Intercultural Marketing Management in the Spotlight; what and why, but what about the how?

Intercultural Marketing Management in the Spotlight —what and why, but what about the how?

Joachim Ramström, Maria Ivanova, Anna–Greta Nyström (Eds.)

Intercultural Marketing Management in the Spotlight —what and why, but what about the how?

Joachim Ramström, Maria Ivanova, Anna–Greta Nyström (Eds.)

Publisher: International Marketing at Åbo Akademi University, School of Business and Economics

Intercultural Marketing Management in the Spotlight; what and why, but what about the how?

Editors: Joachim Ramström, Maria Ivanova, Anna–Greta Nyström

Student authors: Emilia Breider, Manuela Geser, Markus Gotzig, Louise Grams, Ted Hjort, Swenja Krahn, Sonja Lillhonga, Theresa Lotz, Mikaela von Martens, Victoria Mäkimartti, Anna–Lena Müller, Marion Tourney Neyron, Johanna Partanen, Anna Verena Rettelbach, Christopher Sabel, Simon Sängerlaub, Kristiina Salo, Nadine Stumpf, Jing Tian, Lucas Tierny, Paulina Veit, Josefin Vidjeskog, Maren Wehnes, Yichen Zhao

Layout, photographs, figures: Michael Diedrichs, Finland Cover photography: Rami Salle, Finland

Printing: Painosalama, Turku (Åbo), Finland, 2012

ISBN (print): 978-952-12-2788-2 ISBN (digital): 978-952-12-2850-6

Contents Preface 6 Editors’ notes

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Introducing the book — an overview of intercultural marketing management

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1. An intercultural champagne breakfast 1.1 The keys to intercultural marketing management 1.1.1 The essence of culture 1.1.2 An intercultural versus a cross–cultural approach 1.1.3 Culture and communication 1.2 The development of intercultural marketing management research 1.2.1 The 1960s — the initiation of globalization 1.2.2 The 1970s — the era of liberalization 1.2.3 The 1980s — the decade of neoliberalism 1.2.4 The 1990s — the dawn of the information age 1.2.5 The 2000s — the digital decade 1.2.6 The 2010s and beyond 1.3 Does culture really matter in marketing?

2. Tribal Marketing Management — is intercultural marketing old fashioned?

2.1 Introduction 2.2 Why is tribal marketing worth a try?

2.3 Implementing tribal marketing 2.3.1 Finding or creating a tribe 2.3.2 Managing the tribe 2.4 Advice for tribal managers 2.5 Upcoming trends 3. Managing Global Workforce: focus on the manager 3.1 Introduction 3.2 International diversity management 3.3 Qualities of a manager in an intercultural context 3.3.1 Multicultural supervision competencies as seen by subordinates 3.3.2 Transformational leadership and multicultural personality: keys to success for an effective manager 3.4 Communicating across borders 3.4.1 Major points for an effective communication 3.4.2 Modern communications tools 3.5 Summary and conclusions 4. Expatriation Management 4.1 Introduction 4.2 Wanted: 'International Expatriation Specialist' 4.3 Stages of expatriation 4.4 Expatriation training 4.5 Expatriation today and tomorrow 4.6 Concluding thoughts 5. Case: Repatriation Management 5.1 Introduction: Why care about repatriation?

5.2 Literature review: Which problems can occur when coming back?

5.2.1 Who can do what to prevent these problems?

5.3 Method: How we worked 5.3.1 Company description: A German service company sending employees abroad 5.3.2 Case description: Working in China as a young professional 5.4 Case analysis: Did the company set wrong priorities?

5.5 Implications: How can the company improve their repatriation management?

19 20 20 24 24 26 26 28 30 32 33 35 37 43 44 46 49 49 52 54 57 63 64 65 67 67 68 70 71 72 75 79 80 81 82 88 94 97 101 102 103 103 104 105 106 108 109

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5.5.1 Limitations 5.5.2 Conclusion 6. Employer branding and talent management 6.1 Introduction 6.2 Employer Branding 6.3 Talent management 6.4 Talent intelligence 6.5 Views on young talents 6.6 Talent management in practice — recruiting, developing and retaining 7. Culture adds flavor to the brand managers work

115 116 117 119 120 121 124 129

7.1 Introduction 7.2 The concept of brand identity 7.3 Integrated Branding — a holistic brand management model 7.4 Challenges of building brands in different countries 7.5 Brands and consumers in different cultures

130 131 133 134 137

8. Case: Country of origin based branding — considerations

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8.1 Introduction 8.2 What is the country of origin effect about?

8.2.1 Key points concerning the COO effect 8.3 The Case Company 8.3.1 Country of origin and brand considerations 8.3.2 Country of origin and organizational considerations 8.3.3 Country of origin and management considerations 8.4 Considerations for future research on country of origin

144 145 146 148 149 150 151 152

Appendix: themes for the interview 9. Web 2.0 in modern branding — will there finally be intercultural communication?

9.1 Introduction 9.2 From web 1.0 to 2.0 9.3 From company generated brands to user generated brands 9.4 Developing and managing the integration of social media — is every product/service suited for social media?

9.5 Can all social media platforms provide the same opportunity for brands?

9.6 The Do’s and Don’ts of branding in the Web 2.0 era 9.7 Brand dangers and look–outs in Web 2.0 branding 9.8 Web 2.0 branding in different cultures 9.9 An outlook on Web 2.0 branding 10. Business Network Management 10.1 Introduction 10.2 Characteristics of Relationships 10.3 Characteristics of networks 10.4 Network management 10.4.1 Strategic Decisions: relationships — relationship portfolio — network 10.4.2 Strategies in business networks 10.5 Business relationships and networks in Russia and China 10.5.1 Russian network culture 10.5.2 Chinese network culture 10.5.3 Relating Russian and Chinese business networks to theories on managing networks 10.6 The future of business networks 10.7 Concluding discussion

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111 111

154 157 158 158 160 163 163 165 167 169 171 175 176 177 181 184 184 186 188 191 196 200 204 208

11. Case: Communicating with strategic partners in the international business network: LoOoK Industries 215 11.1 Introduction 11.2 Presentation of the case: LoOok industries 11.3 Case analysis: LoOoK Industries managing their international business network 11.4 Conclusion

216 218 220 225

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12. Managing a Key Customer Relationship in a Foreign Culture

229

12.1 Introduction — managing a key customer relationship in a foreign culture 230 12.2 Key account management — getting started 231 12.3 Managing the key account 232 12.3.1 Identifying your key customers — setting criteria 233 12.3.2 Information gathering as the basis for a key relationship 235 12.3.3 Choosing and building strategies for a key customer 238 12.3.3.1 Bow tie vs. Diamond–models of interaction 238 12.3.4 Waterfall vs. Agile methods for developing the account 241 12.3.5 Ending a key account 242 12.4 Intangible dimensions of KAM 243 12.5 Challenges and risks in key account management — can a key account relationship be a burden? 246 12.6 Inter–cultural aspects of KAM 248 12.6.1 Interacting with a foreign key account 250 12.7 Summary 255 13. Corporate Social Responsibility: The intercultural manager’s headache?

13.1 Introduction 13.2 What is Corporate Social Responsibility?

13.3 CSR from a management perspective 13.4 CSR from a marketing perspective 13.5 CSR from an intercultural perspective 13.6 Summary 14. Golden Screw Ups 14.1 Introduction 14.2 Why business blunders happen 14.3 Different kinds of business blunders 14.3.1 Language and translation blunders 14.3.2 Product and service blunders 14.3.3 Advertising Blunders 14.3.4 Distribution blunders 14.3.5 Internal international business blunders 14.4 Consequences of business blunders 14.5 How to deal with the consequences of business blunders 14.5.1 The mistakes of Wal–Mart in Germany 14.5.2 What Wal–Mart could have done better 14.6 Current trends on managing business blunders 14.6.1 Taking business blunders as opportunities 14.6.2 More social media blunders to come 14.6.3 Consulting agencies for business blunders 14.7 Summary Epilogue: Learning intercultural marketing management 15.1 Introduction 15.2 The pedagogical foundation of the course 15.3 The course Intercultural Marketing Management (ICMM) 15.3.1 The outline of the course 15.3.2 The first module of the course 15.3.2.1 Aim and structure of module 1 15.3.2.2 Pedagogical foundation of module 1 15.3.3 The second module of the course 15.3.3.1 Aim and structure of the module 15.3.3.2 Pedagogical foundation of module 2 15.4 The course in hindsight — What actually happened?

15.5 Lessons learned 15.5.1 Choosing themes 15.5.2 Planning and organizing 15.5.3 Facilities 15.5.4 Guest lecture 15.5.5 About the writing process 15.5.6 Cooperation 15.5.7 Work tasks 15.6 What about the next course?

261 262 262 264 267 270 275 281 282 283 284 285 286 287 289 290 291 292 293 295 296 296 297 298 299 303 304 305 313 314 315 315 321 322 323 326 326 331 331 332 334 335 335 336 336 337

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Preface It has become a cliché of the first order to state that we live in an age of accelerating change, but this does not make the statement any less true—and I feel that the book you’re holding is as fine a testament to this fact as you’ll ever find. Earlier, students sat and listened as professors read aloud from books they’d written—and this was if the students were lucky enough to have professors who’d actually written something.

Earlier, knowledge was assumed to lie with the esteemed individual, not with the reading public. Earlier, the publishing of a book required involving yourself with a complex network of editors, publishing houses and media. Today, things are different.

Today, students can co–create knowledge by writing their own textbook, disrupting our ideas about knowledge, publishing and academic legitimacy—and I, for one, applaud this. By approaching studying and scholarship as something you engage with rather than something you merely partake in as a mostly passive audience, the authors of this book are inviting us to reflect on the very meaning of education and research, and at the same time educating us in contemporary marketing. By not accepting the artificial separation between student and teacher, reader and writer, thinker and doer, they are showing us that tomorrow’s world will require from us a much more fluid approach to things we’ve been trained to see as permanent. They are, to use a popular word, ’makers’. And not just of a book, or a course or of knowledge. No, they are the makers of the future, the builders of knowledge yet to come.

So read the book both for what it is and for what it shows. It is, understood as a traditional book, a fine introduction to contemporary issues in marketing. But it is also a challenge to think about how we can re–invent education, and a showcase of what is possible when smart young people are given a task, the tools to complete it, and the freedom to seek out their own paths. In many ways, it is a clarion call to a number of disruptions, a knock on the doors of tradition that will not be denied. Enjoy.

Professor Alf Rehn

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Editors’ notes The book you are holding in your hands is the outcome of an advanced course in intercultural marketing management at Åbo Akademi University, School of Business and Economics, in Turku, Finland. This book is an example of what students are capable of doing when given the opportunity and challenged enough. The students taking part in the course planned, wrote and organized the book by themselves. You would expect academic researchers being the ones writing these kind of books, basing their arguments and judgment on previous research and rich data sets analyzed using sophisticated and academic methods. What, then, can a book written by graduate students offer, as they have less experience of research and management in practice?

The course was designed to confront the students with situations where they need to lead, design, make decisions, as well as be creative and flexible. The students had to deal with leadership issues, choose tasks, confront intercultural issues, work with design and layout and, above all, practice the most challenging issues of them all, namely time management. Since the students taking part in the course originate in a variety of countries, the students also got a real taste of the intricate challenges managers of intercultural teams are confronted with. We believe that students should not only be sitting in auditoriums, listening to someone (usually an academic) talk.

Working life requires other skills and competences than skills of note–taking and academic writing. Firms and organizations seek for employees who are creative and able to solve problems. This includes the abilities to act and react, think and rethink, design and redesign, create and execute. Traditional university courses too seldom allow students to practice such skills.

When planning, organizing and writing this book the students had to set up their own goals and figure out the means and paths of reaching the goals. In a way, the students were practicing interpersonal skills, organizing skills, planning skills and time management skills, along with learning something about intercultural marketing.

This book is not intended as a rigorous scientific contribution to the field of intercultural marketing. It is an example of students contributing to their academic environment in the form of reporting on current trends, highlighting challenges that young professionals might be confronted with as well as providing practical tips and tools for dealing with intercultural challenges. This is a book written by future young

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professionals, providing an overview of the challenges young professionals confront in their daily work as managers doing business across cultures.

The chapters and content, writing processes and thoughts on layout and presentation have been entirely managed by the course participants. The course instructors’ tasks have involved facilitating learning processes and giving feedback on the writings. It has been a rich and giving process for all participants in the process, both students and course instructors. The course instructors feel privileged to have gotten a chance to work with the students of this course; a lot of effort has been put into this book and the course in general.

We thank the School of Business & Economics at Åbo Akademi University for support and the freedom to experiment. Also, we wish to thank Michael Diedrichs for helping the students visualize their messages, and Professor Alf Rehn for bright ideas on trendspotting. And to the students of ICMM 2011–2012 — thank you and all the best wishes for your future endeavors!

December 2012, Turku Joachim Ramström, Maria Ivanova & Anna–Greta Nyström

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Introducing the book — an overview of intercultural marketing management The application of culture in marketing and business studies became popular in the 1970s [1]. Some 40 years later culture still remains a fascinating topic in international marketing and business. Even if researchers have unraveled many challenges and 'mysteries' during the past 70 years, a literature review of current research regarding culture and marketing reveals that some of the topics that intrigued researchers in the past seem to cause challenges still today. In this introductory chapter we start by identifying what currently interest authors and researchers of intercultural marketing management. We then briefly outline the chapters and topics of the book.

A literature review of journal articles and books about intercultural marketing management indicate that research has moved from regarding culture as static, to understanding culture as dynamic, constantly being 'shaped and reshaped by environmental changes' [1, 2]. Another issue that currently catches the attention of researchers is intercultural ignorance in the form of ethnocentrism (cf. [3]). This strand of research points out that even if managers read a considerable amount of literature on cultural issues, they still seem to view the world through their own cultural lenses, therefore ignoring to take into account and adapting to the culture of another person. Recent research points out that ethnocentrism might be one of the largest internal threats a multicultural company can face today [4]. For instance, one remedy could be to use more literature based on a non–Eurocentric approach [5].

Another topic currently receiving the interest of a large amount of research in intercultural marketing management is communication, negotiation and intercultural competence. For instance, a search on the topic 'intercultural' on amazon.com gives a list where eight out of ten books are about intercultural competence or intercultural communication. A similar search in journal databases gives top hits on internal communication within multinational corporations [6, 7], negotiation or communication between businesses partners [8, 9, 10, 11], and marketing communication focusing on consumers [12]. There also seems to be a need to better understand all the practical peculiarities related to this topic [1, 13].

Concerning intercultural competence, recent books and articles cover areas such as managing project teams with team members from several cultures [14], knowledge

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transfer [15, 16] global leadership [17, 18, 19] and customer service [20]. There is also research on interpersonal communication management [21, 22] and diversity management [23, 24, 25]. Finally, despite years of research, a research topic that still seems to occupy researchers and authors to a large extent is expatriation [26, 27, 28, 29] and repatriation [15, 30]. Also, from a geographical point of view, most of the intercultural studies nowadays deal with developing markets [10, 31] or managers from developed countries dealing with managers from developing markets [32, 33, 34].

In this book many of the current research areas of intercultural marketing management listed above are discussed. The focus in the book is more on the managerial aspects of different topics, giving many useful tips and ideas. In addition to citing current research, the chapters also tie into a vast amount of different reports in newspapers, industry magazines and online sources.

Chapter 1 'An intercultural champagne breakfast' offers a short overview of theories of culture. The reader should keep in mind that there is an immense amount of theories, concepts, models and theoretical frameworks dealing with culture, making it impossible to fit all the existing theories in one chapter. The authors present the most popular theorists, such as Hofstede [35], Trompenaars [36], and Hall [37].

Nevertheless, what is popular is not necessarily the most relevant. When using a theory one should be careful when modifying and interpreting according to a given cross– cultural or intercultural situation, because different intercultural or cross–cultural theories are relevant depending on the situation.

Chapter 2 'Tribal marketing management — is intercultural marketing old fashioned?' This chapter raises the question whether country culture is a valid basis for segmenting consumers. With the rise of social media, people are interconnecting in increasingly complex patterns across countries and cultural borders, forming so called tribes. Tribes are glued together not by the country of origin of the members, but by the interests, passions, habits and emotions that bond the tribe members together—cultural backgrounds do not matter. And what makes tribes even more challenging for marketers is the realization that for purchasing decisions tribe members interact and communicate with each other and not with companies. All of

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this turns marketing on its head.

Chapter 3 'Managing global workforce' focuses on the intercultural issues that a leader might face when managing an intercultural work group or team. The authors discuss intercultural aspects, such as religion, gender and ethics, which are

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crucial when supervising a multicultural team. Moreover, the authors approach the issue of intercultural supervision from two perspectives, namely the ‘leader’ and ‘subordinate’, which gives the reader a holistic picture of the issue. Finally, the chapter discusses the issue of communication within a multicultural team. The authors give the topic of internal communication a fresh touch by considering new tools for communicating within a company. The chapter also discusses effective communication tools for internal management. The issue of language is also crucial for intercultural communication within multicultural companies. Many intercultural ‘barriers’ and ‘tensions’ within a company can be caused, e.g., by resistance of the workers to speak a common language, even when a common corporate language exists.

Chapter 4 'Expatriation management': in this chapter the authors look at expatriation both from the company’s perspective as well as the expatriate’s perspective. The authors offer many practical tools and training suggestion for preparing expatriates for their assignment. The authors want to raise awareness about is expatriation planning. Expatriation needs to be viewed as a cycle and each phase of the cycle needs to be clearly planned. Companies should have expatriate training programs, and because the cost of expatiation is high the company should manage the expatriation process as carefully as its customer processes. The chapter draws on examples from the most recent industry magazines and internet sources, exemplifying the current discussion among companies involved in expatriation.

Chapter 5 'Case: Repatriation management' clearly highlights the challenges involved in returning to the parent company from an overseas assignment.

Various studies have reported that up to 55 % of expatriates returning home leave their company during the first years after their return. In the case of this chapter, 'Anne' returns back to Germany after an assignment in China and finds her home environment not quite as she had expected. The case ties nicely into a short literature review, highlighting key issues in the repatriation process. The case is based on an interview with 'Anne' and offers a good insight into various challenges and thoughts 'Anne' has concerning the repatriation process. The case highlights all of the challenges listed both in chapter 4 as well as the literature review in this chapter.

Chapter 6 'Employee branding and talent management' builds on findings from chapter 4 and 5, focusing on the increasing importance of attracting and retaining skilled personnel. Because an alarming rate of expatriates leave their company shortly after returning back home, the authors of this chapter offer different tools

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and thoughts for attracting and keeping talent in the company. Since it is important for the company to present itself as an attractive employer, the authors propose that a company’s brand management should be extended to cover not only the products and services, but to target also potential employees. Talent management raises the awareness of management for a systematic approach to hiring, training and retaining skilled employees. Retaining talented employees is especially crucial in the era of social media, where competitors can easily target company employees with employment offers through, for instance, LinkedIn. Chapter 7 'Culture adds flavor to the brand manager’s work': branding has for some time been considered one of the few remaining competitive tools companies have in their marketing arsenal. The authors of this chapter take a focused view on branding, offering an understanding of factors influencing the consumers’ perception of a brand. One of the key issues influencing the perception of a consumer is his or her cultural background. And in line with this, the authors discuss the intricate challenges of managing a brand in several countries. On the one hand, the brand image should be as clear and concise as possible, but on the other hand, it needs to be changed and adapted since it will be perceived differently depending on the cultural background of the perceiver. Therefore brand managers face contradictions that need to be managed. This chapter mainly offers a discussion about the debate on standardization versus adaptation of branding, and offers a short insight into the some practical challenges related to branding in China.

Chapter 8 'Case: Country of origin based branding considerations' gives a practical view on country of origin (COO) branding. The chapter is written mostly from a marketing management perspective, in particular brand strategy. The authors gather up–to–date information by interviewing a manager of a Finnish company with vast intercultural experience and knowledge on the topic. The country where the respondent has worked in is unfortunately not disclosed; interviews with businessmen are often confidential for several reasons. Even though this chapter does not cover it, it is also important to look at the consumer behaviour perspective of the problem and how the psychographic factors of the consumers influence the COO effect (see, for instance, [38] and [39]).

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Chapter 9 'Web 2.0 in modern branding—will there finally be intercultural communication?' The authors dive into the enormous possibilities that social media has provided to brand managers. While at the same time offering huge

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possibilities, social media demands a whole new approach to branding. And more important from an intercultural marketing management perspective, branding in social media might possibly for the first time allow consumers from all over the world, from all possible cultures, to communicate with each other. Branding 2.0 also adds to our understanding of how consumer communication has changed. Previously communication was more or less one–directional, i.e. from the company to the consumers (B2C). Nowadays consumers are talking with each other about the company (C2C).

The company has to find ways of taking part in this discussion without being turned away by the consumers.

Chapter 10 'Business network management' provides insights on how to strategically manage business networks. The core elements in network management are interaction and relationships. Therefore, these elements become the main focus of the chapter. The authors introduce different strategies on how to deal with business networks, which is useful as a foundation for developing business strategies for networking in various cultural contexts. The intercultural part of the chapter concerns the issue of business relationships and networking in China and in Russia, which is done mainly through the prism of Hofstede’s dimensions [35]. After reading this chapter, the reader understands the concepts of business network and relationships, as well as various useful models and strategies for networking on the international market. Moreover, the reader will gain some practical intercultural knowledge on networking in developing countries.

Chapter 11 'Case: Communicating with strategic partners in the network' gives some practical insights of business networking. The case presented in the chapter concerns a new Finnish innovative company, LoOok industries, and its communication with strategic partners within the company’s business network. The authors collected data by interviewing the owners of LoOok industries. The main focus in this case is on the selling network. After reading this chapter the reader gains understanding of how a small company can operate effectively on an intercultural market with the help of network connections and how to succeed in network management. In particular, the reader will learn about traditional and novel ways of intercultural communication with network partners.

Chapter 12 'Managing a key customer relationship in a foreign culture' provides a step–by–step guidance on how to manage relationships with a key customer in a foreign culture. The chapter provides universal rules, which can be applied

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globally, as well as specific tips on how to interact with the key customer in different cultural contexts, such as Russia and China. After reading this chapter the reader is equipped with a useful framework for building a customer relationship strategy.

Chapter 13 'Corporate social responsibility: The intercultural manager’s headache?' In this chapter corporate social responsibility (CSR) is discussed from different perspectives. The author’s open up what CSR might mean from a management perspective, from a marketing perspective as well as from an intercultural perspective. The authors wish to bring attention to the difficulty in setting normative guidelines for managers who have to deal with ethical issues in different cultural contexts. What might be completely out of the question in one culture, might be a sort of norm in another culture. And this complexity is multiplied if a manager leads a multicultural team.

Chapter 14 'Golden screw ups' familiarizes the reader with the topic of business blunders. It regards business blunders related to language and translation, products and services, as well as advertising and distribution taking place on an intercultural market. The chapter provides examples mainly from B2C business blunders across nations. In other words, the chapter gives the reader an initial taste of business blunders and attempts to raise fascination with this interesting topic. As the authors conclude, it is beneficial to have knowledge of business blunders.

And finally, a few reasons why you should continue reading this book…

•

The book contains not only theory, but also practical examples, cases, tools and tips.

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The book contains both classical issues related to intercultural marketing management such as expatriation and repatriation, as well as topics typical for current marketing management, such as tribal marketing and talent management.

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The book is written by future young professional and offers issues important to the diginatives and next generation.

•

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The book offers a wide perspective on intercultural marketing management, and opens up the complexity of the everyday tasks of the intercultural manager.

Wishing you pleasant moments with the book!

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[17] Caligiuri, P. (2006): Developing global leaders. Human Resource Management Review, 16(2), 219–228.

[18] Kim, Y. J., & Van Dyne, L. (2012): Cultural Intelligence and International Leadership Potential: The Importance of Contact for Members of the Majority.

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[19] Bird, A., Mendenhall, M., Stevens, M. J., & Oddou, G. (2010): Defining the content domain of intercultural competence for global leaders. Journal of Managerial Psychology, 25(8), 810–828.

[20] Hopkins, S.A., Hopkins, W. E., & Hoffman, K. D. (2005): Domestic inter–cultural service encounters: an integrated model.

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[21] Kameda, N. (2005): A research paradigm for international business communication. Corporate Communications: An International Journal, 10(2), 168–182.

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[22] Sriussadaporn, R. (2006): Managing international business communication problems at work: a pilot study in foreign companies in Thailand. Cross Cultural Management, 13(4), 330–344.

[32] Jiang, C. X., Chua, R. Y. J., Kotabe, M. & Murray, J. Y. (2011): Effects of cultural ethnicity, firm size, and firm age on senior executives’ trust in their overseas business partners: Evidence from China. Journal of International [23] Lloyd, S., & Härtel, C. (2010): Intercultural Business Studies, 42(9), 1150–1173 competencies for culturally diverse work teams. Journal of Managerial [33] Wong, J., Wong, P. N. K., & Li, H. Psychology, 25(8), 845–875.

(2007): An investigation of leadership styles and relationship cultures of [24] Rupprecht, M., Birner, K., Gruber; H., Chinese and expatriate managers in & Mulder, R. H. (2011): Dealing with multinational construction companies in diversity in consulting teams: results of Hong Kong. Construction Management two Delphi studies. Human Resource & Economics, 25(1), 95–106.

Development International, 14(5), 561–581.

[34] Koveshnikov A., Barner–Rasmussen, [25] Mazzei, A., & Ravazzani, S. (2012): W., Ehrnrooth, M., & Mäkelä, K. (2012): Leveraging variety for creativity, A framework of successful organizationdialogue and competition. Journal of al practices in Western multinational Communication Management, 16(1), 59–76. companies operating in Russia. Journal [26] Peltokorpi, V. (2010): Intercultural of World Business, 47(3), 371–382. communication in foreign subsidiaries: The influence of expatriates’ language and cultural competencies. Scandinavian Journal of Management, 26(2), 176–188.

[27] Lauring, J. (2010): Intercultural Organizational Communication: The Social Organizing of Interaction in International Encounters. Journal of Business Communication, 48(3), 231–255.

[28] Chien, T–C. (2012): Intercultural training for Taiwanese business expatriates. Industrial & Commercial Training, 44(3), 164–170.

[29] Kupka, B., Everett, A., & Cathro, V. (2008): Home alone and often unprepared — intercultural communication training for expatriated partners in German MNCs. International Journal of Human Resource Management, 19(10), 1765–1791.

[35] Hofstede, G. (1980): Culture’s consequences: International differences in work–related values.

Beverly Hills, CA: Sage.

[36] Trompenaars, F. (1993): Riding the waves of culture: understanding cultural diversity in business. London: Brealey.

[37] Hall, E. T. (1959): The Silent Language. New York.

[42/38] Diamantopoulos, A., Schlegelmilch, B. & Palihawadana, D. (2011): The relationship between country–of–origin image and brand image as drivers of purchase intentions: A test of alternative perspectives. International Marketing Review, 28(5), 508–524

[43/39] Maher, A. A. & Carter, L. L. (2011): The affective and cognitive components of country image: Perceptions of American [30] Furuya, N., Stevens, M. J., Bird, A., products in Kuwait. International Oddou, G., & Mendenhall, M. (2009): Marketing Review, 28(6), 559–580.

Managing the learning and transfer of global management competence: Antecedents and outcomes of Japanese repatriation effectiveness. Journal of International Business Studies, 40(2), 200–215.

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[31] Hutchings K., & Weir D. (2006): Understanding networking in China and the Arab World. Journal of European Industrial Training, 30(4), 272–290.

W H A T A N D W H Y, B U T W H A T A B O U T T H E H O W ?

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1. An intercultural champagne breakfast Emilia Breider & Sonja Lillhonga

1.1 The keys to intercultural marketing management

1.1.1 The essence of culture

1.1.2 An intercultural versus as. cross–cultural approach

1.1.3 Culture and communication

1.2 The development of intercultural marketing management research

1.2.1 The 1960s — the initiation of globalization

1.2.2 The 1970s — the era of liberalization

1.2.3 The 1980s — the decade of neoliberalism

1.2.4 The 1990s — the dawn of the information age

1.2.5 The 2000s — the digital decade

1.2.6 The 2010s and beyond

1.3 Does culture really matter in marketing?

References

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An intercultural champagne breakfast Intercultural marketing management is a sparkling interesting topic and a very important part of international marketing. Understanding different aspects of culture is what makes international marketing managers so excellent at what they do—you need to be able to manage, interpret and define diverse cultural differences around the world and understand which logic different cultures are built upon and thus get past stereotypes and prejudices. This chapter introduces different aspects of culture and marketing in order to understand how intercultural marketing management has increased in importance.

1.1 THE KEYS TO INTERCULTURAL MARKETING MANAGEMENT

Management as a concept has different meanings depending on the cultural background.

However, the aim is usually the same—to become successful at what you do. Today many companies cannot, and do not even want to do business only within their own country borders. Globalization pushes companies to enter foreign markets and companies must therefore learn how to manage its activities in different cultural settings.

“Successful management across borders needs an understanding of issues that bridge cultures as well as issues within cultures.” [1, p. 53]

1.1.1 THE ESSENCE OF CULTURE

A simple search on Google using the word 'culture' gives one and a half billion hits. You can find hundreds upon hundreds of articles about culture and there is a huge amount of books written about the topic. So it seems to be a very popular concept, but what is it all about, why is it so interesting?

Culture is what binds us together; it is something inherited, learned and shared, such as shared languages, meanings and values. But culture is not that simple and there is no agreed definition of it. Culture is a vague, abstract notion, and therefore there are many acceptable ways of understanding it [2]. However, two key characteristics of culture can be pinpointed [cf. 3, 4]. Firstly, culture is a collective phenomenon

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that is shared among other members; this shared content distinguishes the members of one group from another. Secondly, culture is learned and not transmitted genetically; culture is passed on through socialization processes that include communication of symbols, ideas, knowledge and values.

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Culture also influences the perception of the self'. A relatively stable distinction between independent and interdependent self–construal can be traced back to the cultural origin. This is closely related to the theory of individualism and collectivism.

According to the individualistic, independent self–construal, people are separated and different from each other (divisibility), high individual achievement is emphasized and the solution can be found within the human being. The collectivistic, interdependent self–construal, on the other hand, focuses on the group level where people consider themselves belonging together and are not separated from each other. The surrounding context is essential and the 'other' or 'the–self–in–relation–to–other' is the key for the individual experience. The perception of self and other is influential in all areas of business: communication, negotiations, marketing, advertising etc. [2].

People of all time have been part of some cultures. The present is no exception.

Culture is about meanings and symbols. The ability to symbolize is one way to qualify what culture is all about. Culture has the purpose to make life secure and enduring for people; culture relates man to his environment, to both his location and to his fellowman [5]. Culture is the entire social heritage of mankind and covers everything from food to clothes, from work rhythms to industrial techniques, from forms of politeness to mass media. Culture is the sum of knowledge and practices, both intellectual and material [6]. And, hence, studying culture, in the end, is about studying humans as cultural beings and studying how humans act as group members [7].

Self–construal = a sociopsychological term that indicates the perception of the self; the thoughts, feelings and actions in relation to others.

A useful way of approaching an understanding of culture is from an anthropologist perspective [6]. When turning to the anthropological genre, culture can be defined as follows: “Culture […] is that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society.” [8, p.1] “Culture consists of patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts; the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values.“ [9, cited in 4, p.9] The Dutch writer and academic Geert Hofstede developed this particular definition further in the beginning of the 21st century when he defined culture as the software of

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the mind [4, p. 9]: “[…] culture as the collective programming of the mind that distinguishes the members of one group or category of people from another.”

Hofstede pointed out in 1994 that even though there are varieties between people’s minds, for example differences in thinking, feeling and acting, there is still a structure in this variety that can function as a base for mutual understanding.

“Culture is a set of learned core values, beliefs, standards, knowledge, morals, laws, and behaviors shared by individuals and societies that determines how an individual acts, feels, and views oneself and others.” [10, p. 4] Culture practically includes every part of life. However, it can be useful to break down culture in elements and try to understand how these parts are related. This way it is easier to understand and examine a culture [cf. 10]. Some basic elements of culture are language, social institutions, material culture, aesthetics, symbolic production or belief system and education [2, 6].

People often regard culture as the content that makes, for instance, Finnish, Finnish and the Germans, German. However, nationality is only one way of dividing people into cultural groups. The connection between nationality and culture has been debated because the causal relationship between the terms is unclear. Nationality and culture are often used interchangeably and nations have been used as the setting in which cultural variables are measured. Nevertheless, nations do not necessarily represent only one culture as one nation can have what can be called heterogeneous culture.

Also, subcultural differences need to be taken into consideration. Even if nations and cultures are related they are differently constructed. That is why it is important to clearly separate the two terms. [11, 12] An individual can be a part of several cultures at one time. An individual’s cultural identity can be comprised of several elements, such as ethnic group, religion, family, social class, education, profession, family or organization. For example, marketers share a common specialized education, they can have common interests, read the same publications, and may share the same professional culture through, for instance, common training [2].

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It is essential to discuss the difference between national culture and organizational culture. Organizations also have their own culture, which describes the lifestyle of the organization, as well as organization members’ shared meanings, assumptions,

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interpretations, norms, values and knowledge. Organizational culture can also be defined as the collective programming of the organization’s members that differentiate the members in one organization from the members in another organization. [13, 14].

National culture is considered to be a part of the software of the mind that is gathered from the environment during the first ten years of a person’s life and it consists of the most fundamental values. When entering an organization (thus also an organizational culture), the fundamental values are already embedded in the mind. Organizational cultures are based on practices and are therefore more superficial than national culture. We also know that results from studies made on national cultures can be used only to a certain extent when trying to reach an understanding of organizational cultures [14]. Organizational culture models are useful for organizational fields, while country culture models are well suited for the societal sectors [15].

Basically, there are two approaches to comparing cultures, the emic and the etic approach. The emic approach aims at describing behaviour of one specific cultural group, and the perspective is within a culture–view. This approach focuses on the understanding of culture from an insider point of view, and requires an understanding of deep–rooted meanings. The etic approach uses external criteria to describe and compare behaviour of different cultural groups, and the perspective is cross–cultural and on a more general or macro level. Two benchmark studies have been made according to the etic perspective: Hofstede’s Cultures consequences (see info box 1) and Trompenaars’ Riding the waves of culture (see info box 3). It is suggested that the emic approach can result in a richer and more detailed description of the layers below the surface of a culture. When compared with a similar derived data from another culture the result is more accurate than the etic approach offers. However, an emic approach is seldom applied in business research. Moreover, a combination of the etic and the emic approach is also recommended to gain a holistic and better understanding of a given culture [1, 19, 20].

It can be meaningful to consider culture as something that is continuously changing and constantly evolving. Culture should be regarded as a process, a sum of several elements [2]. Even though a society’s culture has some elements that remain constant, there are several components that are far from stagnant [10]. Culture is a part of our identity. Usunier and Lee call it a collective fingerprint [2], while Hofstede argues that culture is to a collectivity what personality is to an individual [4]. Cultures affect us, our opinions, our behavior and our perception, and cover every part of life.

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1.1.2 AN INTERCULTURAL VERSUS A CROSS–CULTURAL APPROACH

There are two different approaches to conducting cultural studies—an intercultural and a cross–cultural. The terms are often used synonymously both in theory and in practice but there is, however, a slight difference of meaning.

The intercultural approach to cultural studies primarily indicates an area of study that aims at describing the impact of culture on communication. The focus is on problems and situations that can occur within an organization or between organizations as a result of intercultural encounters between people. The purpose is to understand how and why people from different cultural backgrounds behave and think the way they do. The cross–cultural approach tends to be comparative. Different national marketing systems and ways of communicating are explored and compared to each other in order to highlight what is typical for a specific culture and what is universal. This approach is essential especially during first steps of a process preparing to enter a foreign market.

The intercultural approach considers interaction a dynamic process in which the counterparts can affect each other and evolve, whereas the cross–cultural approach studies culture in a more static way. However, it is important to point out that the different approaches rather complement than exclude each other. [16, 2]

1.1.3 CULTURE AND COMMUNICATION

A fundamental part of culture is communication, yet, communication between cultures is not very easy. The American anthropologist and cross–cultural researcher Edward T. Hall’s book The Silent Language [17] can be seen as the founding document of the field of intercultural communication. Hall claims that culture is communication [18].

Communication is never language–free, but it can be divided into verbal and non– verbal communication [cf. 2]. Verbal communication involves words, sentences and the spoken discourse. The elements of non–verbal communication can be gestures, posture, and eye contact. The rules, rites and usage of non–verbal communication are culture–bound. For example, in some cultures a direct no is perceived as rude, therefore one will have to understand whether the pronounced 'yes' actually means 'no'

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by taking the means of non–verbal communication into account. Elements of non– verbal communication also include the communicator’s personal characteristics like age, size, weight, sex, etc., as well as where the communication is taking place, e.g., the atmosphere, office time [2].

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Language plays a central role in marketing communication, especially in an international context. No language translates into another language in a comprehensive way.

There are differing meanings to words and expressions. Likewise, idioms and slangs are hard to translate without forgetting the challenges related to unspoken attitudes and information [6]. The linguistic differences are perceived as one of the major things that cause misunderstandings in intercultural communication; for instance depending on whether a culture is low–context or high–context [17]. Low–context cultures use explicit communication while high–context cultures prefer a more diffuse communication style (read more about high–context and low–context in section 1.2.2) [2]. Putting a message into context means that what has been literally said has to be in some way reinterpreted using different signals taken from the context, particularly from the cultural context of the speaker.

A great deal of international business transactions takes place around the negotiation table. The negotiation process basically consists of four phases: (1) non– task soundings, (2) task–related information exchange, (3) persuasion and (4) agreement. Each of these stages takes a different amount of time depending on the identity and the culture of the negotiator. Therefore a negotiation process can be quite a complicated and exhausting process. For instance in low–context cultures the first phase is most important, while agreements and contracts are most important in low–context cultures [21]. Negotiations

Monocultural = only one vculture involved Multicultural = many different cultures involved

can also be regarded as exchanges of verbally and non–verbally expressed signals that are to a great extent culturally influenced. There is always a risk of misinterpreting or being misinterpreted, because signals can mean different things in different cultures [20]. This means that while negotiations are already complex in a monocultural setting they become even more complex in a multicultural setting.

Time is an extremely important factor in marketing, especially in communication and negotiations, and many essential marketing concepts are time–based. In western countries time is normally perceived as linear, continuous and economy wise, and this view is seldom challenged. However, time perception can differ a lot from culture to culture. Such cultural differences are very difficult to define, as they are deeply rooted within a society and a common time model is hardly discoverable. Still, there is a distinction between a monochronic use of time (M–time) and a polychronic use of time (P–time). M–time people focus on one thing at a time and interrupt discussions that take too much time in order to keep their time schedule. P–time people, on the

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other hand, easily modify their schedule and do not perceive time as wasted if it is not 'efficiently' used [2].

To conclude, culture and communication are closely tied together, and communication is one of the most essential parts of marketing. By learning how to efficiently communicate across cultures, you can become a better marketer in the global marketplace.

1.2 THE DEVELOPMENT OF INTERCULTURAL MARKETING MANAGEMENT RESEARCH

In order to understand the present path of research, you have to have a basic understanding of the development through time and know what has been important in the past. What were the focal points of academic research in the field of intercultural marketing in the middle of the 20th century, when the topic arose? What had become important 20 years later? What has happened in the world and how have the events affected the path of the research? Why has culture grown to become such an important part of international marketing?

Anthropologists have studied culture for ages, but it was not until the book Culture’s Consequences by Geert Hofstede, published in 1980, that the interest in culture in connection to business boomed. In order to investigate the development path of research in intercultural marketing management, we interviewed Jan–Åke Törnroos, Professor of international marketing and Head of the School of Business and Economics at Åbo Akademi University [7]. According to Professor Törnroos, each decade since the 1960s has its own characteristics from an intercultural marketing management point of view.

1.2.1 THE 1960S — THE INITIATION OF GLOBALIZATION

The wealth of nations is heavily dependent on the flow of goods from country to country; there has always been trading between regions [22]. Globalization is the great economic event of our time as it explains what is happening in the world economy.

Technology and liberalization has enabled globalization and during the 20th century

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transporting and communication has gradually become easier and more affordable [23]. After World War II there was a major expansion of world trade; from 1948 to 1972 world exports grew from $51 billion to $415 billion. In other words, there was a sevenfold increase in monetary terms and a fourfold increase in volume [24].

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Even though the modern world consists of independent countries, no country can isolate itself from globalization. When new economies are born and borders are opened, it enables a global unregulated marketplace. Whether a country wants to participate in international business or not, it cannot dismiss the effect of increasing number of domestic firms exporting, importing and manufacturing abroad. The rapid growth of world markets and the increasing number of competitors on the global market promote efficiency and productivity [6]. Internationalization and globalization have generated an increasing interest in cultures and constant efforts to reach understanding of cultural differences.

In the mid 1950s a fundamental change in the international competitive environment started to appear. Potential new international competitors, such as Japan, Korea and Taiwan, emerged and gave rise to a need in theories of international competition [25]. A demand arose for marketing managers to understand the fundamental bases of trade between nations and the forces that change its character.

Back then, with a basic understanding of international trade, a manager at least had a chance of coping in international context [22].

It therefore became clear that marketing needed to understand all aspects of a culture in order to comprehend the structure of marketing systems and operations.

Culture became the component that made countries different from each other.

Awareness of the customs, language, religion, taboos, ethnic relationships, and dispositional characteristics of a culture became a significant addition to a marketer’s professional insight [26]. In this era there was no guiding general pattern for cultural market analysis. It was thought that to determine the cultural aspects of markets, a comprehensive market analysis should be conducted, although market research of the area tended to superficial and expensive [cf. 22, 27]. Each market was seen as unique, with specific characteristics that made generalization difficult. However, it was stated that some common issues could be found between different cultural groups, making some general conclusions possible. These common issues were religion, family systems, educational system, social relationships, artistic tastes and temperamental differences among people.

Interest in internationalization led to publication of several books about international marketing. These books did not include any particular theories, but urged to familiarize with and analyze each culture separately. There were some common threads and themes, which could help on the way. It was important to take influences

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of religious, family, educational and social systems into consideration as well as how they affected the marketing system [22].

1.2.2 THE 1970S — THE ERA OF LIBERALIZATION

This decade was characterized by a transition from industrial to service society, as well as the oil crisis of 1973 and the following recession. As a result of the oil crisis, ecological awareness rose significantly, which is still important in marketing.

During the 1970s, Japan experienced an economic boom and export– Some of the first books on international marketing:

driven development took place in Asia, especially in Hong Kong, South Korea, Singapore and Taiwan, which resulted in economic

1961, International marketing: a new frontier for American business

by William Wallance Redemann 1965, International marketing

by John Fayer weather 1967, International marketing

by John M. Hess & Philip M. Cateora

transformation and industrialization. The big economic boom in Japan and an increase in transactions between American and Japanese companies was a valid factor that affected development of general theories and literature about international marketing.

American businessmen did not understand the Japanese way of interacting, communicating and doing business. There were challenges in nonverbal communication—Americans were open while Japanese were locked in their social collective systems—resulting

in difficulties to build trust and confidence. This led to frustrated Americans trying to learn how different cultures work. As a consequence, in the late 1960s and in the early 1970s books about international marketing started to appear. These books were based on a North American perspective, but later on, books were adapted according to regions, meaning that European and Asian editions were published [7].

Business got more and more international, thus increasing intercultural challenges.

A basic understanding of foreign cultures was badly needed. Therefore, theories in books considered the general features cultures could have. Several of these books are still used today. As a consequence, many of the theories used today have their origin in studies conducted in North America, which is something to take into consideration when reading theories of marketing management and motivation.

