9/11 In remembrance: Terrorism and International Business

TERRORISM AND INTERNATIONAL BUSINESS:

Michael R. Czinkota, Gary Knight, Gabriele Suder.

The airplanes of 9/11 forced countless multinational corporations (MNCs) to update their strategic planning.  Our work with executives at more than 150 MNCs shows that more than ten years later, companies are still grappling with how best to manage the terrorist threat.

In the two decades before 2001, the rate at which firms launched international ventures was growing rapidly. After 9/11, foreign direct investment fell dramatically as firms withdrew to their home markets. The popularity of international-sounding company and brand names decreased appreciably as managers now emphasize domestic and local affiliations.

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International Marketing: Three Steps to Muy Bueno

by Isadora Badi 

The most exciting part about international marketing is that you get to create or adapt your marketing mix to expand into a new country and connect with a whole new audience.

The truth is, it’s never as easy as “translating” your marketing communications and website to a new language—the key is to “localize” and better understand the unique qualities of different cultures.

You might need to modify your product to agree with local preferences, the way Coca-Cola and Fanta do. In Europe, for example, Fanta has a higher percentage of fruit juice, no high fructose corn syrup, a lighter color, and a taste that’s more refreshing than the way too orange and sweet American version.

Or, even if your product stays the same, you need to find a way to communicate with a new market. One example is the way multinational companies use different brand names in the US and the UK for the same products: Axe in the US is Lynx in the UK; Mr. Clean in the US is Mr. Proper in the UK.

Localization is the practice of adapting a product, service, or marketing content to conform to the language, culture, and legal and technical requirements of a country.

Here are three basic levels of localization to get you started as you gear up to expand into a new market in another country.

1. Functional requirements

These are the building blocks of your product launch in a new market, and the minimum investment you need to make to set up shop:

Language: It’s vital to connect with consumers with compelling content in their local language. Don’t make any assumptions—even in countries where “most people speak English.”

Take, for instance, the wise words of Nelson Mandela: “If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart.” To reach people’s hearts (and pockets), you need to invest in resources that develop content in their native tongue.

Currency: Be sure to have the local currency loaded on your website, catalogs, and other sales collateral. Don’t expect consumers in other countries to know what the exchange rates are when they are shopping online.

Local regulations: In different countries there might be regulations on how you can advertise. In the Province of Quebec, for example, you can advertise in French only if your call to action promotes a website, call center, or other distribution channel where the information is displayed in French. That makes so much sense and it’s fair to shoppers, who need to be confident they understand what they are signing up for before making a purchase. For example, people need a crystal clear idea of what the return policy is before making a purchase. However, translating an entire website or opening a call center in a new country is also expensive. Factor those requirements in as part of your entry costs into a new market.

Weights and measures: Do your homework. Different countries display times, distances, weights, temperature, and other forms of measure differently. How to display time, for example: Month first? Day first? In the US, 04/07 is April 7, while in Germany that’s July 4. In China and Japan, for example, the year comes first, followed by month and day. You also need to choose the appropriate time system: 12 hours or 24 hours.

Eye movements in reading: Take into consideration the way different countries read marketing collateral (including signage): Vertical or horizontal flow? Left to right, or right to left? In the Middle East, many stores display the Western name of the brand on the left, and the Arabic version on the right, since Arabic speakers will read the sign from right to left.

Now that you’ve done your research, think about how you are engaging these folks.

2. Local Culture

To adapt your product or campaign to a different country, you need to be able to understand the local culture.

Imagery: Ask yourself what visually captivates this new audience. What’s beautiful or appealing in this new market? Who are the local sex symbols? What type of photography or design is popular? What’s cheesy and what’s sophisticated?

Tone and Manner: Find out how people communicate. Are they informal or formal?

Sense of humor: The sense of humor of different cultures likely varies from your own culture’s. Find out what’s funny and what references people understand in other countries. “Knock-knock” jokes, for example, don’t exist in Italy. You might be able to explain your way until your Italian friend gets it, but any references to “knock-knock” will be completely lost.

Rituals: Gauge the daily rituals and habits of your targeted cultures. At what time do most people have dinner? How often do people bathe? Do people have lunch at home or do they go out on weekdays?

Religion: Determine the influence religion has on a person’s day-to-day. How often people pray? What are the observed religious holidays?

Colors: Colors have different meanings in different cultures. For instance, white is the color of mourning in China, while red represents luck and good fortune. Take note on this type of symbolism when developing packaging and visual collateral.

Taboos, extracurriculars, and the like: Superstitions, interests, hobbies, views of sex and relationships, local politics, opinion about other countries and cultures. All of these can immensely affect how well your targeted culture receives your message.

