Introduction:
Before an organization can begin strategy formulation, it must scan the external environment to identify possible opportunities and threats and its internal environment for strengths and weakness.
To the extent that these factors can be quantified, the information may be useful in evaluating relative strength of the forces or trends, and may be useful in further analysis (see value chain development).However, most often this information is qualitative.
Information on the external environment can be obtained from a variety of resources, including:
- Industry periodicals and general news sources
- Analyst reports available on business databases
- Interviews with industry experts
- Annual reports of existing companies that disclose environmental factors in the Management Discussion and Analysis of risks and assumptions
This paper explores sociocultural and how they affect task environment for my organization, Abudawood Distribution Cooperation – Egypt, which is a business partner with P&G and distribute its products. It is a Saudi company has started its operation in Egypt in September 2006.
The sociocultural of the general environment represents the demo graphic characteristics as well as the norms, customs, and values of the general population. Important sociocultural characteristics are geographical distribution, population density, age, and education levels.
Humans essentially create their own cultural and social environment. Customs, practices and traditions for survival and development are passed down from one generation to the next. In this way, the members of a particular society become conditioned to accept certain "truths" about life around them. The increasingly competitive international business environment calls upon exporters to tailor or adapt their business approach to the culture and traditions of specific foreign markets. The inability or unwillingness to do so could become a serious obstacle to success.
The task of adjusting to a new cultural environment is probably one of the biggest challenges of entrepreneur marketing. Export marketing attempts are frequently unsuccessful because the marketer - either consciously or unconsciously - makes decisions or evaluations from a frame of reference that is acceptable to his/her own culture but unacceptable in a foreign environment. Therefore, business practices, which are successful in one group of countries, may be entirely inappropriate in another group of countries. For example, the Marlboro Company took its famous lone cowboy advertisement to Hong Kong in the early 1960's.However, the image of the cowboy riding off in the distance by himself led the Chinese to wonder what he had done wrong.
In the context of the socio-cultural environment, there are a number of factors that you will need to consider. These are:
- Language
- Material culture
- Aesthetics
- Social organization
- Religious beliefs, attitudes, values, space and time
Language is central to the expression of culture. Within each cultural group, the use of words reflects the lifestyle, attitudes and many of the customs of that group. Language is not only a key to understanding the group, it is the principal way of communicating within it.
A language usually defines the parameters of a particular culture. Thus if several languages are spoken within the borders of a country, that country is seen to have as many cultures. In Egypt, for instance, Arabic, Standard are spoken; in Iraq, Adyghe, Arabic, Armenian, Assyrian Neo-Aramaic, Azerbaijani, Bajelani, Chaldean Neo-Aramaic, Domari, Farsi, Gurani, Koy Sanjaq Surat, Kurdish, Sarli and Shabak. There are 12 official languages. In addition, there are often variations within a language - different dialects, accents, pronunciations and terminology may distinguish one cultural group from another, e.g. English-speaking South Africans, the British, Americans and Australians.
The importance of being able to understand other languages cannot be over - emphasized - this is particularly relevant when executives travel abroad and are negotiating with people of different language groups. Because English is the predominant language of business in the western world, people with English as a home language are usually reluctant to learn foreign languages and tend to expect others to converse with them in English. In contrast, European and Far Eastern businesspersons have been willing to learn and converse in the language of their trading partners, leading inevitably to a better understanding and better rapport between the parties concerned. If exporters do not speak the language of the country they plan to visit, they should at least establish the extent to which their own language is spoken there and, if necessary, engages the services of an interpreter during discussions or negotiations.
If promotional material needs to be prepared in a foreign language, it is important to ensure that none of the meaning is lost or distorted when the information is translated. Thus, translations should be undertaken within the country concerned or at least by a native of the country in question.
Material culture relates to the way in which a society organizes and views its economic activities. It includes the techniques and knowledge used in the creation of goods and services, the manner in which the people of the society use their capabilities, and the resulting benefits. When one refers to an 'industrialized' or a 'developing' nation, one is really referring to a material culture.