The primary topics of the 70s were subjective culture and social construction of reality,

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time orientation, cultural distance, and intercultural communications. Subjective culture refers to everyday thinking and behavior, the psychological features that define a group of people and social construction is how you learn how to behave through socialization into the culture [28, 6]. Regarding the issue of intercultural communica-

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tions, one of the most popular books written on this topic in 1970s is Beyond Culture

by Edward T. Hall, which we already touched upon in one of the previous sections.

In his book, Hall divided cultures into high–context (e.g. Japanese, Arabian) and low–context (e.g. Scandinavian, North American).. According to Hall, communication in a high–context culture is highly dependent on the context or nonverbal aspects of communication. In a low–context culture you get down to business more quickly while in a high–context culture it takes more time to conduct business, since there is a higher need of knowing the businessperson before a relationship can grow. Even low–context cultures are dependent on the awareness of the cultural context (see figure 1.1).

Australia

China

Canada

Egypt

Denmark

India

England

France Italy Japan Lebanon Saudi Arabia Spain Syria

High–context

Low–context

Finland Germany Norway Switzerland United States Sweden

Figure 1.1: High–context and low–context countries (based on the work of Edward T. Hall, [17]).

During the latter part of the 1970s, research of international marketing focused on topics linked to multinational corporations, foreign direct investment, consumer behaviour and elements of the marketing mix. It was still considered that studying international marketing was difficult, especially empirically. This was primarily because the complexity of the multinational environment, high monetary and time costs, and the problems of comparability across languages and cultures. Although many of the studies were conducted on one single culture, the conclusions of these studies were often generalized and theories made universal [29]. Therefore, it was realized that research conducted across cultures needed more attention.

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1.2.3 THE 1980S — THE DECADE OF NEOLIBERALISM

The oil crisis and recession of the 1970s continued into the 1980s. However, the 1980s is also characterized by peace: several peace agreements were sealed, the Berlin Wall was torn and the global climate calmed down. In the West there was an economic boom, while several states in South America and East Europe underwent an economic crisis. By the 1980s many industries had entered the multinational phase and there was a demand for culturally sensitive management practices [30].

Important books from the 1970s:

In the early 1980s Dutch academic

1976, Beyond culture

by Edward T. Hall

Geert Hofstede published the article Culture’s consequences:

1976, International and intercultural communication

by Heinz Dietrich Fisher & John Calhoun Merril

International differences in

1979, Handbook of intercultural communication

by Molefi K. Asante, Eileen Newmark & Cecil A. Blake.

national cultures affected IBM, a

work–related value. In this article he examined how different big multinational company that had its base in USA and operated in more than 40 countries. Hofstede initiated his work already in the late 1970s, but the

result was published in 1980. Hofstede made a

The five dimensions of culture Geert Hofstede and Michael Bond [32] developed a cross–cultural model based on five dimensions illustrating differences between national cultures: power–distance, uncertainty avoidance, masculinity/femininity, individualism/ collectivism and long–term/short–term.

1. Power–distance: the different solutions to the basic problem of human disparity, the extent to which unequal distribution of power is accepted and tolerated.

2 Uncertainty avoidance: the level of stress related to the unknown future, the extent of how threatened members feel in uncertain situations.

3. Individualism/collectivism: the integration of individuals into groups, the extent of taking care of oneself and family versus working together for the collective good.

4. Masculinity/femininity: the division of emotional roles between men and women, the extent to which masculine assertive values versus feminine nurturing values are incorporated in a culture.

5. Long–term/short–term: the focus of peoples’ efforts: the future or the present, the ability to follow general long–term goals versus short–term gain and advantage. [4, p. 29] Info 1.1

survey on work–related values, analyzed and compared the results between the international subsidiaries, consequently finding cultural differences in IBM’s organizational culture. Hofstede detected that the differences between managers attitudes could be explained with four dimensions, which he named: power–distance, uncertainty avoidance, masculinity/femininity and individualism/collectivism.

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During the same time Michael Bond and his colleagues made a similar study on values between female and male psychological students belonging to ten different nationalities or ethnic groups, called the Chinese Value Survey (CVS). Bond used

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similar methods of analysis as Hofstede, and his Schein’s theory of organizational culture Assumptions are the core of organizational cultures, the things that organizational members consider to be reality. Thereby, assumptions affect how members perceive the surrounding and how they think and act. Assumptions are taken for granted and exist outside our consciousness; they represent the truth and saturate the cultural life in all aspects. Assumptions are hard to grasp empirically because they are so deeply rooted in human consciousness. [13] Espoused values are the desired cultural elements, they define what organizational members care about and form the basis for assessment of what is right and wrong.

There is a higher conscious awareness of espoused values than of assumptions.

Artifacts include any identifiable element in the organization, all the physical objects in the organization, the verbal manifestations in spoken and written language, rituals, and ceremonies.

Artifacts are the easiest to detect, but they provide only superficial data and are just scratching the surface of culture.

Schein says that the cultural core are assumptions, this core reaches out through the espoused values that a member of the culture is aware of. The espoused values then affect members’ choices and actions that create the artifacts.

results also showed four different dimensions, of which three correlated with Hofstede’s. Later, the fourth dimension of CVS appeared to have a correlation with future economic growth, and therefore it became the fifth dimension, long–term/short–term which complemented the work of Hofstede (see info 1.1) [13, 14, 31].

Culture’s consequences was the first work that classified national cultures by placing them along a number of dimensions. This became a new paradigm in studying cultures, a radically novel approach. This paradigm (a new way of thinking, a step before theory) resulted in several resembling studies [14].

Another prominent theory of the 1980s is the theory of organizational culture developed by American social psychologist Edgar Schein. According to Schein, culture can be found on three levels; on the surface you can see artifacts and behavior, under these you can find espoused values and on the lowest level you can find the basic assumptions (see info 1.2) [13].

Info 1.2

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Artifacts Values Assumptions

Figure 1.2: Three levels of organizational culture (based on Schein). [42]

During the 1980s an interest towards the emerging economies in Southeast Asia arose and resulted in the publication of several books about marketing. In the latter part of 1980s the theories progressively started to shift from general theories to more specific—both regarding specific geographic areas and specific subjects. Several books of intercultural communication and negotiation were published [7].

Publications that influenced the 1980s intercultural marketing management: 1980: Culture’s consequences: International differences in work–related value by Geert Hofstede 1980: Organizational Psychology

by Edgar Schein During the 1980s several books about intercultural communication were published and started to include a more geographical perspective.

1.2.4 THE 1990S — THE DAWN OF THE INFORMATION AGE

The last decade of the 20th century is considered the beginning of the information and digital age. The rise of the internet made it possible to communicate worldwide in completely new ways. The decade began with the collapse of the Soviet Union, the end of the Cold War and the removal of the Iron Curtain. The former Soviet republics became independent nations and new, privatized, unknown markets for foreign companies. Democratic governance and the living standard of countries in Eastern Europe, East Asia, Latin America and South Africa improved notably

and the emerging markets became the focal area of studies [7].

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Business practices of high–context cultures in Southeast Asia continued to confuse Western business people. This is also reflected in the academic literature of that time.

During the 1990s intercultural marketing research was mainly focused on marketing

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practices in the Far East, the cultural differences The seven dimensions of culture [34] 1. Universalism vs. particularism: In a universalist culture there is a defined right and good, which always applies. In a particularist culture the obligation of a relationship is essential, i.e. friendships have obligations and therefore come before the assumed “good way”.

and how to manage them [7]. Researchers studied to a great extent the implications of cross–cultural leadership in China, focusing on the concept of guanxi, which is tightly related to the concepts of guanqing and 'face'. Guanxi is commonly translated as relationships, but has a more profound aspect than the Western interpretation of interpersonal relationships.

2. Individualism vs. collectivism: A matter of self–image —people see themselves as individuals or as part of a group.

Guanxi also implicates that other people’s interest is

3. Neutral vs. emotional: A neutral approach, which is typical for North Europe and America, means that the interaction is impersonal and goal– oriented, while in emotional cultures, often found further south, emotional outbursts of joy, anger or frustration is totally accepted, if not necessary.

counterparts through the relationships can gain favors

4. Specific vs. diffuse: A specific business relationship is focused on the business deal, while in a diffuse relationship the whole person—its family and personal life—is involved in the relationship. In many countries e.g. in South America, a diffuse approach is necessary in order to do business even though it is usually more time–consuming.

Trompenaars made an important

5. Achievement vs. ascription: In Western cultures, achievement, i.e. what you have professionally accomplished, is very important. In case of ascription, which is important in e.g. Japan, other things, than professional achievements, matter, like gender, age, network etc. This is closely tied to the terms “doing–cultures” and “being–cultures”.

people, attitudes to time and attitudes to

6. Attitudes to time: In different cultures the emphasis lies on different time aspects; for the French the past is essential, while Americans tend to look forward and concentrate on present or future.

development of high technology and information

7. Attitudes to environment: Where is the driving force that is affecting life, motivating and giving value—does it lie within a person or is it the outside world that affects the individual?

continued to expand. Off–shore outsourcing and

Info 1.3

more important than personal interest and that both [cf. 33] Even today guanxi is still considered a Important books of the 1990s:

necessity in order to be able to reach high positions in the Chinese business world.

In 1993, the Dutch author Fons

1992, Marketing across cultures by Jean–Claude Usunier

contribution to the studies of cross– cultural business communication when he introduced his model of culture with seven dimensions divided

1993, International marketing — A cultural approach by Jean–Claude Usunier

into three categories: relationships with

1993, Riding the waves of culture by Fons Trompenaars

environment (see info 1.3).

1.2.5 THE 2000S — THE DIGITAL DECADE

During the first decade of the third millennium, the systems was extremely rapid. Internet became mainstream, especially in the Western world, former trade barriers were removed and international trade subcontracting to developing countries like India and China increased further. Energy demand grew, which benefited, amongst others, countries with

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oil deposits. And the end of the decade was characterized by a devastating global financial crisis. Knowing how to properly communicate across cultures on the internet became a challenge for many businesspeople. In the year 2000 the percentage of English language used online dropped for the first time under 50 % and high–context languages, like Japanese, Chinese and Korean, started to increase rapidly. When communicating by e–mail, basically the same manners are applied as in face–to–face conversations, with some exceptions. In more formal cultures, like Germany and many Asian countries, people are, for instance, not address by their first name without having specifically been asked to. This, on the other hand, is appropriate in more informal cultures, like in the USA [2].

The increasing globalization resulted in previous theories on intercultural business being, if not obsolete, at least to some extent in need of adaptation. Many of the books that had been important during previous decades were updated and republished. While the cross–cultural and intercultural studies of previous decades tended to be more generalized, the research gradually became more specified and focused, obtaining knowledge and understanding about a specific culture through e.g. case studies [7]. Nevertheless, the area of study still has rested heavily on the paradigms established by Hofstede in the 1980’s —his words have been cited in other studies more than 5000 times since then, and on average 288 times in the year 2000 —even though there has been tens of other researchers who has studied the same phenomenon [35].

A project based on Hofstede’s paradigms—Global Leadership and Organizational Behavior Effectiveness (GLOBE) —became noticeable only in the beginning of the new millennium although it had been initiated already in 1995 by Robert J. House. About 200 social scientists and management scholars from more than 60 cultures were, and are still today, involved in a major study of cross–cultural leadership. The researchers of GLOBE have divided cultures into different clusters according to similarities in cultural values and beliefs. According to the GLOBE scientists, the secrets of culture in relation to leadership have just started to uncover and it will take time until we can understand the complexity of the topic [36]. A GLOBE report from 2001 stated that the field had some conceptual and methodological problems, e.g. the lack of clear

34

theoretical models of what culture is, how it is measured and compared and how social culture is connected to leadership effectiveness [37].

While the GLOBE project expanded, critique of the Hofstedean framework gained

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recognition. Even though Hofstede never even claimed to have uncovered the one and only method of studying culture and he actually advocated against some of the assumptions in his publications being applicable on other cases, his thoughts and propositions have been used endlessly. His theories have been misapplied, misinterpreted and generalized to the extreme by eager researchers manifesting the ten commandments of culture. The assumptions are: 1.

Cultures are values

2.

Values are cultures

3.

Cultures are extremely stable

4.

Culture is the cause, not an effect

5.

A cross–level analysis of culture leads to the ecological fallacy

6.

Cultures cluster within geo–graphic boundaries

7.

Mean scores and ranking sufficiently quantify culture

8.

Matched samples should be used to study cultural differences

9.

Important books of the 2000s:

Self–response questionnaires adequately measure culture

10. The Hofstede framework is unique and the only viable framework for studying culture.

2000, Global marketing management (2nd edition)

by Masaaki Kotabe

Taking these assumptions for granted when conducting cross– cultural studies distorts the validity of the research. The heavy reliance on Hofstede’s paradigm, which lacks quite a bit of theoretical and empirical evidence, obstructs the development and progress of

2009, Beyond Hofstede: Culture frameworks for global marketing and management

by Cheryl Nakata

the area of study [35].

1.2.6 THE 2010S AND BEYOND

The current decade is characterized by the massive development in the technology area, but also by uncertainty in the world. In the end of 2010 a wave of violent demonstrations against the imperious governments of the Arabian countries started and the repercussions of the great financial recession are still noticeable. Sovereign debt crisis in the south of Europe is making the Europeans struggle financially. Meanwhile, the Chinese economy grows rapidly and is today the second largest after the American.

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The economic centre is shifting eastward and the financial crises are speeding up this process [7].

The globalization is more evident today than ever before; thanks to advanced technology you do not have to travel the world to have a meeting with somebody in Indonesia while you are located in Finland yourself—you can meet online. You can sell products to people in practically any country without ever crossing country borders physically—you can sell online. Interesting fields of study today are e.g. the melting pot phenomenon due to globalization, regional differences, living abroad, the cultural aspect in relation to business communication, media usage, pricing policies and internet. New cultures are all the time formed due to the globalization and digitization so the area is very dynamic and is changing and developing constantly [7].

Due to globalization and the internet, common cultures are created all around the world. Increasing integration across cultures is creating an emerging common consumption culture that is displaying great commonalities across cultural groups, especially amongst the middle class segment. These commonalities could lead to a consumption culture emerging across the world independently from social cultures.

Within this consumption culture, the segment of 'lifestyle' groups seems to have a greater impact on the consumer than that of ethnic orientation. Could this mean that there will be a shift from marketing and adapting according to ethnic orientation to marketing according to 'lifestyle' groups? [38]. Chapter 5 in this book discusses this new trend in 'lifestyle' marketing No one in the 1960s could even have imagined how the World Wide Web would influence the marketing field in just a few decades. It will presumably become more crucial to be truly customer–savvy, which is a great challenge. Especially when taking into consideration the shift to a global lifestyle–segmentation combined with the need to understand ethnic orientations.

Societies are under constant construction and because the economic centre is shifting towards the east, the future is even more challenging to predict. Cultures are already getting more and more integrated and segmentation becomes irrespective of nationality and ethnicity. It is hard to know how the different elements will influence

36

each other, and how it will affect intercultural marketing management.

However, it is important to look at the current and contemporary trends to get a hint of where the world is going and what is and will be required of you as a professional marketer on the global scene.

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1.3 DOES CULTURE REALLY MATTER IN MARKETING?

Today global and cross–cultural trading is undeniably more important than ever before. Studies have shown that culture is the decisive factor in marketing decision– making and that cross–cultural analysis is beneficial in order to understand and anticipate the counterparts’ business customs and behavior. Culture has a great impact on negotiation strategies, problem identification and solving techniques. Failing to recognize this and to adapt to it can lead to 'noisy' communication, misunderstandings and misleading information [39]. But is culture really as important as the studies stress it or is the cultural impact exaggerated?

The marketplace is considered to be completely based on culturally defined customs and behaviors. Culture affects all five aspects of the marketing mix; the product, the price, the place, the people and, the most visible, the promotion. Cultural factors can either act as opportunities or as obstacles depending on how the managers choose to tackle the market [21]. Cultural impact should be taken into consideration both in external and internal processes. The key word here is efficient intercultural communication [39].

Due to the tough worldwide competition it is essential for every company to obtain cultural competence when doing business in countries with foreign cultures in order to avoid cultural blunders that in the end can prove to be very costly. Cultural competence basically consists of three levels [40]: •

Cultural knowledge, which means that you have obtained a basic understanding of the core values, the history and the belief systems of the foreign country in which you are operating;

•

Cultural sensitivity, which implies the usage of the above mentioned cultural knowledge in order to understand and accept the foreign culture;

•

Cultural awareness, which implies fundamental and internal changes in attitudes and values and arises in interaction with people from the foreign culture. Cultural awareness prerequisites cultural knowledge and sensitivity

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A lack of cultural competence can be fatal. One of the biggest mistakes a company can do is to enter a foreign market with an ethnocentric approach, i.e. the belief that the own culture is superior to the other culture, and thinking that marketing solutions that work in the home market will totally fit the other market. Adaption to a new market is always inevitable [21]. Cultural values and norms determine consumer behavior and purchasing motives. In India, for instance, fair skin is considered beautiful and a sign of high–class, while dark skin is associated with hard work and lower class.

Multinational companies acknowledged this cultural norm and introduced a cream that would make the skin fairer—and it became an instant success [cf. 21]. In Finland, on the other hand, where a tanned look is desirable and a sign of health, the product probably would not sell very well.

Culture as the basic and decisive element of marketing is one way of looking at culture’s impact on marketing. Culture can also be regarded as an influential factor only on some parts of marketing, e.g., on the consumer market. Yet another way is to forget about business culture, ignore culture as a critical factor and instead concentrate on institutional characteristics (regulatory, cognitive and normative) that can vary from country to country. According to this outlook, the organization reflects, no matter where it is physically located, the organizational and institutional environment of the country where it is established. The business practice of the origin country does not, however, always fit the institutional environment of the recipient country, which can result in implications that make the transfer more difficult [41].

So does culture matter in marketing? There is no simple answer, just many theories and opinions. You can argue that culture is an important part of a person’s identity, which cannot be erased, and that marketing is communication and communication is a very important part of culture. Or you can say that culture does not have such a great impact on business customs as Hofstede and other researchers claimed back in the day. Whichever approach you choose, you have to remember that no matter how much information has been gathered on different cultures or how many studies have been conducted on regionally bound characteristics, it is never enough. There will always be unforeseen exceptions that do not fit the rules. Business is conducted by people and people are different from each other, even though they might share the same culture or

38

come from the same country.

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REFERENCES

[1] Kris, Anton & Flint, Jacqueline (2003): Etics [11] Holzmueller H, Nijssen, E & Singh, J and emics:bridging a gap in international (2006): Four Decades of Cross–Cultural business culture, in Rugimbana, Robert & Research Practices in International Nwankwo, Sonny (2003): Cross–cultural Marketing An Assessment and marketing. London: Thomson. pp. 51–58.

Advancement of Conceptual, Theoretical, Methodological and Analytical Issues.

[2] Usunier, Jan–Claude & Lee, Julie Academy of Marketing Science Anne (2005): Marketing across Conference Proceedings, Seoul, Korea. cultures, Fourth edition. New York: Financial Times Prentice Hall.

[3] Fisher, Ronald (2009): Where is culture in cross cultural research? An outline of a multilevel research process for measuring culture as a shared meaning system.

International Journal of Cross Cultural Management, Vol. 9, No. 24, pp. 25–49.

[4] Hofstede, Geert (2001): Culture’s consequences: comparing values, behaviors, institutions and organizations across nations. Thousand Oaks: Sage.

[5] White, Leslie A. (2007): The evolution of culture: the development of civilization to the fall of Rome. Walnut Creak, Calif: Left Coast Press.

[6] Cateora, Philip & Ghauri, Pervez (2000): International marketing, European edition. Malta: Interprint.

[7] Törnroos, Jan–Åke (2012): Interview with Professor of international marketing and Head of the School of Business and Economics/Åbo Akademi University, conducted by Breider, Emilia & Lillhonga, Sonja, February 10, 2012.

[8] Tylor, Edward B. (1920): Primitive culture: researches into the development of mythology, philosophy, religion, language, art, and custom. London: Murray.

[9] Kluckhohn, Clyde (1951). Values and value–orientations in the theory of action: An exploration in definition and classification. In T. Parsons & E. Shils (Eds.), Toward a general theory of action.

Cambridge, MA: Harvard University Press [10] Mitchell, Charles (2000): A short course in international business culture: building your international business through cultural awareness.

Novato, CA: World Trade Press, cop.

[12] Schaffer, Bryan S. & Riordan, Christine M. (2003): A Review of Cross–Cultural Methodologies for Organizational Research: A Best–Practices Approach.

Organizational Research Methods, Vol. 6, No. 2, pp. 169–215.

[13] Hatch, Mary Jo (2002): Organisationsteori: moderna, sympoliska och postmoderna perspektiv. Lund: Studentlitter

[14] Hofstede, Geert; Hofstede, Gert Jan & Minkov, Michael (2011): Organisationer och kulturer. Lund: Studentlitteratur.

[15] Jansson, Hans (2007): International business strategy in emerging country markets: the institutional network approach. Cheltenham: Edward Elgar, cop.

[16] Gudykunst, William B (2003): Cross–Cultural and Intercultural Communication. Thousand Oaks: Sage.

[17] Hall, Edward T. (1959). The Silent Language. New York [18] Rogers, Everett M., Hart, William B. & Miike, Yoshitaka (2002): Edward T. Hall and The History of Intercultural Communication: The United States and Japan. Keio Communication Review. No 24, pp. 3–26.

[19] Mooji, Marieke de (1997): Global marketing and advertising, understanding cultural paradoxes. London: Sage [20] Morris, Michael W., Leung, Kwok, Ames, Daniel & Licke, Brian (1999) 'Views from inside and outside: Integrating Emic and Etic Insights about Culture and Justice Judgment'. The Academy of Management Review, Vol. 24, No. 4, pp. 781–796.

[21] Kotabe, Masaaki (2000): Global marketing management, Second edition.

New York : John Wiley & Sons.

[22] Fayerweather, John (1965): International marketing. Engelwood Cliffs: Prentice Hall.

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[23] Wolf, Martin (2000): Why this Hatred of the Market?, in Lechner, Frank J. & Boli, John (eds) (2000): The Globalization Reader, pp. 9–11.

[24] Adler, Nancy J. & Gundersen, Allison (2008): International dimensions of organizational behaviour, 5th edition. Mason, Ohio: Thomson/South–Western, cop.

[25] Porter, Michael E. (1984): Competition in Global Industries.

Boston: Harvard Business Press.

[26] Carson, David (1967): International marketing: a comparative systems approach. New York: John Wiley.

[28] Bennet, Milton J. (1998) Intercultural communication: A current perspective.

In Milton J. Bennett (Ed.), Basic concepts of intercultural communication: Selected readings. Yarmouth, ME: Intercultural Press, pp. 1–20.

[34] Trompenaars, Fons (1993): Riding the waves of culture: understanding cultural diversity in business. London: Brealey.

[35] Taras, Vas, & Steel, Piers. (2009): Beyond Hofstede: Challenging the Ten Commandments of Cross– Cultural Research. In C. Nakata (Ed.), Beyond Hofstede: Culture Frameworks for Global Marketing and Management: Macmillan/Palgrave.

[36] GLOBE (2012) [37] House, R., Javidan, M., & Dorfman, P. (2001). Project GLOBE: An Introduction. Applied Psychology: An International Review, 50(4), 489–505.

[27] Moyer, Reed (1968): International Market Analysis, in Grub, Phillip D & Kaskimies, Mika (1971): International marketing in perspective. Helsinki: Sininen Kirja Oy, pp. 111–130.

[38] Rao, C. P. (2003): The future and challenges of cross–cultural and multicultural marketing. In Rugimbana, Robert & Nwankwo, Sonny (2003): Cross–cultural marketing. London: Thomson. pp. 328–340.

[29] Albaum, Gerald & Peterson, Robert A. (1984): Empirical Reasearch in International Marketing: 1976–1982. in Journal of International Business Studies, Vol. 15, No. 1, pp. 161–173.

[39] Tse, David K., Lee, Kam–hon, Vertinsky, Ilan & Wehrung, Donald A. (1988): Does Culture Matter? A Cross–Cultural Study of Executives’ Choice, Decisiveness, and Risk Adjustment in International Marketing.

Journal of Marketing, Vol. 52, pp. 81–95.

[30] Adler, Nancy J. (1997): International dimensions of organizational behaviour. Cincinnati, OH. South– Western College Publishing.

[31] Hofstede, Geert (1994): Cultures and organizations: software of the mind: intercultural cooperation and its importance for survival. London: HarperCollins.

[32] Hofstede, G. and M. H. Bond (1984).

Hofstede’s Culture Dimensions: An Independent Validation Using Rokeach’s Value Survey. Journal of Cross– Cultural Psychology 15(4): 417–433

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[33] Chun, H & Graen George (1997): Guanxi and professional leadership in contemporary Sino–American joint ventures in mainland China. Leadership Quarterly, Vol. 8, No. 4, pp 451–465

[40] Parada, Henry; Barnoff, Lisa; Moffatt, Ken, & Homan, Mark S (2011): Promoting Community Change: Making it Happen in the Real World. Toronto: Nelson Education.

[41] Kostova, T (1999): Transnational transfer of strategic organizational practices: A contextual perpective.

Academy of Management Review, Vol. 24, No. 2, pp. 308–324.

[42] Schein, E. H. (1978). Career dynamics: Matching individual and organizational needs. Reading, MA: Addison–Wesley.

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2

2. Tribal Marketing Management — is intercultural marketing old fashioned?

Jing Tian & Yichen Zhao

2.1 Introduction 2.2 Why is tribal marketing worth a try?

2.3 Implementing tribal marketing

2.3.1 Finding or creating the tribe

2.3.2 Managing the tribe

2.4 Advice for tribal managers 2.5 Upcoming trends

References

43

CHAPTER 2

2.1 INTRODUCTION

A lively bonfire is under its way while the moon is shining vividly in the sky. Good looking vampires mark the difference this time. They are enjoying themselves while another vampire is driving an Audi S7 with drinks of blood in the trunk. What the vampires did not expect is that Audi’s headlights are so bright that they are killed by the power of LED lights.

Figure 2.1: Screenshot Audi’s 2012 Super Bowl Ad — Vampire party. [1]

The story is Audi’s 2012 Super Bowl Ad — Vampire party [1]. This Audi vampire commercial got nearly 7 million hits in just three weeks since it was posted by AudiofAmerica channel on YouTube. At the time of writing there were 14 099 visitors, who liked the video and only 599 disliked it [2]. Besides the good technology of Audi itself and the unexpected ending, the vampire element in the story is probably the main reason for the popularity of this commercial. The vampire theme recently become very popular and always tend to catch people’s eyes, no matter if it is in novels, TV series or Hollywood movies, or as recently, in advertisements as well. Modern vampire movies have brought back the vampire cultural wave, and there is a solid

44

vampire fun base fuelling the cultural wave. This wave and its fan base have aroused the attention of marketers. From a marketing management perspective, those vampire fans belong to a tribe and the marketing approach Audi AG used this time is called tribal marketing.

T R I B A L M A R K E T I N G M A N A G E M E N T — I S I N T E R C U LT U R A L M A R K E T I N G O L D FA S H I O N E D ?

What is a tribe then? A tribe in the context of this chapter does not refer to a group of individuals who exists only on a small island somewhere far away. Instead, we can say that nearly everyone belongs to one tribal community or another, since the need of belonging seems to be part of human nature. The Merriam–Webster definition describes a tribe as “a group of persons having a common character, occupation, or interest". [27] From a marketing point of view, managers could understand a tribe as a group of people who link with each other emotionally through similar consumption values. Individuals are tied together by their buying habits and brand affiliations—they are building tribes based on their common preferences [3]. High school girls discuss the trendy outfits on the fashion magazines after class; men talk about their cars in the car fans club; a group of friends check their iPhone instead of chitchatting. Unlike traditional consumer segmentation, a tribe is not identified by consumers sharing similar characteristics, but characterized by one common interest. For example, the vampire wave is not just for fanciful school kids. In fact, according to a Nielsen report in 2009 [4], the Twilight website is over–indexed among 25 to 34–year olds despite originally sold as a book series for young adults, and women are over–represented by 44 percent.

Tribal marketing is not a new idea. Already over decade ago

More to read:

economists, such as Maffesoli [4], talked about the power of tribes

Maffesoli, M. (1996): The Time of The Tribes, London: Sage.

and how people’s need to recreate new connections would impact marketing. The interest in tribal marketing has arisen from the realization that traditional marketing methods are proving less and less effective. Marketers’ focus on tribal marketing has increased in recent years because of the rapid rise of different social networking sites (SNS) on the Internet. Marketers have realized that as a result of the popularization of the Internet and the development of the SNS, tribes are more powerful than ever.

A basic understanding of tribal marketing is that people really

Cova, B., Kozinets, R. & Shankar, A. (2007): Consumer Tribes, Elsevier.

Godin, S. (2008): Tribe: We need you to lead us, Piatkus.

Seth’s Blog: http://sethgodin.t ypepad.com Tribaling: http://tribaling.t ypepad.com

want the ability to connect to each other, not to companies [5].

Unlike managing a business–to–business relationship, suppliers cannot play a round of golf with their consumers to build a relationship and then ensure the relationship with a contract. The modern consumer does not function this way. The firm cannot control the relationship between the firm and the consumer. Instead, the

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CHAPTER 2

firm needs to find ways of supporting the link between the customers.

In a globalized world, tribes consisting of people from different cultures bring new questions to the marketer—what role do cultural differences play? Are cultural differences important if common interests define the tribe? How should a marketer treat a tribe who consist of a multitude of different nationalities? For instance, surf riding is very popular among young people—you can find energetic surfers on the beaches of Hawaii, the Golden Coast, even in the Englischer Garten in Munich, Germany. Surfers around the globe might have different cultural backgrounds and characteristics, but when examined more closely, surfers all around the world belong to a large surfing/surfers tribe. As a result of the popularity of SNSs, millions of surfers are connecting all over the world forming a large tribe. And through SNSs surfers can easily find and connect with their kindred spirits anywhere on the globe. For example, there are thousands of users following the topic '#surfing' on Twitter.

People who belong to, for instance, the surfers’ tribe share the same idea, passion, habits or emotions. They have gathered around a common interest and found a connection between them. From a marketing management perspective it does not matter what the members’ cultural backgrounds are. The interests, passions, habits or emotions that bond surfers together are beyond cultural borders. The micro–culture inside the tribe, such as the common behavioural patterns of tribe members, should gain more attention from marketing managers than tribe members’ different national cultural backgrounds. It is not about finding specific marketing efforts for specific national markets. Instead it is about finding out what connects the tribe members to each other and attract tribes with the help of that.

Welcome to the new age of tribal marketing!

2.2 WHY IS TRIBAL MARKETING WORTH A TRY?

Before getting to know why you are encouraged to attempt tribal marketing, knowing the differences between traditional relationship marketing and tribal marketing is essential (see table 2.1).

46

In traditional marketing, consumers obtain and deplete products or services offered by companies, and consumers are typically viewed as passive consumers of marketing efforts. Companies attempt to create connections to the consumers and consumers either accept or refuse. Consumers can not easily create a relationship to the company

T R I B A L M A R K E T I N G M A N A G E M E N T — I S I N T E R C U LT U R A L M A R K E T I N G O L D FA S H I O N E D ?

based on their own initiative. This kind of approach is from company to consumer, which is a top–down approach, and consumers are thought to be isolated [6].

The goal with traditional marketing is to attract as many consumers as possible and make them loyal to the company’s products or service. Although companies have been aware of the fact that interaction between consumers can potentially influence the companies’ reputation, most companies have failed to manage and control the interaction that takes place between consumers.

But the same cultural background does not equal similarity. For example, you might have had this experience: you opened your best friend’s iPod and checked all the songs in it, and then you were disappointed because the list deviates from yours. The bond of culture does not guarantee bonds of interest. Moreover, peoples needs and wants do not always originate from the culture. For instance, rock star Lady Gaga fascinates millions of fans all over the world, in the US, Europe, and Asia. The fans of Lady Gaga probably have very different cultural backgrounds, lifestyles, traditions and so on, and yet they follow Lady Gaga in the same manner. Still traditional inter–cultural marketing tend to treat people the same if they share the same cultural background or have the same age or gender.

This is all changing with tribal marketing. You do not need to treat tribe members differently because of their dissimilar cultural backgrounds or other demographic variables. Tribal marketing acknowledges that belonging to a tribe means that a group of consumers have something in common. Consumers are increasingly joining tribes to share and express their feelings and thoughts and the members in tribes are influenced by each other. When for instance fascinated, they tell and invite others, and in this way the tribe expands.

The marketing efforts should not be communication directed towards the tribe.

For instance, people in a tribe are not easily penetrated by convincing advertising or persuasive sales personnel. Companies marketing efforts need to focus on supporting the link between consumers [7], and the development of SNSs makes tribal marketing possible and practical. Companies build platforms for consumers to interact with each other. When engaged with a tribe, the company works as an intermediary in the network of consumers. With the appearances of tribes, companies face no more individuals but as forms of group, and consumers are not regarded as separate individuals.

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objects

relationship

consumer

foreign consumer

traditional relationship

top–down, relationship

individual,

always different from

marketing

between company and

isolated

domestic market

network, relationship

group,

despite nationalities

between consumers

interactive

tribe members share

marketing approaches

consumers tribal marketing

similarities

Table 2.1: Differences Between Traditional Relationship Marketing & Tribal Marketing.

Normal promotional approaches and consumer relationship management tools have lost their power. For instance, a study in Sweden showed that 75 % of all Swedes avoid commercials on TV, Radio and the Internet. A study by AC Nielsen showed that people tend to remember two marketing messages they have been confronted with per day.

That is scarily little considering that the average consumer is bombarded with over 2 000 messages per day [8]. The question then rises: how to engage consumers, who stay in groups, but do not want to connect with you?

Tribal marketing can do you as a marketer a favour.

Social networking websites have recently had a large influence on society, which in turn influence peoples’ consumption behaviour. According to Michael Bayler [5] “Consumers use social media to filter, resist and reject irrelevant or uninteresting messages, so the tribal consumer is quite happy, amusing himself in his own digital sandpit without having to give attention to advertisements in order to get media the way we used to”.

Consumers get current information from social networks, and they rarely watch TV commercials. Because of social networks, they build connections with each other on their own web pages, blogs or other social networking platforms.

Because humans are social beings, they desire to be part of a group. In the context of tribal marketing, a group can be considered a tribe, if the members come together on

48

account of the same idea or passion. For example, backpackers could belong to a tribe.

The tribe builds an online platform LonelyPlanet to share tips and images. You can regard them as a community and get in touch with them more easily. Traditional marketing views people as individuals, and there are few tools to deal with tightly–knit groups.

T R I B A L M A R K E T I N G M A N A G E M E N T — I S I N T E R C U LT U R A L M A R K E T I N G O L D FA S H I O N E D ?

So if it is human nature to gather, why not make use of it?

As painful as it might sound, members in a tribe do not care about you as a firm. They really care only about themselves. They tend to be indifferent about the brands, and they do not buy products that are disliked by others in the tribe. And they do share their feelings about your products! The tribe members prefer to talk with each other and connect with them.

You as a marketer need to acknowledge this fact. You need to support the relationship between tribe members and help them link with each other. In the process of helping tribe members connect and share with each other, you could be accepted and make a profit as well.

Tips!

Four reasons for switching to tribal marketing:

2.3 IMPLEMENTING TRIBAL MARKETING

2.3.1 FINDING OR CREATING A TRIBE

Nowadays tribes of people can be found everywhere, magnetizing

√ Social net works change people’s behaviour and the mode of getting contact.

numerous companies with their huge size as well as high pertinence. However, unlike the segmentation approach in traditional consumer relationship management, it is hard to

√ People want to stay in a group. √ Same cultural background does not equal similarity.

identify a tribe using traditional marketing approaches. The existence of a tribe is often indeterminate and has a short duration

√ Consumers do not care about you.

because it is based essentially on the emotions and significance between the tribe members. A tribe is also an open system which is free to join and withdraw from [7]. Perhaps you need to think about marketing up–side–down. Seth Godin [9] suggests that instead of looking for consumers for the company’s products/ services, the company needs to seek out products/services for the tribe.

How to find a tribe to target?

Some tribes might be easy to identify, but this also means that if you can identify them easily, so can others. So your goal should be to identify new tribes. Your first step in finding a tribe is by researching widely in newspapers, books, and most importantly on social networking websites, such as blogs, Facebook or Twitter, to find out what is trendy and what people talk and care about right now. Twitter, for instance, is an

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enormous 'i–community' where people are congregating around compelling ideas and causes. If your search runs into keywords such as 'care', 'connect', 'follow', 'interests', it should alert you that here is where people might be building their tribes.

•

Find out what’s happening, right now, with the people and organizations you care about [10];

•

Instantly connect to what’s most important to you. Follow your friends, experts, favourite celebrities, and breaking news [11];

•

Follow your interests: instant updates from your friends, industry experts, favourite celebrities, and what’s happening around the world [12].

Tribes can also be found through both tangible and intangible clues. Tangible clues include e.g. occasions when tribal members gather and the place where they meet [7].

In the past, for example, Arsenal fans met with each other in the bar once a week to cheer their favourite football team, but nowadays they can meet and talk every day on Google+ Circle or some other online community. Intangible cues contain, for instance, the daily activities of tribal members, or current topics and trends in the society.

Secondly, listen to your potential tribe carefully! Listen to what they are saying.

Send your marketing team to 'spy' on the tribe and get to know them. Find out whom you are going to serve and which kind of connections they have. At first you can observe the target tribe as an 'outsider', and find out about their behavioural patterns, tastes, communication methods, etc. You primary goal should be to figure out what issue it is that connects those individuals.

Thirdly, talk to them! The interaction between the firm and its target tribe can help the firm to learn about its consumers–to–be thoroughly and deeply. Have a try to chat with the tribe members. The word 'chat' here means to communicate with tribe members like friends, instead of bombarding the tribe with a stack of promotion messages. Act like folksy presidential candidates—not just shake your tribe’s hand, but sit with them (maybe for a round of beers like what US president Obama has done—a

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show, but effective) and tell them you care about their needs. Then you can win your votes and here it means you find your tribe.

Finding a tribe is one option, creating a tribe is another possibility. The starting point for creating a tribe is to have something to tell. As Seth Godin [9] said “… to build

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a tribe, to build people who want to hear from the company because it helps them connect, it helps them find each other, it gives them a story to tell and something to talk about”. In other words, having a story to tell is a crucial step when beginning to build a tribe.

FREITAG [26] is a Swiss company which designs, produces and sells bags as well as other accessories. The Freitag brothers came up with the idea in 1993 because citizens in Zurich like travelling by bicycle but when it rains the bicyclers and their things get wet. So the Freitag brothers developed a heavy–duty, functional and water–repellent bag to prevent damage to goods caused by water. They made their bag of old truck tarpaulin, second–hand car seat–belt webbing, and old bicycle inner tubes. The brothers do not market the products by only selling and advertising. Their environmental–friendly idea is promoted by telling their story to people who want to hear it, by connecting a tribe of people to get connected to each other, by leading a movement and making change. They also let the products tell the story and provide customers stories to tell. As members of the FREITAG tribe travels around with their unique eco– friendly bags and someone asks about it, the tribe members will tell others the story.

This way the story is transmitted and the tribe grows. When two 'FREITAG–tribe' members meet on the street and no matter where each comes from, they probably will stop and have a chat about their bags because their bags may be made of the same old truck tarpaulin. Such a meeting will then be another story for them to share with others.

The second starting point for building a tribe is to provide the tribe with a platform where they can connect with each other. It can be as simple as throwing out an idea about a product and let people who are attracted by the idea to talk and connect with each other.

Nike+ is a successful ambassador for Nike in the passionate running community.

Nike is focused on users sharing stories about their feats [6]. It can record running parameters and runners can upload their data to Nike+ online. But the new technology is not the core aspect. Runners can connect with friends in the Nike+ online community. In the community, members can not only share experiences but also set different challenge and competitions. For the sport fans it can be the most fun part to join a competition. The Nike+ community also enables runners to get information from each other. As the satisfied Nike+ runners share their feelings and experiences with others, the Nike+ tribe gets bigger and bigger.

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2.3.2 MANAGING THE TRIBE

There is an ongoing debate about tribal marketing. Some scholars, such as Seth Godin, state that tribal marketing is all about leadership. Others, like Jennifer Kirkby, suggest that companies should offer platforms to support consumers’ connection. The third stream of thought goes beyond facilitating conversations. Michael Bayler argues that tribal marketing is about enabling consumers to tell stories about themselves rather than focusing on facilitating conversations [5].

The above marketing strategies are quite different, but they all have one aspect in common: do not try to manipulate the tribe; otherwise you will lose it. The key aspect is 'loose management'. You have to take care of tribes, but you should never try to take everything under control. After creating a platform it is important to be hands–off and let the conversations among consumers flow. However, it does not mean doing nothing. You should keep an eye on the conversations, provide some basic rules and take part in conversations. Additionally, let platforms be as transparent as possible, and accept negative comments about your own firm [5]. Welch [13] uses the analogy of apple and worm to explain how to deal with people, who speak negatively about your business: When you properly care for those who have an interest in your apple—care for them as a tribe of customers—a little worm won’t be able to hurt your apple. Your tribe will help you keep worms away from your apple. They’ll go to great lengths to make sure everyone (including potential customers) knows your apple has no worms in it.

Controlling stories is also quite difficult, since you cannot guide tribe members when they tell stories to each other. You can only hope to wait for feedback and make changes in time. The possible success depends to a large degree to how attractive your stories are and how far and how fast they will spread. When a story is related to the brand and company as well as being easy to repeat, it increases the chance of success.

It is also important that you also join the tribe to understand them better, and knowing what the tribe talk about helps you to manage it.

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When it comes to the daily management of the tribe, Seth Godin [9] offers the following guideline “Marketing management is now tribal leadership”. In other words, managing the tribe means managing tribe leaders. In the tribe the number of leaders

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could be one or thousands. The work of leaders in the tribe is more than leading: they influence others by expressing their thoughts and feelings; they introduce tribe members to each other and build relationship among them; they encourage members to share stories bravely; they invite new persons to take part; sometimes, they would help companies to control and manage the tribe. The task of the tribe leader is might not be as cumbersome as it may seem, because the majority of people in the tribe is 'sheepwalkers' and is raised to be obedient [5]. This is good news because then you do not have to manage everyone.

There are numerous ways of building relationship with leaders. One option is to create a leader, for instance you yourself can become one of the leaders in the tribe.

One example of a 'self–made' tribe leader was Steve Jobs. Although some of the success of Apple relates to the products themselves, some of the success relates to successful tribe–building. There was and will continue to be a tribe of people trying to follow Steve Jobs and learn from him. The stories around Steve Jobs were about standing out from the normal, being cool and enjoying the modern lifestyle. And although everyone cannot be another Steve Jobs, there is nothing preventing any company leader to create stories around them. Employees can also be tribe leaders, although they will need training and have a compassion for the company.

Another option is finding an external tribe leader. While external leaders can be hard to identify, they tend share some similar characteristics: they are passionate; they talk a lot in the tribe and spread information; they find something worth fighting for and insist on it; they give others a chance to lead and dear to ask for help [14].

