, there are a number of risk factors for any company going into another market. There is little likelihood of a shared set of values, beginning with something as seemingly simple, especially in the current global economy, as attitude toward work and leisure. Are employees gung-ho to get started every day or do they mark time till it is time to go home? Is overtime desirable or an infringement on personal time? And, what about attitudes to hierarchy? Do employees need command-and-control leadership or participative roles in management? What motivates them...the carrot or the stick? And, we haven't even begun to discuss issues of communication, regardless of the language or languages spoken.
Those are just a few of the more obvious issues confronting a leader confronting a different culture. Now, just imagine you have a global team comprised of people from a variety of cultures with numerous conflicting values, attitudes and communication styles. It can become a minefield for companies, leaders and their teams. As admirable as the Nordic model of social capitalism, the American model of management, the Japanese model of quality or any other economic or business model may be, the moment you move from a small, homogeneous group, culture rears its fascinating head and plays havoc...unless you have done your homework and are informed, adaptable and open to whatever may happen.