The material culture of a particular market will affect the nature and extent of demand for a product. Whereas a luxury item, such as a sophisticated piece of computer hardware, may have a ready market in a country such as France, demand for it may be non-existent in a developing country, which is hampered by inadequate facilities and/or foreign exchange shortages. The material culture of a country may also necessitate modifications to the product. Electrical appliances, for example, may have to be adapted to cater for differences in voltage levels. To illustrate this: the United States operates under a system of 110V in contrast to South Africa's 220V. Alternatively, weights and measurements may have to be converted to those applicable in the importing country (again the US uses measures such as miles, gallons and pounds, whereas most other parts of the world use the metric system - kilometers, liters and kilograms).
Material culture can also have a significant effect on the proposed marketing and distribution strategies. While highways and rail transport are the principal means of moving goods within the United States, rivers and canals are used extensively in certain European countries. If the company is planning to develop a manufacturing operation in a foreign market, aspects such as the supply of raw materials, power, transportation and financing need to be investigated.
A culture's aesthetics refer to its ideas concerning good taste and beauty as expressed in the fine arts - music, art, drama and dance - and in the appreciation of color and form. Insensitivity to aesthetic values can not only lead to ineffective advertising and package design for products, it can also offend prospective customers.
Aesthetics also embrace people's dress and appearance, i.e. their outward garments and adornments or accessories. Distinctive national attire, for instance, includes the Japanese kimono, Dutch clogs, and the Englishman's bowler hat and 'brollie'.
Social organization refers to the ways in which people relate to one another, form groups and organize their activities, teach acceptable behavior and govern themselves. It thus comprises the social, educational and political systems of a society.
The entrepreneur’s ability to communicate depends to some extent, on the educational level of the foreign market. If the consumers are largely illiterate, advertising materials or package labels may have to be adapted to the needs of the market. In this regard, however, a company marketing baby food in a certain African country put the picture of a smiling child on the outside of the jar. The local resident assuming there were preserved babies inside avoided the product! In addition, there are unspoken signals, which identify cultural differences, from certain taboos to less obvious practices like the time taken to answer a letter. In some societies, for instance, an important issue is dealt with immediately; in others, promptness is taken as a sign that the matter is regarded as unimportant, the time taken corresponding with the gravity of the issue.
In a culture where great importance is attached to the family unit, promotional efforts should be directed at the family rather than the individual. The size of the family unit differs from one culture to another. It can range from the nuclear family, i.e. mother, father, and children, to the extended family which includes many relatives and whose role is to provide protection, support and economic security to its members. In the extended family, characteristic of developing countries, consumption decision-making takes place in a larger unit and purchasing power patterns may be different from those evident in western cultures.
In any society, certain occupations carry more prestige, social status and monetary reward than others do. In India, for example, there is a strong reluctance amongst people with university education to perform 'menial' tasks using their hands, even answering the telephone. In many countries, including France, Italy and Singapore, financial independence is considered essential for occupation-related prestige. In Japan, however, the majority of university-educated professionals tend to prefer working for large multinational firms than for themselves.
Social organization is also evidenced in the operation of the class system, e.g. the Hindu caste system and the grouping of society members according to age, sex, political orientation, etc.
1.5. Religious beliefs, attitudes, values, space and time:
While language, material culture, aesthetics and social organization are outward manifestations of a culture, a society’s religious beliefs, attitudes and values dictate the behavior of its members.
A religious system refers to the spiritual side of a culture or its approach to the supernatural. Western culture is accepted as having been largely influenced by the Judeo-Christian traditions, while Eastern or Oriental cultures have been strongly influenced by Buddhism, Confucianism, Taoism and Hinduism. Although very few religions influence business activities directly, the impact of religion on human value systems and decision-making is significant. Thus, religion exerts a considerable influence on people's actions and outlook on life, as well as on the products they buy. In certain part of the world, such as Latin America, the influence of religion extends even beyond the individual or family and is manifested in a whole community's deep involvement in, and devotion to, the church.