Tips:

Once you have identified a potential leader, you need to build a relationship to him or her. Do not try to persuade them to tell others how great your products are; otherwise you are viewed as a spammer. Contact them regularly, listen carefully to what they say. Make contributions to topics unrelated to your business as well. When they ask you something in the same area of your business, answer them by telling facts, not showing your business [13]. What you need to keep in mind is that you need

Remember to open social net working accounts, for instance, on blogs, Facebook, Twitter or Google+, to engage in the tribe, and make good use of them as your management tools.

patience to be accepted by leaders and also the tribe. If you are perceived as a sales person, you will hardly be allowed to connect with the leader or the rest of the tribe. It is the process of building trust. Once trust has been established, leaders are likely to share information about your business with other members.

Keep in mind that even though most people in tribes like to follow the leader(s),

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they will only follow a leader who shares the same ideas. Tribe members are also not blind sheep, and they are not trying to please the tribe leader. Tribe members do as they please [14]. If you notice that the leader does not have the power to connect members to together, you might have to consider creating your own leader. Also keep in mind that tribes are unstable and the same goes with tribe leaders. So don’t rely on only one leader, because the leader might be out of the tribe at any moment.

In many ways a tribe is self managed, and you have to be careful and not try to control leaders or manipulate them. You have to regard them as friends, not as consumers. If the leaders become your true believers, they will help you with the work of managing the tribe. According to Godin [15] a true fan is a person who care enough and will always get you the next round.

If tribal marketing do–it–yourself seems tedious, there are professional consulting firms who can provide you with systems where you can post messages in plenty of social networks and be instantly shared by millions of individuals. They typically offer you knowledge about where to post information and how to make the tribe follow your latest fashion.

2.4 ADVICE FOR TRIBAL MANAGERS

•

Do not try to please everyone. There will always be someone who hates your idea, has no interest in your business, and does not want to listen to you. So what? Tell your opinion to people who want to hear it from you, assemble tribes and spread messages. Tribal marketing is no more about manufacturing an average product to attract everyone. You only need to find people with same idea and connect with them. That’s enough. [16]

•

Make a product worth talking about. If there is no story can about your product or service, then how could you expect tribe members to evangelize, and share with others? The product or service you provide needs to be relevant to their connections. Maybe you could give the tribe an experience that they have never had before or one which exceeded their

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expectations, such as Siri in the iPhone 4S. Chatting with Siri on the iPhone 4S brought more fun beyond customers preconceived idea. As a result, a spate of iPhone fans shares their conversations with Siri on YouTube. [16]

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•

Join the tribe. No matter whether you want to lead other members or not, becoming a member of the tribe is the first step. Only after you get into the community, you can find out their interest and be accepted by them. If you stay out of the tribe, you will always be an 'outsider'. [17]

•

Help tribe members to find each other. If you want a strong and long–lasting tribe, you need to help people enhance their connections with each other. To build a platform to let them gather and meet could be a good idea. For example, on Twitter, you could forward Twitter messages about your brand sent by your fans to help them find and get to know other members in their tribe. Moreover, the platform needs to be open not just for existing tribe members but also for people who want to reach your tribe members.

•

Treat your tribe carefully. With the popularization of the computer and the developing of the internet, messages can be spread very fast all around the world. Therefore, a tribe can be formed and destroyed in split seconds. If you lie to your tribes or make them feel disappointed, members may leave the tribe. If a message has been sent, you do not have any chance to apologize or to retrieve it.

•

Do not push your tribe too hard. Maybe you have heard that Facebook is where all your potential consumers have chosen to gather, and you decide to build a page for your company on Facebook. Here is the thing. If your company wants to get the attention of your future– to–be tribal members, then do it softly and appropriately instead of pushing your tribe with direct and inferior selling information. People go to Facebook when they want to socialize, not to search for stuff or buy things. Approximately 95 % of posts to brands pages on Facebook went unanswered [18].

•

Give the tribe a badge. Your product or service should be like a badge, which help your tribe announce their membership to others. If someone is installing an Aqua–Lung regulator before going scuba diving, the message of this product to people around is like somebody typing on a MacBook Air while the others only have a notebook. A badge helps the tribe members to highlight their taste and attitude [16].

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•

Do not forget other promotion channels besides Internet. You may know how to exploit the power of Internet; open Twitter accounts, use Facebook, write Blogs, and build online forums. Traditional TV commercials, for instance advertising could be of help. Just keep in mind what you use other channels for. For instance, TV commercials such as the Audi commercial in the beginning of the chapter can be used to sow a seed for a story. Also product placement could be a way to give the tribe a badge of a sort. In season 5 in episode 14 in the American sitcom 'TBBT' Siri makes an appearance [19]. Even though audiences could not be told that Siri is an Apple application, Siri is well known and a lot of viewers could recognize and relate to it. The clip and Siris appearance has been discussed on several social platforms [20].

•

Keep updating, spot trends and make use of them. Consumers update their knowledge very fast through various internet channels. If you are a marketing manager, you better to do it as well. If your company wants to, for instance, join a tribe with young members, you could get close with them by using modern language, engaging their idols and so on. And you have to know what your tribe wants, it is time for you to make products for your tribe. Nanso, a Finnish textile company, was considered old–fashioned by young people. Nanso did research about their potential tribe of young people, and as a result they called in the Finnish designer Paola Suhonen to create a new collection 'Lempivaate' for the tribe [21].

•

Do not be bossy. Always remember that you are part of the tribe, but not manager of the tribe. Your company needs to support the connections inside the tribe instead of forcing the consumers to tie themselves with the company. Encouraging your tribe members to tell stories about your brand (of course as positive as possible) on your page is better than to force them to listen to you all the time.

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2.5 UPCOMING TRENDS

Since the SNS are fertile land for the flourishing tribal marketing, it has a stake in tribal marketing’s success. And Facebooks announcement about the 'Open Graph' [22] has attracted tribal marketers’ attention.

Figure 2.2: Facebook’s Open Graph. [28]

The open graph is one of the core concepts of Facebook and is spinoff of a term Facebook popularized to describe its social network, the social graph, which essentially refers to the global mapping of everybody and how they are related [23]. Facebook CEO Zuckerberg deems that such connections are not just happening on Facebook, but all over the Web. He has called for making all websites to work together to build a more comprehensive map of connections and create better, more social experiences for everyone [24]. Facebook has in effect already mapped a portion of this graph [18].

Facebook’s competitor Twitter also has plans to draw users’ connection graph, called the public interest graph. The term 'public interest graph' implies that Twitter knows who you are connected to, and what you (and they) are interested in [25]. The difference between Facebook’s 'social graph' and Twitter’s 'interest graph' is that in the social graph people are connected through personal relationships while in the interest graph people share interests with other people who they do not necessarily know personally. Google also launched its social network service, Google+, to join in building

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connection graphs of billions Internet users. Those graphs will give a clear picture about the connection between individuals, also the one between individuals and their interests.

The information underlying the graph is definitely a powerful tool for tribal marketers, and would bring tribal marketing into a new epoch. The concept of tribe is still today quite abstract. We know that people assemble tribes based on the same passion or idea, but there is little knowledge about how and when they form.

Members link with each other, but the link is invisible. It is almost impossible to know who exactly is related to the tribe. It is also hard to manage the entire community.

Managers can share messages through leaders or function as leaders themselves.

However, that’s almost all strategies available at the moment.

This will change greatly if it will be possible to visualize a tribe by capitalizing on the social and interest graph. This would make tribes more concrete and measurable.

Companies would know exactly who is involved in the tribe and how many members there are. This would help companies to analyze people’s common interest and to promote itself by exploiting the most popular topics, like Audi has tried in the vampire–ad.

Visualization of the tribes might also lead to personalized versions of websites people visit [23]. This could lead to a deconstruction of online–tribes where companies customize their website or platforms to let each tribe member possess his/her own version. The outlook of the personalized sites builds on information gathered by the graphs. Depending on whom someone follows or is related to, the site would be different from others.

There is some risk in this possible scenario. Facebook possesses over 400 million users’ personal information; Twitter almost as much; Google records and saves all single words you have searched into archives, not to mention the information stored

by APIs such as Google Mail, Google Calendar, etc. Such detailed information about people and their connections, preferences, habits and views might lead to people abandoning social networking websites—network effects can go quickly into reverse as well. Although there has so far been little sign of such a backlash, governments

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are paying closer attention to privacy. For example America is thinking of creating a general consumer–privacy law and the European Union is updating its rules [18]. Of course, tribes would not seize to exits. People would still belong to various tribes, but if tribe members started to exit social networking sites, the work of tribal marketing

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managers would become much more difficult, almost impossible.

However, que sera sera. Preparing for the future is good, but seizing the moment is even more important. Start to build your tribes now.

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REFERENCES

[1] Vampire Party. URL: http://theinspiration- [13] Welch (2008), Tribes, Customers, Apples room.com/daily/2012/audi–vampire–party/ and Worms, October 02, 2008, URL: http://www.tribebuilding.

[2] YouTube (2012a): Audi 2012 Game com/2008/10/tribes-customer.html Day Commercial — Vampire Party, (accessed February 18, 2012).

January 25, 2012, URL: http://www. youtube.com/watch?v=lw9ZeXB2uKs (accessed February 21, 2012).

[3] Nielsenwire (2009): Vampire Fan Base Runs Thicker Than Blood Online, July 22, 2009, URL: http://blog.nielsen.com/ nielsenwire/online_mobile/vampirefan-base-runs-thicker-than-blood-online/ (accessed February 19, 2012).

[4] Maffesoli, Michel (1996): The Time of The Tribes, London: Sage.

[5] Davey, Neil (2009): Tribal marketing: How do you engage with customer tribes?, July 6, 2009, URL: http:// www.mycustomer.com/topic/customer-experience/tribal-marketinghow-do-you-engage-customer-tribes (accessed February 12, 2012).

[6] Morling, Elia (2009): Re–thinking the Company, February 2, 2009, URL: http://tribaling.typepad.com/ my_weblog/2009/02/index.html (accessed February 12, 2012).

[7] Hu, Zhenhu, Duan, Zhonglei & Wan, Min (2004): The Tribal Marketing – A Postmodern Marketing Perspective.

Modern Economic Science, Vol. 26, No. 3, pp. 72–75.

[8] Lucensky, Jacob (2011).

Sounds like branding. London, A & C Black Publishers Ltd [9] Godin, Seth (2008): Tribe Mabagement, January 30, 2008, URL: http://sethgodin. typepad.com/seths_blog/2008/01/tribal-manageme.html (accessed February 18, 2012).

[10] Twitter (2012): URL: http://twitter. com/ (accessed February 20, 2012).

[11] Google (2012): URL: https://www.google. com (accessed February 20, 2012).

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[12] iTunes.apple (2012): URL: http://itunes.apple.com/us/ app/twitter/id333903271?mt=8&ignmpt=uo%3D2 (accessed February 20, 2012)

[14] Hoefele, Helen (2009): Notes on Seth Godin’s 'Tribes', Slide p. 3, Jan 11, 2009, URL: http://www.slideshare.net/hhoefele/ notes-on-seth-godins-book-tribes-presentation (accessed February 20, 2012).

[15] TED (2009): Seth Godin on the tribes we lead, Filmed February 2009, Posted May 2009, URL: http://www.ted.com/talks/ seth_godin_on_the_tribes_we_lead.html (accessed February 18, 2012).

[16] Godin, Seth (2010): Secrets of the biggest selling launch ever, April 07, 2010, URL: http://sethgodin.typepad. com/seths_blog/2010/04/secretsof-the-biggest-selling-launch-ever. html (accessed February 18, 2012).

[17] Welch (2009): 10 Steps to Marketing in a Tribe, April 08, 2009, URL: http://www. tribebuilding.com/2009/04/10-steps-tomarketing-in-a-tribe.html (accessed February 18, 2012).

[18] Economist (2012): Floating Facebook, The value of friendship, February 4, 2012, URL: http://www.economist.com/ node/21546020 (accessed February 21, 2012).

[19] Elmer–DeWitt, Philip (2012): Siri makes a cameo appearance on The Big Bang Theory, January 29, 2012, URL: http:// tech.fortune.cnn.com/2012/01/29/sirimakes-a-cameo-appearance-on-the-bigbang-theory/ (accessed February 18, 2012).

[20] YouTube (2012b): Siri on Raj’s iPhone 4S — The Big Bang Theory, 26 January, 2012, URL: http://www.youtube.com/ watch?v=V5529ghwysM&feature=youtu.be (accessed February 18, 2012).

[21] Tuikka, Satu (2005): Contemporary Finnish Fashion, May 16, 2005, URL: http://www.uta.fi/~st66231/finnish_ institutions/ (accessed February 18, 2012).

[22] Open Graph, URL: http://blog.facebook. com/blog.php?post=383404517130 [23] McCarthy, Caroline (2010): Facebook, One Social Graph to Rule Them All?, April 21, 2010, URL: http://www.cbsnews.com/ stories/2010/04/21/tech/main6418458. shtml (accessed February 21, 2012).

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[24] Zuckerberg, Mark (2010): Building The Social Web Together, April 21, 2010, URL: http://blog.facebook.com/ blog.php?post=383404517130 (accessed February 21, 2012).

[25] Battelle, John (2010): Twitter’s Public Interest Graph, April 18, 2010, URL: http://battellemedia.com/ archives/2010/04/twitters_public_interest_ graph.php (accessed February 22, 2012).

[26] FREITAG: Story, URL: http:// www.freitag.ch/about/history (accessed February 20, 2012) [27] Merriam–Webster: tribe, URL: http:// www.merriam-webster.com/dictionary/ tribe (accessed February 25, 2012).

[28] Open Graph, SOURCE: http://blog. facebook.com/blog.php?post=383404517130

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3. Managing Global Workforce: focus on the manager Lucas Tierny & Marion Tourney Neyron

3.1 Introduction 3.2 International Diversity Management 3.3 Qualities of manager in a intercultural context

3.3.1 Multicultural supervision competencies as seen by subordinates

3.3.2 Transformational leadership and multicultural personality:

keys to success for an effective manager

3.4 Communication across borders

3.4.1 Major points for effective communication

3.4.2 Modern communications tools

3.5 Summary and conclusions

References

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3.1 INTRODUCTION

The internationalization of firms and the increase in global business activities has forced firms and their managers to deal with the challenge of managing efficiently a global workforce. The marketing manager of a global and international firm might have to manage a marketing team that is located in different countries as well as dealing with marketing teams in, for instance, subsidiaries in other countries. The marketing manager might also be involved in purchasing marketing services from service providers in many different countries. In more and more cases the marketing department will consist of employees from many different cultural backgrounds.

Since globalization also involves a strong intercultural aspect, leading and gathering people from different societies, with different beliefs and cultural backgrounds poses a great challenge. Not to mention the challenge of getting a globalized workforce to work towards the same goals. In other words, managing global or culturally diversified employees raises several interesting questions: •

In which way is leadership and decision making in organizations affected by culture?

•

How can the manager deal with such cultural differences in order to reach organizational goals?

•

What personal and professional qualities does a manager need in order to assure his/her leading role?

•

How can the manager communicate efficiently when a unit and its employee(s) might be located and divided around the globe, in addition to having different cultural backgrounds and working methods?

•

Which new tools are there for the manager?

•

Can new information technology and web 2.0 constitute a response to this challenge?

In this chapter we address the questions mentioned above and discuss different

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perspectives. We aim at offering the reader, whether it is a manager or business student, tools and ideas that enable the management of a workforce regardless of its location, cultural background and international spread of the employees or

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subordinates. The chapter is divided into three parts. The first part focuses on providing (1) an understanding of the challenges, that the intercultural manager faces, and (2) an understanding for managing diversity. In the second part of the chapter, we also focus on the manager per se, discussing whether it is possible to identify management competencies and personal characteristics? The theme of transformational leadership is used to deepen the understanding of managing diversity. Finally, cultural differences are discussed, as well as how they might affect decision–making and leadership. The third part of the chapter focuses on how cultural differences may impact communication. Is there a one, best way to communicate across borders? What is effective communication? What are the current communication tools? In order to illustrate the importance of communicating effectively across borders, the IBM case is presented, in which IBM is using the social web as an internal way of communicating and sharing knowledge.

3.2 INTERNATIONAL DIVERSITY MANAGEMENT

When managers think about managing subordintates with a high degree of intercultural diversity, they may start thinking about not only issues such as culture, gender, religion and ethnicity, but also decision making and leadership. Although the concepts of intercultural and global may walk hand in hand, managers can also work with different cultures without being global. For example, in Finland there are a lot of expatriates who come to work for Finnish companies. There are also the Swedish– speaking Finns, who are considered as a linguistic minority that have a strong identity.

They are reputed as a distinct subgroup of Finnish, like a different ethnic group [1].

Being a manager of intercultural subordinates includes managing a variety of intercultural differences, such as issues related to culture, gender, religion, ethnic issues, or even legal issues. Such issues relate to culture in a larger framework: they are a part of a set of shared attitudes, values, goals, and practices that characterizes an institution, organization, or group [2]. From an intercultural/global workforce perspective three issues are worth bringing up, namely (1) religion, (2) gender and (3) ethics. We will focus on these issues in the chapter.

Religion is maybe one of the most difficult issues to deal with, because of the many historical facts related to each existing religion. Of course, religious diversity at work may bring new ideas and points of view, but it still poses a real challenge for managers.

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Religious diversity may be one of the greatest challenges for an intercultural manager. Priority should be on facilitating tolerance and acceptance. In order to accomplish that, McFarlin [4] suggests that managers can use five different strategies. The first is the training of employees, with the purpose of engaging communication about what is acceptable or not. It is, however, important that the discussion is monitored to prevent that employees impose their belief systems on others.

The second strategy is to provide time off to employees for religious reasons. For instance, some religions require that worship need to be done at specific times,

Examples of religious worship [3] • Muslim people pray five times per day. Those practicing praying require breaks during working hours as well as some space where they can kneel and face Mecca. • Cutting hair is strictly forbidden in Sikhism. Sikhs are required to keep turbans on their head to hide their hair. It can be a problem if they have a uniform with a hat.

Info 3.1

and it is likely that these specific times interfere with a workday. While other employees representing different religions may criticize some of these arrangements, it is good to remember that most religions have their own holidays and arrangements. The third strategy is to facilitate tolerance and acceptance by encouraging employees to accept differences by discussing their faith and problems outside the working environment. This could provide a better understanding of each other. The fourth strategy is to avoid overreacting, calm tensions and develop compromises. The fifth and last strategy is to implement a zero tolerance policy. That imposes automatic punishment when it comes to serious issues.

Gender, relationships between men and women in general, and women positions at the workplace cause challenges for managers of intercultural subordinates. Gender inequality is a complex set of social forces [5]. Managers need to encourage better communication and understanding between the genders. Managers should also highlight the qualities of both genders. It is important to promote women to management positions. A study from 2004 'The Bottom Line: Connecting Corporate Performances and Gender Diversity' [6] points out that companies, in which women are part of top management, have the best financial performance. While women in fact are promoted to management positions, it is still important that women with a high management and executive position support and advice other women, in order to increase gender

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diversification [7].

When managers work with people from other cultures, they may not understand their way of thinking and working because of cultural issues and language barriers.

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Sometimes subordinates’ view of business can be completely different from the managers, which may have consequences for instance on the perception of risk.

Although different employment practices, human rights issues, environmental regulations, moral obligation can make the managers life cumbersome, managers have no other choice but to deal with them [8].

3.3 QUALITIES OF A MANAGER IN AN INTERCULTURAL CONTEXT

Although attempting to identify qualities of a manager or leader is difficult, it can still shed light on useful aspects of intercultural management. Therefore, this part of the chapter discusses useful qualities of a manager or leader who deals with an intercultrural workforce.

3.3.1 MULTICULTURAL SUPERVISION COMPETENCIES AS SEEN BY SUBORDINATES

Managers want to do their best and might ask themselves which qualities they need in order to perform their task as managers. In a multicultural context a manager may be nervous about their performance or ability to manage the workforce. One way to approach this challenge is to use Ancis and Marshalls [9] framework, which focuses on how subordinates describe their managers’ 'multicultural competencies'.

The first main point of the framework is that in addition to personal improvement, the manager role involves focusing on the subordinates’ multicultural personal training. Indeed, the manager demonstrates his or her strength by being aware of different multicultural issues. He or she also extends his/her knowledge by conducting research on multicultural issues.

Another important action of the manager is to include the subordinates in the discussion about multicultural issues. It is an active process where questions are asked and where a dialogue

Some qualities, which should be acquired by the manager: • Focus on the manager’s personal development • Focus on subordinates’ personal development • Extend knowledge with research–based information • Include the subordinates in discussions • Help subordinates explore their cultural background • Help subordinates increase their multicultural awareness

is important to see every aspect of multicultural issues. The dialogue makes it possible for the manager and subordinates to talk about their personal cultural beliefs, and also about cultural biases, cultural background, their values and their experiences. Another subject for the dialogue can be the impact of racism and oppression, which managers need to be aware of.

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Another role of the manager is also to help subordinates to explore the impact of their cultural backgrounds. With this activity, subordinates gain an increased awareness of their own race, ethnicity, class and gender on clients. Similarly, managers encourage subordinates to increase their multicultural behavior and awareness with new activities such as reading books, watching movies and asking questions about different cultures. In others words, managers need to push their subordinates to be open– minded. With dialogue, research, new questions, and new multicultural behavior and awareness, it is possible to note an acceptance of cultural differences in managerial relationships. The different activities mentioned previously also create a safe and open managerial climate, in which the subordinates dare to be vulnerable and take risks. Ancis & Marshall’s [9] studies showed that if managers conduct the activities mentioned above, subordinates tend to describe their supervision as 'safe' and in control, and their manager as open, nonjudgmental, supportive, patient, and understanding.

The four component of multi–factor leadership:

3.3.2 TRANSFORMATIONAL LEADERSHIP AND MULTICULTURAL PERSONALITY: KEYS TO SUCCESS FOR AN EFFECTIVE MANAGER

• inspirational motivation • idealized influence • intellectual stimulation • individualized consideration

If managers are supposed to have qualities such as nonjudgmental, supportive and patient in order to be an excellent performer, how can these qualities be described and understood? A starting point is Bass’ [10] ideas on transformational leadership. Transformational leadership is about leaders who have the objective to motivate their subordinates.

Transformational leaders attempt to push subordinates to do more than they

originally intended or expected. These leaders do it beyond their own self–interest and for the good of the group. Some research on leadership also showed that transformational leadership are linked to positive individual and organizational outcomes [11].

In order to develop the idea of transformational leadership, Bass created a concept called 'concept of multi–factor leadership'. This concept is based on four components.

The first component is 'inspirational motivation', which follows the idea of working for the group by providing challenge and meaning to the work. The second component is

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'idealized influence', which means that the manager should be on a pedestal because he/she is the person who gives orders and advice. The third component is 'intellectual stimulation', which pushes the subordinates to be innovative and creative by questioning assumptions, reframing problems and approaching old situations. The last

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concept is 'individualized consideration', which will bring the manager to pay attention to all subordinates by acting as a coach or mentor. De Hoogh et al. [12] consider the two first components as central to transformational leadership. More precicely, transformational leadership can be described as a behavior including visioning, inspiring, stimulating, coaching and team–building. [13] Bono and Judge [14] propose that personality traits predict transformational leadership behavior. Hence, the concept of multicultural personality was developed and converted into a multidimensional instrument called MPQ or the Multicultural Personality Questionnaire [15]. While the concept of transformational leadership behavior includes charisma, motivation, intellectual stimulation and individualized consideration, the concept of multicultural personality refers to traits that people should have in a culturally diverse environment.

The MPQ is based on five factors. The first factor is cultural empathy. With this factor it is possible to calculate the capacity of the manager to deal with feelings, thoughts and behavior of people from different cultural backgrounds. This factor is important; when managers have to work with people from others cultures it is important to get some new knowledge about those cultures. In the same way, Bhawuk and Brislin [16] explain that to be effective and to learn about new cultures, people have to be aware and sensitive to cultural differences and show interest.

This explanation works especially in an intercultural working environment, where managers will have challenges in inspiring, stimulating, and coaching employees.

The second factor of the MPQ is open–mindedness, which according to Arthur and Bennett [17] refers to an open attitude and the absence of prejudices to other cultural groups, behavior values, norms and/or habits. This factor resembles cultural empathy and points out that it is important to understand and deal with rules and values in an effective way. A person with a high open–mindedness is more able to accept new ideas and new opportunities based on unconventional methods, without any judgment or stereotype.

Social Initiative is the third factor. This factor indicates people’s tendency to approach social situations and to take initiative. It shows how people interact with other cultures but also their social initiative. Here, two kinds of personalities can be distinguished. The first personality type corresponds to the transformational leader, who engages in an active social approach and takes initiative with the aim to inspire and stimulate diverse subordinates. The second personality type is rather reserved and

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will stay in background.

Emotional stability is the fourth factor and measures the degree to which people tend to remain calm in stressful situations. When managers are working with The five factors of MPQ:

people from other cultural background, they can find themselves in stressful

• Cultural empathy • Open–mindedness • Social initiative • Emotional stability • Flexibility

situations because they are not used to it. McCrae and Costa [18] developed the idea that emotional stability is associated with self–confidence and the ability to remain calm, secure and non–anxious which is argued to be a central characteristic of transformational leaders. Frustration, tension, fear, social detachment, financial problems and interpersonal conflicts could be the results of a strong reaction to stress.

The last but not the least factor is flexibility. Flexibility could be compared to

adaptation because it shows the ability to adjust behavior to new or unknown situations. Those new situations could be seen as a challenge to change ones own behavioral patterns, to innovate, to deal with unexpected circumstances with people from different cultures.

Although performance appraisals is present in many multinational companies performance is not a criterion used in the Multicultural Personality Questionnaire.

Van Woerkom and Reuver [19] studied a case based on a sample of expatriate managers or managers working with subordinates from different cultural backgrounds. The study case showed that transformational leadership is strongly related to multicultural personality, cultural empathy, open–mindedness and social initiative. Management performance appraisals showed that transformational leadership and multicultural personality leads to a better performance in intercultural environment. There is also a high correlation between transformational leadership and multicultural personality because multicultural personality helps to make transformational leadership in intercultural contexts more tangible. This finding may be used in the recruitment process of managers [15].

3.4 COMMUNICATING ACROSS BORDERS

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In previous sections of this chapter, communication has been mentioned as a major issue when dealing with intercultural management challenges. Although communication is an important asset when managing a global workforce; on the one hand communication can solve cultural challenges, but on the other hand, effective communication itself is at

MANAGING GLOBAL WORKFORCE: FOCUS ON THE MANAGER

the same time a challenge. A main challenge is to get different, for instance, marketing teams and units to understand each other to reach their common objectives and stay effective. Hence, managerial decision making need to be aware that it is difficult to communicate across borders because of cultural and language barriers, and because face to face communication is rare. Since communication is critical to intercultural marketing management, in this part of the chapter we will discuss the topic in more detail.

3.4.1 MAJOR POINTS FOR AN EFFECTIVE COMMUNICATION

Imagine that you have a marketing team that is spread out in several countries.

Assume that the team has recently been assembled and that you as a manager are in charge of building your team and making the team efficient. Before considering how to communicate effectively with the team, it is worthwile to reserve time for creating the team. Bell [21] suggests four major points to consider when assembling

Important goals of the first meeting:

and creating a team. First of all, it is important to create a budget for face–to–face communication. Face to face communication concerns the beginning. The meeting can be real or virtual with videoconferencing.

The goal of this first meeting is to associate faces with names, set up communication protocols, team member roles and responsibilities, and project objectives. The budget of the team communication could include a training module on virtual communication techniques and practices to

• Associate faces with names • Set up communication protocols • Team member roles and responsibilities • Project objectives

facilitate virtual teaming.

Trust between the team members is the second major point.

“It is difficult, if not impossible, to have effective and How to plan meetings for a global team taking different time zones into account One of the most popular practices for planning schedule in global team is to rotate the meeting time for each virtual team meeting. To be clearer, every audio meeting should be recorded and available for replay for members who miss a meeting.

In addition, the team leader has to be sure that every member of the team can have a written summary of each meeting. [21] Info 3.1

productive working relationships without trust.” [22]

Heathfield [23] gives us five steps to succeed on the way to having a trusting and effective team. First, managers should help the team to focus on the project, on objectives and not on how to work together as a team. Secondly, the manager has to check the team progress and if there are any personality issues between co–workers. Thirdly, managers should organize, for

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instance, dinners or sporting events with the whole team with the goal of creating a fun team environment, where everyone could feel involved and appreciated. The fourth step for the manager is to gradually help co–workers to know each other, to promote interaction and camaraderie with icebreakers and fun team building exercises. The last step to create trust is to valorize the group as a whole for their work [24].

The third point by Bell is setting up communication protocols, already during the first meeting. There are some guidelines to take into consideration when the team is planning the communication protocols. The team has to schedule when they can receive and respond to each other, and they have to respect these schedules. When planning the schedule managers have to consider differences in time zones. Still, for the members of a global team, no single time slot is convenient.

The team members have to be efficient in their communication with intent, relevance, situation and purpose. A scheduled meeting should be relatively close Key guidelines for communication protocols

in time to maintain continuity between team members. Also, when a team member sends information, he or she has to be efficient by choosing the

• make a schedule • be efficient in the communication • meeting should be close in time • be efficient in choosing the importance of messages

importance of the message (urgent, important, routine or informational) [21].

The fourth major point by Bell for the manager is to make sure that the team understands the project objectives. There are different kind of objectives. There is the main objective, which is the reason for doing this project, and the additional objectives, which are the benefits of the project [25]. In defining the objective to the team, the manager should make every

member of the team understand that they have a target, a common goal [26]. Although discussing objectives is an activity for the first meeting, objectives need to be stressed on the follow–up meetings as well.

3.4.2 MODERN COMMUNICATIONS TOOLS

There are nowadays many communication tools, such as electronic communication tools, which reduce communication costs and time. Some of the electronic communication tools will be discussed briefly. Using e–mail makes it possible to create groups

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of contacts, like circulation lists, and to easily track the mail to the entire team. The main challenge with e–mail is that people may be lazy to read everything, or may ignore non–urgent and impersonal messages. Web chat services can enable the team

MANAGING GLOBAL WORKFORCE: FOCUS ON THE MANAGER

to communicate in real time by sending short text Some possible content of an intranet [28] • Provision of information about the company (board)

messages. This chat services can be used by two or more participants and bring instant check. So, once the person has read the message, the answer can be instantaneous.

• Provision of technical documents

This service is more effective if all team members can

• Search engine documentation

have access to a repertory of all chat addresses. Team

• Data exchange between employees

newsletters can be a motivating, fun and informative

• Directory • Project management, decision support, calendar

way to communicate. This tool can help build team spirit and at the same time give general information about the

• E–mail

project. However, such newsletters can be a waste of

• Discussion forum, mailing list, live chat

time and resources if team members do not find enough

• Videoconferencing • Internet portal

useful content in them [27]. Intranet is another tool, which allows the manager to make information readily available to team members various documents and

Info 3.3

allows a centralized and coherent access to the memory of both the team and the company. If a team makes use of intranet, then manager need to discuss knowledge Two examples of platforms • Google Docs, nowadays known as Google Drive, is a web based office where you can store and share documents. This platform is free and is offered by Google. In addition to sharing documents, you can also edit them while collaborating in real time with co–workers [29].

• Dropbox, like Google Docs, is a web based office where you can store and share documents. It is also possible to use “Dropbox for Teams” which is more for businesses and collaborative teams, with providing services as administrative control, central billing etc. Dropbox can be a free or paid service with several options, and can be used both with mobile phones and computers. This platform is offered by Dropbox, Inc. [30] Info 3.4

capitalization.

When a team has a lot of documentation and when different versions of the work will be exchanged and revised, virtual platforms can make it easier to communicate and to to share documents and modify directly.

The team members will be able to communicate instantly: no more ceasing and recurring e–mail and inbox saturation. Such platforms can be compared to an internal social network and using them is a good answer to the challenge of managing a global team. They allow people to work easily together at a distance. In the long term, they find a more useful utilization by the fact that they allow the employees to share information.

In proximity with an ERP1 or a database,

1 Entreprise Ressource Planning: software or information system to coordinate and gather all the data regarding the global activities of the organization: production, marketing, supply, sales, human ressource etc.

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the virtual/social platform can be used to gather all team and company documents.

This will help the team to capitalize on their realisations and experiences by Two main styles of videoconferencing • Specialist videoconference facilities • Desktop soft ware from our PC

sharing them.

Virtual/Social platforms also enable a function called social tagging, which can be used to evaluate a team member and reveal his or her reliability to the colleagues. With social tagging a team member do not describe his or her own skills, instead persons who have worked with him or her will describe the skills. A team member can, for instance, describe in which business area the person is efficient and why. That will increase the efficiency at works because the team member will feel more concerned and implicated regarding the fact that somebody is able to evaluate him. In the case of teamwork, it is a way to improve team organization [31].

When used properly, a virtual/social platform can facilitate the internal communication between, for example, a brand store in Asia and its head office located in Europe, as well as facilitating accounting services with the commercial services. Nevertheless, in order to manage efficient global communication people may have to meet as well as have access to videoconferencing.

Face to face meetings are still one of the best ways to build relationships and, hence, a mixture of physical and virtual meeting seems to be the best solution. While virtual/ social platforms are attractive, they need to be programmed to take into account cultural differences in order to decrease frustration due to delay of information exchange.

The following example illustrates the usage of a virtual platform. IBM, who

A good net work inside a company pushes innovation and improves processes.

specializes in the production of big computers, information exploitation and management, lodging and hiding of room servers as well as service activities in consulting and formation, successfully deployed an internal 2.0 platform [32].

IBM took full advantage of the use of social platforms with their Wiki and Lotus Green house [33]. Wiki is the good example of synergy between different actors in a business the size of IBM. The information system collects and gathers all information shared by the firm employees, the customers,

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or some partners, in order to resolve problems and advance a common goal and promote a benchmarking perspective. The Wiki platform is a common platform that is improved by common people for everybody promoting online collaboration.

All IBM employees have their own profile, a kind of blog where they can publish their

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realizations and advice of all types. They can also publish on their LinkedIn profile. By using Greenhouse and the 2.0 platform, IBM is connecting with its workers from all around the world. They can interact by showing their thinking, project and innovation and that contributes to an important leverage effect of effectiveness.

The use of a social media platform like this to manage a global workforce constitutes a risk of information divulgation. Therefore IBM has created social platform guidelines that employees have engaged themselves to respect. There are still some projects with strategic orientation that have to be kept secret for competitive advantage reasons, and therefore some private spaces are devoted to teams that work independently [34].

Since IBM is a global company the company’s usage of a social platform is a striking example of how a firm can take advantage of cultural diversity and encouraging new development opportunities by promoting open minded and a better share of knowledge and skills. Of course, there are large obstacles to overcome and a system like this requires a perfect standardization of the communication tools and practices.

3.5 SUMMARY AND CONCLUSIONS

This chapter brought to focus that managing a global and intercultural workforce involves many components, challenges and issues. The role of the manager and his characteristics were emphasized as well as the aspects and challenges of multicultural management. The chapter also brought light on some cultural difficulties regarding gender, religion and ethics. The chapter highlighted that intercultural management requires many qualities such as cultural empathy, open–mindedness, social initiative, emotional stability and flexibility.

One section of the chapter focused on a major challenge, which is communication across borders. The chapter offered several tools to improve cross–cultural communication and make it efficient. A case was presented where IBM uses a social platform for internal cross–cultural communication. Some other virtual platforms to improve communication and save time were also presented, such as Google Doc, web chat services, newsletter and videoconferencing.

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[4] McFarlin, Kate (2012): How to Manage European Journal of Work and Religious Diversity in the Workplace, Organizational Psychology, 13, 447–471.

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[5] Wharton, Amy (2005): The sociology of gender: An introduction to theory and research. Wiley–Blackwell, England.

[13] DiStefano, J. J. (2003) : Managing with Teams Globally, Orchestrating Winning Performance. IMD International Institute for Management Development.

[14] Bono, J. E., & Judge, T. A. (2004).

Personality and transformation[6] Catalyst (2004), The Bottom Line: al and transactional leadership: A Connecting Corporate Performances and meta–analysis. Journal of Applied Gender Diversity. Catalyst Publication, New Psychology, 89, 901–910.

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[10] Bass, B.M., Avolio, B.J., Jung, D.I., & Berson, Y. (2003). Predicting unit performance by assessing transformational and transactional leadership. Journal of Applied Psychology, 88(2), pp. 207–218.

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[19] van Woerkom, Renée & de Reuver, Marianne (2009): Predicting excellent management performance in an intercultural context: a study of the influence of multicultural personality on transformational leadership and performance. The International Journal of Human Resource Management, Vol. 20, pp. 2013–2029.

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[21] Bell, Michael (2002): Leading an International Virtual Team: Tips for Success. Research note, Gartner Research.

[22] Castro, John. (1994). Trust, teamwork, and business in the 90s. Center for ethical business cultures. URL : http://www. cebcglobal.org/index.php?/ceos-corner/ comments/trust-teamwork-and-businessin-the-90s. (accessed February 16, 2012).

[33] IBM (2011): IBM leader in social software. URL: https://www14.software. ibm.com/webapp/iwm/web/signup. do?source=swg-US_Lotus_WebMerch&S_ PKG=web_ibm_ls_wp_rn (accessed October 15, 2011).

[34] Traudt, Erin & Vancil, Richard (2011): Becoming a social business: the IBM story. IDC White Paper.

[23] Heathfield, Susan M. (2002b). How to build a teamwork culture: Do the hard stuff. New York Times, About.com. URL : http://humanresources.about.com/ od/involvementteams/a/team_culture. htm. (accessed February 16, 2012).

[24] Becton, Clayton, Allen Wysocki, & Karl Kepner (2008). Building Teamwork and the Importance of Trust in a Business Environment. Gainesville, FL: UF/ IFAS EDIS Publication HR023.

[25] Marios, Alexandrou (2012): Project Objective Definition, URL: http://infolific.com/technology/ definitions/pm-definitions/project-objective/ (accessed February 16, 2012).

[26] Koning, Lisa (2010): Setting Team Objectives, URL: http://www.managementtrainee.co.uk/setting-team-objectives.html (accessed February 16, 2012).

[27] Wallace, Simon (2007): The ePMbook, URL: http://www.epmbook.com/ (accessed February 16, 2012).

[28] Entreprise comment รงa marche? (2011): Intranet et Extranet URL: http://www.commentcamarche.net/contents/entreprise/ intranet.php3 (accessed February 16, 2012).

[29] Android Market: Google Docs, URL: https://market.android.com/ details?id=com.google.android.apps.docs (accessed February 18, 2012).

[30] http://www.dropbox.com [31] Crampton, Thomas (2010): How to use social media for internal communication.

URL:. http://www.thomascrampton.com/ social-media/watson-wyatt-social-media/ (accessed November 4, 2011).

[32] Le Monde Newspaper, 2010, URL: http://abonnes.lemonde.fr/ technologies/article/2011/10/26/ virginia-rometty-devient-patronned-ibm_1593859_651865.html (accessed October 27, 2011).

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4. Expatriation Management Louise Grams & Anna Verena Rettelbach

4.1 Introduction 4.2 Wanted: 'International Expatriation Specialist' 4.3 Stages of expatriation 4.4 Expatriation training 4.5 Expatiation today and tomorrow 4.6 Concluding thoughts

References

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4.1 INTRODUCTION

In a world becoming more and more global the number of employees that work abroad for a certain amount of time is growing [1]. In April 2011 the number of expatriates worldwide was estimated at about 1.5 million, indicating an increase of 40 % during the past ten years [2]. The development and growth of new markets also support this phenomenon [3]. In a global business environment, the exchange of knowledge and employees between international companies and countries can be an important factor of success. A balance of local and foreign employees can create a great mixture of local market knowledge paired with an international perspective. Therefore expatriates are getting more and more important for companies, and many companies are sending their employees abroad as expatriates working on global assignments even for periods of decades. Expatriation is raised as an important issue in intercultural marketing management; this chapter gives insights into the processes of sending expatriates abroad and what the expatriation means for the company and the expatriate.

There are two different perspectives by which one can examine the topic of expatriation, namely (1) the expatriate manager or the human resource department of the company and (2) the expatriate her/himself. Whether you are an expatriate or managing expatriates it is beneficial to take both perspectives of expatriation into account. For those managing expatriates it is crucial to have an idea of potential problems and concerns of an employee sent abroad. Otherwise it seems impossible to prepare the expatriate for the assignment abroad in the right way.

This chapter starts with examining the importance and relevance of the topic by presenting an advertisement for an international company looking for an 'International Expatriation Specialist' (section 2). Thereafter, we address the importance of successful execution of the expatriation process. We then discuss in detail the stages of the expatriation processes (section 3). We then explain the expatriation procedure by focusing on the management perspective, but also including relevant insights from the perspective of the expatriate her/himself. Due to the fact that training before and after the expatriation are considered to be very important for

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the success of the whole expatriation this chapter considers in particular expatriation training, and to some extent also repatriation training (section 4).

E X PAT R I AT I O N M A N A G E M E N T

4.2 WANTED: 'INTERNATIONAL EXPATRIATION SPECIALIST'

When exploring the issue of expatriation, one particular vacancy caught our eye on the employment website Monster.de. The paper and packaging company Mondi, which has 29 000 employees in 31 countries, was searching for an 'International Expatriation Specialist' [4]. The responsibilities and requirements of the international expatriation specialist was explained as shown in info 4.1.

The ad as such points out that managing a company’s expatriates is considered so important Mondi Group [ 31] International Expatriation Specialist (m/f) Europe & International, Austria, Vienna Headquarters Europe & International Your responsibilities: • Managing the assignment process for Mondi Group • Administration of expatriate database, tax authorization, salaries and bonuses

that special workforces are required to manage those expatriates. Since expatriates are employees of the company, an expatriate manager works closely with the human resource department. In a way you can say that the expatriate manager is a special form of a human resource manager. The difference between an expatriate specialist and a human resource manager is that there are a lot of specific requirements when it

• Document preparation

comes to managing expatriates. You can easily see this

• Close liaison with senior and executive managers, expatriates, the HR community, tax and accounting departments as well as international tax advisors

when you read the responsibilities of the 'International

• Support for the annual salary increase and bonus cycle and participation in international HR projects Our requirements: • Preferably university degree in economics or business administration • A minimum of 2 years relevant work experience in the field of expatriation • Fluent in English; German and other languages would be an advantage • Excellent knowledge of MS Office (especially Excel) • Highly numerate • Analytical orientation combined with strong organizational skills • Good communication and interpersonal skills Info 4.1

Expatriation Specialist' in the vacancy description above. For instance, specific knowledge is required and concerns such issues as paying taxes for the expatriate or preparing the required legal documents for working in a foreign country.

We do stress that every expatriation is different and the expatriate manager has to take individual circumstances into consideration when caring for the expatriate. There are also differences in the length of an expatriation. Some companies allow their expatriates to stay only a certain amount of time abroad, while in other cases the duration of the expatriation might depend on the reason for the expatriation. A company may not be willing to pay the high costs for the expatriation longer than necessary. Also, when the expatriation

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takes place between two different international companies with the purpose of exchanging knowledge, those two companies should define the duration and the aim of the assignment abroad at the very beginning. In doing so, both companies ensure a successful expatriation assignment.

As necessary an expatriation might be for some companies, there is economical risk involved if the expatriation fails. Any company investing in an expatriate would want to find somebody that is able to fulfill this assignment successfully [5]. When sending an employee abroad, a company may pay three to five times as much compared to the employee’s salary in the home country [3,6]. One should also remember the additional costs involved if the expatriate’s family also moves to the new location. In most cases the company sending an expatriate also pays e.g. school costs for the children. As there are high economical risks involved, expatriate managers or some kind of expatriation specialist is useful in a company.

