Case of Burns Phillips Co., Importance of Culture in International Marketing

Essay by archdukeUniversity, Bachelor'sA, March 2007

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Culture is a major factor that multinational enterprises should carefully consider when operating their business overseas because different cultures have different ways of doing things and they can vary quite significantly. "Understanding manners and customs is especially important in negotiations, because interpretations based on one's own frame of reference may lead to a totally incorrect conclusion." (M.R. Czinkota and I.A. Ronkainen, page 70) Generally, cultures are divided into high context and low context culture. High context cultures are more common in the eastern cultures than in western and they are cultures that value the group over the individual. It promotes in-groups and group reliance and relationship. In a high context culture, many things are left unsaid, letting the culture explain. The group relies on their common background to explain the situation, rather than words. In contrast, a low context culture values the individual over the group and it explains things more precisely (by contract) when conflicts arise.

In this case, Mr. Arthur Aroney, a general manager of an Australian (low context culture) company called Burns Phillips and Co. Ltd that engages in international marketing, was dissatisfy with conditions on their Chinese (high context culture) counterpart largely due to different cultural background. There are four cultural dimensions suggested by Geert Hofstede that can be used to reason Mr. Aroney's dissatisfaction. These dimensions include power distance, individualistic vs. collectivistic, uncertainty avoidance and long-term vs. short-term orientation.

The cultural dimensions above mentioned are also very closely related to the concept of high and low context cultures for high context cultures usually have higher level of power distance; higher level of uncertainty avoidance; are collectivistic and prefer long-term orientation. Here, because China has a high context culture; therefore, the power distance and uncertainty avoidance level is high. They are also collectivistic and prefer long-term...