A society's religious belief system is often dependent on its stage of human or economic development. Primitive tribesmen tend to be superstitious about life in general while people in technologically advanced cultures seem to have dismissed the notion of traditional religious worship and practice in favor of a more scientific approach to life and death.
To disregard the significance of religious beliefs or superstitions evident in a potential export market could result in expensive mistakes.
The failure to consider specialized aspects of local religions has created a number of difficulties for firms. Companies have encountered problems in Asia when they incorporated a picture of a Buddha in their promotions. Religious ties are strong in this area, and the use of local religious symbols in advertising is strongly resented - especially when words are deliberately or even accidentally printed across the picture of a Buddha. One company was nearly burned to the ground when it ignorantly tried such a strategy. The seemingly minor incident led to a major international political conflict remembered for years.[1]
Attitudes are psychological states that predispose people to behave in certain ways. Attitudes may relate, for example, to work, wealth, achievement, change, the role of women in the economy, etc.
Western cultures, for example, value individualism and promote the importance of autonomy and personal achievement needs. In contrast, in many eastern and developing countries, there is a strong sense of collectivism and the importance of social and security needs. For instance, the Hindu religion imparts a type of work ethic that considers work central to one's life but maintains that it must be performed as a service to others, not for one's own personal achievement.
Stereotypes are sets of attitudes in which one attributes qualities or characteristics to a person on the basis of the group to which that person belongs. An international businessperson's tendency to judge others by his or her personal and cultural standards instead of attempting to understand others in the context of their unique historical, political, economic and social backgrounds could, for example, be termed an undesirable attitude.
Values are judgments regarding what is valuable or important in life, and they vary greatly from one culture to another. People who are operating at a survival level will value food, shelter and clothing. Those with high security needs, on the other hand, may value job security, status, money, etc. From its value system, a culture sets norms, i.e. acceptable standards of behavior.
Pepsodent reportedly tried to sell its toothpaste in regions of southeast Asia through a promotion which stressed that the toothpaste helped enhance white teeth. In this area, where some local people deliberately chewed betel nut in order to achieve the social prestige of darkly stained teeth, such an ad was understandably less than effective. Many as a racial slur also viewed the slogan “wonder where the yellow went”.[2]
The concept of space is different wherever one goes. In western corporate culture, the size and location of an executive's office is usually determined by his level of seniority in the company. The locality and size of an Arab business executive's office, on the other hand, are a poor indication of the person's importance.
Conversation distance between two people is learned early in life - almost completely unconsciously. A western business executive, conditioned to operating within a certain amount of personal space, may feel uncomfortable or alarmed at the closeness and physical contact displayed in the Middle East or Latin America, for example.
Time also has a different meaning in each country. Western cultures tend to perceive time in terms of past, present and future. They are orientated towards the future and in the process of preparing for it; they save, waste, make up or spend time.
In South Africa, giving a person a deadline is a way of indicating the degree of urgency or relative importance of the work. In the Middle East, however, time does not usually include schedules and timetables. The time required to get something accomplished depends on the relationship. With South Africans, the more important an event is, the earlier it is planned, which is why last minute invitations are often regarded as an insult. In planning future events with Arab businesspersons, it is often advisable to keep the lead-time to a week or less, because other factors may intervene and take precedence.
Some time ago, an American lost a major contract in Greece because he did not appreciate the Greek concept of time. The Greek executive could not understand the American's insistence on setting time limits on the length of their business meetings - he and his colleagues were prepared to spend as much time in discussion as they felt was necessary. The American also insisted that the senior managers involved in the transaction be responsible only for working out the general principles of the deal, with the actual details being left to subordinates. Suspicious that this represented a lack of commitment on the part of the American, the Greek called off the deal.
Many factors continuously produce cultural changes in a society - new technology, population shifts, availability of scarce resources and changing values regarding the role of education or women. Culture is thus dynamic, and exporters, particularly those involved in international travel and marketing, need to regularly assess what new products and service needs have been created, who the potential buyers and users are, and how best to reach them.
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