4.3 STAGES OF EXPATRIATION

Even though the reasons for working abroad and the personal and professional circumstances of expatriates may vary strongly, the average expatriate goes through more or less the same kind of stages during the expatriation. Literature on the topic often refers to models that describe the whole expatriation as some kind of circular career model [1,8,9]. A circular presentation of an expatriation is reasonable, as most expatriates are abroad for a limited time and return to their home country after they finish their assignment abroad. Some models focus on the expatriate [8], while other models address the management perspective of the company sending an expatriate abroad [1]. In the following we look at both perspectives.

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Potential critical economic factors. [5,7] • The expatriate quits the expatriation earlier than expected • The expatriate is not able to fulfill the assignment • High administrative expenses during the expatriation process • The expatriate leaves the company directly after the expatriation Info 4.2

E X PAT R I AT I O N M A N A G E M E N T

The perspective of an expatriation manager According to Nancy J. Adler, professor of organizational behavior and international management in Canada, the expatriation of employees can be depicted in a model called 'The Expatriate’s Global Career Cycle' [1, p.276]. This cycle defines eight different steps of the expatriation.

Return Home country assignment Recruitment

Selection Reentry Orientation Debriefing Global assignment

Figure 4.1: The Expatriate’s Global Career Cycle. [1]

The first stage in the cycle is referred to as the home country assignment. The current job and assignment of a potential new expatriate builds the basis of the whole cycle. The potential new expatriate can be a current employee of the company, but it is also possible that this person works for another company at this time. It is, of course, more likely that a person who is already familiar with the company culture is chosen as an expatriate. This is especially the case when sending an expatriate has a secondary goal of creating bonds between the international branches of the company [3].

The recruitment and selection of the future expatriate constitute the second and third stage. The expatriate may be recruited from within the company or from outside. In these two stages an expatriate specialist with insight knowledge can be very helpful. The expatriate manager should have information about the professional and

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cultural surrounding in which the expatriate is going to work and live in for a longer time. This makes it easier to evaluate if an expatriate candidate is suitable for the job.

Before the final decision a 'Look–and–See–Trip' to the chosen country for the favored expatriate candidate can help to figure out if she or he can imagine working in this cultural and professional environment. In those cases where the expatriate candidate has a family, they should be included in this process. The expatriate manager should check if the expatriate candidate satisfies a number of requirements during the stage of recruitment and selection. Some personal factors that can indicate the qualification to become an expatriate are [3,10,27] •

Professional expertise

•

Strong learning ability and willingness

•

Flexibility

•

Tolerance

•

Empathy

•

Accordance with the corporate company philosophy

•

Very good English and further language skills

•

Attitude and motivation

•

Intercultural competences

•

Family situation

Professional expertise alone is not expected to be sufficient. It is the personality of the expatriate candidate that plays an important role when it comes to the decision whether she or he is suitable for the job [3]. Therefore, one possibility is to test the expatriate candidate’s intercultural abilities in assessment centers. Another possibility is to measure their intercultural competences with tests that check the expatriate candidates action and reflection capability to interact in intercultural situations in the right way [3,11]. These tests are assumed to be very helpful for the expatriate manager to select the right expatriate candidate for the global assignment.

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One example of an intercultural competences test is the 'Test of Intercultural Sensitivity (TIS)' from ICUnet.AG. The test in particular tests the intercultural competence by comparing the self–image and the self–representation in seven char-

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acteristics. The seven characteristics that are on the right of the figure below are basic characteristics, which indicate the ability to integrate oneself in a new culture. This is considered necessary for successful international co–operation. A psychologist of ICUnet.AG tests a person and gives an in–depth appraisal of the intercultural competence and a person’s ability of self–assessment. A visual graphic like shown below can help to visualize the result [12].

Flexibility Self–reflection Emotional stability Communication Tolerance of ambiguity Willingness to learn Openness to new 0

10

Personal values Value of a comparable sample

20

30

40

50

60

70

80

90

100

Self–image Self–representation

Figure 4.2: 'Test of Intercultural Sensitivity (TIS)'. [12]

The fourth stage is called the orientation. This stage contains e.g. the explanation

Don`t miss the case “Managing repatriation” to get more interesting insights.

of the global assignment as well as training the cultural competences and language skills of the expatriate. The global assignment abroad as such is defined as the fifth stage, followed by the sixth stage, namely debriefing. Debriefing can be considered very important for a successful reentry of the expatriate, which is the next–to–the last stage of the cycle. Expatriation trainings in the orientation stage and re–expatriation trainings in the debriefing stage can be considered crucial for the success of the whole expatriation. Therefore section 4 'Expatriation and Repatriation Training' of our chapter focuses on that important topic of training the expatriates.

The last stage in the cycle is the return of the expatriate to the home country.

Especially medium–sized companies often neglect to offer special repatriation programs after the expatriate fulfilled the global assignment [13]. It should not be ignored that an expatriate can be confronted with difficulties when she or he returns home. For instance, the structure in the company may have changed during the expatriate’s time abroad. A new employee may be taking care of the expatriate’s old

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position and related tasks. It is therefore crucial to talk to the expatriate about her or his further scope of duties in the company before the return. The experiences and knowledge of the expatriate is valuable for the company. This means that the management of a company should consider possibilities to tighten the relationship between the expatriate and the company. The company should acknowledge and value the experiences the expatriate has gained [3]. Otherwise there is a risk that the expatriate feels less valued and leaves the company. That would be a big loss for the company.

What 'The Expatriate’s Global Career Cycle' has bypassed and still can be considered important is the knowledge–management aspect of the expatriation [3].

Knowledge–management can help the company learn from the experiences of To–Do–List for an expatriation manager:

the expatriate. The company can then use this knowledge to improve the intercultural competences in the international business world.

Test the professional and intercultural competences of the future expatriate

The perspective of the expatriate

Define the global assignment and goals

From the perspective of the expatriate it seems to be a huge

Prepare the expatriate (trainings, legal support, expatriate family)

problem that the headquarters of the company often know

Support the expatriate in the new environment

business environment abroad [14]. This can make it very

Prepare the repatriation and define the new assignments after the expatriation has ended Value the experiences of the expatriate and learn from them

too little about the actual situation and difficulties of the difficult to prepare the expatriate in the right way. There are several difficulties an expatriate might face during the whole expatriation. A nice overview over the concerns of an expatriate is provided by the online magazine 'InterNations Expact Magazine' [15]. The reader of the 'InterNations Expact Magazine' will find

information about expatriation sorted into ten different categories (see info 4.3).

Articles with tips and information for the new situation in the expatriate life can make it easier for them to cope with the difficulties of the expatriation. City guides or tips how to discover the new environment can help the expatriate to make the new country a home away from home. In countries where the expatriate cannot read signs

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it is important that she or he can rely on local support.

It can be considered very important that the expatriate does not feel alone abroad.

The expatriate should feel well prepared and supported by the company [3]. The same applies for the family of the expatriate. It can be assumed that a good preparation and

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support during and after the expatriation reduces the risk of a failure. This requires resources from the company but can pay off in the end. Especially in medical and legal questions the support can be especially needed.

The new and unfamiliar situation in the foreign country can cause some kind of a culture shock [8]. Herbolzheimer [8] also mentions the possibility of a reverse culture shock taking place when an expatriate returns to her or his home country. When a lot has changed in the home country as well as in the company during the expatriate’s time abroad, this person is again confronted with an unknown environment and culture that could lead into a reverse culture shock. Culture shocks can especially occur when the expatriate was not prepared with repatriation trainings. Training might not prevent but at least can allay a possible culture shock.

At this point we want to mention that an expatriation does not have to end with the return to the home country. The expatriate may receive an offer to move to another country after the first expatriation. The expatriation manager of the company who is responsible for the expatriate has to prepare her or him for the next assignment. The expatriate also needs support for the logistic part of the expatriation e.g. moving from one country to another.

Taking the presented aspects of the expatriation process into account, we propose a revised and combined expatriation cycle. We base the cycle on the 'Expatriate Assignment Live Cycle' by Herbolzheimer [8] and the 'The Expatriate’s Global Career Cycle' by Adler [1]. Figure 4.3 sums up the discussed aspects of expatriation and gives an overview of the concerns of the expatriation manager and the expatriate • Expatriation

her/himself.

• Living Abroad • Cross–Cultural Communication • Family & Relationships • Repatriation • Moving Abroad • Working Abroad • Culture Shock • Expat Women • Country & City Guides Info 4.3

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Return: • reintegration into home country life • possible reverse culture shock • career change

move to home country Home country assignment

move to another country

Knowledge man age

nt me

train ing

Selection / Decision making process

pa tria tio n

io iat atr Rep

nt rai nin g

Late assignment stage • after assignment expiry • debriefing • repatriation preparation

Recruitment / Assignment offer

Preparation / Orientation / Expectation shaping

Ex

g Accompanying coachin Global assignment

move to another country

Early assignment stage • setting–in period • accultural process including possible culture shock

Figure 4.3: Expatriation Cycle, based on Adler. [1,8]

4.4 EXPATRIATION TRAINING

Literature stress that training results in positive influence on an expatriate’s success and they pose an important aspect for human resource management [16]. Many authors stress the importance of cross–cultural or intercultural trainings [17,18,19] in order to adjust to a foreign culture. The main goal of expatriation training is to prepare the expatriate for contacts with members of a different culture and enabling a smooth entry into the foreign culture, thus ensuring a successful stay. The findings suggest that trainings lead to an increase in confidence, cross–cultural effectiveness and in the ability to adjust [19]. The inability to adjust might be one reason for failures and

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early repatriation (17,19,20). A failed expatriation comes with a lot of costs [17,21], and therefore investment into trainings is worth considering. It should, hence, come as no surprise that business consultancies recognized a golden opportunity and started offering intercultural or cross–cultural trainings for expatriates [22].

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When it comes to the reality of expatriation and repatriation management, companies seldom use trainings to prepare their employees for international assignments. Even if we take into account that some training programs do not take place in advance but at the host unit [16], one can still say they are not very popular. Burch & Suutari [16] stress that if a company does offer cross–cultural or intercultural training, the training is in most cases very basic in nature. Therefore the question arises why companies seldom use expatriation training? Could it be that companies question the usefulness of trainings? Do trainings actually weaken an expatriate’s performance abroad?

In the following section we will take a closer look at the different concepts of expatriation and repatriation trainings, discuss possible assets and drawbacks and explore ways of how to advance them.

Why training?

Sending people abroad or going abroad yourself is fraught with problems [16]. One of the main difficulties is seen in the limited capacity of the expatriate to adjust her/ himself to the new environment, i.e. the culture of the host country [19,21]. There is an assumption that the expatriate’s adjustment is directly linked to her or his overall subjective wellbeing in a different culture and therefore with her or his success [18,21].

“Adjustment is generally described as a process where a person leaves a familiar cultural environment and enters an unfamiliar. Because the new setting is unfamiliar, it upsets old routines and creates psychological uncertainty” [19, p23] It is assumed that individuals try to reduce this uncertainty by taking up new behavior, which is socially accepted in the new environment. Moreover, one lets go of behavior, which is less accepted. Cross–cultural adjustment is therefore “the perceived degree of psychological comfort and familiarity an individual has working with the new culture” [19]. This refers to the working and general environment as well as the interaction with host nationals [20].

Literature on expatriate adjustment explains elaborately the different phases, degrees and facets of the adjustment process. It is assumed that when an expatriate enters a different culture she or he undergoes several phases in which her or his perception of the culture alters. Starting with a 'honeymoon stage' where the host culture is still new, exciting and often idealized, merging into a more realistic view.

In the second stage the expatriate might have to deal with frustration because his/her glorified image got damaged. When the frustration reaches a maximum, the expatriate

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experiences a culture shock. However, once the expatriate is able to understand the different culture and adjust his/her way of living accordingly the culture shock passes in the last phase. The literature refers to this as 'adequate adjustment' [20]. The degree of this adjustment can either be seen as psychological or social. From a psychological point of view it focuses on the individual’s overall wellbeing in the host country, whilst the social aspect deals with the individual’s ability to perform appropriate according to her or his social role [20].

There are also three different modes in which the expatriate can adjust: (1) integration, (2) reaction, and (3) withdrawal. Integration describes the stage in which an individual learns to behave in a socially appropriate way; the risk of conflicts with the environment is relatively low. Adjustment by reaction then again means that the expatriate rather tries to change the foreign environment to a more familiar one.

This can involve changing the organization structure of the host unit according to the home organization’s approach. In the withdrawal mode the expatriate flees the foreign environment, for instance, by spending most of his/her time with other expatriates from the home country [20]. However, it is important to keep in mind that a satisfied, i.e. psychologically adjusted expatriate, is not necessarily a socially adjusted one.

She or he might just withdraw from the host culture and be perfectly happy with this situation. To be completely adjusted and interculturally effective both social and psychological adjustment is necessary: [20]

What modes of training are there?

Generally speaking there are three types of training to prepare the expatriate for her or his assignment abroad, namely (1) language training, (2) job–related training, and (3) cross–cultural or intercultural training [16]. As adaption to an unfamiliar culture is seen as the main problem for expatriates, we will focus here on cross–cultural or intercultural trainings. The main assumption of these trainings is that they can potentially influence the effective interaction between persons from different cultural backgrounds [19]. It is assumed that they can do so on three different levels: (1) cognitive, (2) affective, and (3) behavioral [17]. The practice on every level and the expected results are presented in table 4.1.

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Level of influence

Practice and expected results

Cognitive level

Providing knowledge about culture in general and its influence on human behavior in order to extend the participant’s appreciation for the complexity of culture and to reduce her or his use of stereotypes

Affective level

Enabling successful interaction with people from a different culture

Behavioral level

Enabling the participant to adjust her or his behavior in order to achieve positive relationships, reduce stress and work efficiently

Table 4.1: Levels of influence on the participant, modified from Gertsen [17, pp. 15–16].

It is also possible to distinguish between four different main approaches to cross– cultural or intercultural trainings. The trainings may emphasize so–called 'ex– cathedra teaching', where the expatriate receives information in form of a lecture, or several lectures. This approach is called conventional or didactic training. The experimental training approach, on the other hand, requires the active involvement of the expatriate. Moreover, the training might either give an overview over the impact of culture and cultural differences in general, or focus on the characteristics of the one specific culture the expatriate is going to enter [17].

Training method: General experimental training vs.

General conventional/ didactic training

Preparation for a different culture in general

Preparation for a specific culture

Training method: Specific experimental training vs.

Specific conventional/ didactic training

Figure 4.4: The four main approaches of intercultural/ cross–cultural training (adapted and modified from [19,22]).

There are also a number of specific programs [22]. For instance, the 'Contrast–Culture Training' focuses on the analysis and comparison of cultural differences in behavior. It was developed in the 1960s by Edward T. Stewart [23] to prepare soldiers for foreign assignments. The 'Culture Assimilator' is a special program, which was developed

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in the United States in the 1970s [24]. It confronts the participant with case studies focusing on critical incidents in a different culture. The participant is asked to choose between multiple answers, of which only one determines the 'correct' way to react in a specific situation. The aim of this program is first of all to sensitize the participant, and additionally to enable her or him to use cultural differences in a somewhat constructive way. The aim of the program is to help ease the effect of a cultural shock on the individual. Yet another program, the 'Cultural–(self)–Awareness–Training', developed in 1979 by Kraemer [25], assumes that the participant has to become aware of her or his own culture in order to understand other cultures.

Is training useful?

According to Lackner [22] the chances of preparing someone for 'the foreign' are very limited. In most cases the reality abroad does not correspond with the image the expatriate creates in her or his mind. Although trainings might give the expatriate a certain degree of orientation, Lackner continues, the risk of providing and strengthening prejudices alongside is relatively high. Once in the host country, the false assumption of being well prepared leads to disappointment and frustration.

As trainings are not able to reflect reality, they are also no appropriate tool for the expatriate selection process; it is impossible to predict a person’s behavior in advance.

Lackner therefore proposes a different approach on intercultural associations, focusing on realizing differences and making them discussable rather than trying to eliminate them. The irritations that are caused by cultural differences should be used and not fought. When confronted with differences, the expatriate realizes the values and norms of the own culture and 'the foreignness' within her/himself. This enables the expatriate to relate to the different culture. The aim is to shift borders between cultures instead of dispersing them. However, Lackner admits that this method requires a common language with common words and meanings.

How to improve trainings After having discussed the usefulness of cross–cultural/intercultural training, we will now conclude this part by giving a few proposals on how to advance trainings a little

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further to make them as effective as possible. We are convinced that when it comes to training there is no such thing as 'one size fits all' [16]. As Kabongo and Okpara [19, p28] put it:

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“[T]he method of training should be tailored to the cultural distance between each expatriate’s country of origin and the host country, and also to the nature of his assignment, to his position, and to the duration of his contract”.

One could suggest that an assignment, which depends largely on human interaction, for instance a managerial position, calls for more extensive training than a technical assignment. Moreover, Human Resource Management (HRM) should listen carefully to individual worries and wishes as these differ between expatriates [22] and it should try to meet those needs by offering trainings accordingly [21]. However, the most important aspect is that there is a match between the promises made by the HRM and its actual action to prevent the expatriate from being disappointed [21].

If the expatriate meets problems once entering the host country, it might be worth considering offering trainings also at the foreign location [16,19]. Moreover, the repatriation, which is often an overlooked stage, should be prepared as well, although this does not necessarily have to include training [29]. However, if the expatriate is not returning home but is re–located to a third country another training might be necessary. Additionally, one could also consider the possibility of training for the staff of the host country in order to prepare both 'sides' for the upcoming assignment [16].

Since especially people who have been abroad have in–depth knowledge about cultural differences and can relate to the problems of expatriates, Kabongo and Okpara [19] propose former expatriates as trainers for new ones. This might be a promising way for the company to exploit the experience and knowledge gathered by former expatriates.

Our last advice focuses on the role of the expatriate’s trailing family. The family is often far more exposed to the culture and thus has to face more problems than the expatriate her/himself [2,17,22]. Furthermore, the trailing spouse most probably has to put her or his own career on hold or perhaps even give up her or his job. Thus, an important area of life is suddenly missing. In addition, the expatriate is often absent and cannot support the spouse in this difficult and stressful situation. It comes as no surprise that the dissatisfaction of the spouse with his or her missing ability to adjust to the host culture is one of the main reasons for early repatriation [32,17,19,20].

Although many expatriates consider training for the family as important, few companies offer it [16,17]. The company wants to make sure that the expatriation is an overall success. As the areas of work and family always overlap and influence each other, we think that companies should embrace the expatriate’s trailing family in all stages of the expatriation process, which also includes preparation and training.

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Whether training is useful is a question to which we can give no definite answer. At least the expatriates themselves consider knowledge about the different culture as important [21] and are positive about trainings [16,18]. Brewster and Suutari note that those expatriates who received support by their company considered it as being important, while those who did not receive such help downplayed its importance. There are also expatriates who question the possibility

How to improve training — things to remember:

of preparing for the experience of living in a different culture [18].

• No “one–size–fits all” in terms of choosing the right training • On–site training for the expatriate • Training of the staff at the host company

In any case, before a company decides on offering training, it has to take into account that the overall success of an expatriation depends on many factors, for instance, prior foreign experience of the expatriate, the familial situation,

• Use former expatriates as trainers

the expatriate’s personality, existing language–skills, the kind

• Include the expatriate’s family, if they too are moving to the foreign location

of assignment, the length of the stay abroad, the perceived

• Do not forget the repatriation process and consequently support during this process

distance to the foreign culture etc [18]. Each individual case has to be regarded carefully. Training may be useful but other kinds of preparation can be more cost–effective [21].

4.5 EXPATRIATION TODAY AND TOMORROW

What does the future have in store for expatriation and repatriation? Unfortunately, our skills in foretelling the future are just as limited as anybody’s. However, business operation and managerial decisions are always embedded in society and are thus affected by the ever–changing political, social, cultural and natural environment. By taking into consideration general trends within society and broader developments worldwide we might be able to sneak a peak of future expatriation and repatriation.

Moreover, we rummaged through several online blogs and recent studies on trends concerning expatriation. In the following we will present our findings in form of a brief roundup of what managers as well as expatriates might have to face in the future.

To begin with, it is more or less likely that the proceeding globalization will lead to an overall increasing intercultural integration, not only in business situations. This means that as people from all over the world associate with each other more and more,

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the meaning of time and space is decreasing extremely fast. And so might cultural differences too. By coming in contact with other cultures (i.e. staying in a different culture for a longer period of time or hosting someone from a different culture), people take up certain 'foreign' practices and include them into their own way of living, in

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business and in private situations. The boundaries of culture therefore begin to blur and mutual adaption creates a new business culture of its own. Companies want and need to participate in this process. Therefore the intercultural association will lead to an increasing number of expatriates. The experience of being an expatriate, living and working abroad for several years, will thus become more and more an integral part of many careers. It might even become a condition for getting certain jobs, which implies a growing number of self–initiated expatriates [26]. Increased mobility also tends to result in a growing number of short–term assignments, lasting from a week to less than a year.

For children, especially those of expatriates who might have been born or raised in different parts of the world, will experience an increasing international climate.

Studying abroad for a certain period of time is already a matter of course in schools and universities and it is likely that this trend will continue. The meaning of the word 'home country' will change drastically. Therefore, the act of thinking and acting global will become more common. Intercultural skills become even more important and might already be practiced in the form of lectures or trainings in school and university courses.

What does this mean for intercultural or cross–cultural trainings in business situations? On one hand, there is evidence that companies increasingly pay attention to the impact of culture in business situations abroad as they acknowledge and appreciate prior foreign experience of expatriates [18]. This process might continue in the following years, leading to stronger emphasis on intercultural preparation and training. On the other hand, intercultural skills might by then be perceived (wrongly or rightly) as a matter of course that does not need any particular attention (any more). In this case the role of trainings will diminish even more.

An increased number of expatriates also mean an increased demand in appropriate management of these employees. Companies might more often hire special expatriate managers who have in–depth knowledge about the process of expatriation and the needs of expatriates. This opens interesting career opportunities for young, interculturally well versed managers. In the Western World, especially those with knowledge about China and India will be in demand, as these destinations pose the greatest challenges for international assignments [28] and are expected to grow in importance.

At the same time chances are that in India and China managers with western business market insights are becoming more and more important as these countries are

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increasing their exports to the West. Additionally, the rising number of expatriates might also be accompanied by an extending range of products and services, which are especially created for the needs of this target group; practical help in form of books or personal guides which provide on–site support with everyday issues starting with translating a parking ticket up to finding a nearby supermarket.

Faced with the increasing importance of intercultural cooperation and connectedness, companies might understand that they cannot afford to not completely exploit the experience and knowledge gathered by their expatriates. Expatriation is to a larger degree seen as a strategic means to transfer knowledge and, if performed correctly, as a competitive advantage [26]. This is only possible if companies are able to commit their experienced and successful expatriates to themselves. They will thus support the needs of their expatriates to a larger degree. This means for instance that, as the 'international life' becomes more common, companies acknowledge the importance of integrating the expatriate’s family in the assignment. Today the lack of support for the family is one of the main reasons why employees resist accepting international assignments [28]. The challenge of providing appropriate support for expatriates and their families can be seen as one element of talent management, a rising trend in human resource management.

Given the restlessness of an expatriate lifestyle, the company wants to assure the ability of planning one’s professional and personal life. This applies even more as companies want to attract successful and career–minded women for international business operations. That fact that in 2009 only 47 % of all expatriates had families with children shows that conditions need to be improved. Also, in the same year only 17 % of all expatriates were women [28]. However, the number of female expatriates is rising and can be seen as a trend [29].

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4.6 CONCLUDING THOUGHTS

An expatriation should be a positive experience and successful for both the company and the expatriate. A good preparation of the expatriation can help to reduce the probability of a failure of the expatriation. Expatriation and repatriation trainings can help to prepare the expatriate for her or his time abroad and the return to the home country.

Since the number of expatriations is growing, a whole new business around expatriation has been created. Agencies and consulting companies offer packages of, for instance, intercultural and language trainings for companies that send away expatriates. These trainings can support the success of the expatriation and are very helpful when they are used in the right way. Not every form of intercultural competence training is suitable for every expatriate. The challenge for the companies these days is to pick the right preparation for their expatriates.

In the face of the variety of offers to train and support expatriates this seems to be a very tough task to do. A special expatriate manager with own experiences working abroad can help to support the expatriates of the company and offer them the suitable trainings and help. The expatriate manager should have an insight in the local working and living situation to

In connection to this chapter you find a very interesting case concerning the topic repatriation in the next chapter “Case: Repatriation Management”

be able to give the expatriate the needed support. Also, even if the majority of expatriates are men, more and more women are sent abroad. This may lead to a need of adjusting and tailoring the preparation for an expatriation. Furthermore, as the personality of an expatriate plays a huge role for the success of an expatriation, the stages of recruitment and selection are very important. Good knowledge management can facilitate using the experiences of the expatriate and pass insights on to the next expatriates as well as to co–workers. As it is very conventional to have spent some time studying abroad, expatriation might become more and more common. This means the companies should know how to prepare, train and support their expatriates to make the expatriation a success.

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Copenhagen: Institute of International Economics and Management.

[18] Hutchings, Kate (2004): Cross–Cultural Preparation of Australian Expatriates in Organisations in China: The Need for Greater Attention to Training.

Asia Pacific Journal of Management, Vol. 20, No. 3, pp. 375–396.

[19] Kabongo, Jean D. & Okpara, John O. (2011): Cross–cultural training and expatriate adjustment: A study of western expatriates in Nigeria, in: Journal of World Business, Vol. 46, No. 1, pp. 22–30.

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[20] Kauppinen, Marja (1993): Expatriate adjustment: a review and discussion of recent research approaches. Helsinki: Helsinki School of Economics and Business Administration, Centre for International Business Research.

[27] Jönsson (2011b): Expatriates: Karrieresprung–Brett Ausland!?, in Mediaplanet. Expatriate. Geschäftlich erfolgreich weltweit. Experten geben Einblick in den Expatriate–Markt, No.1, April 2011, p. 4, URL: http://www.icunet. ag/uploads/media/Expatriate_WELT. [21] Brewster, Chris & Suutari, Vesa (1998): pdf (accessed February 18, 2012).

Expatriate management practices and their perceived relevance: evidence from Finnish [28] The Forum For Expatriate Management expatriates. Vaasa: Vaasan yliopisto.

(2010): Global Relocation Trends Survey 2010, URL: http://www.articles.totallyexpat.

[22] Lackner, Karin (2008): com/global-relocation-trends-survey-2010/ Expatriation: Entsendung ohne (accessed February 15, 2012).

Wiederkehr?, in Gruppendynamik und Organisationsberatung, Vol. 39, No. 1, pp. 64–87.

[23] Stewart, E. C. (1995): Contrast culture training, in Fowler, S. M. and Mumford, M. G. (Eds.). Intercultural sourcebook: cross– cultural training methods, Vol. 1. Yarmouth, NE: Intercultural Press, INC. [24] Fiedler, F. E., Mitchell, T., & Triandis, H. C. (1971): The culture assimilator: An approach to cross– cultural training. Journal of Applied Psychology, Vol. 55, pp. 95–102.

[25] Kraemer, Alfred J. (1973): Development of a Cultural Self– Awareness Approach to Instruction in Intercultural Communication.

Technical Report No. 73–71, Human Resources Research Organization.

[29] Abdullah, Dayang Nailul Munna Abang & Jin, Cheam Sheue (2011): Issues and Trends in Expatriation Management, URL: http://www.ipcsit.com/vol16/46ICICM2011M3019.pdf (accessed February 20, 2012).

[29] Baruch, Yehuda, Steele, D. J. & Quantrill, G. A. (2002): Management of expatriation and repatriation for novice global player. International Journal of Manpower, Vol. 23, No. 7, pp. 659–571.

[30] Paik, Yongsun; Segaud, Barbara & Malinowski, Christy (2002): How to improve repatriation management. Are motivations and expectations congruent between the company and expatriates?.

International Journal of Manpower, Vol. 23, No. 7, pp. 635–648.

[31] Mondi (2012): Current vacancies.

[26] EURAM (2010): TRACK 21: Expatriate International Expatriation Specialist management: new trends, new challenges (m/w), URL: http://www.mondigroup. and new prospects, URL: http://www. com/desktopdefault.aspx/tabid-321/74_ euram2010.org/userfiles/file/TRACK%2021. read-20753/ (accessed February 16, 2012). pdf (accessed February 20, 2012).

[32] Adler, Nancy J. (1997): International Dimensions of Organizational Behavior, Third Edition, Cincinnati: South–Western.

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5. Case: Repatriation Management Anna–Lena Müller & Markus Gotzig

5.1 Introduction: Why care about repatriation?

5.2 Literature review: Which problems can occur when coming back?

5.2.1 Who can do what to prevent these problems?

5.3 Method: How we worked

5.3.1 Company description: A German service company sending

employees abroad

5.3.2 Case description: Working in China as a young professional

5.4 Case analysis: Did the company set wrong priorities?

5.5 Implications: How can the company improve their repatriation management?

5.5.1 Limitations

5.5.2 Conclusion

References

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What’s it all about?

Despite the recognized importance of expatriate management, repatriation still receives minor attention, although it is the important closing stage of the Career Cycle. And often this last part is the most frustrating part of an assignment abroad, both for the expatriate and for the companies and thus also their human resource managers. The following case is designed to deepen the chapter on expatriation management by focusing on repatriation. Based on a literature review and an interview with a German young professional working in China for 15 months, this case confirms that repatriation is still somewhat underestimated. We therefore conclude with managerial implications to facilitate the home country reentry.

5.1 INTRODUCTION: WHY CARE ABOUT REPATRIATION?

The final stage of the Career Cycle is the home country reentry, or the so–called repatriation. Repatriation involves phases of euphoria, disappointment and adjustment similar to the Culture Shock Cycle [1] [see Chapter 4] and bears difficulties, both organizational and societal. These difficulties have been underestimated for a long time, but the awareness in this respect has recently increased [2]. The increased awareness is a result from the surprisingly high turnover rate among repatriates. For example, research indicates that between 40 % and 55 % of repatriates in European and American companies leave their companies during the first four years after returning home from an international assignment[3]. Failed repatriation turns out to be very costly regarding time, money and human resource [4], which calls for improvement in repatriation management. Basically, what expatriates have to face during the course of repatriation is the gap between the way it was and the way it is. In other words, the gap concerns their idealized memories and reality [1]. What makes this even more difficult is that, in contrast to the cross–cultural entry, people do normally not expect such problems before returning home.

In the following case study, we will briefly introduce different kinds of problems that can occur during repatriation and then present different measures that both

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the company as well as the expatriate him/herself can take in order to ease the transition back to the home country and organization. Additionally, the role of the expatriate’s personality will be shortly discussed. After presenting the case company, we summarize the interview with the young professional, who has spent 15 months

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working in China and then returned to Germany. Finally, we will present managerial implications followed by a summary.

5.2 LITERATURE REVIEW: WHICH PROBLEMS CAN OCCUR WHEN COMING BACK?

When it comes to discussing the potential problems threatening successful repatriation, Baughn [5] well as Paik et al. [6] refers to three decisive factors, namely (1) the work environment, (2) socio–cultural and (3) family factors. When it comes to the work environment, many expatriates suffer from the 'out–of–sight, out–of– mind syndrome' [1]. This refers to the fact that the home organization may forget the expatriate in terms of career planning and reintegration as a result of changes within the company as well as the geographical distance. Also, expatriates might be bored of their reentry jobs as, back at home, they are just one amongst many employees and the work might be less challenging and exciting for them. This often results from disregarding the expatriate’s experiences and skills gained abroad when reintegrating him in the home organization. Consequently, in such cases expatriates often have to realize that the global assignment did not help their career in the expected way.

The socio–cultural factor refers to the expatriate’s ability to reintegrate into the home country culture [6]. Important aspects include the reintegration of the spouse and the family as well as the reintegration in the expatriate’s private environment.

Expatriates might find that friends and family cannot understand their experiences, do not have time for them or that friends simply changed during the time the expatriate spent abroad.

5.2.1 WHO CAN DO WHAT TO PREVENT THESE PROBLEMS?

According to O’Sullivan[7], in order to ease problems in relation to repatriation and to finally minimize repatriate turnover, three dimensions are relevant and influence the repatriation transition outcomes. These dimensions are (1) the expatriate’s personality, (2) the expatriate’s behavior and (3) the behavior of the company. The first dimension (expatriate’s personality) highlights a few key personal characteristics that ease career transitions: locus of control, self–esteem, self–efficacy, extraversion, responsiveness, self–awareness, and hardiness. These characteristics may also guide the company when choosing the right employee for an assignment abroad in the first place. The second dimension concerning the behavior of and actions taken by the expatriate

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himself can of course facilitate the return after the assignment. Two key possibilities are social networking and independent information seeking, which might for example enable the expatriate to influence on his return position. The third dimension highlights that also the company can assist the repatriate’s adjustment through various measurements. These generally consist of a mixture of information provision, financial benefit supports, and career planning. Examples include trips home, provision of a mentor through whom steady contact to the home unit is assured, as well as pre– and post–return training. All these are actions to be taken in order for the company and the expatriate to stay in touch with each other. As for the career planning, early talks and early communication are crucial in order to finally be able to integrate the international assignment into the expatriate’s career path and consequently find an adequate return position that considers the expatriate’s newly acquired experiences and skills.

Very generally, the overall aim for both the organization and the expatriate should be permanent communication during the expatriate stay in order to limit the congruence between each other’s expectations [6].

In their empirical study about the repatriation of female international managers, Linehan and Scullion[8] emphasize that female expatriates may experience more difficulties during reentry than their male counterparts. Nevertheless, we will not discuss this in detail due to the fact that we see the key problems of repatriation as common to both female and male repatriated managers. As our respondent is a female young professional we still wanted to pinpoint that women might need more support and attention during expatriation and repatriation.

5.3 METHOD: HOW WE WORKED

After reviewing literature on expatriation and repatriation, we conducted an interview with a former expatriate [10] in order to investigate problematic issues that were raised in the literature. By using a qualitative approach in data collection and analysis, we aimed at practical insights and personal experiences. Finally, we formulated our managerial implications based on the interview and the literature.

The interview questions were derived from Sojla Paganus’ dissertation 'Finnish

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business repatriates’ coping strategies' [9] and from literature cited in the book.

Our interview guide started with some standard background questions regarding for example age and education. The topic related section began with asking the interviewee to explain the concepts of expatriation and repatriation. After this,

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focused questions were asked about the time, the position and the type of work in the company before and after the assignment. We then inquired the relationship between the home unit before, during and after the assignment. We asked for an evaluation of the implemented measures. Furthermore, the feelings before, during and after the assignment in the private and professional field were investigated. The interviewee was also asked to explain the repatriation process, both from a professional and a personal angle. At the end of the interview, we asked the interviewee to discuss whether she would go abroad as an expatriate again. We also asked our interviewee to give advice for the management that would facilitate the expatriation and the final stage of the Career Cycle, i.e. the home reentry. We ended our interview with an open question for comments and suggestions.

On request of our interviewee we performed our interview in written form. Our interview guide contained 42 questions, of which the interviewee answered all. We would like to point out that the interview cannot be seen as representative as it reflects one individual perception, but, nevertheless, it supplements and exemplifies theoretical insights from the literature. Both the interviewee and the company represented asked for discretion. Therefore we made the data anonymous and changed the names randomly into CAR for the company and their interviewed employee is here referred to as Anne.

5.3.1  COMPANY DESCRIPTION: A GERMAN SERVICE COMPANY SENDING EMPLOYEES ABROAD

CAR, a company founded in Germany in the late 1960s, is an independent engineering partner in the international mobility industry. Its services include product development, small–volume production, and the development and construction of production plants and systems. Besides conducting own projects, the company also sends its employees working on projects in other companies. The main target group is the car industry, besides other industries as renewable energy, rail and aerospace.

Consequently, the majority of the company’s customers are manufacturers and suppliers in the automotive industry from all over the world. With its head office still being located in Germany, the company is active in more than 40 countries on four continents and currently employs a total number of more than 6 000 people. For several years, the company has been active in China, whose market is one of the main drivers of growth for the automotive industry.

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5.3.2 CASE DESCRIPTION: WORKING IN CHINA AS A YOUNG PROFESSIONAL

After successfully having finished her diploma in industrial engineering and business studies, Anne, our interviewee, was looking for an interesting job in the automotive industry, which would enable her to work in an international environment.

Consequently, she applied at company CAR and was soon hired. As concluded already from the job advertisement she had replied to, one of the key attributes required for her position was international mobility. CAR was in need of experts to work locally on projects for international customers. Unsurprisingly, she was assigned with a project in China right on the spot. There she was supposed to work as a planner for a major German car producer in the field of car body construction. In detail, her responsibilities included coordinating the establishment of a new product line, introducing measurements for quality improvement and controlling the early stages of the production. Of course, Anne was not sent to China directly on the first day of her new job. Before her departure to what was to be her new home for the next 15 months, she spent three months at the home unit of the company in Germany. During this time, she got to know the company, her bosses and colleagues and was prepared for her assignment. Besides technical instructions and professional training, Anne’s predecessor from whom she overtook the position in China played a central role in the preparation phase. He functioned as a mentor for her, giving useful advices and support, including information about the culture and the company she was supposed to work for, as well as tips about practical issues like accommodation.

When Anne’s day of departure finally arrived, the feelings of excitement and anticipation were mixed with the pain of separation, as it was time to say goodbye to her family and her boyfriend. However, the difficulty of the situation was somewhat reduced by the fact that it was not the first parting of this kind for all of them as Anne had already spent quite some time away from home. She had spent one semester abroad and worked and travelled in Australia after high school. After her arrival in China, the information her predecessor had given her beforehand made it easy for Anne to adapt to her new responsibilities. But the contact with the predecessor was not limited to the time before the assignment; while being in China, he continued

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functioning as a mentor for Anne, assisting her with professional advice whenever she needed help. Anne also stayed in monthly contact with her superior and colleagues from the home unit. Regarding the German car producer she worked for in China,

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Anne always felt like being in good hands too. This was largely due to one department within the company, which was called Expatriate Coordination. In this department, the German speaking staff took care of all the things that could possibly cause problems for employees from other countries. In Anne’s case, it was mainly organizational issues that she needed help with, such as the extension of her visa, visits to doctors and to the police, renting of a car, application for a driver’s license and general help with the law in China. Anne felt that this was especially helpful as the language barrier presented a big problem for her even when dealing with the local authorities. Therefore, many processes were eased and accelerated through a Chinese companion with corresponding knowledge and contacts.

Privately, Anne’s contacts were to a large extent limited to her international colleagues, many of which had already worked in China before. Although the lack of knowledge in Mandarin language made contact to local people impossible, Anne enjoyed the team spirit and solidarity amongst the international work force of the company, which also resulted in regular undertakings after work. The bonds to her private environment back in Germany were kept through regular contact via e–mail and video telephony, which could of course not replace having her boyfriend, her family and friends around her. All in all, despite really having enjoyed her time in China, Anne’s anticipation of coming home grew larger and larger as the day of her return approached, which was because she had successfully completed her assignment for the company and the vast majority of her colleagues had already left.

Upon her arrival back in Germany, Anne received a warm return at the airport from her family and her boyfriend who had desperately been waiting for her to come back. All of them really enjoyed having each other around regularly and Anne was especially glad that, although she had changed in some ways through her stay abroad, her private relationships remained just how she wanted them to. At work however, things did not go that well. Anne was assigned to a new project in Germany, working for a local car producer in the south of the country. It had been her wish to be placed in that region as her boyfriend was employed nearby as well, so she was very happy with that in the beginning. Without any kind of mentoring offered to her from the company, Anne had to face two challenges at the same time; the integration into a new company on the one hand and on the other hand the reintegration to her new position upon return. Compared to the 15 months she had spent in China, she missed the amicable atmosphere and the solidarity amongst the staff. Furthermore, it was hard

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to readjust to the regulated processes at work in Germany. Where she had improvised in cooperation with colleagues in China, there most certainly was a rule to be followed back in Germany. This soon started to bore her. But what was even more striking was the character of the position she got assigned to. In comparison to her international assignment, her new job felt rather uninteresting to Anne, as her responsibilities were somewhat limited. Unlike in China, Anne felt like one amongst many employees and her job was of lesser importance than when working abroad. To sum it up, she perceived her return position as boring. So what went wrong?

5.4 CASE ANALYSIS: DID THE COMPANY SET WRONG PRIORITIES?

Anne’s answers confirm the central pre–assumption identified in literature; the repatriation is still underestimated and the stepchild of the Career Cycle. Our study confirms that the company already has quite a good management before and during the assignment, while after the assignment there is no re–integration support.

Anne also pinpoints that the pre–arrangements at CAR are good. Besides technical instructions, and the contact to Anne’s predecessor, the company provided an adequate preparation ahead and during the assignment regarding both work and non– work related aspects. A lot of information from her predecessor prepared Anne for her assignment in an appropriate way. Through e–mails and pictures she got illustrative impressions about the company, the work and accommodation situation as well as impressions of the Chinese culture. The given advice and tips were, during the 15 months abroad, locally completed by the department of Expatriate Coordination of the resident car producer. Furthermore, to ensure that Anne as an expatriate would not feel isolated from the home unit, she had monthly contact with her superior in order to stay informed about developments at the home unit. In these periodical contacts, Anne had the possibility to talk about her current project in China and ask for technical support if necessary. Insofar, we infer that Anne and the company implement the first steps of the Career Cycle in a very good way. However, this positive impression is somewhat clouded by the last step of the process, namely the repatriation. Thus, when it comes to the question if Anne got any preparation to facilitate the reentry, the

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answer would be negative.

Anne tells us that there was no preparation for her reentry neither in the professional nor in the private field. She criticizes the fact that her position and role after her assignment was not defined concretely. With this she verifies difficulties

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mentioned in the literature [1, 8]. Anne feels bored with her reentry job. She considers her work in Germany less challenging and exciting for her compared to the work she conducted in China. She misses the work–related responsibility and self–reliance she had during her expatriation. Anne therefore confirms one key challenge of a successful reintegration into the home organization: finding a suitable position, which takes into account her changes in experience and skill. The interviewee feels that her positive developments as a result of working abroad are currently unused and unnoticed. At a first glance, this result seems unexpected considering that Anne stayed in regular contact with CAR. So why has the repatriation failed nevertheless? And how can the company improve their repatriation management?

5.5 IMPLICATIONS: HOW CAN THE COMPANY IMPROVE THEIR REPATRIATION MANAGEMENT?

First of all, we have to stress again one important point. Anne wanted to change her position after her return from China in order to be in the same city as her boyfriend.

The company enabled the change in location on Anne’s request. Nevertheless, the repatriation and the new position are suboptimal. Even if this might seem a special case, there are several factors affecting the reintegration, which were neglected by the company and the expatriate.

Surely the personality is playing a certain and important role in the repatriation process. Even though it was Anne’s desire and priority to make the local change, she herself might have underestimated the consequences. Despite personal and private reasons for the location change, it seems that she has not thought much about the ramifications and the right position after the assignment. With an appropriate training for the reentry the company could avoid such incidents. By meliorating the repatriation management for example with special reintegration trainings before and during the assignment, the company could create and stimulate the awareness of the difficulties regarding the most important factors of repatriation. These have been identified as work environment, socio–cultural and family issues. Thus, with a proper preparation of a successful expatriate return, the company prevents disappointment, frustration and resignation. This is crucial in the work–related areas and also in the private field— in the end both are interrelated. If you are satisfied with your work, you are more likely content with yourself and your private life and the other way around. In our case, appropriate training could have led to increased awareness and, in the end, possibly

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have avoided the unsatisfying job situation Anne found herself in at the end. Both sides would profit as Anne would be more satisfied and probably more productive at work.