3. Local consumer behavior

Gauge how your target buys. Working on the following areas is extremely important to getting your campaign off on the right foot:

Availability of credit: How easy is for people to buy on credit? Are people buying through layaway or cash? In Brazil, for example, the majority of apparel retail sales are done through private-label credit cards issued by large department stores, not banks.

Saving vs. spending: Are consumers more motivated to spend or to save? Is shopping a distraction, a pleasure, or a necessity?

Research: Determine how much in advance people research before making a purchase. How many touchpoints are consulted when shopping for a product? Do people wait for payday to shop?

Vacation: To successfully sell a product or campaign, find out the typical schedule of your target. For instance, the duration or time of vacation, how many days a year, etc.

Distribution channels: Determine the optimal distribution channels for your target. Bookstores and book printers, for example, are vanishing in the US, as the use of e-book readers increases. In Latin America, however, the market is way behind that trend. Consumers are slowly moving from brick-and-mortar to online bookstores, but they’re still buying paper, as e-book offerings are still scarce in that market.

* * *

Research, research, research is the best way to go about international marketing. The idea is to build the foundation for your brand to succeed in a new market. Translating is one of the steps, but after that there’s way more work to do.

Once your team has a true understanding of local culture and shopping behavior, that’s when you’re fully equipped to localize your efforts and create a stronger connection with consumers globally.

Achieving ‘Glocal’ Success

Michael R. Czinkota and Ilkka A. Ronkainen for www.ama.org

Companies that have adopted this approach have incorporated the following four dimensions into their organizations.

Building a Shared Vision

The first dimension relates to a clear and consistent long-term corporate mission that guides individuals wherever they work in the organization. Examples of this are Johnson & Johnson’s corporate credo of customer focus; Coca-Cola’s mission of leveraging global beverage brand leadership “to refresh the world, inspire moments of optimism and happiness, create value and make a difference”; Nestlé’s vision to make the company the “reference for nutrition, health and wellness”; and Samsung’s mission to “create superior products and services, thereby contributing to a better global society.” But formulating and communicating a vision or mission cannot succeed unless individual employees understand and accept the company’s stated goals and objectives.

Broadening Perspectives

This relates to the development of a cooperative mindset among region or country organizations to ensure the effective implementation of global strategies. Managers may believe that global strategies are intrusions on their operations if they do not have an understanding of the corporate vision, if they have not contributed to the global corporate agenda, if they are not given direct responsibility for its implementation or if there is no reward for their cooperation.

Capable Managers

The third component in the “glocal” approach is making use of representatives from different countries, regions, and cultures. Organizationally, the forces of globalization are changing the country manager’s role significantly. With profit-and-loss responsibility, oversight of multiple functions, and the benefits (and drawbacks) of distance from headquarters, country managers enjoyed considerable decision-making autonomy, as well as entrepreneurial initiative. Today, however, many companies have to emphasize the product dimension of the product-geography matrix, which means that power has to shift at least to some extent from country managers to worldwide strategic business unit and product line managers. Many of the previously local decisions are now subordinated to global strategic moves.

Internal Cooperation

In today’s environment, the global business entity can be successful only if it is able to move intellectual capital within the organization—that is, to transmit ideas and information in real time. If there are impediments to the free flow of information across organizational boundaries, important updates about changes in the competitive environment might not be communicated in a timely fashion to those tasked with incorporating them into the strategy.

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Image from ama.org

9/11 In remembrance: Terrorism and International Business

TERRORISM AND INTERNATIONAL BUSINESS:

Michael R. Czinkota, Gary Knight, Gabriele Suder.

The airplanes of 9/11 forced countless multinational corporations (MNCs) to update their strategic planning.  Our work with executives at more than 150 MNCs shows that more than ten years later, companies are still grappling with how best to manage the terrorist threat.

In the two decades before 2001, the rate at which firms launched international ventures was growing rapidly. After 9/11, foreign direct investment fell dramatically as firms withdrew to their home markets. The popularity of international-sounding company and brand names decreased appreciably as managers now emphasize domestic and local affiliations.

Continue reading

Why International Marketing? Five Core Benefits Explain Key Rationale

This article, “Why International Marketing?“, authored by Dr. Czinkota appeared in the Summer 2011 edition of Marketing Management. Dr. Czinkota describes how change can affect our perceptions of international marketing, especially in light of the particularly damaging consequences of economic recession on  globalized brands and businesses.  To address his question, Dr. Czinkota discussed the issues at hand with those “in the trenches”  themselves– international executives.  What arose from these discussions were five intrinsic benefits of international marketing which continue to influence the hopes and interests of those in the field as well as illuminate places  for growth.

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