INTERNATIONAL MARKETING Transformation and Adaptation over Time Part 3

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Please find below the third and final part of my presentation from my International Marketing speech at the 13th Annual Conference of the EuroMed Academy of Business in Cyprus on September 9th. It describes the transition from the old to the new pillars of marketing and its implications.

Please feel free to leave your comments below and hope you enjoy it.

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The Unspoken Truth about International Business

Language has been described as the mirror of culture. Language itself is multidimensional. This is true not only of the spoken word but also of the nonverbal language of international business.

Messages are conveyed not just by the words used, but also by how those words are spoken and through such nonverbal means as gestures, body position, and eye contact. These nonverbal actions and behaviors reveal hidden clues to culture.

Five key topics – time, space, body language, friendship patterns and business agreements – offer a starting point from which managers can begin to acquire the understanding necessary to do business in foreign countries.

Understanding national and cultural differences in the concept of time is critical for an international business manager. In many parts of the world, time is flexible and is not seen as a limited commodity; people come late to appointments or may not come at all.

In Mexico for instance, it is not unusual to show up at 1:45PM for a 1:00PM appointment. Although a late afternoon siesta cuts apart the business day, businesspeople will often be at their desks until 10 o’clock at night.

In Hong Kong, too, it is futile to set exact meeting times because getting from one place to another may take minutes or hours, depending on traffic.

Showing indignation or impatience at such behavior would astonish an Arab, Latin American, or Asian.

Perception of time also affects business negotiations. Asians and Europeans tend to be more interested in long-term partnerships, while Americans are eager for deals that will be profitable in the short term, meaning less than a year.

Individuals vary in their preferences for personal space. Arabs and Latin Americans like to stand close to people when they talk. If an American who may not be comfortable at such close range, backs away from an Arab, this might incorrectly be perceived as a negative reaction.

An interesting exercise is to compare and contrast the conversation styles of different nationalities. Northern Europeans are quite reserved in using their hands and maintain a good amount of personal space, whereas Southern Europeans involved their bodies to a far greater degree in making a point.

International body language, too, can befuddle international business relations.

For example, an American manager may after successful completion of negotiations, impulsively give a finger-and-thumb “okay” sign. In southern France, this would signify the deal was worthless, and in Japan, it would mean that a little bribe had been requested. The gesture would be grossly insulting to Brazilians.

Misunderstanding nonverbal cues can undermine international negotiations. While Eastern and Chinese negotiators usually lean back and make frequent eye contact while projecting negativity, Western negotiators usually avert their gaze for the same purpose.

In some countries, extended social acquaintance and the establishment of appropriate personal rapport are essential to conducting business. The feeling is that one should know one’s business partner on a personal level before transactions can occur.

Therefore, rushing straight to business will not be rewarded because deals are made on the basis of not only the best product or price, but also the entity or person deemed most trustworthy. Contract may be bound on handshakes, not lengthy and complex agreements – a fact that makes some, especially Western, businesspeople uneasy.

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Excerpt from Fundamentals of International Business, 3rdby Michael R. Czinkota, Ilkka A. Ronkainen, and Michael H. Moffett

Michael Czinkota (czinkotm@georgetown.edu) teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His latest book, forthcoming in October 2018, is “In Search for the Soul of International Business”.

The Sharing Economy reaches Africa

Uber. Lyft. Airbnb. Ebay. These companies using cutting edge technology have transformed the way the transportation and hospitality industries operate. Dubbed as pioneers of the sharing economy, the emergence of information technology and online marketplaces have allowed for the optimization of resources or the sharing of excess goods and services. That is the core premise of these businesses.

There are now 17 multi-billion dollar companies in the sharing economy around the world with 60,000 employees and $15 billion in funding in the sharing economy. 12 of them including Lyft, Airbnb, and Uber are based in the United States. 1 is based in Europe and 4 are based in Asia and Australia. Of these companies, 46% are involved in the money and transportation industries while another 36% are in the goods and space sector.

Now, the agriculture sector has joined the bandwagon. Hello Tractor, the brainchild of Jehiel Oliver is an Anacostia-based U.S. company that follows an Uber business model in lending tractors to farmers in Nigeria. Oliver devised a business model where farmers send a text message to Hello Tractor’s U.S.-based dispatchers who then located the nearest GPS-embedded Smart Tractor and alert the service provider. The tractors typically arrive within three days. Farmers can conveniently prepay for the services through SMS messaging and mobile money. Payment is only released once the service is completed.

“Nigeria has one of the largest inventories of uncultivated rain-fed farmland. But much crops are lost because of labor shortages and lack of mechanization,” Oliver said. The “Smart Tractor” that his business provides to farmers comes with attachments that produces in one day what Nigerian farmers do manually in 40 days. While the tractors benefit the farmers by cutting their labor costs by two-thirds, the service providers get additional revenue as well. For a $75 daily fee, tractor owners could earn five times the average wage.

When Oliver was working in investment banking, he visited developing countries and saw microfinance models in play. “I wanted to serve the base of the pyramid – to support the people who simply needed tools to enable them to be self-sufficient,” Oliver said. “Despite all the negative news you read about the Boko Haram or Ebola, you can’t ignore Africa.” Sharing is big business that goes beyond borders.

 

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China, Philippines, and Kenya top list for 2015 fastest growing economies

BloombergBusiness reports on the world’s 20 fastest growing economies for 2015. While overall global growth is projected to be 3.2 percent this year, emerging markets in Asia and Africa will grow exceptionally for the next two years.

According to a survey conducted by Bloomberg, China, the Philippines, Kenya, and Indonesia together will make up 16 percent of the global gross domestic product. They are all expected to grow more than 5 percent in 2015.

By comparison, the US and UK which combined make up about 25 percent of global GDP will grow 3.1 and 2.6 percent respectively.

2015 Global Economy

Read the full report here: http://www.bloomberg.com/news/articles/2015-02-25/the-20-fastest-growing-economies-this-year

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2014-15 Global Competitiveness Ranking

The Global Competitiveness Report that is published by the World Economic Forum looks at the competitive landscape of 144 economies in terms of the institutions, policies, and factors that determine the productivity and long-term growth of a country. Sectors such as a country’s infrastructure, macroeconomic environment, health, education, job market, financial development, and technological readiness are all considered.

Key Findings:

  • Switzerland and Singapore retain their position as first and second respectively. The United States moves to third from fifth place last year.
  • Those countries in Europe such as Spain, Portugal, and Greece are effectively implementing reforms and remain highly competitive. Whereas, the other half of Europe is lagging behind including France and Italy.
  • Most improved region belongs to Southeast Asia where Malaysia (20th), Thailand (31st), Indonesia (34th), Philippines and Vietnam (68th) have all progressed in their rankings. The Philippines is the most improved economy since 2010 jumping from 85 to 52.
  • Emerging market economies such as Brazil (from 57 to 56) and India (from 60 to 71) lost their competitiveness. But Russia (from 64 to 53) and China (from 29 to 28) climbed in global rankings.
  • Most Latin American economies need to address their productivity challenges in order to keep the momentum of their growth in the past years.
  • Due to geopolitical instability in the Middle East and North Africa, the region depicts a mixed picture. United Arab Emirates takes the lead in 12th place. Sub-Saharan Africa continues to pose impressive growth rates of 5 percent.

Global Rank2Are the rankings useful to you? Any surprises? Tell us what you think.

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