Another useful measurement to improve the repatriation process in our example might have been a designated mentor specifically addressing repatriation. Despite making use of this before and during the assignment, mentoring was not used in the phase of repatriation. A mentor could have helped Anne with her situation in several ways; warned her about the danger of primarily focusing on the change of location and neglecting the impact of finding an appropriate position beforehand. Also when Anne was back in Germany, a mentor could possibly have given her advice on how to deal with the unsatisfying situation she found herself in. Furthermore, the company could generally improve the communication with expatriates about career paths and the definition of the return position. Clearly, there were no talks about the responsibilities and possibilities related to Anne’s new position despite regular contact. Her wish to change location might have influenced her career changes, resulting in dissatisfaction with her current position. By discussing the advantages and disadvantages of relocation and possible alternatives in advance, Anne would have been (more) aware of the consequences or would have articulated more concretely her perceptions of her prospective position. Insofar, it is up to the company to reflect together with the expatriates and repatriates a trouble–free re–entry, not only concerning work but also concerning the socio environment. Regarding Anne’s social and private life, Anne does not seem to have great problems to adjust. Overall, Anne optimistically describes her adjustment after the reentry in Germany in the private and the professional area as fast. Nevertheless, she admits that every new beginning bears difficulties.

Having analyzed Anne’s answers, the findings of our case example supports the results of previous studies on expatriation and repatriation. Even if the preparation ahead and during an assignment may be excellent, the repatriation process continues to be neglected. Anne indeed had a mentor before and during her stay abroad, but no longer when she was returning. We do not think that the company really set the wrong priorities, since the preparation before and during the assignment is important too.

However, there are two sides of the coin; it is a rather adequate balance between the preparation of expatriation and repatriation management. With a sharper focus on the

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repatriation, CAR could improve its already well–organized expatriate management and guarantee their employees a successful reentry by offering a fulfilling work position after the return home. A proper preparation prevents the high turnover

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rate among repatriates, diminishing the frustration after the return into the home organization. Re–adjustment to the socio–cultural circumstances is often underestimated. According to Adler[1] an improvement in the repatriation management could address the gap between the repatriate’s idealized memories and reality.

5.5.1 LIMITATIONS

Concerning the limitation of our study, we would like to point out that with only one interviewee we cannot generalize the results. Nevertheless, that was not the aim of this study. One could also argue that it is one–sided since we only interviewed Anne and not a representative of or a human resource manager at CAR. There is a need for further empirical research in order to understand and facilitate the repatriation process, especially in examining the awareness and importance of the preparation and expectations during the repatriation.

5.5.2 CONCLUSION

The case study gives an overview of the difficulties of repatriation and links to the chapter on expatriation management (Chapter 4). We conclude that the Career Cycle does not end with the preparation and the support before and during working abroad.

Thus, even if a company uses several good methods to prepare their expatriates for assignments and is keeping contact with them during their stay abroad, there are, however, gaps when it comes to repatriation. By implementing re–entry trainings, perhaps even executed by a third party, mentoring and explicit communication about the challenge of professional reentry, CAR could provide important implications for their employees working abroad.

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REFERENCES

[1] Adler, Nancy J. (1997): International Dimensions of Organizational Behavior.

Third Edition, Cincinnati: South–Western.

[2] Peltonen, T. (1997): Facing the rankings from the past: A tournament perspective on repatriate career mobility.

International Journal of Human Resource Management, Vol. 8, No. 1, pp. 106–123.

[3] Black, J. S. & H. B. Gregersen (1999): The right way to manage expats.

Harvard Business Review, Vol. 77, pp. 52–7.

[4] Stahl, G. K., Miller, E. L. & Tung, R. L. (2002): Toward the boundaryless career: a closer look at the expatriate career concept and the perceived implications of an international assignment. Journal of World Business, Vol. 37, pp. 216–227.

[5] Baughn, C. (1995): Personal and organizational factors associated with effective repatriation, in J. Selmer (Ed.): Expatriate Management: New Ideas for International Businesses. Westport, CT: Quorum Books.

[6] Paik,Y., Segaud, B., & Malinowski, C. (2002): How to improve repatriation management. Are motivations and expectations congruent between the company and expatriates?. International Journal of Manpower, Vol. 23, No. 7, pp. 635–648.

[7] O’Sullivan, S. L. (2002). The protean approach to managing repatriation transitions, in International Journal of Manpower, Vol. 23, No. 7, pp. 597–616.

[8] Linehan, Margaret & Scullion, Hugh (2002): The repatriation of female international managers. An empirical study.

International Journal of Manpower, Vol. 23, No. 7, pp. 649–658.

[9] Paganus, Solja (2005): Finnish Business Repatriates’ Coping Strategies.

Helsinki: Swedish School of Economics and Business Administration.

[10] Interview with a German Young Professional, conducted by Markus Gotzig & Anna–Lena Müller, February 9, 2012.

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6. Employer branding and talent management Christopher Sabel, Simon Sängerlaub, Lucas Tierny & Marion Tourney Neyron — with contributions from the editors

6.1 Introduction 6.2 Employer Branding 6.3 Talent management 6.4 Talent intelligence 6.5 Views on young talents 6.6 Talent management in practice—recruiting, developing and retaining

References

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CHAPTER 6

6.1 INTRODUCTION

In today’s fast paced, interconnected, global corporate world, any Human Resource manager has his or her hands full. There is basically an ongoing war for talent in the corporate world, where recruitment offices and head–hunting firms are locating and contacting employees far and wide [20]. The advancement of Web 2.0 and social media has but to increase this phenomenon [21]. Also, when companies are looking to streamline their organizations, the cost of losing talented employees is not looked upon kindly. If a talent leaves the company there is not only the cost of the lost talent but it increases the cost of recruiting and training. Loosing talented employees with experience from intercultural business can be costly for the company, because it has to spend resources on training, for instance, new expatriates and introducing them to the new country. The recruitment process is often both time–consuming as well as costly and resources are needed to assimilate a new employee into the organizational culture.

One particular problem for firms with operations in foreign countries is retaining their returning expatriates. A study showed that one in four or five of expatriates returning home leave their employer within the 12 months of repatriation [1,2]. One reason identified is lack of attention paid to the career development of the employee when the expatriate has returned to the home organization. This is where talent management comes in. One of the goals with talent management is to retain employees and cater to their professional development. Employer branding, on the other hand, is needed when need talent needs to be employed—it makes sure the company is able to attract the best employees.

This chapter deals with two issues that are indirectly related to managing a global workforce, that is, employer branding and talent management. Employer branding and talent management are crucial for any company with intentions of doing intercultural business. Employer branding focuses on how a company can present itself as an attractive employer and therefore attract the best and most skilled employees. And since the competition for, for example, skilled expatriate employees is hard, companies need the best strategies for attracting people who are willing to do foreign assignments.

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Talent management focuses on how a company can work with its current employees and how to improve the processes of recruitment, development and increase of employee’s loyalty.

E M P L O Y E R B R A N D I N G A N D TA L E N T M A N A G E M E N T

6.2 EMPLOYER BRANDING

Employer brand is defined as the combination of 'psychological, economic, and functional benefits provided by employment and identified with an employer' [1]. The goal of employer branding is, obviously, to brand oneself as an attractive employer in order to skim the market off the best (young) professionals. Parment & Dyhre [3] point out that … it becomes increasingly difficult for companies to stay competitive in consumer markets if they are not attractive to employees.

Every company can be sure that if they do not live up to their promises, their own employees will be disappointed. The results can be a lack of spirit, worsening performance and dropouts, which again has a bad influence on customer experiences.

Similar to customers, also employees have values they want a company brand to epitomize. Table 6.1 shows a collection of expectations prospective employees impose on an employer of choice. The expectation vary from expectation regarding general findings over geographical features (India) to different job positions (white– collar, manager) within a company. While different employee groups have different preferences, reputation seems to be recurring in most contexts.

White–collar workers [3]

Managers [5]

Indians [6]

Without specific

– Competence is more

–Prestigious is better

–The employer

– Affective

important than titles

than exciting

of choice should

internal practices,

– Work as self–fulfilment

–Agreeableness, but

be known and

openness,

– Strive for emotional

also ruthlessness,

appreciated by

synergistic organi-

and immaterial

arrogance, aggres-

friends and family

zational values

experiences on and off

siveness and a hint of

work

totalitarianism have a

– Loyalty becomes less

positive impact on job

important

attractiveness

discriminants [7]

– Company reputation is more important than field of activity

117 Table 6.1: Expected employer qualities and benefits.

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As denoted in table 6.1, perceptions of employer attractiveness drift apart across cultures, positions within a company, and individuals. One example is the balance between work and personal life. Some may say that this is an entirely personal issue that every person decides for him/herself. But what matters here are tendencies; if a company is set on branding itself as being a top–paying employer, this might attract many, possibly even the right talents in its home market. The situation will be different when they start looking for loyal long–term employees, employees in or from another country, or just a new department in the home country. In this case the company might experience that the most promising applicants prioritize something completely different than money, be it flex time, personal development opportunities or attractive colleagues. All these are values that differ between cultures.

Imagine Mr. Happy, who has happiness as his highest value. Mr. Happy will embrace working for a company that provides happiness even at a lower salary than the sad company, which offered him a job with a very good salary.

Info 6.1

Employer branding requires that the image the company wants to project is also reflected in the mindset of company’s management and leadership mindset. If a company wants to project, for instance, a youthful outlook, then management and leadership need to accept that young people are required and needed. In such a case employer branding also needs to focus on the qualities the firm looks for when hiring employees. Age as a factor for hiring might for instance be replaced by competency. It would also require that the company creates a working environment that attracts young people. Once somebody has been recruited, promotional criteria should also be revised. Instead of years of experience based promotions, employees could be promoted based on performance.

The example above shows that a key aspect of employer branding is not only about great advertisements and communication efforts. It is about how employees experience the organisation and the reality of working in the company [8].

What should be clear is that a company’s employer brand is a reflection in the mind of current employees as well as key stakeholder in the external market, such as active and passive candidates, clients, customers, and other key stakeholders. “Employer branding is therefore concerned with the attraction, engagement, and retention

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initiatives targeted at enhancing your company’s employer brand.” [9] If a company believes employer branding is only about external communication or recruitment, then the company will never rank high as 'the best place to work'.

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6.3 TALENT MANAGEMENT

Today MNCs and their managers deal with an uncertain and more competitive environment than ever before [13]. The need for innovation and growth becomes even more important, and individual skills are the main factor for firms to compete with their competitors. As a result of globalization, commercial exchange worldwide has increased from $ 89 billion to $ 10 trillion [14]. In order to succeed abroad firms want to be nearer to their customers [15]. Therefore, there is a need to recruit people who are able to understand quickly the culture he or she is facing in order to adapt the company offer by being innovative [10]. An employee has to be quick and easily adapt himself/herself, which requires additional competencies and adaptation capacity [16]. Crossing borders and managing intercultural relationship requires more than just passing the entrance barriers to getting the job: it is necessary to be a knowledge worker. This means having the capacity to lead and work in teams [17]. Employees need to be capable of executing a wide range of tasks at every local and international level. Now more than ever all HR department needs to manage their talents as efficiently as possible [18].

Talent management is a rising trend in human resource management and is clearly linked to employer branding, since it focuses on and offers different tools for attracting employees, developing employees and improving employee loyalty. Talent management can be defined as the establishment of strategies or integrated systems, conceived to improve the processes of recruitment, development and increase of employee’s loyalty. “Taken generally, talent management is the question of recruiting a talent, a global, skilled candidate with high potential, to develop him and make it more efficient in the firm thanks to a training and development program. Talent Management is the solution and new challenge of firms that are managing a global workforce, or prepare themselves to do it, in order to improve the effectiveness and productivity of their workforce and therefore their business” [10, p. 507].

There are a few different approaches to talent management. For some, it is about the improvement of recruiting skills and a way to follow people in the company [11]. For others, talent management is the global process of career management via development of talent skills to keep people in the firm [1]. Due to outsourcing and the use of Internet, talent management can also be described as an acceleration of the human resource practices for external and internal use [12]. To some, talent

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management also involves a question about talent mobility and circulation around the globe to assure the talents availability.

Many firms may have to send people from their home country to manage operations in new markets targeted by the company. Once they have been placed in the new market they acquire more skills and knowledge through challenges and experiences. Such human resources ensure the long–term success of the firm and constitute its competitive advantage. Therefore, the aim should be to keep those talents in the company [1].

HSBC is one of the largest banks in the world and is present in 88 countries. Its business strategy since 2004 has been to gain a better return on investment and cost control in emerging markets. That requires leaders that are able to understand both local and global strategies. In order to reach their goal, they have resorted to a global talent management process by: Identifying the senior business talent pool ––> expanding it to the senior manager level ––> implementing new development program ––> setting the new employee value proposition. [19] Info 6.2

6.4 TALENT INTELLIGENCE

For a long time firms have had structured tools for determining financial and technical resources needed when entering a new market.

For instance, advanced supply chain management tools can provide the firm with information quickly. However, determining whether the firm has enough engineering talents, marketing experience or leadership available is not as structured and quick.

This is where talent intelligence comes in. Talent intelligence is an HR information system to make good and fast decision when managing a global workforce. Talent intelligence gathers complete information into a talent profile using cloud technology.

The profile contains information about an employee’s past experience, educations, skills, competencies, network, achievements and expectations. Such profiles will help talent managers to determine whether the firm has the potential resources needed and where the manager can find it [28]. While talent intelligence systems are a good interface to link leadership development, succession planning, talent mobility and talent pipelines, it might also bring some drawbacks. It is important to weight the social consequence from implementing such an intelligence system, since employees might feel negatively about continuously being evaluated personal performance and competencies. Talent intelligence might even lead to a stronger competition climate

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and increase rivalries between the employees and, thus, lead to a decrease in effectiveness and pleasure at work. Furthermore, cultural characteristics might also influence the effectiveness of talent intelligence. For instance it is not in the Asian culture to communicate about ones own work. In Asian thinking, the organization comes first.

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So the company’s talent manager should never forget to keep a balance between evaluating, giving constructive solutions and improvement feedback to assure the wellness of the employees.

6.5 VIEWS ON YOUNG TALENTS

We summarize the chapter with a discussion between two managers and one director.

They discuss their view on different issues in talent management. Caroline Valent is the ex CEO and founder of the 3 SUISSE´S International branch, called MEZZO, a global call centre that employs 600 employees divided between Tunisia and France.

Aurélie Duquennoy is a specialist and teacher in development and product marketing and has worked thirteen years as an expatriate. Gerard Tierny is a manager of MEDIAMA, a 35 person strong SME specialized in numeric printing of communication support for B2B activities.

(1) Today, which are the essential qualifications a young undergraduate needs in order to work in the international and increasinly competitive world?

C. Valent: Knowhow to use information and communication technologies and the ability to speak English, maybe Spanish, but without any doubts, I would say Chinese.

A. Duquennoy: Nowadays, graduates should be able to understand the environment, in which they will work and live, even if they have not had to deal with any of its criteria before. What they have to get, is immediate and absolute understanding of their environment and of its key rules.

G. Tierny: Obviously he or she should be proficient in several languages and able to connect with people. He or she should eventually be able to build a network towards the realization of shared interests while investing him– or herself locally.

(2) If you were to hire a recently graduated person to make him or her in charge of your future international extension, which qualities would you expect him or her to have?

C. Valent: Know–how, being open–minded and having some relational and

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adaptation skills and capabilities.

A. Duquennoy: If I had to hire a graduate, I would like him or her to be able to invest own time and energy as much as possible in this project. He or she should be able to adapt to this working environment, and more than everything, be open to every rule and new experiences.

G. Tierny: Besides the usual qualities/competences, he or she should especially be able to integrate the accurate human resources to his or her working environment, as well as setting up 'cultural' bridges and interfaces. Before going abroad, being in phase with how the company is working and its ideals. The point is that he or she would develop a strong relation with the company as well as a developed sense of its purpose, so that he or she would be able to manage the difficulty and sensitiveness of to the fact of being away.

(3) Did you notice some skills, modules that schools and universities do not offer and that you think are necessary or essentials? If so, how can the student acquire them by him/herself?

C. Valent: A pragmatic and less dogmatic teaching, and the necessity to execute six months, why not one year, as sales internship.

A. Duquennoy: I noticed that most of the students I talked to were not made aware of the changing world they are going to work and live in. Most of the curriculum I saw is still founded on obsolete information. This should be a necessary change.

G. Tierny: I have a poor knowledge on what schools are teaching, but I can say that the relational, transversal dimensions are hardly evoked.

(4) How do you recognize someone with potential inside or outside of you company?

C. Valent: I recognize an individual with potential according to his or her capacity to act, desire to learn, and capacity to both question him/herself and understand the surrounding environment.

A. Duquennoy: I can‘t explain, I just feel it…watching his or her behaviour and

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motivation.

G. Tierny: Thanks to his receptiveness or should I say interest in problematic issues aside from the usual array of expertise and intervention.

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(5) A talented person has to be pushed forward. How would you develop this talent in your organization in order to make that person responsible of your international development?

C. Valent: He or she has to know the company and its offer and have some management knowledge and skills and show a desire for going abroad.

A. Duquennoy: I think the greatest experience for him or her would be to go abroad as soon as possible, in order to get the most of the intercultural differences.

G. Tierny: Initiate the person in various steps, which would include him or her in the company process; to have a solid reporting and various A/R with people, making decisions and to be able to adjust fast and accurately if needed, and also to be very flexible.

(6) You have to keep skilled and talented persons. Which means would you employ to be sure that this individual you have recruited and then formed, will extend his/her career in your company as long as possible?

C. Valent: I would build an improvement plan and make the person evaluate different jobs and push him or her forward in the company’s projects.

A. Duquennoy: The answer lies in the pleasure the person gets by working at the company.

G. Tierny: Listen to the person, understand his/her needs and wishes, should they be material or immaterial, as well as analyze their role in the overall company project. Work and plan on a relatively long term, spot the main work axis’s and let it go, being neither too far nor too close in order to be able to provide help or to reorient the work.

(7) Which advice would you give to a student in marketing and management today? Or, based on your experience of the international stage, which skills illustrate the difficulty of managing an intercultural team?

C. Valent: Know yourself in order to know the others. Don’t try to be as someone else.

Use the time as a partner.

A. Duquennoy: Get rid of what you know and look at what others do.

G. Tierny: Change your orientation—open your mind at every opportunity. Accept the complexity of the challenge and more than ever in a global context improve your relational skills, respect your interlocutor and listen to him.

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6.6  TALENT MANAGEMENT IN PRACTICE — RECRUITING, DEVELOPING AND RETAINING

The question of recruiting talented people in a global context is problematic for the HR department and manager. First of all, successful recruiting depends on both external and internal factors. Internally the firm has to make an educated guess about future expectations about the direction of the business. Making educated guesses in a global context is even more challenging. There also needs to be close cooperation between the HR department and the talent manager [22]. There might be external factors, such as cultural differences, that will have an impact on decision making.

Secondly, the firm has to choose between recruiting internally or externally.

Whether a firm chooses to recruit externally or internally finding good talent is a question of supply and demand of workers. If the firm wants to recruit internally, it first has to define its talent pool. The aim is to segment it based on an identification process, focusing on the connection between future needs and current resources in the company. The pool of talents also has to be segmented according to core business hierarchies as the main criteria.

If the firm chooses to recruit externally, then there is a question of improving recruiting tools and sourcing intelligence. 1.5 billion individuals have entered the global labour market during the past fifteen years [10], so finding the right talent is increasingly more demanding. If a firm is recruiting abroad, it has to be aware of whether foreign employees have been formed with different beliefs according to their own culture insights. For a large firm it might be useful to have a separate department completely devoted to the identification of cross/intercultural employee issues [10]. This

HSBC has developed six core capabilities to identify its senior business manager talent pool: driving business vision and brand, commercial judgment, leading performance, customer drive, working with others, drive commitment and personal development. HSBC has also defined three additional assessments and two core values to hierarchies in its talent workforce: capability, performance, individual inspiration and the notion of integrity and collegiality.

Info 6.3

would minimize the risk of misunderstandings as well as assuring a better adaptation to firms human resource

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needs.

Thirdly, regardless whether a firm chooses to recruit externally or internally, it has to make itself attractive, visible and easy to approach, even more so if recruiting talents globally. The firm can improve its visibility by improving its presence on the internet

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and especially on different social networks, such as LinkedIn, Facebook, Google+ and so on. For instance, LinkedIn had 150 million members in February 2012 [23].

Using LinkedIn a firm can specify its search, for instance country and city, for possible employees through people’s career pages and it also gives the opportunity to discuss with candidates for a job [24].

“Using the search function of LinkedIn, we are able to narrow down the 90 million users to just a handful of professionals in a particular geography based on a few keywords.” Adam Riccoboni, director at MBA&Company, 2011 [24] With the growth and effectiveness of communication and information technology, individual work demands HSBC have distinguished four keys areas to develop a relevant employee value proposition: • Reward and Recognition • Work Environment • Career and Development • Work and Life Balance Info 6.4

have emerged. The firm can also make itself more attractive by developing different 'employee value propositions' [10]. It involves asking the question why an employee would like to work for the company and why he or she should continue doing so for a long time [25].

Although it is the individual’s task to train and improve his or her skills, knowledge and ways to be effective, it is the firm’s and especially the manager’s task to provide his/her workforce with the opportunity

to do it and to motivate them. From an intercultural talent management perspective this development process has several areas. Talent has to be trained to catch and learn the firms’ and its operations’ main issues as well as the challenges of the firm’s business and environment [10]. Talent needs to be sent abroad for training in order to return to the parent organization even more efficient [1]. Such processes allow workers to gain self–confidence, while receiving attention and comparing himself with the others in an affirmative way. This will also increase motivation and consequently his or her effectiveness. Training programs have to take into consideration people with different cultural backgrounds. A firm cannot assume that foreign employees are able to utilize knowledge from the parent organization [26].

The HR department and manager have to develop new strategies to make sure that the talent who has been recruited and trained will stay. There are several tools to do so. Firstly, offering attractive career opportunities constitutes a prerequisite. It is the role of the manager to provide challenging work assignments to allow employees

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to develop their capabilities. The employees also want the company to have a clear and established strategy regarding its business development and they want to be involved in it. Employees also attach importance to working in an innovative environment and using new tools [27]. The salary also constitutes a criterion of importance even if the worker does not emphasize it. A salary has to be appropriate and fair. The idea of offering incentive pay or bonus on the basis of team merits and not on individual ones, constitutes a good measure to gather employees abroad on a common goal, especially if it is a team consisting of people with diverse cultural backgrounds [27].

A final note on retaining talent is that companies in emerging markets are showing an increased interest in talented people from Western countries, and companies from emerging market are competing for top talent from developed countries. When firms from emerging markets are expanding globally, they are sure to attract talent from western firms, increasing the need for firms to have a working talent retention program.

REFERENCES

[1] Wollard, Stuart, (2010): Managing Talent across a global workforce. Strategic HR Review, Vol. 9, No. 5, pp. 5–10.

[2] Ernst & Young (2009): Managing today’s global workforce, URL: http://www. ey.com/...Global.../Managing_Todays_ Global_workforce.pdf (accessed February 9, 2012).

[3] Parment, Anders & Dyhre, Anna (2009): Sustainable employer branding.

Guildelines, worktools and best practices, Samfundslitteratur: Fredriksberg.

[4] Davies, Gary 2008: Employer branding and its influence on managers.

European Journal of Marketing, Vol. 42, No. 5/6, 2008 [5] |7] [6] Kapoor, Vikram 2010: Employer Branding: A Study of Its Relevance in India. The IUP Journal of Brand Management, Vol VII, 1 & 2, 2010.

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[7] King, Ceridwyn; Grace, Debra: Building and measuring employee–based brand equity.

European Journal of Marketing, Vol. 44, No. 7/8, 2010.

[8] Krishnan, Sandeep K. (2012): The importance of employer branding, URL: http://www.deccanherald. com/content/109808/importance-employer-branding.html [9] Minchington, Brett & Estis, Ryan (2009): 6 Steps to an Employer Brand Strategy, May 18, 2009, URL: http:// www.ere.net/2009/05/18/6-stepsto-an-employer-brand-strategy/ [10] Schuler, Randall S., Jackson, Susan E. & Tarique, Ibraiz (2011): Global talent management and global talent challenges: Strategic opportunities for IHRM. Journal of World Business, Vol. 46, pp. 506–516.

[11] Mirralès, Pierre (2007): La gestion des talents emergence d’un nouveau modèle de management. Revue Management et Avenir, No. 11, pp. 30–42.

[12] Nicholson, Sean R. (2009): Do you know your Employees? Social Intranets As The New Talent Management System. SocMedSean, URL: http:// www.socmedsean.com/do-you-knowyour-employees-social-intranets-asthe-new-talent-management-system/ (accessed February 19, 2012).

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[13] Berson, Y., Erez, M., Adler, S. (2004): Reflections of organizational identity and national culture on managerial roles in a multinational corporation. Academy of Management Best Papers Proceedings, August.

[21] Hollon, John (2011): News and Trends, Talent Management, Are you ready for war for talent 2.0? TLNT The Business of HR, URL: http://www.tlnt.com/2011/03/02/ are-you-ready-for-war-for-talent-2-0/ (accessed February 22, 2012).

[14] UNCTAD (2008): World investment report, URL: http://unctad. org/en/docs/wir2008_en.pdf (accessed February 1, 2012).

[22] Kumar, Pankaj (2011): Human Resource Planning, Process Methods and Techniques, URL: http://www.slideshare.net/ birubiru/human-resource-planningprocess-methods-and-techniques (accessed February 17, 2012).

[15] INSEE (2008): Mondialisation et compétitivité française, l’opinion des chefs d’entreprise de l’industrie In Institut National Statistique, URL: http://www. insee.fr/fr/themes/document.asp?ref_ id=ip1188&reg_id=0 (accessed February 1, 2012).

[16] Rich, Motoko (2010): Factory jobs return, but employers find skills shortage.

The New York Times, July 1, 2010, URL: http://www.nytimes. com/2010/07/02/business/economy/02manufacturing.html (accessed February 5, 2012).

[17] Rosen, Evan (2011): Every Worker Is a Knowledge Worker. Bloomberg Busineesweek, URL: http://www. businessweek.com/managing/content/ jan2011/ca20110110_985915_page_2.htm (accessed February 5, 2012).

[18] Meykens, M., Von Glinow, M.A., Werther, W.B. & Clarke, L. (2009): The paradox of international talent: alternative forms of international assignments. The International Journal of Human Resource Management, Vol. 20, No. 6 (June), pp. 1439–1450.

[19] Womack, Adelina (2010): Global Talent Management at HSBC, March 23, URL: http://www.slideshare.net/ adelinawomack/global-talent-management-at-hsbc-5690427 [20] Stone, Thomas (2012): Strategic Talent Issue for 2012 and Beyond: Leadership Development, Talent Mobility, and Building Critical Talent Pipelines, January 2012, URL: http://www.taleo.com/talent-management-blog/2012/01/27/ strategic-talent-issues-for-2012-and-beyond-leadership-development-talent-mobility-and-building-critical-talent-pipelines/ (accessed February 24, 2012).

[23] Wasserman, Todd (2012): LinkedIn hits 150 Million Members, URL: http://mashable.com/2012/02/09/ linkedin-150-million-members/ (accessed February 25, 2012).

[24] Lauby, Sharlyn (2011): How to recruit globally using LinkedIn in Openforum. com, Powering Small Business success, URL: http://www.openforum.com/articles/ how-to-recruit-globally-using-linkedin (accessed February 23, 2012).

[25] Irvine, Derek (2012): Talent Management, Retaining employees: is it about better pay of better culture? TLNT The business of HR, URL: http://www.tlnt.com/2012/01/18/ retaining-employees-is-it-about-better-payor-better-culture/ (accessed February 17, 2012).

[26] ITAP International (2012): Global Workforce training and development overview, URL: http://www.itapintl. com/whatwedo/globalworkforcetraining/globaltraininganddevelopment. html (accessed February 19, 2012).

[27] Wheeler, Kevin (2011): HR insights, HR management, Why people leave organizations — and 4 things they want if they stay.

The business of HR, URL: http://www. tlnt.com/2011/06/02/why-people-leaveorganizations-and-4-things-they-want-ifthey-stay/ (accessed February 18, 2012).

[28] Doherty, Richard (2012): The talent management blog, URL: http://www.taleo. com/talent-management-blog/author/ rdoherty/ (accessed February 9, 2012).

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7. Culture adds flavor to the brand managers work Christopher Sabel & Simon Sängerlaub

7.1 Introduction 7.2 The concept of brand identity 7.3 Integrated branding — a holistic brand management model 7.4 Challenges of building brands in different countries 7.5 Brands and consumers in different cultures

References

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7.1 INTRODUCTION

Today we live in a world of multiple choices when it comes to buying tools and a myriad of other products, and with more choices than during any other century before.

For companies, brands are more important than ever, as brands make products distinguishable from those of the competitors. This also concerns services, places, companies and people themselves. The number of choices simply grows, although a lot of products become technically more identical. For instance, one could argue that Peugeot has a better range of colors or that their new cars smell better, but when comparing their model '107' with Citroën’s 'C1' or Toyota’s 'Aygo' one does not need to be a car expert to notice that these cars are basically identical.

Figure 7.1: Hard to distinguish for people without brand knowledge and cone cells: Toyota Aygo, Peugeot 107 and Citroën C1 (fltr).

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The reason for this is that the three car manufacturers in the example above, from France and Japan, cooperated when building their compact cars, only leaving some small features unique for each brand. Even so, there is a price difference between the products. So why are we willing to pay considerably more for a car just because

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it for instance has a lion emblem and a slightly more cheerful radiator grill than its competitors?

The original reason for branding products was to distinguish a producer’s superior quality of products from the products of his competitors. Another reason was introduced in the 16th century at the latest, when European emperors awarded royal trademarks to famous goldsmiths and merchants, raising their products to a more prestigious level available only to aristocrats and wealthy townspeople [1].

These are just two of the many different values that brands can impersonate today.

The crucial thing is to make people realize that your brand is the right choice for them, and one way of doing it is to highlight that the brand advocates the same unique values as the people who will buy it have. These shared values enable your brand to build a connection to its customers and by that give it a competitive edge.

If we were Peugeot and our potential customer was a Homo economicus, i.e. a completely rational decision maker looking for the best cost–performance ratio, all branding efforts would be in vain. Homo economicus would simply buy the cheapest of these three cars. But luckily we search extremely hard to find any homo economicus customers. Instead, culture, personal experiences and many other things influence customers' decisions. According to these influences a person constructs a set of values that guides (purchase) actions.

7.2  THE CONCEPT OF BRAND IDENTITY

There are many definitions of a brand, however, mostly focusing on the perceived or measured value brought by the brand. A brand can be seen as nothing more than a name that influences buyers [2]. The basis of a brand is its identity, the tangible and intangible characteristics of a brand that are seen, felt and communicated [2]. Kapferer [2] defines six parts, which compose brand identity.

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Picture of sender Physique

Externalisation

Personality

Relationship

Culture

Reflection

Internationalisation

Self–image

Picture of recipient

Figure 7.2: The Brand Identity Prism. [2, p. 182]

1. Physique: A brand has a physical character based on clearly visible features and appearance. Physique is the brand’s tangible asset. The physique of a brand also points to the creator or owner of the brand, as the owner determines the physique. Many might say that appearance is not important, but would you buy a label–less soda or a green ketchup?

2. Personality: Brands communicate products. But not every brand communicates products in the same way. Differences in this communication are defined as brand personality. The main issue is how the brand should be perceived.

3. Culture: The brand culture is at the core of the brand. Culture is composed of the underlying values the brand has and communicates. Every brand has a culture that should underline all the products. Culture furthermore shows fundamental ideas and the view on the world the brand has. This directly reflects on the customers the brand attracts. Are you rather the Mercedes type that wants to have a reliable high–quality car, or a Ferrari type, who embraces a fast, tomboyish way of life?

4. Relationship: A brand is a relationship. Brands define how to deal with

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customers and are at the interface between company and consumers. This is of special importance for the service sector where interaction with the customer is vital.

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5. Reflection: Brand reflection builds up over time and consists of the image the brand buyers or users possess.

6. Self–image: If reflection is the outside mirror of the brand, self–image is the brand’s own internal mirror. By buying a certain brand we also develop a certain relationship with ourselves. The self–image of a brand is how we want ourselves to be seen.

As the brand identity prism shows, all six aspects are interrelated and influence each other. Additionally, they are all about communication. A brand is a measure of communication itself. Therefore brands can only exist if there is communication. As in any communication process, there is a sender and a receiver. For brand managers the reflection and self–image can help to find the receiver. The sender, on the other hand, determines the physics and personality. Relationship and culture helps the brand to build a bridge between those two and bring them together. Furthermore, you can divide the brand identity prism vertically. The facets to the left (physique, relationship and reflection) are the social facets, which give the brand its outward expression. All three are visible facets. The facets to the right (personality, culture and self–image) are those incorporated within the brand itself, within its spirit.

7.3 INTEGRATED BRANDING — A HOLISTIC BRAND

Holistic brand management model To illustrate the depth of brand influence on company’s operations, a limited number of models have been introduced.

A model by Shaun Smith [3] stresses how a brand proposition, that is the benefits this brand actively communicates to the outside world, is only the tip of the iceberg and it is the picture of the sender (compare to [2]). But as foreshadowed in the model (see Figure 4.2), the major part of the iceberg is a consistent block built up of a company’s products, its processes, and the people producing and delivering the customer experience.

Info 7.1

MANAGEMENT MODEL

A fancy advertisement alone will (most likely) not be enough to convince consumers to buy a brand that is more expensive compared to another brand. So there has to be more to branding than just communicating the identity to as many customers as possible. For quite a while now, scholars have stressed the importance of delivering a brand idea across all operations of an organization. This is due to the fact that “customers experience the brand in many ways—through the people who sell it, the product itself, the people who provide after–sales service, the reactions to it of friends and colleagues and so on […]”. Therefore, 'people' is the most important driver of brand loyalty within the marketing

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mix [3]. This calls for a holistic approach to managing a brand, reaching far beyond the creation of a logo, motto and TV commercials.

Proposition managing the expectation People

managing the experience Processes

Products

Figure 7.3: Brand management iceberg. [3, p. 100]

As if this was not complex enough, most brands have to align several differen0t communication strategies and propositions, designed for different stakeholders. Peter Dann [4] points out that this would be almost impossible if there was no congruent brand management: “Understanding the strengths and weaknesses of the brand at each of these points of contact is a key skill for any brand planner. While customers might expect complete consistency at all points, few brands can deliver it in reality; the clever communications strategy will take account of this and attempt to ´tweak´ only the ones that can (and need to) be addressed. With increasing remit and reducing budgets, knowing how to prioritize and play to a brand’s strengths is increasingly important.”

7.4 CHALLENGES OF BUILDING BRANDS IN DIFFERENT COUNTRIES

We all know that there are companies that have been successful in building global and

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globally consistent brands. Interbrand’s notorious 'Best Global Brands Ranking' lists those brands. The top ten are made up solely of US–American brands [10].

Interbrand also identified the critical success factors of its 'Best Global Brands', namely recognition, consistency, emotion uniqueness, adaptability, and management.

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Industry leaders usually reach the highest recognition. This can be measured through brand awareness. Consistency refers to a brand’s visual, verbal, auditory, and tactile identity. To create an outstanding customer experience, an integrated, global marketing effort (like that of for example McDonald’s) is helpful. Emotion refers to a desirable promise, making the brand relevant to the consumer. Emotion uniqueness is just another term for the before mentioned specific brand values in the brand identity prism (figure 7.2). A unique positioning comes with great ideas (like Apple’s innovation–driven marketing) that also have to be legally protected (like Apple does…). Adaptability indicates taking into account local needs, wants, and tastes, which was also the starting point for this chapter. Finally, management refers to the leadership during the 'mission' to embody the brand.

From these factors, consistency and adaptability seem to be somewhat contradictory to each other, as adapting your brand to local needs means you have to give up at least some of your brand’s consistency. Highly standardized international branding might work for a few products and services. An assumption that anyone around the world would

Interbrand 2011 ranking of the top brands (maybe rather the brand–symbols than names?)

embrace a company’s brand just because of the great image it has in its home market does simply not conform with the unique needs of customers in different markets [11]. Chajet [12] states that “marketers simply cannot address the range of consumer needs under a single brand, in a single language, with a single customer experience”, because even within one single continent the gaps between cultures, languages, policies etc. are simply too wide.

(1) Coca–Cola (2) IBM (3) Microsoft (4) Google (5) General Electric (6) McDonalds (7) Intel (8) Apple (9) Disney (10) Hewlett Packard

Instead it is crucial to understand different consumption patterns and that cultural differences do impact branding. Even with top global brands that have a high ratio of standardization, perception of these brands can vary a lot across cultures. Therefore, all six factors of the brand identity prism can change between countries. McDonald’s, as an example, is associated with different things in different Asian countries, namely modernity, cleanliness, a student hangout, and even a dating destination. That is because “the construction of brands becomes a collective process involving a host of 'authors' who all add up their own interpretations: not only consumers and managers, but also popular culture intermediaries in different cultural context”. [13] Brands in certain industries can even function as 'cultural anchors for the immigrant population living in various host countries', but are not necessarily perceived in

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the same way by those target groups outside the home market [14]. For example, Bollywood movies may have a broader cultural meaning for Indians living outside of India. As a consequence, Roll [11] pleads to weave the brand into the cultural fiber, even if a brand can only provide the yarn and accompany the process, because the weaving is done by people. And just a small proportion of those people are listed on companies’ payrolls. What are the benefits of these complex efforts?

“Research has demonstrated that people choose brands which are congruent with their self–image”. [15] Achieving this synchronization allows brands to establish customer relationships that are more profitable and lasting.

Still, though the concept of singular global brands has its limitations, Interbrand [21] names some managerial implications that are very well suitable for any brand on its way to foreign markets: •

Seek Out Insights: If characteristics are shared across cultures, the brand can adopt them globally.

•

Integrate Local Intelligence: Not only to keep operations smooth, but also to be open for 'the next big thing' and having the first mover advantage.

•

Team: A brand management team is crucial to create, review and improve brand performance.

•

Investment: Major assets demand capital investment, even if they are intangible. Brands are a perfect example for that.

When building a global brand, the challenges are those, which Interbrand originally promoted, namely to remain consistent, including brand name, brand visuals, sound elements (brand physique) and the brand personality [16]. In reality, many companies do not even make an effort to translate their website into different languages, even though most visitors will stay longer on a website and are willing to buy more when the content of that site is in their native language [17]. While it is rather easy to gather

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information about a country’s import regulations and trade laws, finding out about cultural do’s and don’ts can become very difficult without having insider knowledge [18]. This knowledge is fundamental though for deciding on how to brand oneself within different cultural contexts.

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7.5 BRANDS AND CONSUMERS IN DIFFERENT CULTURES

There are almost countless studies on consumer preferences and behaviors. Many of those refer to the cultural dimensions introduced by Hofstede [19]. Murphy & Scharl [20, p. 308] for example found out that “in countries with strong cultural values of masculinity and collectivism, international business managers should pay homage to local domain names for websites and employee email addresses.” Another study

by Eisingerich & Rubera [15] found that the effect of brand innovativeness on brand commitment is stronger in individualist, short–term oriented countries with a low power distance (e.g. UK) than in collectivist, long–term oriented countries with high power distance (e.g. China). The authors also state that customer orientation and corporate social responsibility had positive effects on consumers’ attitude towards a brand in China, but none in the UK, whereas brand self–relevance (the relevance of the brand for the individual consumer) was stronger in the UK. Even though such findings are not that surprising, there still seem to exist people in executive positions who successfully ignore them. In contrast, any brand manager should be thankful to have access to information about customer preferences before wasting money on measures that are not even appreciated by the respective target groups.

Branding is not just what Western scholars and practitioners promote it to be. Even in developing countries that may not have been open to Western brands that long, there is understanding of branding. Simply applying the same principles as in the USA and Western Europe could fail short of these different brand cultures. Instead, a cross–cultural perspective can help understanding in which situations certain concepts of branding really can be helpful [13].

An example: branding in Asia We turn to the world’s most populous areas to exemplify issues international brand managers can come across. The emerging Chinese middle class is often characterized as being eager to “spend their new–found wealth, and they use brands as signposts to guide their spending” [12, p. 185], whereas the vast majority are rather non–affluent, price conscious and nationalistic consumers. Internet users are growing in number and consist to a large part of young, well educated middle class people. They are more receptive to information about new products, contrary to rather critical and cynical internet users in the West [22], which allows a better dialogue with those groups.

Chinese brands therefore often use aspects of national pride such as traditional

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symbols and words. A similar divide between old consumers and the younger, more Western oriented generation can be seen in India. Here too, national brands are emerging and receiving good feedback by the population, which is proud of its rich cultural heritage [23]. This makes it even harder for foreign brands to establish themselves, taking also into account the strict trade laws India puts on foreign owned firms.

As heard before, naming is one of the most basic questions when entering new markets. Re–naming your brand for the Chinese market is a must, since otherwise the Chinese distributors or customers will do it themselves. The process must be thought through very well because of the many dialects and different pronunciation possibilities of Chinese Characters. Brand names in China traditionally communicate attributes such as benefits, values, beliefs or product characteristics. This tradition is valued by the consumers and helps brands promote their identity. On the other hand, when promoting something inventive, a direct translation without additional attributes might be a suitable option in certain industries, too [24]. For example, many Japanese companies avoid cultural and ethnic references in their brand architecture, which reduces complexity during internationalization [13]. Also, possible negative country– of–origin effects can be avoided, which is not so relevant for Japan, but is so for cheap manufacturing countries such as China or Malaysia.

Because of the counterfeit and product safety discussion concerning many Chinese producers, even the Chinese consumers are alerted. For that reason, product safety is a popular branding value for Chinese producers [12], similar to Scandinavian car manufacturer Volvo’s safety and quality branding strategy, which normally should not work at all since safety within the car industry is a matter of chance rather than a unique feature. Anyways, if a company wants to build a consistent global brand, it must identify a core value that is applicable across cultures, build its brand personality and positioning around that value and execute this construct through marketing (see [16]).

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It is noteworthy that when referring to culture, territorial categories such as 'regional', 'national' or 'global' may not always hit the spot [13], cultural grouping can be based on many other factors, as profession, hobby, etc. Various cultural communities can be addressed more accurately through different channels, one of which being social media. And more than that, these communities even co–author brand meaning.

The road for Westerns manufacturers to establish their own brands is Asia and China is a bumpy one. Western firms may still have a branding advantage over Asian firms. Many Asian firms are family–owned and have a mentality of trading. They are used to narrow profit margins, conducting push marketing rather than pull marketing, which means they are concentrating on sales and channels instead of branding and positioning. Also, the often rigid hierarchies prevent bottom–up information flow and innovation, which is necessary for successful branding. Branding is rather seen as a temporary 'special project' [12], similar to how Western companies approached branding in the early days. However, recently Asian firms have started to realize that there is a possibility to incrase the profit margins, since western brands already have equally low production cost but higher margins. [25]. Even though branding does not guarantee success for western firms in Asia, it might be the only advantage western firms have. But increasingly western firms are finding themselves competing with stronger Asian and Chinese brands.

One example of an Asian brand that fully succeeded in globalizing its brand values and image is Singapore Airlines. The company managed to identify that friendliness is of high value not only in Singapore, but could also be exploited around the world in the form of their unique selling proposition (USP).

[18]

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REFERENCES

[1] Meldau, Robert (1967): Zeichen Warenzeichen Marken. Gehlen: Bad Homburg/Berlin/Zürich.

[2] Kapferer, J. N. (2008): The New Strategic Band Management — creating and sustaining brand equity long term, 4th edition, London: Kogan Page.

[3] Smith, Shaun (2009): Brand Experience.

In: Clifton, Rita et al. (Eds): Brands and Branding. Princeton: Bloomberg Press [4] Dann, Peter (2002): Brand communication beyond customers. In: Baskin, Merry & Earls, Mark (Eds.): Brand New Brand Thinking brought to life by 11 experts who do. London: Kogan Page.

[5] Wilden, Ralph, Gudergan, Siegfried, & Lings, Ian (2010). Employer branding: strategic implications for staff recruitment. Journal of Marketing Management, 26(1), pp. 56–73.

[6] Parment, Anders & Dyhre, Anna (2009): Sustainable Employer Branding — Guidelines, Worktools and Best Practices. Liber: Malmö.

[7] Davies, Gary (2008): Employer branding and its influence on managers. European Journal of Marketing, Vol. 42, No. 5/6.

[8] Kapoor, Vikram (2010): Employer Branding: A Study of Its Relevance in India. In: The IUP Journal of Brand Management, Vol. VII, 1 & 2.

[9] King, Ceridwyn; Grace, Debra (2010): Building and measuring employee– based brand equity. European Journal of Marketing, Vol. 44, No. 7/8.

[10] Interbrand (2012): 2011 Ranking of the Top 100 Brands. URL: http:// www.interbrand.com/de/best-global-brands/best-global-brands-2008/ best-global-brands-2011.aspx (accessed February 20, 2012).

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[11] Roll, Martin (2009): The Impact of Culture on Branding. URL: http://www.brandingstrategyinsider.com/2009/05/the-impactof-culture-on-branding.html (accessed February 2, 2012).

[13] Cayla, Julien; Arnould, Eric J. (2008): A Cultural Approach to Branding in the Global Marketplace. Journal of International Marketing, Vol. 16, No. 4.

[14] Guzmán, Francisco; Paswan, Audhesh K. (2009): Cultural Brands from Emerging Markets: Brand Image Across Host and Home Countries. Journal of International Marketing, Vol. 17, No. 3.

[15] Eisingerich, Andreas B. & Gaia Rubera (2010): Drivers of Brand Commitment: A Cross-National Investigation. Journal of International Marketing, Vol. 18, No. 2.

[16] Whitelock, Jeryl & Fastoso, Fernando (2007): Understanding international branding: defining the domain and reviewing the literature.

International Marketing Review, Vol. 24 Issue 3, pp. 252–270.

[17] Halliburton, Chris & Ziegfeld, Agnes (2009): How do major European companies communicate their corporate identity across countries? — An empirical investigation of corporate internet communications. Journal of Marketing Management, Vol. 25, No. 9–10.

[18] Krueger, Dale & Nandan, Shiva (2008): Branding in the global arena: the role of culture. Marketing Management Journal, Vol. 18 Issue 1, p. 30.

[19] Hofstede, Geert (1983). Culture’s Consequences: International Differences in Work–Related Values. Administrative Science Quarterly 28 (4): 625–629.

[20] Murphy, Jamie & Scharl, Arno (2007): An investigation of global versus local online branding. International Marketing Review, Vol. 24, Issue 3, pp. 297–312.

[21] Interbrand (2006): Lessons Learned from Global Brands. URL: http://www.brandchannel.com/ papers_review.asp?sp_id=1260#author (accessed February 18, 2012).

[22] Riegner, Cate (2008): Wired China: The Power of the World’s Largest Internet Population. Journal of Advertising Research, December.

[12] Chajet, Jonathan (2004): Branding in Asia.

[23] Raison, Max (2004): From elephant to In: Clifton, Rita et al. (Eds.): Brands and tiger: brands and branding in India.

Branding. Princeton: Bloomberg Press.

In: Clifton, Rita et al. (Eds.): Brands and Branding. Princeton: Bloomberg Press.

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[24] Alon, I., Littrell, R. F., & Chan, A. K. K. (2009): Branding in China: Global Product Strategy Alternatives. Multinational Business Review, 17(4), 123-142.

[25] Birnik, Andreas; Birnik, Anna窶適arin & Sheth, Jagdish (2010): The branding challenges of Asian manufacturing firms. Business Horizons, No. 53.

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8. Case: Country of origin based branding — considerations Swenja Krahn & Nadine Stumpf

8.1 Introduction 8.2 What is the country of origin effect about?

8.2.1 Key points concerning the COO effect

8.3 The case company

8.3.1 Country of origin and brand considerations

8.3.2 Country of origin and organizational considerations

8.3.3 Country of origin and management considerations

8.4 Considerations for future research on country of origin

Appendix: themes for the interview References

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8.1 INTRODUCTION

Nowadays, companies from all over the world are trying to find new ways of competing. Those companies seek to convince customers of the quality of their brands, and brands are increasingly perceived as one of the only remaining tools a company has for differentiating from other companies and gaining a competitive advantage.

As was discussed in the previous chapter about branding, there are different ways a company can brand itself. Quite often a brand is linked to quality. But, is the promise to offer good quality enough to convince international consumers, since quality in a sense is a subjective concept. In a world where consumers are increasingly seeking originality, stories and trying to connect with a brand on a personal level, might a company’s country of origin offer the extra edge needed to create for instance loyal customers? Could for instance consumers image of Finland in some way function as a deciding factor when consumers make their choice between several similar products?

For instance, 'made in Germany' has for a long time been linked to high quality and endurance. If that brings an advantage to companies from Germany, what is preventing companies all over the world from exploring such an advantage?

Although there are possible positive effects for a brand, according to resent studies, international firms often prefer to leave their customers uninformed of a product’s origin as the current system of global sourcing is predominantly based on low–cost manufacturing regions which rather have a bad image [12]. In consequence, companies use more uninformative labels like 'Made in Europe' or 'Made in Asia' if this is permitted. What could be the motive for this? Are there specific risks with using country of origin as a feature of a brand? If that is the case, if a company would decide to promote its origin, what are the issues the company needs to take into consideration? What is required by the company? Are there different ways to promote country of origin in a product?

This chapter develops further our understanding of branding from country of origin perspective. The chapter discusses what a company needs to take into consideration when considering branding based on country of origin. The theoretical considerations are complemented with insights from a Finnish food company operating internation-

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ally and promoting some of its products using a country of origin label. As both the company and the interviewee asked for discretion, we use FinnFood as a code for the case company and call the interviewee Matti, assistant product manager at FinnFood.

Finnfood and Matti are fictional names.

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8.2 WHAT IS THE COUNTRY OF ORIGIN EFFECT ABOUT?

COO is one of the most frequently studied issues of international marketing [1].

Despite this, one thing concerning the definition of the COO effect is that there is no consensus on what it actually is [2]. This has resulted in lots of different approaches.

Whereas some authors have focused on the mere 'made–in' labeling as the only way to indicate the COO, later definitions have included the quality perception of products and services by consumers, or it has been related to the concept of stereotyping and country images [3].

Han [4] provides a useful explanation of the COO effect. In his opinion it operates in two different ways. Firstly, it can appear as a halo effect. In this case the consumer judgment of a product is based on his/her perception and image of the country.

One example would be “Overall the Germans make good quality products. This is a washing machine from Germany, and therefore it must be a product of good quality.” Secondly, it can appear as a summary construct by “abstracting previous beliefs about attributes of products and services from a particular country into a chunk of information” [5, p. 275]. An example would be: “I know, from experience that the Japanese cannot make good wine. This is a wine from Japan; therefore I expect that this wine is a product of bad quality.” COO as a summary construct is used by consumers who have greater knowledge about the respective product category from a specific country. This

Two main influencing variables on COO have to be distinguished: the general country image and the product–specific country image.

[1]

knowledge is then generalized to that specific product category [5].

The COO effect varies not only between different product categories but also between sexes, ages, social Country Images are dynamic!

backgrounds, attitudes, level of knowledge about the product etc. For example, “consumer age has been

Remember that the influence of COO and its related images are not stable and consistent over time. After dramatic events, such as the nuclear disaster in 2011 in Japan, customers might have greater interest in the actual country of manufacture, especially in food and beverages (cf. [1, 6]). On the other hand, “while the image of a country affects the image of its products, experience with these products causes revision in the country image”. [2, p. 23] Info 8.1

identified as a variable that significantly corre,lates with ethnocentrism. In particular, older consumers were found to be much more ethnocentric than younger ones“ [6, p. 292]. Therefore, one could suspect that the COO of a product and its labeling is less important to younger generations in at least some product categories, whereas for older people COO is usually more important. Highly ethnocentric consumers avoid purchasing imported products because they are likely to believe that this

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harms the domestic economy and causes unemployment [6].

In most countries there are overall preferences for domestic products even though foreign products are cheaper or might have a better quality [5]. But researchers found that there are also countries or regions, in which consumers prefer foreign products, e.g. Indian, Turkish, South African and Mexican consumers [7]. Consumers tend to associate countries with specific products and vice versa [6].

The COO label has a stronger influence on a consumer who is “unfamiliar, lacks knowledge or is not motivated to process the information” about a product [6, p. 292] (see also [8]). For this reason marketers have to decide which kind of people they want to target; novices or experts. A strong brand cannot compensate a negative COO perception, but a positive one can compensate a weak brand [6].

8.2.1 KEY POINTS CONCERNING THE COO EFFECT

When it comes to managing the COO effect, there are different options for the marketing manager. Which one the marketing manager is to choose or combine depends on (1) the respective results of the research he/she has conducted beforehand and on (2) how the COO is perceived or whether it will play a role in the respective product category at all. We list the following options: •

Use a brand name that sounds like, e.g., Finnish, or indicate the COO on the packaging or product itself in case this adds value for the target group [8].

•

Transfer the positive country image to the specific product by communicating the positive stereotypical attributes, characteristics and images of the country of origin.

•

Introduce the country as being great for the product type by informing the potential customers through, e.g., images that create associations with the high quality of products.

•

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Invest in building a strong brand to compensate the negative product–specific COO effect, in case the customers will appreciate a strong brand more than the

The current trend in COO research Currently, the discussion evolves around whether the COO effect is at all relevant in certain customer segments in relation to certain products (cf. [1]).

Therefore, the marketer has to find out if the product–specific COO effect is also a target group–specific one.

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COO. Building a strong international brand is something that most likely only large companies are able to implement. Therefore, the interaction between the brand and the associated COO has to be investigated before. This is especially important for certain industries. For example, this attempt would not be recommended for the service industry, since research has found that a strong brand could not compensate for a negative COO perception. By contrast, a positive COO could compensate a weak brand [6].

•

Borrow a COO, which potential customers believe to be 'particularly suitable for the manufacture of a particular product' because of its 'physical, climatic or social environment' [6, p. 293]. In this case, the actual country of manufacture should not be mentioned, except for mandatory indications. Instead, the borrowed origin of a favorable country needs to be extra emphasized. There are different ways to stimulate associations in order to give the product the desired identity.

Choose for example country typical symbols, letters, names that sound like being from the desired country of origin and a packaging design that is associated with the desired country [3]. Researchers agree that the country that consumers associate with the brand and/or product has a stronger impact on the consumer judgment than the origin label.

Borrowing the desired COO is a promising strategy when the marketing department succeeds in accomplishing it. Frequently, some providers of products that are manufactured in low–wage countries have to pursue the strategy of ‘Borrowed Origin’ to gain at least some advantages [1].

•

To reduce the price when entering a new market for which the COO might not be a preferred strategy, since this extrinsic product attribute can compensate a negative COO effect. In regards to that, marketing managers have to gain the information on the level of monetary discount, the consumers demand to accept a less favorable origin in relation to a specific product and brand [6].

•

Identify the relevant target group and get thorough knowledge of it.

Although this step should be the primary concern of every marketing effort, it should be noted that the COO effect is also highly dependent on the target group.

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•

If the country of origin of the product is perceived in the target market as being 'risky', then use risk relievers, e.g., guarantees by third parties, tests by independent laboratories or warehousing within importing countries [9].

In summary, it can be said that it is almost impossible to make a general statement about the COO effect, since it is a very complex phenomenon that depends on numerous and non–calculable influencing factors.

8.3 THE CASE COMPANY

FinnFood is a big Finnish food company focusing on the production of plant–based nutrition. Its brand portfolio comprises international and local brands, as well as niche products, within categories like breakfast, snacks, dairy and baking. FinnFood started to export its products in the 1960s and started to build production sites abroad in the 1980s. Later on, the international-

Legal aspects Legal requirements of the COO differ between countries, even within Europe.

Therefore, the marketing management can learn about these requirements by cooperating and working together with legal experts who could be part of the company or as external appointees.

The difference between “Product of Country” and “Made in Country” labeling requirements needs to be taken into account. For example, in Australia the labeling “Product of Australia” means that the product is (nearly) 100 % of local content. To use the labeling “Made in Australia” the product must be substantially transformed in Australia and 50 % or more of the production costs have to be incurred there. On the other hand, in New Zealand the labeling “Product of New Zealand” can be used if at least 50 % of the production cost have incurred in the country. In addition, the last step of manufacture must have taken place in New Zealand. But there is no requirement for the use of “Made in Country” labeling [2].

Info 8.3

ization process was extended through the acquisition of foreign companies. Nowadays, FinnFood operates in more than ten countries worldwide, concentrating especially on the Eastern and Western European markets, but also aiming at being present in Asia. The company generates the majority of its sales in Finland, but further internationalization is a big part of the current strategy, along with the aim to become the European leader in its sector. The company plans to grow internationally through organic growth as well as

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further acquisitions of foreign companies. Therefore, FinnFood is continuously developing new products to be able to enter new markets and product categories.

“House of brands” A “house of brands” is one type of brand architecture. The characteristic of a house of brands is a de–emphasized, weak, or unknown corporate entity, which owns multiple strong brands [10]. These brands are to a great extent independent in decision–making and “often operate as individual and/or separate entities with their own budgets and business plans” [10, p. 64]. One example of a house of brands is Procter and Gamble (P&G) which owns well–known brands like Wella, Pringles and Ariel (cf. [11]).

To reach its objectives, FinnFood focuses on the global Info 8.4

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trends in food market, which are health, pleasure, convenience and ecology. These trends are reflected in all actions of the company.

FinnFood’s internationalization has led to the extension of its brand portfolio. It includes Finnish, English, Swedish and neutral sounding brand names along with packaging that ranges from a traditional and natural appearance to a more trendy design. The brands either evoke associations with foreign regions or domestic products, depending on the countries they are sold in. None of FinnFood’s brands is marketed under the company brand name, as it follows the strategy of a 'house of brands'.

Concerning labels that indicate the country of origin, FinnFood uses the 'made–in– Finland' label on at least some of its Finnish and international brands.

8.3.1 COUNTRY OF ORIGIN AND BRAND CONSIDERATIONS

During his expatriation period in a Western European country, Matti worked with one special product category and brand of FinnFood and is now assigned to this brand in Finland. The brand is a local brand that was acquired by FinnFood some years ago and is only sold in the respective country.

The brand Matti was working with in country x has not been changed after its acquisition by FinnFood. It is a very well known brand in country x and this is why a change would not be reasonable. The product would never receive a label indicating Finland as a country of origin, the reason being, in Matti’s words, “We do not add the 'made–in Finland' label, because it does not bring any value to the people in country. People of country x buy brand y because they think it’s a product from country x”.

Another reason is that Finnish products are not perceived as something special in country x and people there prefer domestic products as well. Matti also added that FinnFood would never claim to be a domestic product in a foreign country; “We just leave it as it is. We do not highlight the Finnish aspect”.

In Matti’s opinion it is obvious that sales would go down if this aspect was to be highlighted. FinnFood would love to introduce Finnish brands, as it would save lots of costs for packaging, but it is not possible due to the fact that people in country x would then switch to domestic products. This is also related to the way in which products for the Finnish market and the market in country x are designed. For the Finnish market

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the packaging has to look more natural and traditional, whereas the packaging overall look for country x has to be trendier.

In Matti’s opinion the COO effect is mainly related to 'made–in' labels that can be used to enhance product preference. FinnFood uses these labels especially on the Finnish market. In his opinion this is due to the fact that Finns prefer domestic products when it comes to food, as most of them feel that they have to support their own country. Yet, only in a few cases consumers know that FinnFood is behind the various FinnFood brands. It is more important the brand is a Finnish brand/product.

In general, FinnFood uses the advantage of the internationally known brand names in combination with a trendier appearance to enter new markets. Nevertheless, for niche products the volume sold will not compensate the costs for individual packaging.

Therefore, consolidation of niche market brands takes place in order to reduce costs.

Matti’s advice for those who have an unknown brand name and plan to enter in a new market is to set a lower price in the beginning.

8.3.2 COUNTRY OF ORIGIN AND ORGANIZATIONAL CONSIDERATIONS

Matti mentions the purchasing department as the most important concerning COO. If the aim is to emphasize the origin of ingredients it is crucial to check whether it is possible to get all ingredients from the home country, as this is required by law in order to fulfill such a claim. It is also important to calculate whether using only local ingredients would affect the price of the product. Furthermore, the packaging needs to be changed, in case it is decided to emphasize the COO of ingredients on it. The purchasing department needs to discuss with the marketing department when new packaging could be introduced, as old packages have to be used first.

At FinnFood there is also a department concerned with questions of 'made–in' label usage. The department checks that labels are available in the home country, cooperating with the marketing department. In case the marketing department decides that the usage of a proposed label will add enough value to the product then the 'label' department will apply for it, as the usage of labels products have to meet special requirements.

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The legal department has to be consulted before the decision to make any claims to check if claims and labels that are to be used are in line with regulations. There is, for instance, a legal difference between saying that a product is Finnish and that it is

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produced in Finland. In the first case all the ingredients have to be of Finnish origin whereas in the latter only the biggest part of production has to be done in Finland.

Concerning how and by whom the evaluation of a label’s added value would be made, Matti commented in the following way: “Marketing is all about feelings and intuition”.

Therefore, in case of evaluation it would probably be useful to ask for the opinion of someone familiar with the country or local manager. This is also why FinnFood is now setting up more and more people abroad to be able to improve communication.

8.3.3 COUNTRY OF ORIGIN AND MANAGEMENT CONSIDERATIONS

In order to be aware of how consumers may respond to a company’s products, marketing managers should gain knowledge about how to use the products’ COO as a tool to compete with local and foreign products. Marketing managers of local products can also benefit by knowing to what extent these products have a home country advantage (or disadvantage) compared to foreign products, as well as by finding out against which countries [7]. As Matti explained, the COO importance is evaluated at FinnFood by managers and is a result of a wide knowledge of the target group and the market.

In research indicates a positive COO effect it has to be stressed on the package, for instance in the form of a 'made–in' label. The origin of the product could also be emphasized through country’s typical symbols or colors [1]. If symbols and colors are used, it is important to ensure that they evoke the desired, positive associations.

This can be done for instance through previously conducted studies or using a native translation agency that offer connotation checking. For example, FinnFood uses nature images in Finland and a trendy design in country x because it is aware that the Finnish way would not work there.

In case consumers prefer foreign products, domestic marketers should choose the strategy of ‘Borrowed Origin’ or ‘Foreign Branding’, by referring to a country with a better product–related country image than the actual country. This can be done by the use of country typical letters, syllables or sounds within brand names that arouse associations to a designated country. This way the American sandwich chain 'Pret a manger' conveys a French origin which the company takes advantage of [1]. But managers need to be aware that different product categories may invoke different

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associations. Cross–country consumers may have a positive attitude towards French food, especially baguettes, but may not have positive attitudes towards for example French cameras. Thus, different products coming from the same country can have varying patterns of acceptability, because consumers tend to associate countries with specific products and vice versa [6].

According to Matti, if a company operates in a country where the company has a weak reputation the manufacturer or COO should be indicated in as small letters as possible and placed somewhere on the packaging where it is not seen at first sight.

In order to improve reputation, a new brand design that fits the market could be developed. The use of a native marketing agency and local media for advice would be recommended.

While increasing globalization has lead to consumers feeling that they want to support their own country and firms, there are still many markets where consumers prefer non–domestic products over domestic. The Baltic countries are, according to Matti, a group of such countries. In general, Matti thinks that the perception of Finnish products in the world is good. If a Finish label or design does not add value to people this is due to the fact that “… people just don’t know of Finland, that’s the problem”.

8.4 CONSIDERATIONS FOR FUTURE RESEARCH ON COUNTRY OF ORIGIN

Despite a huge number of studies on the COO effect, the current level of knowledge is still unsatisfactory because among other things invalid single–cue studies are conducted. In particular, the question of its relevance in the marketing practice has been largely neglected [1]. But new insights based on valid multi cue study designs are of major importance for marketing managers since they offer a better understanding of how products and brands are likely to be perceived with reference to domestic and foreign products [1, 7].

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Future research should respond to the complexity of the COO effect by defining the most important influencing factors and including them in a study that is related to a specific product or product class of the respective company. Moreover, companies nowadays increasingly market hybrid products that are produced not only in one country, but for example designed in one, partly manufactured in others and assembled in another one. Therefore, concepts like 'country of brand' and 'country of manufacture' have to be taken into consideration, and by doing this marketing management could also gain new insights for the practice of intercultural marketing management [1].

Literature reveal that “there is less and less marking of origin labels on products in world trade” [6, p. 291], which also this case study also indicates. FinnFood does not label its products on foreign markets because it adds neither advantages nor disadvantages. Thus, one can suspect that Finnish products and the country itself have an almost neutral image internationally. Nevertheless, since customers are very different from each other, Finnish companies should investigate whether there are relevant target groups in foreign countries, where the direct or indirect labeling 'Made in Finland' gives promising advantages.

Multi cue studies on the COO are needed!

More complex multi cue study designs (1) include the plurality of further product attributes (e.g. quality, size, price and brands), and (2) consider changing market conditions and differences between target segments. The use of such a multi–cue study design, instead of a single–cue one, is necessary in order to obtain meaningful results from which adequate implications can be derived [1, 7, 9).

Info 8.5

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APPENDIX: THEMES FOR THE INTERVIEW

Summary of themes for the interview with Matti at FinnFood: •

Matti’s definition of the COO effect

•

The perceived consumer attitude towards Finnish products in the respective country as well as other countries

•

The usage of 'made–in' labels in Finland and the country Matti worked in

•

The reasons behind the decision not to change foreign brand names after their acquisition

•

The reasons for repositioning and make–over of brands that should be marketed internationally

•

The perceived patriotism and ethnocentrism in Finland and other countries

•

How to react as a manager of a product with a bad country image in the targeted markets

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•

How information is gathered

•

Who decides whether the COO will add value

•

Which departments are concerned with COO issues

•

What is the perceived importance of the COO in times of globalization

C A S E : C O U N T RY O F O R I G I N B A S E D B R A N D I N G — C O N S I D E R AT I O N S

REFERENCES

[1] Mai, R. (2011): Der Herkunftslandeffekt: Eine kritische Würdigung des State of the Art. Journal für Betriebswirtschaft, Vol. 61, No. 2, pp. 91–121.

[2] Jaffe, Eugene D. & Israel D. Nebenzahl (2006): National Image and Competitive Advantage: The Theory and Practice of Place Branding. Copenhagen, Copenhagen Business School Press.

[3] Hallberg, Annika (2005): Post–Travel Consumption — Country–of–Origin effects of international travel experiences.

Göteborg, Göteborg University.

[4] Han, C.M. (1989): ‘Country image: halo or summary construct’. Journal of Marketing Research, Vol. XXVI, May, pp. 222–229.

[5] Pecotich, Anthony & Ward, Steven (2007): Global branding, country of origin and expertise: An experimental evaluation. International Marketing Review, Vol. 24, Iss. 3, pp. 271–296.

[6] Usunier, Jean–Claude & Lee, Julie A. (2005): Marketing across cultures.

Harlow, Prentice Hall, 4th Edition.

[7] Balabanis, George & Diamantopoulos, Adamantios (2004): Domestic country bias, country–of–origin effects, and consumer ethnocentrism: A multidimensional unfolding approach. Journal of Academy of Marketing Science, Vol. 32, No. 1, pp. 80–95.

[8] Maheswaran, Durairaj (1994): Country of Origin as a Stereotype. Effects on Consumer Expertise and Attribute Strength on Product Evaluations. The Journal of Consumer Research, Vol. 21, No. 2, pp. 354–365.

[9] Bilkey, Warren J. & Nes, Erik (1982): Country–of–origin effects on product evaluations. Journal of International Business Studies, Vol. 13, No. 1, pp. 89–99.

[10] Davis, John A. (2010): Competitive Success. How branding adds value.

Chichester: John Wiley and Sons, Ltd. [11] PG (2012): Brands. URL: http:// www.pg.com/en_US/brands/index. shtml (accessed February 26, 2012).

[12] Usunier, Jean–Claude, Cestre, G. (2007): Product Ethnicity: Revisiting the match between products and countries. Journal of International Marketing: Vol. 15, No. 3, pp. 32–72.

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9. Web 2.0 in modern branding — will there finally be intercultural communication?

Christopher Sabel & Simon Sängerlaub

9.1 Introduction 9.2 From web 1.0 to 2.0 9.3 From company generated brands to user generated brands 9.4 Developing and managing the integration of social media —

is every product/service suited for social media?

9.5 Can all social media platforms provide the same opportunity for brands?

9.6 The Do’s and Don’ts of branding in the Web 2.0 era 9.7 Brand dangers and look–outs in Web 2.0 branding 9.8 Web 2.0 branding in different cultures 9.9 An outlook on Web 2.0 branding

References

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9.1 INTRODUCTION

For most of the marketers and brand managers branding used to be a one sided process. It was all about storytelling and promoting the values and features of the brand towards the consumers, hoping that their values and customer needs were overlapping. This should then result in attachment towards the brand and repeated repurchases or reuse of the product/service. However, with the development of the Internet, the search for information and communication changed immensely, which deeply affects branding. Brands are even more important in the digital world, because the physical interaction with the branded product or service is completely missing and the interaction with the brand takes place in the web. Interactivity is the key element in branding on the Internet. Famous examples like Amazon.com show how to implement interactivity in online appearance and thus gain advantage over competitors [1]. But how can brand managers develop their online tools to be interactive? And is there a single best approach for everyone? From an intercultural marketing perspective, are consumers in different cultures equally interested in being part of the brand creation process, or perhaps not at all. Are social media suited to build a global brand or do they lack the same scope as traditional branding methods have?

9.2 FROM WEB 1.0 TO 2.0

Former approaches to branding with repeated messages via mass media such as TV, magazines or newspapers are not enough anymore to create a strong brand. The focus today lies on interactions and dialogues between companies and customers. Companies want to create relationships with their customers. Relationships are important, because customers buy the brands they know and trust. Online tools can help to achieve a relationship

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status faster, as they place the brand in front of the customer on a weekly or even daily basis [2].

An excellent example of the use of interactivity in their web–appearance is Amazon.

They were the first company, which used “collaborative filtering”. Collaborative filtering means that recommendations made for a customer are based on the products bought by customers with similar taste. In combination with unfiltered recommendations, this made rating of products possible. Amazon created a customer community with similar interests.

Today it does not seem special but in the 1990s that was something never seen before. However, that is not all Amazon did in the early stage to implement interactivity to their web offerings. In 1997, Amazon wanted to bring interactivity to a new level.

Amazon persuaded the famous writer John Updike to co–write a story with customers who could submit their ideas through the web. In the peak day over 20 000 entries reached Amazon. In the end Updike and 44 co–authors wrote a compelling short story. Amazon’s success is therefore not a coincidence; they knew how to implement interactivity in the early days making their brand look innovative and fresh.

Info 9.2

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PUSH

PULL

PARTICIPATE

WEB 1.0

WEB 1.5

WEB 2.0

PORTALS

SEARCH ENGINES

SOCIAL NETWORKS

YAHOO!

GOOGLE

FACEBOOK, TWITTER

Table 9.1: Development from Web 1.0 to Web 2.0.: the web has evolved significantly over the last two decades; from providing the consumers with information, to actively letting consumers search information, and to the current stage of active participation.

Consequently, former approaches with unanswered mass media are not suited for the dynamic environment of the Internet and do not increase interaction. In the beginning of the web it was common that offline marketing efforts were just repeated on the Internet, which lead to nothing more than a mass of standardized websites. With that, the huge potential of interaction through the Internet was given away. Brand managers soon realized that the hierarchical, one–sided communication methods of mass media were unsuited for the nature of computer–mediated environments [3].

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Figure 9.1: Amazon collaborating with writer John Updike. [1, 4]

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Branding has changed enormously, moving away from a one–sidedly communicated brand message of how wonderful the brand is, to a circular communication between the firm and consumers, but also between and among consumers. A general advantage of online communities is that they are not constrained by time and space. Therefore physical proximity plays no role at all and facilitates the exchange of information.

Additionally, social interaction with many people at the same time is possible [5]. Most of the consumers are not passive and the brand managers have had to lose some of their control in order to make branding in the Internet successful [3]. You could even say that most of the branding today is outside of managerial control, as public dialogues in the Internet about the brand image appear without the company’s involvement and sometimes force managers to act in response to these discussions [2].

9.3 FROM COMPANY GENERATED BRANDS TO USER GENERATED BRANDS

Above all, the so–called user generated content (UGC) is increasingly becoming the focus of brand managers. As a result of highly interactive relationships, user generated content is expected to lead to stronger relationships between consumers and brands. User generated content sites such as YouTube and Wikipedia can create significant brand equity in a relatively short period of time due to their ability to enable interactively created content and value [7]. Today, customers interact, share knowledge and therefore develop the brand among each other without the influence of companies. The image that is created during this process can often conflict with the image the brand owner wants to portray. As customers rather seek information

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about products and brands among each other than from the companies, the shift of power towards more interaction becomes even more visible [7]. The management of content

Nearly everyone knows the company Apple. At some point almost every person have seen at least one of their TV commercials, visited their website or seen their products in the streets, at a friend’s place or simply in a shop. We can say their branding seems to work.

They are distinctive and unique.

But who knows the “Neistat Brothers”? Most people certainly did not in the beginning, some do not remember them anymore and some never did know them.

However Apple will probably always remember them.

When in 2003 Casey Neistat needed a new battery for his iPod after 18 months of use, he was simply shocked as the Apple staff just told him to buy a new iPod, because they did not repair that kind of defect. It was company policy to recommend the customers to buy a new one.

Consequently, Neistat and his brother made a short film “iPod’s Dirty Secret” revealing Apple’s unfriendly customer policies, stating that the battery just lasts 18 months on purpose.

The video was uploaded on YouTube referring to a website (http://www.ipodsdirtysecret.com/) which explained the whole story. Major US news channels such as FOX and CBS picked up the story, as did newspapers like the Washington Post and the New York Times.

Today the website has more than 2.4 million views. Shortly after the release of the website Apple offered replacement batteries and an extended warranty. Apple scarcely escaped a PR disaster.

However Apple learned that just one detractor with a meaningful message on the Internet is enough to damage your brand image if not taken seriously. [6] Info 9.3

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that is generated among consumers is often referred to as user generated branding (UGB). User generated branding is based on the bi–perceptional perspective of the identity based brand management approach. This approach takes both the perceptive of external stakeholders (brand image) and the perceptive of internal stakeholders (brand identity) into account. Given that, in the era of the web 2.0, not fulfilling the brand promise leads to dissatisfaction faster and more intense. Therefore, internal brand management also becomes increasingly important. When employees and business partners 'live the brand', negative brand related user generated content can be counteracted and positive brand messages can be evoked. User generated brand messages are regarded as brand touch points next to corporate communication efforts, affecting a consumer’s brand experience and brand expectations [8].

Brand identity

Company

Brand

Brand image

Internal branding UGB

Customer UGC

Figure 9.2: The concept of user generated branding (UGB). [8]

Taking this into account, user generated branding is something that has to be developed, monitored and managed. Furthermore UGB is not the same as word of mouth and the content that is produced in brand communities. Brand communities represent a network of brand fans or detractors. Therefore word–of–mouth describes a dissemination channel whereas UGB refers to brand related content. However UGB can be generated in brand communities and spread through online word–of–mouth.

Consequently, it is clearly visible that UGB is more than e–branding. While e– branding uses the channel internet to present the brand, UGB uses the interactional approach as explained before [8].

Two major UGB streams can be identified, natural unprompted UGB without interference of the company and actively asked consumer contributions through blogs,

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campaigns and contests. The main idea behind this, besides market research, is idea generation. Additionally it may also be used for customer acquisition and retention [8].

UGB has several advantages over traditional mass marketing methods like TV advertisements. Firstly, the costs for setting up a blog, online community or other online tools are apparently less than for a prime–time TV advertising campaign. Secondly interactional online activities are easier traceable in quantitative (reached people) and qualitative (acceptance of brand message) feedback. However, online tools still cannot replace traditional branding activities because awareness for these programs has to be created first. Additionally, traditional campaigns such as TV spots seem to be more effective regarding long–term brand building [8].

To use the possibilities of the internet, marketers need to shift their focus on repeated messaging to the customer, consequently interacting with the customer. With the help of the internet, customers can be addressed both individually and communally.

Therefore social needs of the customer, such as sharing of consumption related experiences, can be fulfilled while offering customized products and services [7].

Media

Traditional approach

Social media approach

Television, radio, print etc.

Social networks, blogs, microblogs, online communities etc.

Spending

Cash, cost

measurement

Trustworthiness, authenticity, transparency, investment (workforce, money)

Delivery

Direct from marketer, unedited

From source (company, customer,

Objectives

Awareness, knowledge, recall,

Conversation, collaboration, sharing,

purchase etc.

engagement etc.

employee, etc.)

Table 9.2:Â Differences between traditional and user generated approach. [9]

This is of course not that easy. There are many things to consider when using social media and some questions have to be asked. Which vehicles should be used? Can the use of social media also contain risks? Are social media affected by culture? Is

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the branded product/service suited for social media? Are social media really that powerful? And of course, how can managers actually use social media efficiently to get the most out of it?

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9.4 DEVELOPING AND MANAGING THE INTEGRATION OF SOCIAL MEDIA — IS EVERY PRODUCT/SERVICE SUITED FOR SOCIAL MEDIA?

One of the most important questions before engaging in social media is the question whether the to be branded product or service is suited for this environment. The question concerns whether social media are of use for every company. Some businesses might not need to be active on social media, because their customers are not active online. Especially elderly people might find conventional media more useful as they are mostly not connected in the web 2.0 [10]. The product category can also matter. For example, luxury brands such as Prada and Versace neglected the online environment completely until 2005, respectively 2007. It is not clear whether it is useful for these brands to engage in web 2.0 as the luxury concept of exclusiveness contradicts the concept of the internet as an equalizing mass media [11]. Luxury brand marketers feared that the luxury–effect would suffer from an online appearance. An important part of luxury brands is the actual shopping experience, which should be exclusive.

Shopping on the internet does not have that feature yet.

Another question is whether brands based on basic commodities are suited for the web 2.0. Characterized by their low–involvement nature, it might seem that customers do not want to communicate that much about them and show rather low commitment.

Also for more sophisticated services, such as lawyers and doctors, the interactional web 2.0 might become a challenge, as it may not be clear how interaction can be utilized in enhancing these services. However, engaging in social media does not mean that you have to alter your brand or engage in an unprofessional manner. Law firms could use social media such as Twitter and Facebook, still using a formal language and provide relevant knowledge to their customers. The only thing that matters is that the message continues to be distinctive from competition and reflects the values of the company and its environment, for example in case of a law firm it would be a serious, formally styled environment [10].

9.5 CAN ALL SOCIAL MEDIA PLATFORMS PROVIDE THE SAME OPPORTUNITY FOR BRANDS?

Not all social media platforms are identical. People use platforms in different ways. As a microblogging device, Twitter only allows a 140 character tweet. Traditional bloggers tend to write a page per day and Facebook posts can contain nearly everything from a

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video or a picture up to some pages writing. Therefore, a social media mix should be used to gain the biggest impact on consumers [9]. Consequently, a marketer has to find out which information to place in which platform. For example, microblogs such as Twitter share relatively shallow information with a short lifetime and a high communication speed. Additionally, there seem to be conversations 24 hours a day. Thus microblogs are best suited to keep the customer informed on short time topics. They work rather as a vehicle to create awareness and brand recall for established brands [9]. The best advice is therefore to use Twitter for informing your audience on what is going on today. For richer informational content a webpage is still needed.

In contrast to microblogs, social networks such as Facebook offer a deeper information pool, where content from firms, customers and customer interactions are visible. However, the information also has a rather short time–span, as the information on the page can change many times a day. Social networks may be best suited for tracking brand image and attitudes towards a product/brand [9]. Social networks should therefore be used to make consumers aware of your current projects.

How to do this? Just publish what you are doing for the customers and ask for response. In social networks a brand marketer can see the reactions of many people simply by posting something and watching what will come back.

Blogs have a relatively long life–time or half–life, as conversations can go over years. Therefore, they are more suited to create product knowledge and for brand building. Blogs are, however, not that interactive. Even though they have interactive elements such as comments and responses, the variety in perspectives tends to be limited and there are way less conversations compared to microblogs [8]. If the aim is to spread information about your brand, a blog could be a good choice. Simply write what your product can do and people that want to, will hear you. If you want to have a rather deep, long–term conversation about your brand, online communities are the best approach. Online communities attract many different people, which tend to talk over long–term periods with a variety of perspectives. Therefore, they are best suited for relationship building and customer relationship management. However, it is hard to create a community from scratch and it takes time to develop it. One alternative is to start by creating expert communities with people that are already interested in your

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products and want to have additional information.

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long Blogs • e.g. WordPress • Brand building • Convey product knowledge

Information depth

Communities • e.g. HP communities, MacRumors • Establish and maintain relations

deep

shallow Micro–blogs • e.g. Twitter • Create awareness and recall • Brief engagement, short conversation

Social networks • e.g. Facebook • Influence and track beliefs and attitudes

Half–life of information

Figure 9.3: The difference of social media in half–life and depth. [34]

9.6 THE DO’S AND DON’TS OF BRANDING IN THE WEB 2.0 ERA

What should brand managers consider regarding the use of social media? Are there any uniform guidelines that can be applied to all different forms of web 2.0 or are the vehicles so different that you should manage each of them completely differently? In fact, there are some guidelines that should be followed when using different social media like Facebook, YouTube, Twitter and other services because these different communities all have their different environments. It also matters whether you decide to use actively promoted user generated branding or rely on passive unprompted user generated branding. The best solution is to integrate both if possible.

There are also some other basics that have to be considered. Before engaging in web 2.0, brand managers should know their target audience. They should know how the members of this target audience use social media and which topics are they talking about at the moment [12]. This has to be done by traditional segmentation and targeting. Firstly, monitor all vehicles for content of interest. When a target audience is found, decide whether it is relevant for the brand and big enough to approach [9].

Secondly, the goals of the social media interaction should be clear [12]. What do you want to achieve for the brand with the use of web 2.0? It takes time and resources to

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engage in social media, so there has to be a clear strategy for how you want to convert online followers into customers. These strategies however have to be unique and not merely copied from others [13].

Furthermore, a voice has to be developed that suits social media. It should be able to transmit the brand message but also be open to the customers and engage them in an unforced manner [12]. So speak to customers in their own voice. Use the language that your followers use and adapt that language to different target groups. Do not use marketing terms to sound smart. For example, why not use slang when talking to a young audience [13].

Additionally, performance has to be measured in order to evaluate whether the interaction with the help of social media is working. Facebook–likes, comments, feedback percentage ratios and also the change in financial performance can be used as measures [12]. Do people tweet about your brand, visit your Facebook page and comment positively on your web–appearance or is nobody interested you? This is something that can be monitored manually simply by watching what happens in the online tool and whether interaction is increasing or not. However, also the content should be evaluated on a regularly basis, because of the dynamic interactional character of social media. Interactions with the customers will and have to change over time to be meaningful and content as well as the reactions of the customers to that content have to be monitored [12]. The topics that interest users change so keep on track of these changes simply by watching closely what they are talking about.

Privacy is also an important topic. As much as a customer likes a certain brand she/he will be annoyed by too much information and interaction and begin to see approaches rather as spam than as meaningful or helpful. So beware of too much prompted UGB [14]. Research shows that customers are more likely to respond and interact with digital messages from sources, which they already know and trust [14].

This clearly shows that online efforts should not stand alone, but be a complement to traditional branding efforts, which are more likely to take the first step and make the customer aware of the brand, build trust and commitment. Thus, follow and monitor unprompted UGC to be able to act proactively towards arising problems, instead of

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acting later, when it is too late. Analyze the UGC because it contains valuable market research data that are nearly for free and up to date [7]. To monitor and analyze UGC, brand marketers have begun implementing social media 'mission control' where special software filters analyze content in real time according to search specifica-

WEB 2.0 IN MODERN BRANDING – WILL THERE FINALLY BE INTERCULTURAL COMMUNICATION?

tions [7]. In addition, sponsored UGC campaigns should reflect the brand identity to promote it and align it to the brand image that customers hold to create a strong brand [7]. To achieve this, simply communicate explicitly what you want your brand image to be. It is up to the customer whether he believes you or not. The most important requirement here is still that your actual product performance reflects the image.

As people demand more transparency of companies and brands, the use of social media can help companies to become more visible for consumers. Therefore, companies should use it by integrating social media on all levels in the company.

This means that not only the CEO should provide his point of view but also the frontline staff that has the direct customer contact [10]. Let the frontline staff do the 'tweeting' and 'facebooking'. This is not only a management job. Your company will be immediately seen as more transparent if the normal staff can tell stories about their daily work life in the origin of the brand. Still, one should not forget the fact that staff is needed for monitoring UGC and interacting with customers. People have to be assigned and trained, because if used, social media have to be used regularly and monitored ongoing which requires additional work time or workforce [10]. If you simply stop using social media, people will ask themselves why and immediately think that something is wrong in your company. In the end you should not forget that working with social media cannot be managed completely. You have to work with what you find there. The consumers dictate platform, time and topic and you can simply try to join their conversation and hope that they accept you.

9.7 BRAND DANGERS AND LOOK–OUTS IN WEB 2.0 BRANDING

Social media has received more and more influence during the last decade. People refer to it as a source of information, which they trust. This is probably the best example for co–creation, where customers and the companies actually created the brand together.

Mostly the users define social media themselves; social media that are not used vanish, while others become meeting spots for people all over the world. Consequently the used vehicles like Facebook, Twitter and YouTube became brands themselves. Today these brands even interact outside their respective areas and involve themselves in political and societal issues. For instance, Wikipedia, Google and many others opposed the bills of the 'Protect IP Act' and the 'Stop Online Piracy Act' in the Senate and House of the United States of America in early 2012. While the aforementioned Web 2.0 firms started to create awareness of these bills, Tumblr, a popular blogging service, invoked

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people to call their representatives and oppose the bill. This resulted in 80 000 calls to legislators in a three–day period [16]. Given that these laws affect web 2.0 sites directly, you can say that this is active lobbyism, without the use of money and rather by creating awareness with the web 2.0 services. This clearly shows the influence and relationship–creating potential of these virtual brands that having no physical presence are still able to fight alongside with the users.

However, this development can also become dangerous for brands, as social media and UGC influence people. Where there are people, opportunists might show up causing trouble, for instance, in the case of BP in 2010 where a fake blogger pretended to be a BP PR–manager. He even increased the rage of other Twitter followers as he spoke sarcastically about the 'Deepwater Horizon' crisis while oil polluted to the Gulf of Mexico. He overshadowed BP’s real Twitter account, made every real communication impossible and clearly damaged BPs brand image [17]. These so called 'reputation– snipers' have huge opportunities with the help of social media and can damage brand images easily. Everyone can damage the reputation of multi–billion brands without much effort whether it is justified or not. As the two military scholars Deirdre Collings and Rafal Rohozinski pointed out, “Today anyone armed with a hundred dollar digital camera and a connection to the Internet is a potential Spielberg or Riefenstahl” [17].

In addition anti–brand websites tend to emerge the more famous a brand gets. These websites can damage a company’s reputation and brand and are created for many different reasons. From experts that really discovered wrongdoings in companies up to simply bored individuals that find something in a brand message that annoys them, everything is possible [18].

What should a company do with them? Simply try to crush them with the force of their resources? Try that and your image will be damaged even more. There is a better way to deal with them. You just have to follow some guidelines [17]: •

The most important part is to react fast. When a 'reputation–sniper' tries to attack your brand and says that it is polluting or overpriced, immediately use all the social media channels you have, to explain to the online community why this person is completely wrong. The last thing you want is that criticism goes viral unanswered.

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•

Give your frontline staff the power to show their point of view. The public will rather listen to one of the frontline employees, than to the high management 'bigshot'. To make that possible, encourage your employees to use social media on behalf of the company. Give them guidelines, time and incentives to do it.

•

When you have your own people and channels already working, engage associates which can back up your point of view and involve them in your social media appearance. It does not matter whether it is a supplier, customer or another stakeholder, if he has something good to say, simply let him speak.

9.8 WEB 2.0 BRANDING IN DIFFERENT CULTURES

At least regarding European and US branding efforts in the web, it seems that they are quite similar and tend to focus on the same things, however, with a slightly stronger focus on interactivity from US companies [15]. This could also stem from the fact that most of the social media websites originate from the USA, making them more known and accustomed to the consumers. China, on the other hand, has the world’s largest internet population. Still many websites are blocked and regulated by the government.

Therefore, interactional sites like Facebook, Twitter and Google do not exist. Does social media exist in China? China’s 'Baidu' looks like a copy of Google and is currently also working on a Chinese copy of Wikipedia. 'Taobao' is the Asian eBay and there are many copies of Facebook such as 'Renren'. YouTube resembles the Chinese 'Youku' and these are just a few [19].

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video sharing web site online marketplace

personal social networking site

professional social networking site

search engine web browser, Apps

micro–blogging site

blogging site

Figure 9.4: Comparison between different social media in China and the Western world.

There is an important difference between the internet users of China and the Western countries. Even if the Chinese and American online population are nearly equally large, (≈220 million level in 2008), the composition of the users is totally different.

While American users reflect the mainstream population, Chinese users are the educated, young 'elite', more than 10 years younger, better educated and likely to have a full–time job [19]. So how does Chinese users engagement with social media differ?

Even though the development of the web started later in China it seems like they skipped the early stages of it, which has resulted in differences in usage. The Chinese users did not go through the entire steps form web 1.0 to 2.0, they only know web 2.0 and tend to take full advantage of it. They are more involved in producing UGC and have a broad online network of family, friends and online acquaintances. Nearly half of the online population contributes to interactive content [19]. Chinese users

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seem to be more involved in web 2.0 through participation in chats, blogs and in the general production of UGC. Also UGC seems to be more important in China than in the USA. Community exchanges and communication among customers seem to be very important and immensely influence purchase decisions [19]. Other studies also

WEB 2.0 IN MODERN BRANDING – WILL THERE FINALLY BE INTERCULTURAL COMMUNICATION?

show that, for instance, South Koreans are more engaged in social networks than their Spanish and US counterparts. They seem to use them more regularly and to a higher extent [19]. Also, entertainment with social media seems to be far more important in Asian countries such as China or South Korea than in the USA. People actually spend time in the web to have fun with friends and family and later talk online about it [19, 14]. In China, other consumers influence online shopping to a greater extent. Nearly two thirds of the online population refers to UGC when explaining buying decisions.

Astonishing is that in a study of Cate Riegner in 2008 [19] only 7 % of the Chinese sample claims to shop without using the internet. In China user recommendations clearly influence buying decisions to an extent that influences even buying considerations. An efficient branding without the inclusion of the users seems quite impossible, as people will not consider your brand if it is not considered by other consumers in the first place.

Consequently, the cultural differences between the Chinese and Western online landscape seem to favor the use of social media for branding. Community based interactions simply resemble the Asian mindset and the number of users engaged in communities is even expected to grow, as at the moment barely a quarter of the Chinese population is using the internet.

Also Africa often remains forgotten when Web 2.0 branding is discussed, because access to and using the internet is still not that developed there. It’s worthwile remembering that 10 years ago people say that the Web is of no significance for Asia, and today they are are already ahead of the Western world concerning interactive communities on the internet.

9.9 AN OUTLOOK ON WEB 2.0 BRANDING

There are still many questions concerning intellectual property rights in the virtual world. It is not clear who owns UGC in company communities. The question about who owns published thoughts and ideas in such environments is delicate. Furthermore, it is often not even distinguishable who contributed most, because the content was developed through dialogues and interactions of many persons. It is also interesting whether the social media world will stay the way it is since internet, TV and mobile phones converge and increasingly integrate. The question for branding is whether TV and internet will merge, creating a totally new platform. Major TV networks in the USA have already launched apps where you can watch their programs on mobile devices

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while tweeting about it and therefore sharing real–time reactions with the complete audience.

There is no doubt that the ongoing technological development will raise connectivity between devices and people. But one important part tends to be forgotten quite easily when enthusing about all these new possibilities: people. We argued earlier that people are the most important driver of brand loyalty, and we believe that in the future, brand managers will still need to be around providing people with first hand brand experiences. It is one thing to watch your favorite sports team on TV, sharing your thoughts about what is happening in social media and connecting with other supporters. But this is most likely not the way you became a fan in the first place. Instead, to win people as brand enthusiasts, you have to provide first hand experiences. The rising popularity of public viewing events is an indication for this trend. People do not want to sit alone in front of their electronic device. They want to gather with friends, on the market square or in a pub to watch their favorite team or sitcom or the Academy Awards.

We are not saying that social media is getting obsolete. Instead, people are more likely to share their first hand experiences in social media. The Arab Spring is an excellent example for this combination of online and offline activities, where opinion leaders could reach a greater mass of people through the use of social media such as YouTube, Twitter and Facebook. Nevertheless the important events that changed the fate of nations still happened on the streets where people actively fought for their rights.

The globalization effect brings another positive development for any brand, which is pointed out in the chapter about tribal marketing. With a growing number of potential customers sharing the same unique values, it will become more worthwhile and easier for brands to focus on niches instead of trying to please everybody and losing uniqueness in the process.

The last decade has seen numerous examples of anti–brand activism (ipodsdirtysecret, unitedbreaksguitars, etc.) that has taught companies to better live up to their brand promises and provide a holistic and integrated brand experience across all

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operations. With new cultures stepping into social media and actively taking part in online activities, we imagine that some new styles of conversation are to flow into these activities, establishing a netiquette that is more lenient towards imperfect brands.

WEB 2.0 IN MODERN BRANDING – WILL THERE FINALLY BE INTERCULTURAL COMMUNICATION?

REFERENCES

[1] Neelotpaul, B. (2010): A Study on [14] Taylor, Charles, R. (2009): Interactivity and Online Branding. Advances The six principles of digital in Management, 3(3) (March), 13–16. advertising. International Journal of Advertising, 28(3), 411–418.

[2] Müller, B., Florès, L., Agrebi, M. & Chandon, J–L. (2008): The Branding Impact of Brand Websites: Do Newsletters and Consumer Magazines Have a Moderating Role?. Journal of Advertising Research, September, 465–472.

[3] Christodoulides, George (2009): Branding in the post–internet era.

Marketing Theory, 9(1), 141–145.

[4] Harris, Rae (2010): http://g-ecx.images-amazon.com/images/G/01/books/ authors/murder-makes-the-magazine.pdf [5] Kim J., W., Choi J., Qualls W. & Han K., (2008): It takes a marketplace community to raise brand commitment: the role of online communities. Journal of Marketing Management, 24(3-4), 409–431.

[6] Ives, Nat (2004), The New York Times. URL: http://select.nytimes. com/gst/abstract.html?res=F00E1EFF34540C748EDDAB0994DC404482&scp=5&sq=neistat%20 brothers%20ipod&st=cse&pagewanted=1 (accessed February 18, 2012).

[15] Voorveld, H., Neijens, P. & Smit, E. (2010): The interactive authority of brand websites. Journal of Advertising Research, 50(3), 292–304.

[16] Wortham, Jenna (2012), The New York Times, URL: http://www.nytimes. com/2012/01/18/technology/web-wideprotest-over-two-antipiracy-bills.html?pagewanted=all (accessed February 10, 2012).

[17] Gaines–Ross, Leslie (2010): Reputation warfare. Harvard business review, December.

[18] Kucuk, S., U. (2008): Negative double jeopardy: The role of anti–brand sites on the internet. Journal of Brand Management, 15, 209–222.

[19] Riegner, Cate (2008): Wired China: The Power of the World’s Largest Internet Population. Journal of Advertising Research, December.

[7] Christodoulides, G. & Jevons, C. (2011): The voice of the consumer speaks forcefully in brand identity. Journal of Advertising Research, 51, 101–108.

[8] Burmann, C. (2010): A call for user– generated branding. Journal of Brand Management, No. 18, pp. 1–4.

[9] Weinberg, B., D. & Pehlivan, E. (2011): Social spending: managing the social media mix, Business Horizons, 54, 275–282.

[10] Yan, J. (2011): Social media in branding: fulfilling a need. Journal of Brand Management, No. 18, pp. 688–696.

[11] Okonkwo, Uché (2009): Sustaining the luxury brand on the internet. Journal of Brand Management, 16, 302–310.

[12] Metz, K. & Hemmann, S. (2011): Making it work: 5 steps to social media success, Public Relations Tactics. Vol. 18, Issue 10, p. 14.

[13] B&T Magazine (2011): The rules of social engagement.

B&T Magazine, 61(2741), 14–19.

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10. Business Network Management Mikaela von Martens & Maren Wehnes

10.1 Introduction 10.2 Characteristics of relationships 10.3 Characteristics of networks 10.4 Network management

10.4.1 Strategic Decisions: relationships — relationship portfolio —

network

10.4.2 Strategies in business networks

10.5 Business relationships and networks in Russia and China

10.5.1 Russian network culture

10.5.2 Chinese network culture

10.5.3 Relating Russian and Chinese business networks to theories

on managing networks

10.6 The future of business networks 10.7 Conclusion

References

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10.1 INTRODUCTION

Mr. Yoshi buys a new Audi A8 in Tokyo. But Audi is not only the company involved in this process. Instead, the car is made out of pieces from many different suppliers. The engine was developed in R&D cooperation with Volkswagen, the mother company of AUDI [1]. The graphic and entertainment system inside the car was developed with NVIDIA [2]. And, the distribution network in Japan was developed together with the Japanese company Yanase & Co. Ltd [3]. And these are only a few examples of cooperation between companies; usually this is not visible to the end–customer who buys a complete product or service. Companies’ relationships and cooperation patterns are referred to as business networks. The example of Audi shows why business networks are very important. Without all these business partners, what would exist is most likely only the idea of an Audi A8. In this chapter we dig deeper into the process of managing networks in an intercultural environment.

Most often when marketing processes (how the product looks like, what quality it has, how much it costs, how it is distributed and promoted) are described, the internal processes are emphasized. But all that is highly dependent on external actors, i.e. customers, suppliers, distributors and other business partners [4]. According to Håkansson, Ford, Gadde, Snehota and Waluszewski [5], in former times the companies focused on competition, internal development and innovation. But the researchers show that nowadays most of the innovation and on average 70 to 90 percent of the product value comes from interaction with external partners. The Audi example shows and research also indicates that good relationships with the 'right' portfolio of business partners are the key to innovation and product success. To be able to develop this sort of competitive advantage, companies must possess skills to handle, use and exploit inter–organizational relationships. In other words, they need network competence (cf. [6], [7]).

Furthermore, as business nowadays takes place mostly on an international level, companies must be able to cope with cultural differences in business relationships and networks. Different approaches must be undertaken depending on the cultural

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contexts. These cultural differences imply that networks can undertake different forms and have their own rules, norms, processes and structures [8].

Before we dive into the world of business networks across cultures and in general, we want to explain the concept of business networks by using three steps (figure 10.1):

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1. Relationships: The smallest unit of a business network is a relationship, i.e. a company interacts for example with a supplier.

2.

Portfolio of relationships: No company has only one relationship.

Instead, it interacts with many different other actors in the market—with its suppliers, distributors, customers, competitors etc.

3. Network: The specialty of the term network is the understanding that these other business partners are also contained in several relationships [9]. That leads to the picture of indirect connections with business partners’ partners.

Figure 10.1: Relationship — Relationship portfolio — Network.

According to this construct, we assume that networks cannot be explored without also discussing relationships. We therefore continue by explaining the characteristics of relationships and move on to networks and network management. We then present the characteristics of business relationships and networks in Russia and China, and suggest managerial implications. We also discuss future trends in business networks and offer conclusions on the topic. Enjoy the ride!

10.2 CHARACTERISTICS OF RELATIONSHIPS

(1) Relationships can differ in terms of stages of trust, commitment, closeness and adaptation as well as their outcome (physical or non– physical profit) and their kind of activity (production, logistics, etc.).

(2) Relationships are continuously changing, in other words, they are dynamic (3) Both business relationship partners influence each other.

Info 10.1

Relationships are the smallest unit of business networks.

Thus, it is important to understand their characteristics.

There are three important characteristics (see info 10.1) Business relationships are interactions between any kind of business actors (suppliers, customers, distributors, etc.). The social competence of interacting appropriate with people in a relationship is a key success

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factor of a relationship— 'People do business with people' [23]. We know it, e.g., from sport in school; if you are the one who selects the team, you choose the best players as well as your friends. Smith [23, p. 71] sums up the advice from different books as “be positive, take an interest, do your research, while being approachable, knowledgeable and sincere”. Especially in an intercultural context this issue is important.

Relationships can also be seen as having 3 different layers [12]. The actor Layer is the interpersonal component of a relationship. It includes different stages of trust, closeness and influence. It means that bonds between actors can be more or less and strong and thus also the perception of how much is possible through the interaction highly depends on this interpersonal level. The resource Layer concerns what is exchanged, for instance physical items as well as intangible one (knowledge, etc.)

The activity Layer concerns the activities that happen between the actors: “Various activities such as production, logistics, administration, deliveries, information handling and the like may be more or less integrated and linked together.”

Relationships can develop in different ways. There has been many attempts at identifying for instance steps or stages of a relationship, but it seems as if there is no single pre–defined path one can follow that would ensure the development of a relationship. Wilkinson and Young [10] have taken a different approach to explaining how a relationship develops. They use a metaphor 'Like a dance party' to show how a relationship develops and evolves. The dance starts with an Invitation. Before you have a dance party, you need to decide who you will invite. It means you have to think of people you already know as well as of how attract new people. Concerning how to invite new people to the dance, there are many possibilities in business to get in touch with people from other companies: field specific congresses, trade fairs or other events, as well as just incidental acquaintances and of course different online business networks (e.g. LinkedIn, Xing).

The second activity in the dance party is the actual dance. When at the party, you try to dance with somebody, and you hope to find somebody to dance with who somewhat fits your style of dancing. In a business context, finding a fit means that you will first check if, for instance, you and a potential supplier fit together: could he/she

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provide what you are looking for (the right products in the right amount at the right time etc.)? Do your goals fit together? And so on. The third activity in the dance party is the outcome of the actual dance. When you have found a dance partner, and you dance with him/her long enough, your dance might adapt and improve—you will try

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new steps or other music and the dancers will learn from each other. You may know how to dance tango, while your dance partner might be a professional waltz dancer.

In a business context adapting and learning means that you might develop your interaction, i.e. the way you work together. Especially when entering new markets, a lot of learning is required: new language, social culture, operation customs, etc. [9]. At the same time, the level of trust and commitment will increase. In similar fashion as dance partners become better by spending time and competence on the dance floor, business relationships call for resource investment, commitment and adapting [11].

Besides that, every dance respectively relationship should of course be profitable. In business profit can have different forms: monetary or non–monetary, like learning or joint developments [11].

The final activity on the dance party metaphor is to repeat the dance, do it again at a different party. If you liked the dancing evening with your partner, you might call each other when there is another dance party. In a business context it means for instance that if a project you have worked on together is completed, and your cooperation was successful, you might work together on another project. Or, if the contract with your supplier ends, you might both agree on renewing the contract for another couple of month or years. And like a dance can be a single dance or continuous dancing, relationships can also be short–term (i.e. just for a project) as well as long–term (e.g. a long–term relationship with a company and its distributor).

Just like a successful dance might lead to another dance, the start of a dance might get or not get anywhere. There can dancing pairs who fits perfectly to each others dancing style from the very first second of the dance, while there might be other dancing pairs, even though being good dancers individually, need longer to adapt their dancing styles until it looks like a high performance. The understanding is that each partners influence the other.

One peculiar aspect of relationships is that a firm can have a business relationship with close partners but also with competitors. Coopetition is a special form of relationship between firms, where two firms cooperate in one field, while competing in other fields of their business [13]. Many examples of coopetition can be found in R&D, i.e. firms working together on a project to develop something new that is useful to both of them [16]. In R&D–projects coopetition is especially beneficial since competitors work on similar developments, which makes it easier to share and create new knowledge [13]. Coopetition is also often used successfully in the procurement

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area [17], since an alliance is able to negotiate better prices. Co–branding is another example of coopetition. Here the two parties profit from the value of both brands. The aim is to develop something together to add a value to their normal products and then promote it together to both their target groups. Apple & Nike did this e.g. through their Nike+iPod [18].

Osarenkhoe [19] investigated other cases of coopetition, for instance food courts in shopping malls. In a food court all the restaurants share the same location, have a spokesperson, organize events, do communication together, as well as hire mall security and cleaning personnel. There is no food cannibalization, since every restaurant provides another kind of food. Instead the variety brings all of them a competitive advantage, i.e. attracting more customers to the food court and thus winning more overall market share. The individual competitive advantage is improved through things like decorations, presentation of the dishes, food quality, waitress’ friendliness, etc. The only disadvantage pointed out by the restaurant owners is the risk sharing of damage at the facilities or utensils, and that joint decisions are necessary, which is not always easy.

A core question is of course why a company should collaborate with its competitor?

The essential motive is that bigger business is created through cooperating with a competitor [14]. The prerequisite for coopetition is of course that both actors assume that there will be a more valuable outcome of this relationship than without collaborating with the competitor. According to Lou (2004), especially in international business, coopetition brings a new set of possibilities. But to what extend a company should cooperate with its competitor depends on its global experience and strategic orientation as well as dyadic attributes like “global divergence, resource complementary, market commonality, and power asymmetry” [14, p. 204]. Additionally, to collaborate with competitors and not with other business partners is also useful, since competitors have similar understanding, capabilities and interest [15]. Besides these, there are several other advantages and challenges for cooperating with competitors (see info 10.2).

Despite the many advantages it is quite possible that one will benefit more than the

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other [18,19]. For instance Apple got a lot more out of the coopetition than Nike [18].

There are also some other challenges with coopetition (info 10.3).

The amount of knowledge and information shared is especially for managers a core challenge. Effective mechanisms for working together have to be found while

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not giving away special knowledge [16]. Enberg’s [16] Advantages of coopetition [18,19]: One advantage is the increased knowledge through the synergy from combined resources, respectively complement competences Additionally—in terms of product development—it leads to technology transfer, pro–active product development and inter–partner learning, allowing one firm to acquire capabilities that they lack from a partner. At the same time, the development process is likely to be faster.

Another advantage is the sharing of costs and risks, when operating together.

Regarding the outcome of such relationships, the product quality might be higher due to the double–knowledge, and thus sales or market share can be increased.

Especially in the co–branding case, these advantages can be seen, namely the client portfolio was expanded, it was possible to set a higher prices due to the added value by the co–branding, and the reputation and credibility of both brands increased.

Info 10.2

suggestion, based on a study of the defense industry, is that a clear definition about project content and what to share is necessary. Ritala [15] accompanies that the goals and outcomes of the coopetition must be pointed out and clear. She stresses that these are often clear in the beginning, when value is created, but not when it comes to individual value appropriation objectives.

Therefore, early agreements on the goals and protection of the core–knowledge are useful: “If it (the company) does this in a reasonable way it will be able to exchange knowledge with its competitors more smoothly, which in turn will increase the potential for generating valuable results in the collaboration“ [15, p. 73). In addition, Ritala [15] points out that to cooperate with the competitors is often better than just to compete with them. These alliances are often especially successful in technology–intensive sectors, and in an uncertain business environment it might be a key factor to survive [15, 22].

10.3 CHARACTERISTICS OF NETWORKS

Challenges • defining rules for decision taking [18].

• Or, Osarenkhoe [19] points out that an important coopetitive relationship may be managed so poorly that a strategic opportunity is lost due to conflicting goals of the participating firms.

• both actors have to give up control and depend then on each other, which also can lead to conflicts [19].

• Often actors fear giving too much information to the counterpart, respectively the fear of industrial espionage [18]. Therefore, in R&D projects it is often focused on developments that are not too near to the customer [21].

Info 10.3

The main challenge of analyzing a firm’s network is that it is not a stable construct that has a particular amount of connections in it. For instance how large a network is depends on the particular time and setting, since relationships and networks develop and change over time.

Additionally, the network size depends on the scale, complexity and diversity of the company’s business partners [4]. It means, for example, that Audi’s business network can be seen as more complex than the network of a two–men–joinery that is only providing their service to people in their domestic city.

Despite network being complicated constructs to

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define and analyze, there are two general characteristics of business networks; they are dynamic and there are a lot of paradoxes in networks. The dynamic nature of networks depends on six factors influencing networks, relationships and companies [4] (figure 10.2):

Cost pressures

Time pressures

Companies

Relationship complexity

Globalization

Relationships Pressures on relationship management

Networks

Network complexity

Figure 10.2: The dynamics of business networks. [4, p. 10]

Companies are under cost pressure, as competition on a global level has increased.

As customers demand lower prices, it not only puts pressure on the company itself but also on its suppliers and distributors. Technological development is taking place with faster speed creating time pressures. This means that companies must be time efficient in the process from developing a product to introducing it to customers and gaining from it before the news worth of the product is lost. In electronic companies this process is called 'six–month markets', while in the fashion industry the process is comprehended in only six weeks.

As pointed out in the introduction, companies nowadays focus on their core business, and thus outsource non–core–competences. Thus, suppliers, distributors and other business partners are required to provide these competences. Additionally,

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the overall increasing technological intensity in many businesses requires a tighter relationship between the supplier and the company. These two parallel situations make network and relationship complex. The complexity, time and cost pressure requires new skills of managing relationships with business partners. The respon-

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sibilities of sales and sometimes marketing people are becoming more of a service function, where they secure that the relationships are on track.

These factors ca be overcome, for instance time pressure can be overcome by working closer and more intensively with a few suppliers or by searching for quicker and cheaper suppliers, which is profitable in the short run but not necessarily in the long run [4]. A solution to cope with the complexity is the integration of information technology between business partners. With the help of IT–systems people from the different companies may all follow the same data regardless of where in the world they are situated.

While the dynamic nature or networks create a headache for managers, the inherit paradoxes of business networks can cause nightmares for managers. One paradox is that a network is both the source of life for a company and the cage that imprisons it. [5, p. 190]. This means that on one hand the network is the basis for growth and development of a company. On the other hand, these relationships tie the company to act or not to act in certain ways. For instance, if an actor wants to make changes in its operation, the company often needs the approval from its counterpart.

Additionally, one can say that stronger relationships are better. But the stronger relationships are, the less flexibility the company has. Furthermore, the manager must consider that innovation often comes from outside existing relationships. But actors are often more concerned about their existing relationships than with how to build new ones.

Another paradox is that the more a company achieves control, the less effective and innovative the network becomes [5, p. 190]. This seems simple, but is not obvious. If only one actor in the network has the control, this actor can hardly gain knowledge or innovation. Additionally, Granovetter [24] proposed the idea of the strength of weak ties. It was proven by his study and supported by a study of Brown and Konrad [25, p. 438] that your closest relationships (strong ties) 'tend to move in the same circles' and thus provide hardly no new information. Instead, relationships with people one has less contact with (i.e. weak ties) are much more likely to provide new information. Applied to business networks, this means that innovation often comes from outside the network respectively, not from close business partners.

Even though, the close business partners are most important on a daily basis.

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10.4 NETWORK MANAGEMENT

When talking about strategic management decisions in business networks, the question arises whether business networks (or its smaller unit relationships) can be managed. According to Ritter et al. [4], authors have different answers to that question. On one hand, a firm can control its relationship when the firm has a lot of power like monopolists do. Then this company can direct the way the relationships operate, even though their business partners influence these actors. On the other hand, many authors are convinced that partners in a relationship are dependent on each other and thus influence and restrict each other’s activity. But managers have to manage and they do so, even in relationships and networks. They do it in the way of acting and reacting, influence and being influenced, forcing and adapting. The problem is just that they cannot be sure about what the counterparts do [4]. So management of relationships and networks rather means trying to make strategic decisions during uncertainty as well as handling counterparts’ decisions that may influence the company.

When we talk about the management of networks, we will focus on two models that are useful when evaluating the options a manager has in a network. The first model

by Håkansson et al. [5] concerns management options in relationships, portfolios of relationships, and network. It includes the idea that a network cannot be managed without taking the smallest unit of a network into consideration. The second model

by Hoffmann [26] concentrates on the overall view. It points out three strategies concerning the network. Which strategy is appropriate, depends on the situation the company is in.

10.4.1 STRATEGIC DECISIONS: RELATIONSHIPS — RELATIONSHIP PORTFOLIO — NETWORK

A manager typically has to deal with three different areas of business networks. For each area there are contrary options for acting (see figure 10.3).

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Management of existing relationships

Networking in business networks

confront conform

Management of current position

consolidate

Strategies on how to network

coerce

create

concede

Figure 10.3: Management options in Business Networks. [5]

1st area: Management of existing relationships — confront vs. conform On every smallest unit of the network, i.e. in every existing relationship, the manager has to decide whether he/she wants to make changes in some aspects of the relationship (confront) or to conform to these or other aspects.

2nd area: Management of relationship combinations — consolidate vs. create Concerning the set of relationship, the manager has to decide on building new relationships and on strengthening the existing ones. Managers consolidate for several reasons, e.g., if they want to access resources more effectively, connect existing resources better or reduce overall (concerning the whole network) resource investment. Another intent could be to specialize activities to existing relationships or to rationalize and systemize through standardization. Consolidation is continuous and incremental on a daily basis.

But there are also clear reasons why managers create new relationships, such as to develop new activities or trying to change a company’s role or position in a network in relation to its counterparts. Nevertheless, creating is quite radical. Both counterparts are investing time and money with a negative cash flow and it can take months or years before profit is reached.

Managers have to consolidate existing relationships and create new ones at the same time. Consolidation is essential for the success of interaction processes the company is engaged in, and creation is essential to develop the network. However,

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Clarke [27] points out that managers are likely to do the mistake of trying to create many new relationships instead of exploiting those that already exist.

3rd area: Approach to networking — coerce vs. concede This last area focuses on the management decisions on how to network, i.e. whether to follow or to influence the business partners. Usually, managers try to control relations and to lead it in the direction the manager rates 'best'. But it depends on the position in the network—i.e. own resources, relationships, knowledge, technical and commercial expertise compared to others in the network—how able a company is to coerce. In spite of that, it is not always good to coerce counterparts: Firstly, the conceding actor can learn from the coercing actor. Secondly, one 'controlling company' coercing their counterparts in a part of a network restricts the evolution of the network. This means initiatives can only come from one point. But one company does not have all wisdom.

Mangers have to decide in their relations when to lead and when to follow, to teach or to learn.

10.4.2 STRATEGIES IN BUSINESS NETWORKS

The second model (see figure 10.4), created by Hoffmann [26], shows three strategies for firms to manage its network, respectively its portfolio of alliances. Which strategy is used is dependent on the level of strategic uncertainty and the resource endowment.

Hoffmann points out that resources can be (1) technical capital (i.e. capability to create new products, processes or technologies), (2) commercial capital (i.e. capability to commercialize developed products efficiently and make money out of them) as well as (3) social capital (i.e. a firm’s position in the network). Strategic uncertainty is the level of perceived uncertainty of a company when making strategic decisions caused by unclear environmental developments.

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Shaping potential (resource endowment) LOW

Increase flexibility

HIGH

Shape the environment

HIGH

Exploration

Strategic uncertainty

Adapting probing/ platform alliances

Exploitation LOW

Shaping core exploration/ alliances

Stabilizing exploitation alliances

Figure 10.4:Â Strategies in business networks. [26]

The three strategies help the company to cope with a complex and changing environment. And since the environment is changing and not stable, the strategies can be changed or combined.

1st strategy: reactively adapting This strategy arises when the firm has a low amount of resources and a high level of strategic uncertainty. In order to cope with that the company could try to increase its strategic flexibility. That means managers of the company should probe with different alliances and make selective follow–up investments. So they should adapt to what is happening in their environment. For example, a firm could have many small R&D alliances, instead of one with a high investment, in order to be more flexible and overcome uncertainties.

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Saturday evening –example

2nd strategy: actively shaping This strategy is relevant when firms have a high amount of resources plus a high level of strategic uncertainty.

Here, the firm should shape its environment. It should exploit existing alliances and resources, and try to actively develop them to something new. This means that the outcome can be very uncertain and distant in time. This happens for example, when firms develop new technologies or fundamentally improve product lines.

3rd strategy: stabilizing This strategy arises when firms are at a low level of strategically uncertainty. The aim is to stabilize the

To make this model easier to understand, let us consider Saturday evening plans. Jenny is thinking about going to a new club this evening or do something completely new.

She tries to convince all of her friends to join and can be seen as a “shaper”. In spite of that, John wants to make a game evening as always. He tries to convince his friends by introducing a new game or with sentences like “Hey, this was fun last weekend. And anyway, Saturday is our games evening.”

John could be seen as a ”stabilizer”. Beside that, another friend Lucas has not decided what he wants to do yet. Instead, he has several invitations by different friends, who have different plans, and tells all of them: “Maybe I will come. Let’s see what happens.”

Lucas can be seen as an “adaptor”.

Info 10.4

environment. That is done through exploiting the alliances. The company could focus on deepening relationships and try to exploit established competitive advantages. Examples can be seen in building long– term supply contracts or “open up new distribution and sales channels for established products, and collusion alliances among competitors” [26, p. 831] (info 10.4).

When it comes to the management of business networks, Ford et al. [11] offers a useful summary on what is at least required from a manager when trying to manage networks (info 10.5).

10.5 BUSINESS RELATIONSHIPS AND NETWORKS IN RUSSIA AND CHINA

So far we have discussed business relationships and the more complex issue of business networks. But as we pointed out in the introduction, business nowadays takes

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mostly place on an international level. This means that intercultural issues must be taken into consideration when for instance interacting with foreign business partners. When managing networks on global level,

The manager must consider the company’s aims when making decisions. Some relationships are essential for the survival of the company whereas others are just important or even trivial. According to that, the manager must decide on the level of resources, investments, adaption, integration and what is expected from counterpart.

Each relationship should be examined from the own and from the counterpart’s perspective to be better understood.

One must not forget that relationship management is a combination of cooperation and confrontation, lead and guide, teach and learn.

Relationships bring choices concerning commitment, investment, extent of adaption etc. But management decisions are affected by the interdependencies between the two companies.

Managers should keep view about the whole network to (fore)see changes and to understand how partners are affected by other relationships.

Many companies develop a strategy without a realistic view of the likely responses of counterparts. But to emphasis action, re– action and re–re–action is a must. It means to act against, with and through the others.

Info 10.5

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different cultural settings should be taken into consideration to be able to succeed. To be able to successfully build relationships and networks in these countries, one should be aware of the characteristics of the networks.

In the following section we will focus on the differences between networking behavior in Western Europe, Russia and China. The market economy in Europe differs from the transition economies in Russia and China, and historical, political as well as cultural differences influence the business network behavior. The cultural differences reflect the different forms networks may take in different circumstances and 'the rules of the game' that should be followed, which is why it is essential for management to adapt the network process to different cultures [8].

Russia has traditionally been an important business partner for Finland, while China’s impact in the world economy has become more important than ever. The reason why these two countries are compared to Western is their great potential as well as the challenge for outsiders to operate in them.

Hofstede’s work on understanding cultural differences is a good starting point for beginning to get an understanding for differences between networks in different cultural contexts.

Dimension

Western Europe

Russia

China

Power distance

Low

High

High

Collectivism (vs. Individualism)

Low

Medium

High

Uncertainty avoidance

Low (Medium)

High

Medium

Long–term (vs. Short–term)

Medium

Low

High

High (vs. low) context

Low

Medium

High

Masculinity (vs. Femininity)

Low

Low

High

orientation

Table 10.1: Western European, Russian and Chinese cultural characteristics.

[8, p. 4]

Power distance explains the dependence relationships in a country. In countries with low power distance leadership in organizations take a consultative form between managers and subordinates. This means that subordinates can rather easily approach their managers. From a management perspective, high power distance means that the manager is expected to act autocratically and is seen as an authority [8]. This also

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means that there is a much bigger gap between the managers and the subordinates [31].

In individualistic cultures people are seen as individuals with respective own interests and needs, and work is supposed to meet both the self–interest and the employer’s interest [31]. This implies that people do not see themselves obligated to belong to certain workplaces, friends or even family, instead the social environment can change rather quickly [33]. This also means that networks are unstable, as they change constantly, when people leave companies to find other career opportunities.

In collectivistic cultures people are rather seen as persons who belong to different in–groups. The self–interest is put on the second place, as the interest of the in–group is prioritized.

Uncertainty avoidance implies how people will react to changes in different cultures. In low uncertainty avoiding cultures people are comfortable with new unexpected situations and people are more willing to accept new features and devices (e.g. mobile phone, e–mail, the Internet) and do risky investments. A high–uncertainty avoidance country means that there exist an emotional need for common rules that can have a ritual meaning, but are not necessarily consistent or functional. People from low uncertainty–avoidance countries have therefore often difficult to see that the rules that seem ineffective feed people’s emotional need for formal structure. A medium uncertainty avoiding culture means, for instance, that people are more flexible and not that rule oriented. People prefer acting instead of reacting to internal and external business changes. [31, 33] Differences in short–term vs. long–term orientation can be recognized for instance in the attitude towards efficiency, gaining competitive advantages, development of strategic systems, organizational independence and access to additional resources without taking ownership risks. For instance short–term oriented networks are usually clearly structured and are easily recognized through the visibility of the relationship exchange process. [8] Relationships between companies in short–term oriented cultures tend to be more lateral and not socially strong. Networks are typically seen as a means to an end and not directly as resources [34]. Managers in short–term oriented cultures want to see quick results and the business atmosphere is impatient.

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Low context versus high context communication relate to the complexity of communication in different cultures. Low context communication means that communication is direct and straightforward. Low context communication is often straight forward 'getting all the issues on the table', while high context communication involves

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harmony and respectful communication. Written word and legal contracts have an importance in low–context cultures, as they are seen as binding and not merely symbolic [32]. A high–contextual communication culture implies that the culture consists of less explicit rules and verbal communication and more about understanding what is not necessarily said [8, 35].

Countries seen as feminine are often characterized by soft values as an important part of organizational life: Managers prefer to have good working relations with their superiors and cooperation is considered important, as well as trust between employers and employees. In feminine cultures women and men can very much do the same things concerning work, studies and society. In masculine cultures opportunities to high earnings, recognition, advancement and challenges are desired. Competition is generally very high and women and men have separate roles. [31]

10.5.1 RUSSIAN NETWORK CULTURE

In order to understand the current state of the networking culture in Russia, we shortly rewind to the former Soviet Union. Companies got to know each other unofficially in the Soviet Union, through the black economy, because of constant problems with procurement, which forced them to acquire products illegally [8]. As the prices were centrally fixed, bribes and various forms of gifts were exchanged. Compared to the market economy, it did not result in increased supply as the production was planned beforehand and profits were not part of the planned economy. The illegal exchange process enabled firms to meet up with the production goals by obtaining materials from other firms. It was also possible to avoid difficult production tasks by making other firms perform them by persuading the authorities. [36] These forms of informal connections were and are still called 'blat' in Russia and it involved making favors for one another and often illegality (cf. [8]).

Blat could be based on family and friendship bonds and the relationships were taken care of and developed by exchanging gifts. This was a method of creating a good reputation in the long–term and an alternative to marketing and advertising in the market economies. Blat was used in various activities and especially when companies were communicating with each other. In combination with blat was the function of 'tolkach', which was the name of companies’ middlemen, pushing different actors in order to fulfill the companies’ own production goals. The actors could be other firms, the authorities and even the Communist Party itself. The 'tolkach' were in a manner

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the companies–specialists on 'blat' and had important roles as negotiators between firms in order to be able to meet the production goals. This also implicated heavy risks and uncertainty for companies, which implied high degree of interdependence and trust in the unofficial networks [8, 36].

Many things have changed since the Soviet Union era, but the history does still reflect on the business atmosphere [8]. Jansson, Johanson and Ramström [34] explain that blat still exists in the Russian networks, but it has transformed from friendship corruption to money corruption. This means that bribes imply money today— compared to the former custom of exchanging goods. Personal contacts are in general still very important in the Russian networks, as politics today still continue to affect the economic activities. This means that companies need to maintain good relationships with the authorities, as tax administration, government regulations and inspections can be seen as the major challenges for Russian SME’s and foreign companies [38].

The transition from the planned economy towards the market economy has also been one of the reasons for increased network building, as the economy is in many ways less predictable and unstable [8].

Business in Russia is often linked to problems as organized crime, bureaucracy and an unstable political and economical environment [28]. These issues can also be seen in the Russian business networks as the unstable national conditions put different forms of challenges in the relationship and network management process compared to the Western ones.

Power distance High power distance in Russia has its roots in the tsarist regime and the Soviet Union (cf. [8]). Success was met through the physical production and how well companies lived up to the plans. The system did not support business–to–business relationships and the control was in the hands of the authorities. One could say that firms in the Soviet Union functioned as suppliers to the autocratic state, as firms did not have a vote concerning payment, transportation, products and the survival of the firm.

High power distance can as well be seen in Russian companies and the general

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mentality of how 'workers work and managers manage'. Communication between people from different organizational levels is considered as unnatural. In many Russian companies the workforce can be divided in two very different groups, namely the old Russians, the so called 'Russian Russians' and the young workers, the so–called

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'New Russians' or 'Global Russians'. The older group represents a traditional Russian mindset, resistant to changes. The young Russians are usually more active, aggressive and eager to adapt, they are more educated and are more familiar with English. There is also a general pattern of having the younger ones in charge of the older workers, which adds even more tension and power distance between these opposites. [28, 39] Since hierarchical structures are valued in Russia, it is essential to know the level of the person participating in the meeting. If the person from the other company is a high level manager, a high level manager should be sent to the negotiations, as a representative from a lower level in hierarchy might give an expression of disrespect and it is not worth the risk of loosing a deal with an important partner. As the Russian culture is characterized as highly hierarchical, attention should also be paid to the counterpart’s title. It is simply safer to stick to the formal names, until else is signaled [32]. Managers should pay more attention to the existing hierarchies in Russia and be certain that the right person in the company is contacted. This is a way to indicate respect and appreciation for the counterpart and it is a good start for building a relationship

Collectivism Russia is a more collectivistic country than many Western European countries, but not as collectivistic as the Chinese culture [8]. During the Soviet Union time, competition between companies was encouraged, as companies competed against each other concerning how well they met the production goals, but at the same time competition between individuals was discouraged. This is one of the reasons Russians generally like working in groups and why they are good at it. In Fey and Denisons [28] study of AGA in Russia, the employees in different departments constituted different subgroups and subcultures, where they felt loyalty to the in–group, but not to the company as a whole. This was partly a consequence of the different mindsets between the different functions and because of poor communication. The same study took a closer look at the company Alfa Laval, where top managers were from Sweden, with little knowledge of the Russian language. This resulted in the top management working with the young English speaking Russians. On the other hand this meant that the older managers, with little knowledge of English became an outside group and had little awareness of the international activities.

Internal communication is something that can be hard to influence in other

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companies, but one way to counteract the mentioned scenario is by employing Russian–speaking managers, who can communicate in both English and Russian and in that way avoid possible conflicts. The different in–groups in Russia also imply that people are held at an arm’s length until trust is built, but it is said that when you have a Russian friend, you have them for life. The same concerns the opposite, if you get an enemy, forgiveness can be very hard to get if they feel that they have been betrayed.

The collectivistic culture in Russia also implies that relationships are seen as more important than rules. [39, 40]

Uncertainty avoidance The high–uncertainty avoidance also reflects the relationships. For Russian managers it is important to obtain control and retain power [8]. The high–uncertainty avoidance in Russia implies that the Russian managers feel threatened by ambiguous and unknown [31]. The challenge is therefore to maintain stability within the relationship and not to push new decisions or propositions too rapidly on Russian managers.

Because of the system in the planned economy, trust and commitment was not naturally established between firms in Russia. Trust issues can therefore be a great challenge, which means that it takes much effort to convince partners of the seriousness of the relationships. Jansson et al. [34] also point out that Russian companies tend to be reluctant to invest in the relationship and that relationships are rather terminated than activities changed. This means that even if a relationship is important for a company doing business in Russia, when the future of the relationship is uncertain, investments in it should be made carefully.

On the other hand it is important to show Russians that you actually are serious about the business relationship, as Russians are emotional business people and 'heart' is an essential part of the business culture. This means that communication between companies in Russian business networks involve emotional and personal aspects especially when companies know and trust each other. This also means that they are good at interpreting and taking advantage of the emotional state of their counterparts.

The Russian temperament means that the managers’ behavior may vary from situation

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to situation, they can behave as caring older brothers to new employees, seem like emotionless professional negotiators or be determinant leaders and fire successful managers for unethical behavior [34, 39].

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In Russian business relationships planning can sometimes be seen as a negative thing, as many are afraid of being cheated or somehow exploited. The best way of creating mutual trust is probably by delivering results, as Russians prefer monitoring achievements rather than setting goals [28].

Short–term orientation Another challenge in network and relationship building in Russia is the short–term orientation of relationships, which make it difficult to predict the future and thus, management has to be done on a day–by–day strategy [34]. Short–term orientation implies that emphasis is put on short–term results, on a month, quarter or year basis and that people and managers are judged by results, meaning that they are either rewarded or punished. The short–term orientation also implicates that managers should be able to adapt quickly or abandon new ideas in order to meet the short–term objectives [31]. The Russian style of doing business can generally be seen as very impatient due to their short–term orientation. Focus should thereby be on the results, as Russians don’t accept any 'honeymoon' periods, where results are not seen right from the beginning [34].

Contextual communication The Russian culture is characterized by being somewhere between the Western European low–context and the Chinese high–context culture. This means that they are not as direct as people in the Western Europe, nor are they as deeply involved with each other than the people in China [8, 35]. Topschishvili [41], the CEO of Global Advertising Strategies, recommends a direct approach in Russia, as being direct is part of everyday business in Russia, even though the direct communication may seem rude sometimes.

Although Russians can be very straightforward, there exists a tradition of starting by saying 'nyet' ('no') to new suggestions, as innovations used to be discouraged in the Soviet Union. The first 'nyet' answer should although not be accepted, instead it should be seen as a signal for starting the negotiations. The same goes the other way around; Russians do not generally accept 'nyet' for an answer from a business partner. In the Russian context a negative answer means that the replying person needs incentives or more time to think about the suggestion. Medium contextual communication also implies that criticism shouldn’t be pointed out directly, as personal pride is

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important in Russian culture. Instead of criticizing it is better to propose an alternative suggestion. [42]

Femininity Femininity in Russian culture can mainly be seen through the strong bonds that exist in Russian relationships and networks. Even if Russia has a long history of strong leaders, an inner circle supports the strong leaders. Kets de Vries et al. [39] explain that Russian leaders often cooperate with a handful of people who operate quietly, outside the spotlight, to support the leader. This inner circle is also called 'Boyarskaya Duma' ('the Council of Boyars') that relates back to the tsarist times, when advisers were surrounding the tsar. This is also a way for leaders to retain their confident public image, while they are still able to discuss their ideas and concerns with people.

Gender equality was officially guaranteed by the Soviet Union and women were given the right to vote in 1917. Russia can still be seen as a rather male–dominated country and traditionally men have had the responsibility of supporting their families and taking care of business. Russian men generally prefer doing business with men, but foreign businesswomen are respected, as they know that there are cultural differences between Russia and the Western world. [42]

10.5.2 CHINESE NETWORK CULTURE

The significance of 'guanxi' (pronounced 'gwan–shee') is the Chinese for relationships and implies relationships between two partners. 'Guanxi wang' is on the other hand the term for networks in China and compared to the Western European networks, the Chinese networks are based on personal connections. In this context the term 'guanxi' is used for both 'guanxi' and 'guanxi wang'. Guanxi has a complex meaning in the Chinese society and it is involved in all relationships, both personal and business.

[8, 43, 44] Without the right guanxi it can be hard for a company to proceed in China, especially if the competitors have better guanxi, it can be almost impossible to succeed [45]. The terms 'guanxi' and 'guanxi wang' should not be mystified as business is business, and a good approach is to show that one cares, is trustworthy and show

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long–term interests [44]. Guanxi is in a manner the key to get things done in China, as the Chinese proverb says “Zhi ren zhong yu zhi wu”, which means: “Who you know is more important than what you know”

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Guanxi differs from the Western European networks in the matter that it involves mutual obligations. If a favor is received, the person is obliged to reciprocate the favor, when it is requested. This may as well imply personal sacrifices. The obligation is not only conclusive between two parties, as it comprehends the whole guanxi network [8]. Failing to return a favor can have very bad consequences and if bad reputation is gained, the person is likely to become an outsider and the former strength of the guanxi is vanished [45].

In China, piracy can be seen as a major challenge, as people try to replicate anything that succeeds in the country. The way for an SME to succeed in the Chinese markets is thereby to focus on hands–on, daily experience that is more difficult to copy and by being aware of the rules of the culture. When building a network, it is important to acknowledge that Chinese companies might not only want to buy your product, but they actually want to learn how to make the same as you do [29]. By understanding the characteristics of Chinese relationships and networks, it is possible to succeed with business in China and avoid misunderstandings.

Power distance China is a high power distance country, which means that the same actions should be considered as in the Russian culture. Therefore formal names should be used and hierarchical levels should be respected.

In China, questioning the boss or suggesting alternatives when the boss is speaking, would most probably lead to a face–losing situation for the subordinate, the boss and even for the company. Actually, a face–losing situation can sometime create an enemy for life [37]. The importance of 'face' is further discussed in the next section, collectivism in China.

Collectivism The Chinese culture is a good example of a group–oriented culture, where strong bonds to families and in–groups exist. The bonds within the in–groups support people in exchange for loyalty [31]. This implicates that group–oriented cultures as the Chinese may maintain lifelong relationships with people they know. It may as well take some time to get into these groups, but once the position is earned, it is secured, if not for life, then at least for a long time. This pattern implicates as well a stronger employer loyalty than in Western European countries [28].

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The Chinese concept of 'face' also has to do with the collectivistic approach, as it has to do with how other people see them. The 'face' relate to peoples’ pride, dignity and prestige and goes beyond the Western thoughts about reputation. The 'face' is very important for the Chinese and for many Westerners the Chinese can sometimes seem oversensitive, if one is used to a straightforward communication. This is something that a manager has to be aware of before starting business negotiations in China.

Failing to respect the counterpart’s face can have bad consequences for the business.

For instance, a person who is being very straightforward is likely to be seen as very uncultured and rude in China [37].

Uncertainty avoidance The medium uncertainty avoidance in China can in practice be seen in the dichotomy of dividing people in to two groups, namely the in–group and the out–group [45].

If you have mutual connections as for instance friends, relatives and classmates you are probably considered to be in the in–group, which means that guanxi implies immediate trust. This also means that trust is valid in relationships where no exchange has occurred and in relationships where a common connection exists, but no direct connections exist. Trust is simply something that is required in relationships in China, compared to the Western network models, where trust and commitment is gained after exchange between the participants. Guanxi is for that matter a social resource right from the beginning, and not only a term to define interactions between partners.

Guanxi could therefore be compared to other network resources, as technology and knowledge. [8] If you on the contrary are a foreigner, you are considered to belong to the out– group. The collectivistic culture can be very friendly and supporting if you are within it, but if you are not, people do not necessarily feel any need to be friendly or helpful.

[45]. This has to do with the different bases of guanxi networks. First of all family and relatives comprise the strongest bonds, which are called expressive ties, and are strongly held together by emotions. The lowest prioritized bonds are instrumental, temporary and anonymous bonds; these are only maintained for a mutual interest and benefits in a specific relationship. It is nevertheless possible that the instrumental

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bonds develop up to relationships with expressive ties. This process has a lot in common with the Western style of building relationships and step by step earning commitment and trust. [8, 37]

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Long–term orientation The time–orientation in China is long–term oriented, which imply that instead of pressures on achievement, focus is on learning, honesty, adaption, accountability and self–discipline. Importance is also put on the long–term business objectives, as profits ten years from the present. When building networks in China an important thing to remember is patience, as the culture is long–term oriented and the legal environment is not as predictable and transparent than in the Western countries [34]. It should thereby not be expected that success could be reached quickly.

When relationships are established the Chinese networks, they tend to be more stable, because of the social aspects compared to the dynamic Western European networks [34]. This means that there exist more long–term perspectives in the overall view of networks in China, compared to the quickly transforming Western European networks, where a greater focus relies on efficiency and profitability. The decision making in China also differs from the typical Western European rational thinking and decisions are based on intuition and feeling [34]. As long as all actors feel that there are mutual benefits, companies not necessarily only look at the numbers and the relationship may overcome short–term difficulties.

Contextual communication The high–contextual communication in China indicates that the culture supports indirect communication that can be difficult to interpret for Western managers, as 'Yes' or 'No' problem can actually mean 'Big problem!'. The reason for saying the opposite is caused by the cultural value of avoiding conflicts and counting on the listener to interpret the meaning. [28] This means that Western managers should think very carefully about the indirect pattern of communication and observe what the Chinese partner is trying to signal. That concerns not only the choice of words, but also the issue that conflicts should be expressed diplomatically, as the face is an important part of the Chinese culture. It is also better to wait and reconsider, than to express oneself too hasty.

Masculinity China has historically been a male–dominated society and men had the responsibility for the society and families. The Confucianism philosophy has although brought a more feminine characteristic to the Chinese culture, where harmony and respecting

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others were added to the otherwise masculine culture. [46] Women in leading positions have become somewhat more accepted than earlier, but it is still quite common that women still play a decorative role in some companies [47].

So how should this be taken into account when trying to build relationships and networks in China? Foreign businesswomen are usually not discriminated. Rather, they are often respected and admired because it is thought that a female businessperson must possess exceptional competence to be given such an important task. If a female representative is sent to China it is good to acknowledge the Chinese company about her leadership position, accomplishments and credentials beforehand. The official authoritative title should be written on the business card. At a business meeting, the female leader should always respond before anyone else in her own team, to make herself trustworthy [47].

10.5.3 RELATING RUSSIAN AND CHINESE BUSINESS NETWORKS TO THEORIES ON MANAGING NETWORKS

In part two and three we pointed out characteristics and strategies in business relationships and networks. But when it comes to networking across cultures additional factors have to be considered. Therefore, we first sum up aspects that have to be taken into consideration concerning relationships in Russia and China, and relate it to the dance party metaphor by Wilkinson and Young [10]. Secondly, we sum up the characteristics of networks in Russia and China and relate them to the two network strategies, we discussed in part 4.

To start with, in general there are several pieces of advice that can be given to a Western manager in Russia or China.

•

Due to the high level of power distance, it is important that the domestic contact person has the same or higher hierarchical level as the contact person from the Russian or Chinese business partner

•

Communication in both Russia and China is rather indirect, which has to be taken into account.

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•

Especially in China, the Western style of being straightforward and getting things on the table is seen as a rather rough behavior.

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•

Another fact concerning Chinese relationships is that relationships are in general long–term. This has to do with the guanxi. It takes time and effort to get into such a guanxi. But once you are in, it is a strong, trustful bond; also with the other members of that guanxi, even though there has not been any resource exchange until then.

•

In Russia, however, business relationships are very short–term–result orientated. This makes long–term planning difficult. Instead, it is a step– by–step respectively result–by–result process. To build trust takes very much effort.

•

In Russia network bonds are not as strong. In spite of that, authorities (government, tax administration, etc.) have a big influence on business.

Thus, good connections to those are a must. Additionally, the result– orientation can make it difficult to build a strong network.

•

The first step into a business network in China is very hard, since it consists most often of family members and long–term personal friends.

But once you made it into a network it has strong, long–term bonds.

Additionally, there is a high level of trust even though there has not been any exchange yet. However, the networks’ expectations or rules, such as doing favors, must not be neglected.

A Chinese dance party When we relate relationship characteristics to the metaphor of dancing, there are certain things to remember at a Chinese dance party. Firstly, who is at the party? Send someone who has at least the same management level. Secondly, before you can start to dance with somebody, you need to get to know the person and build trust. Thus, this step can take a while before you actually can start to dance. Thirdly, if you dance with somebody (i.e. starting to work together), then it is a long dance respectively a long– term relationship. But you have to remember not to be rude, that means do not say straightforward if you do not like the steps, but try to be very polite. At the same time, try to recognize signals in communication rather than explicit messages. Last but not least, when it comes to the question whether to dance again on a different party, the answer is probably a clear 'Yes'.

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A Russian Dance party At a Russian dance party, the following aspects should be taken into consideration.

Firstly, someone with the same management level as the Russian guests should be attending the party. Secondly, if you dance with somebody, it is a step–by–step dance; first you probably try a standard Foxtrot, when you succeed you may try something else. But there is hardly the possibility to plan the whole dance evening in the beginning. Additionally, also at a Russian dance party one should not be rude by being straightforward and try to recognize indirect communication methods. Last but not least, even if your dance was successful, it does not necessarily mean that you will dance at another party again, since it is very hard to build trust.

Strategic decisions and strategies in Russia & China But what does the dancing metaphor mean for strategic management decision?

Within relationships with Russian and Chinese business partners, the manager has to decide whether to confront or conform to different aspects of the relation. However, when confronting it is important not to seem rude as explained above. Concerning the portfolio of business partners and the decision involved whether to consolidate or create; in China it is easier to consolidate, since business relationships are stronger and more long–term orientated compared to Russia and Western Countries. In spite of that, it is harder to create new relationships in China, since it takes time to build trust. Thus, creating new relationships seems to be easier in Russia. Nevertheless, this decision is a strategic one. That means, even though one or the other option might seem easier, it is not necessarily the better decision.

When it comes to the question of whether to follow or influence the network, it generally speaken depends on the resources how able a company is to influence the network. In China, however, not only the resources but also the business connections (i.e. who you know) are the important determinants. In Russia however, the authorities play an important role and thus your relationship to them play the decisive role if you are able to coerce.

When considering resource endowment and the level of strategic uncertainty,

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several aspects have to be mentioned when discussing Russian and Chinese networks.

Firstly, in a Chinese network who you are related to (the right business partners) can be seen as an additional resource. It is also harder to apply a reactively adapting strategy in China, since business relationships need a rather long time to develop. It

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means that a manager cannot count on spontaneous follow–up investments. Thus, the aim is to develop personal relationships to different potential business partners, and then try to exploit them at the right moment. In Russia however, the reactively adaptating strategy can be seen as easier and useful, since short–term relationships are easier to build. The second strategy—actively shaping—is useful in China, since long– term planning is very common. But piracy can lead to problems. In Russia, a actively shaping strategy is hard to implement, since it needs a long–term planning and the outcome is rather far away and uncertain. Concerning the last strategy—stabilizing –, the picture seems to be similar to the strategy of actively shaping: In China the favor of long–term relationships supports this strategy. In Russia however, the difficulty of building trust, which is necessary to exploit relationships, is an obstacle.

Although it does not relate to any of the previous theories on management and network, corruption in both Russia and China is wroth a discussion. Illegal networks can be very difficult to recognize, as they are hidden and companies and people involved try to hide them from outsiders [34]. Both Russian and Chinese networks often involve gift–giving and it can be difficult to see the difference between symbols of friendship and bribery, if you are not used to it. Both 'guanxi' and 'blat' relate to relationship building, while bribery means illegal transactions. There are basically two forms of relationships, those related to the person and those related to the company [48]. Corruption relate to the case, where the position in a company is used for personal gain [49]. Bribery is an act, where gain–and–loss calculations dominate, which is realized for an immediate and specific goal, with no emotions involved [48]. ”You scratch my back and I will scratch yours?”

Corruption can be seen as a consequence of the high uncertainty avoidance in Russia and the medium uncertainty avoidance in China. These forms of informal networks with mutual obligation is something that is common in countries, where the official governmental institutions cannot be trusted because of their weakness or lack of authority. These informal networks help companies to protect each other from for instance lack of property rights and contract laws, as well as unreliable business regulation enforcement. They are also helping businesses to mobilize resources to deal with the uncertainties in the transition economies. But how are corruptive entrepreneurs arguing? First of all there are those who think that good ends justify the means, i.e. if the 'dirty' means lead to a better outcome financially it is justified to use bribery.

Another reason for corruption is the overall atmosphere in some countries, which leads

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to the thought that if everyone else is corrupted it can seem more justified [51].

Transparency International (TI) [52] is a global civil society organisation that fights actively against corruption. They have published a guide for companies, 'Business Principles for Countering Bribery'. By following their guidelines it is possible to counteract corruption in business and at the same time it is a method of guarding and promoting the company’s reputation for integrity. According to Transparency International, the corruption risks are a growing concern for all companies, as companies can be demanded to give or take bribes, their competitors might be corrupted and even employees can act corruptly. Companies can be proactive against these threats by formulating clear and strong anti–bribery policies within the organization, which are implemented from top management level to the whole staff.

According to Transparency International, companies should prohibit bribery in any form and independent of whether it is direct or indirect. This should be engaged by If you want to know more about conducting an anti–bribery program — check out:

implementing, monitoring and assuring that the defined anti–bribery program is followed at all levels of the company and including suppliers, intermediaries and business relationships.

http://www. transparency.org/ global_priorities/ private_sector/ business_principles

10.6 THE FUTURE OF BUSINESS NETWORKS

The whole chapter so far has pointed out what relationships and networks are, how useful and important they are in business, some strategies a manager can choose fromand how to behave in other cultures, especially China and Russia. Concerning the importance of business networks, this is

only the start: networks, especially across nations, will gain importance for two main reasons: (1) Internationalization: Companies will go on extending their business into new markets (2) WWW: The World Wide Web supports us (and company staff) with information about new developments, new technologies and innovation all over the world. For instance, the success of any new technology will quickly spread over the whole world. Thus, concerned businesses will try

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to work together on this technology or try to include it in their products somehow.

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Besides that, there is an explosion of online social business networks.

The Internet’s possibilities are not boiled out yet To get in contact with new business partners is normally part of the first steps to internationalize. This has become easier through the Internet, since most companies have a homepage where they present themselves, there are many online social business networks (like LinkedIn or Xing), as well as many other websites about congresses, trade fairs etc., where potential business partners can be met. That indicates that the Internet offers possibilities, which are not boiled out by companies yet. Hence, the Internet makes it easier to find partners. Moreover, it makes easier to find information about a potential business partner. Therefore, honesty and reputation will probably gain importance (like it has already happened when firms present themselves in social media to their end consumers). This implicates as well, that honesty and trustworthiness in a relationship is getting even more important, since nobody wants spread out bad reputation.

Language Another future issue concerning especially social business networks is the language.

Western manager have often the feeling that English is the key to international business anywhere. But one should be careful with this. As Figure 10.5 shows, only 27 % (536,6 million) of the Internet users use English–speaking.

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English 536.6 Chinese 444.9 Spanish 153.3 Japanese 99.1 Portuguese 82.5 German 75.2 Arabic 65.4 French 59.8 Russia 59.7 Korean 39.4 All the rest 350.6

0

50

100

150

200

250

300

350

400

450

500

550

600

Figure 10.5: Top ten languages in the Internet (2010, in millions of users). [53]

Additionally, in social business networks you normally use your mother tongue to describe yourself, write posts etc. But then, foreign people do not understand what you are talking about. For sure, English is a good option, but in reality it is not constantly in use and, hence, creates borders.

Besides that, every network has its culture. Thus it might be useful to connect with the foreign network through people, who are already in that network in order to get to know that culture. This is nothing new, it just happens also online.

This language challenge causes on the one side that language skills are getting more and more important, as business gets more and more multinational. On the other side we think, that translation tools like Google–translator are going to be further developed and more intensively used in social business networks.

Face–to–face The Internet facilitates networking. But one should not underestimate the power of

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contacting and meeting in person. That means face–to–face contacts are and will be most important also in the future. When it comes to intercultural relationships and business networks, face–to–face meetings are even more important, for instance in China, where the communication is indirect, it can be difficult to read the counterpart’s

BUSINESS NETWORK MANAGEMENT

underlying message through phone, e–mail or social media. It can also be harder to make an impression from distance even through videoconferences, as personal presence is still important. By visiting partners’ offices it is possible to learn about their businesses and understand the companies’ dynamics, which can ease and improve communication [54].

Newer Generation and training What about the next generation of managers? Misner [55, 56] showed a structural problem in the universities. Many of the lecturers have only little practical experience, and they do not see the value of networking. Therefore, universities will not stress the topics networking and world–of–mouth marketing. This may lead to the fact that more private companies will offer training in business networking [56]. Therefore, we pinpoint the importance of educating students and offering them the opportunity to train for international careers.

A shift from networking in industrialized countries to emerging economies As the BRIC–countries are becoming an increasingly important player in the world economics, a shift in networking can as well be predicted. This means that the rules of networking will shift. In the future Brazil, Russia, India and China will more and more determine the codes of conduct. Asia, Africa and Latin America are all getting stronger and at the same time power is shifted from industrialized countries to the east. [57] According to European Commission’s report 'The World in 2025 —Rising Asia and socio–ecological transition' [58] the positions of the EU and Asia will be reversed in 2025 and EU will no longer be the number one world exporter. The recent trends have also indicated that in 2025 the U.S. and Europe will have lost their research and development supremacy to Asia.

This is something that should be considered by businesses today. How can the future position be secured? How could connections to Asia be strengthened? As China is getting stronger—the question lies, will there be shifts in business language in the future, from English to Chinese? In the future networking may get more influenced

by Asian cultures and the Western countries may have to adapt to alternative cultural settings.

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10.7 CONCLUDING DISCUSSION

A business network is a complex construct, especially across different cultures. At the same time networks and cooperation with other business actors are highly important, since 70–90 % of the product value and most of the innovations rise from interaction with external partners.

The challenges of a company are multifaceted when it comes to successful networking, since it has to operate in every single relationship as well as keep the overall view of the network. The following recommendation may aid a manager in dealing with the network.

First of all, appropriate direct business partners must be found. Within every relationship it must be clear that the level of trust, closeness, adaption, resources and commitment can differ from other relationships. Plus, the two actors influence each other. On an international level, it is important to know the culture specific codes of behavior in relationships. For instance, Chinese and Russian style compared to Western style starts from paying attention to the management grade, to the way of speaking polite and the tendency of relationships being in general rather short– or long–term orientated.

Concerning relationships, coopetition is common. Cooperation with your competitor can have several advantages, especially when aiming to open up foreign markets or to develop new technologies. Here, knowledge about a foreign market can be exchanged respectively; technological skills can be brought together and complemented.

It is important to develop a strategy for the company’s portfolio of relationships.

With this viewpoint, the manager has to decide whether to consolidate relationships or create new ones. Concerning cultural differences, it is important to know the cultural rules. In every single relationship, the manager has to decide whether to make changes or conform to each aspect of the relationship. For instance to terminate a relationship with a Chinese business actor can have negative influence (even a break–up) on the other relationships within the network of the Chinese business partner.

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As business partners influence each other, it is important to know that also indirect influence exists. This is especially obvious in China’s guanxi wang, where it is expected to do favors also to indirect business partners. These influences lead to the fact that

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strategies have to be constantly adapted to the business environment.

Even though networks cannot be fully managed because of the stream of influences, there are different strategies a company can adapt. One set of strategies is to reactively adapt, actively shape or stabilize. These three strategies are useful depending on the amount of resources and the perceived strategic uncertainty a company has. To reactively adapt to changes in the network is appropriate, if the perceived strategic uncertainty is high while there is a low amount of resources. Here the company tries to participate in several small R&D alliances, instead of pushing a high investment only into one. Thus, the firm tries to stay flexible. This can be a problem in China since relationships and planning are long–term orientated. On contrary, the fact that Russian business partners are rather short–term oriented makes this strategy easier to implement. To actively shape, however, is useful if a company has a high resource endowment, while the perceived strategic uncertainty is still low.

Attempt to stabilize the environment (used by a low level of perceived strategic uncertainty) by deepening existing relationships and exploiting competitive advantages. The Chinese the favor of long–term relationships supports this strategy, while in Russia difficulty of building trust is an obstacle.

Since networks are not stable, strategies can be changed or combined.

As shown, business networks are complex but very important constructs—and often the key to success. We pointed out the cultural differences between China, Russia and Western countries, which make successful networking even more challenging. But of course, cultural differences have to be taken into consideration when doing business in other countries as well. Thus, cultural trainings will gain importance, especially concerning the BRIC–countries. In terms of these new emerging countries it is even more important to gain knowledge of their DOs and DON´Ts: for several decades the Western European countries and the U.S. have had a dominant position and they have been able to put the rules of the game in global economics and politics, but will this be the future? Nevertheless, all this should not discourage companies to enter foreign markets. It is just important to be sensitive for those to gain success.

The most difficult part in general is to set a foot into a foreign network or a foreign market. Once you are in a network, it is easier to learn about differences and adjust your behavior to local expectations. However, as pointed out in the part about social business networks, the Internet can help to enter foreign markets or at least to get in contact with foreign companies. On the other hand language boundaries can slow

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down the process.

When we talk about relationships and networks, one thing must not be neglected: people do business with people! And you prefer to work together with somebody you like, rather then with one you dislike. At the same time it means that even though online communication makes connecting easier on a global level, strong relationships are much easier to build if you know the person face–to–face as well.

Last but not least, resuming the overall term network we want to point out some general advice: •

You do not need to develop everything on your own; let the network help you!

•

Of course managers want to control their environment; but too much control can lead to less innovation.

•

Do not get stacked in comfortable close relationships, since innovation comes mostly from outside. At the same time, try to see the whole network and guess what is going on there, instead of only concentrate on your portfolio of business partners.

•

Be aware of cultural differences in networks and business relationships; especially on the code of conduct in the foreign nation.

Even though both the Russian and Chinese business network behavior is different from the Western European countries in many ways, everything can be learnt and the most important asset to possess is the eagerness to learn new things and the fearlessness of unexpected events. Even if foreign cultures offer challenges to management, understanding differences makes it possible to find solutions that work in each culture [31].

According to Zashev and Kaartamo [30] the greatest risk lies after all in not expanding to Russia. By being aware of some of the characteristics it can though be easier to avoid screwing up with the basic rules. Remember to be determined, open–minded, respectful and patient, and then you are ready to go!

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11. Case: Communicating with strategic partners in the international business network: LoOoK Industries Ted Hjort & Kristiina Salo

11.1 Introduction 11.2 Presentation of the case: LoOok industries 11.3 Case analysis: LoOoK Industries managing their international

business network

11.4 Conclusions

References

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11.1 INTRODUCTION

Being the new kid on the block is never easy. Starting your first company without any broader knowledge of how to run a business can be even harder. There are a lot of things you will have to learn the hard way, but if you have the will and determination to succeed there is nothing you cannot achieve. Success in design business is to a big extent about connections and relationships, as it is in most business–to–business industries. The bigger your network and the more references you have, the more likely you will sell your products and succeed, even if you are the new kid on the block. The big question is how all these contacts and networks should be managed in the best way, especially if the road is unknown? If you have a large international network, and limited resources to arrange face–to–face meeting, what options do you have when it comes to communication? Since there are many new communication tools, such as Skype, what implications to such tools have for a company with network spanning many countries?

Building up your network, not to talk about managing your network, takes time and you will probably make mistakes along the way, but that is the way you learn and adapt. Add to that an intercultural context and building and managing your business network becomes even harder. Doing business internationally can force the management of a company to rethink their strategies and adopt different communication approaches. Intercultural network management evidently means understanding customers from different cultures, trying to find the best way of interacting and communicating in different relationships.

A company’s management most often handles strategic issues, including questions regarding communication with business partners. But what if management really does not have experience from managing an international network? What approaches could be used and based on which factors are decisions made?

The framework of this chapter is built up around the case company, LoOok Industries, which is an international company specializing in innovative furniture design. The company has a rather unusual way of doing business in culturally different

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areas, especially from a management point of view. The company mainly conducts business abroad and all sales are concentrated around business–to–business (B2B).

The owners do not see business–to–consumer sales as impossible in the future. The focus on the B2B market is a managerial decision, since consumers consider the prices

CASE: COMMUNICATING WITH STRATEGIC PARTNERS IN THE INTERNATIONAL BUSINESS NETWORK

of the products far too high.

The purpose with the presented case is not to provide a list of things that affect company adaptation to local tastes, neither to explain how cultures differ. There are several books written about adaptation to culturally different markets (see table 11.1) and even more books about specific differences in various cultures.

Author(s)

Book title

Robert Rugimbana and Sonny

Cross–cultural Marketing (2003),

Nwankwo

Thomson Learning, Italy

Hans Mühlbacher, Helmuth

International Marketing: a global perspective (2006),

Leihs and Lee Dahringer

Thomson Learning, Italy

Deborah Swallow and

Communicating across culture: the key to successful

Philip Khan–Panni

diversity management (2003), Oxford

Don W. Prince and

Communicating Across Cultures, (2004),

Michael H. Hoppe

Center for Creative Leadership, North Carolina

Table 11.1: Examples of authors and books about adaptation to culturally different markets.

There is no point in trying to answer a question like: “Does culture affect the decisions management is making?” Of course it affects. Cultural differences are often subjective and every person interprets them in a different way. It is extremely difficult, even worthless, trying to compare these interpretations.

The purpose with the case described below is to highlight how an inexperienced management duo deals with the challenge of communicating with a large, international network. We try to answer the following questions: •

How do the cultural differences within business networks in different countries affect management’s decision on communication strategies?

•

Which are possible problems with different alternatives of communicating?

•

Do new tools of communication, such as linked–in and skype, decrease the need for face–to–face communication?

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In other words, we see cultural adaptation in networks as a managerial process where we try to highlight the importance of solutions, rather than focusing on the problems.

Naturally there are a lot of problems that cannot be neglected when a company has an international network. For example, when doing business abroad, every company meets cultural differences in working manners (different communication and marketing channels preferred, different purchase decision making etc.). Nevertheless, our focus is more on consequences depending on cultural differences, not on the reasons behind the consequences. Still, it is good to bear in mind that it is only one example and thus not generalizable because every case is unique in some way.

In this case we are going to look at the approach taken by the management of the company when interacting and communicating with a cross–cultural environment. We will look at what their experience have been and how they have learnt to deal with the problems confronted. We are also going to analyze the findings and look at what has been successful and which problems can arise in the future for the company.

11.2 PRESENTATION OF THE CASE: LOOOK INDUSTRIES

In the summer of 2009, two furniture designers, Kevin Lahtinen and Ivar Gestranius, noticed a man reading a newspaper in the middle of the city of Turku in the south– west of Finland. The business idea for LoOok Industries originates from that occasion; a calm working space without noise and fuzz. The idea was named as Magazone Stop and Go. The test production of furniture started quite quickly in Sweden and the designers patented the idea within a while. Today, LoOok Industries designs and develops products for public spaces and working environments that provide their users with auditory, visual and social privacy and secure their property. Their concept of privacy solutions is based on the thought that privacy is something rare in public spaces as well as in working environments.

In December 2010, LoOok Industries launched a privacy providing couch and chair— The Box, in addition to the workbench Magazone Stop and Go. The company’s products, which are today mainly sofas and chairs (so called Loungers), features at least one of the four elements of privacy the firm has developed. In addition to the

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practicality of the products, the design is an essential part of LoOok industries vision where they try to combine the Scandinavian design traditions with their own unique style.

CASE: COMMUNICATING WITH STRATEGIC PARTNERS IN THE INTERNATIONAL BUSINESS NETWORK

The company does not have its own warehouse. Therefore the production is order– based and done in an Estonian factory. Generally, the products are the same regardless of where the customer is situated, and minimal adaptation is made. However, furniture meant for public spaces has to meet special requirements, for example, regarding fire safety where the requirements may differ from country to country. In England they require melamine in the material, which is therefore added in the furniture when shipped to England.

The management of LoOok Industries consists only of three persons and the company employs three persons for non–management tasks. The management team is in charge of the company’s selling and administration and is located in Finland. In the future there is a possibility to employ additional people for tasks related to administration. All other actions are taken care of by outsourced agents and resellers. [1] The company uses several different channels in their marketing. On the whole, marketing is concentrated online and the budget is minimal. Still, the management team is willing to try new methods and is constantly changing their marketing approach. For example, the company’s Box Lounger chairs were introduced in the Formula 1 motor show in Kuala Lumpur in Malaysia. Finnish driver Heikki Kovalainen was there to promote the chair’s sales and the chair was customized according to his wishes [2]. According to LoOok Industries CEO Kevin Lahtinen, this kind of visibility is important for a small company as LoOok Industries.

So, what is the intercultural aspect of LoOok industries business idea? From the very beginning it was clear that the big money will be made abroad; the Finnish market is too small. The process of conquering the world started in Scandinavia (mainly Sweden and Norway) and has from there continued to Northern Europe (Germany and the Benelux–countries) as well as Russia. USA is a potential market in the future [3].

When establishing a company on a new market, two things are extremely important, namely (1) education and (2) good connections. Good connections can be made for example through consulting companies (e.g. FinPro) or other private advisor who can help you to establish yourself on the market. A network of different advisors and mentors in varying areas is really important especially when you are new on the market.

Since the whole management lacked entrepreneurial background and business education, they received help from other sources when starting their business and deciding to go international. The Foundation for Finnish Inventions support emerging

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entrepreneurs and LoOok Industries received help from them when making up their international business strategy [4]. The Foundation also helped with questions regarding the international context and gave advice on how the management should react on and deal with questions that rose due to cultural differences. Lahtinen comments this in the following way: “We set out to become entrepreneurs as soon as we got from school, so we needed help in both our business development and finance. Without the Foundation such business would not be able to start” [4] “Our cooperation has worked very well. We have received help and support on all issues. With the help of the Foundation we have also developed our own network, which allowed us to develop our second product in half the time compared to the first” [5] Since almost all of sales is generated abroad, LoOok industries is an appropriate case company for the purposes of this case study. None of the three management members have an extensive background in business, which allows us to examine the management’s decisions and reflect on actions comparing to similar companies with wider knowledge and experience. LoOok Industries’ business network consists of mostly companies but also some consumers or architects. Their main selling channel is through independent selling agents or resellers. In the next chapter we will take a closer look on how LoOok Industries manages their business network.

11.3 CASE ANALYSIS: LOOOK INDUSTRIES MANAGING THEIR INTERNATIONAL BUSINESS NETWORK

LoOok Industries have their own internal sales and customer relationship management.

Additionally, the biggest part of sales and customer contact is handled by local, independent agents or resellers selected by the management in Finland. The agents are always local people who know the local language, local people and local culture well. This is something the management think is of big importance. It is important to provide good service to the customers via a local salesperson with a good understanding of the markets and the needs of the local people. For example, the independent agents translate various texts and marketing material into the local language in order to ensure

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correct translations. If the Finnish team would try to do the translation, it could end in a poor result as a result of ignoring e.g. the cultural context of linguistic peculiarities. The agents are, however, given clear guidelines. Moreover, the company carefully reviews the agents before hiring them, in order to be sure that they are reliable. The resellers

CASE: COMMUNICATING WITH STRATEGIC PARTNERS IN THE INTERNATIONAL BUSINESS NETWORK

are often in charge of contacting other bigger resellers. The company has noticed, and is very well informed about the fact that resellers in Middle Europe put a higher price on the product and also take a larger amount in selling fee.

The management does not have only one plan when trying to find possible resellers or agents in other countries and interacting with the existing ones. An important tool they use is, unsurprisingly, e–mail, but there are restrictions according to Lahtinen.

First of all, in different cultures people tend to have different time perceptions. The management’s experience is that especially when dealing with partners in Southern Europe, it often takes several days before they answer e–mails. This means that e–mail probably is not the fastest way of communication with partners in some countries.

When using e–mail to contact possible partners, an important thing to think about is whether your message will reach the right person. The contacted person should be able to make decisions. “Otherwise time is lost since decisions have to be made quickly and effectively, Lahtinen explains.

LinkedIn is a good tool to find and contact persons that you want to do business with. One way to find new agents or resellers is to look at one’s own contacts’ contacts and simply write them a short message about yourself, your company and your products. According to Lahtinen, most of them will answer. Some might think its rude to just spam people like that, but actually you have got nothing to lose and if the people you contact are in the business of selling furniture, they should at least be interested in what is out there on the market. LinkedIn is also a good way to manage your business network. The experience of the management is that phone calls can be time consuming, as it is often hard to reach the right person and sometimes there is a possibility that he/she might not speak English that well. LinkedIn allows you to directly contact the person you want to reach and it is often easier for the other person to understand and write in English than to speak it. Skype is also another way to be in contact with business partners that you are not able to meet in person because of long travel distances. Of course, the best way to get in contact and hopefully find a reseller is to meet face to face, regardless of the country or culture. But the practical aspect of Skype and LinkedIn cannot be disregarded and the management of LoOok Industries highlights the importance of these tools, which are quite rarely used in business life to such a great extent as in the company.

An example of different communication styles is a recent event, told by the company management. The story highlights the importance of face–to–face communication.

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The management stumbled into a German agent at a furniture fare. The agent acted as a representative agent for LoOok Industries furniture, but they had not heard from him in half a year. After meeting with the agent, he contacted them and offered them what they considered a really good deal: The agent was willing to represent them to resellers. The management of LoOk Industries points out that most people prefer to meet in person to really get to know each other and build a good relationship. Also many misunderstandings can be avoided when meeting face to face, something that LinkedIn and Skype cannot afford.

Based on past experience of managing their business network, the management has decided to regularly check up with their agents and resellers on Skype. It would of course be even better to travel to see them in person but it is still too time and money consuming for the company. So, this is one way in which the management has changed their approach to managing their network. According to the management, it is an ongoing process of trial an error, and if you do not succeed the first time you will try a different approach and go on. For example, having only one product did not seem very successful when trying to get resellers or agents. Sales chances improved vastly when the company started to offer more products. It also became easier when they got more references, which helped to find architects and resellers.

The business network is of really great importance to LoOok Industries. As the network expands, the more resellers they get and the bigger their market and network grows. It is therefore important to find as many resellers and/or agents as possible.

In the beginning it was harder for the management to find the right contacts because they had only a few products and references. Lahtinen points out that “[…] when you are new in the business the agents and resellers are more skeptical towards you and your products. They do not know if you are serious enough and if they can trust you. So they will not promise you anything. In some countries they can be even more skeptical than in others but no huge differences can, however, be noticed.” However, issues like the political relationship between Finland and the other country, the local currency, or how the furniture retailing business in the country looks like, can affect the agent’s decision. For example, the number of furniture retailing stores is high in Sweden as opposed to Finland and Denmark, where it is much less.

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Figure 11.1 illustrates the company’s business network in terms of sales. LoOok Industries sells directly to the end customer, who can be a private customer or a company. However, the main selling channel is through sales agents or resellers.

CASE: COMMUNICATING WITH STRATEGIC PARTNERS IN THE INTERNATIONAL BUSINESS NETWORK

The network still expands further from that because the agents will also sell to other resellers who in their turn sell to new end customers. This is a good way to expand the company’s selling network, according to the management, even though selling directly to a company or a reseller would generate more income.

Architects

End customer

LoOok Industries End customers

Resellers

End customers

Agents Resellers Architects

Architects Architects

End customers

Figure 11.1: The LoOok Industries business network (sales).

Resellers are commonly used in many business fields but in such cases as LoOok Industries, it can be especially important. During the interview both owners highlighted the importance of face–to–face contact and knowledge of local culture and traditions. Since management carries the artistic and aesthetic burden with them all the time, decision–making based on different consumer tastes can be rather demanding. This kind of knowledge and decision–making outsourcing leaves more space for other things, which are important for the company success, as well as benefits consumers and their intentions. It is good, however, to keep in mind that despite the autonomous agents, the final responsibility always lies on the management’s shoulders. What kind of pros and cons does outsourcing result in and how much does it depend on inexperienced management? As the interviewees mentioned, internationalization requires good insight of the local culture and especially the language.

Face–to–face contact is important and affects the final purchasing decision more than anything else. In SMEs, customer contact is not an operative level task but rather a managerial duty. In LoOok Industries, which employs directly less than five people and basically lacks its own operative level, it has been a managerial decision to outsource much of the management duties to a second part, in this case local

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agents. This decision has been made based on aspects of cost, time and own skills. If the management would have a different background, the setup would look different.

However, as the company is in its early stages and lacks both international and business related experience, it is advantageous to use experts where needed, also when making managerial decisions.

A negative aspect is, however, that there is big loss of money when the company is forced to pay a certain provision to local agents and resellers. The same goes for customer contact. If one of the golden rules of selling is to be near your customers, this is not fulfilled here. Also the communication (in–out) can suffer from the arrangement.

How can uninterrupted interaction be ensured and how can the management of LoOok Industries be sure that the customer feedback (for example about product development) really reaches the designers? Having agents is not always a rosy path and often it can result in trouble and extra work. Much depends, however, on how the agents and resellers are chosen and how the relationship with them is handled. All the decision–making is, however, not left on the agents’ shoulders. Naturally, the final word and responsibility lies with the management.

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11.4 CONCLUSION

The above presented case with LoOok Industries had a purpose to illustrate how such a company deals with intercultural questions on a management level. LoOok Industries is not a typical example that often can be found in business education books. The case also illustrates how inexperience and lack of business background on international level affects the way intercultural problems are managed. LoOok Inustries focuses on what they can do best—design. Much of business activities are learnt by doing or through outsourcing.

The way LoOok Industries manage their networks fits quite well with Hoffmann’s model presented in the chapter about network management. The chosen strategy depends on the level of strategic uncertainty and the resource endowment. Since international marketing management is rather time consuming and requires insight of multiple managerial and cultural factors, LoOok Industries has chosen to rely to great extent on their local business partners when communicating with customers. Still, they are actively interacting with their agents and sales organization in other countries.

This is because the founders have a strong artistic vision that they want the agents and resellers to be able to represent.

For LoOok industries it has been and will be in the near future really important to expand their network and to get a lot of publicity and references. This helped and will help them in selling their products. Until now, they have mainly been dealing with customers in Northern Europe. However in the future they will probably have to think more on how to manage their network. For example, if they are planning to expand to the Russian market, the network building may require a different approach because it is typically harder to build a good, but yet strong, relationship with a Russian partner.

As explained earlier in the chapter, a lot of effort has to be made to convince partners that you are serious about the relationship. If LoOok Industries decide to change their strategy when entering new culturally different areas remains to be seen in the near future. With more experience in international contexts the company’s management will possibly shift into more 'traditional' ways of dealing with intercultural problems on managerial level. At least for now, their low resource, Skype and LinkedIn concentrated style, where much of the managerial responsibility has been outsourced to local agents, functions more than well.

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Shortly about the interview The two founders of LoOok Industries, Ivar Gestranius and Kevin Lahtinen were interviewed in January 2012 in CafÊ Art in Turku. The aim of the interview was to discuss how they see and handle intercultural marketing management in their own company. In order to really understand how their management acts and their global business model looks like, it was motivated to use freely structured open–ended questions. Quality was favored instead on quantity. Since the only real experts were the management team, we decided that one interview with the management team is sufficient for our purpose. A second shorter interview was also conducted one month later to get a deeper insight on their network and selling channels. From this second interview a figure of the different selling channels was made. Moreover, in order to get a valid result, secondary sources were later used in order to broaden the overall picture and deepen the case and its content.

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REFERENCES

[1] LoOok Industries (2012), URL: http://www.loookindustries.com/ (accessed February 1, 2012).

[2] MTV 3, Kovalainen sai uuden varikkotuolin, MTV 3 Uutiset, April 5, 2011, URL: http://www.mtv3.fi/urheilu/ f1/uutiset.shtml/2011/04/1307723/ kovalainen-sai-oman-varikkotuolin (accessed January 30, 2012).

[3] Interview with Kevin Lahtinen and Ivar Gestranius, January 31, 2012, Café Art, Turku, Finland, interview conducted

by Ted Hjort and Kristiina Salo.

[4] Creve (2010), Luovat, osaavat ja onnekkaat, Creve, June 22, URL: http:// creve.fi/attachments/loook_artikkeli. pdf (accessed February 13, 2012).

[5] Keksintösäätiö (2010), Loook Industries Oy – Yksityisyyttä, olkaa hyvä!

URL: http://www.keksintosaatio.fi/ Keksinnot/Menestystarinoita/LoookIndustries-Oy-Yksityisyytta-olkaa-hyva/ (accessed February 14, 2012).

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12. Managing a Key Customer Relationship in a Foreign Culture Johanna Partanen & Josefin Vidjeskog — with contributions from the editors

12.1 Introduction — managing a key customer relationship in a foreign culture 12.2 Key account management — getting started 12.3 Managing the key account

12.3.1 Identifying your key customers — setting criteria

12.3.2 Information gathering as the basis for a key relationship

12.3.3 Choosing and building strategies for a key customer

12.3.3.1 Bow tie vs. Diamond–models of interaction

12.3.4 Waterfall vs. Agile methods for developing the account

12.3.5 Ending a key account

12.4 Intangible dimensions of KAM 12.5 Challenges and risks in key account management — can a key account relationship be a burden?

12.6 Inter–cultural aspects of KAM

12.6.1 Interacting with a foreign key account

12.7 Summary

References

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12.1 INTRODUCTION — MANAGING A KEY CUSTOMER RELATIONSHIP IN A FOREIGN CULTURE

During the last decade and a half, Key Account Management (KAM) has gained high significance for companies. As a consequence of globalization, increased competition, concentration of accounts and a decrease in the number of suppliers, it is more relevant than ever for companies to take care of their most valuable customers [2]. In other words, the internationalization of firms has made business relationships on a long term basis a company’s most important asset.

KAM, in a nutshell, is all about caring for the relationships with the most important or key customers

Figure 12.1: The golden key.

You might think that culture is irrelevant in a highly rational and formal business– to–business (B2B) relationship. Well, then you might want to reconsider that opinion.

No matter how formalized a business relationship might be, culture is always present.

Both academic and business literature point out that one of the main reasons for international business failure is the inability to function in a foreign culture [1]. Everything from preferences about which communication channels to use to the perception of time, is influenced by culture. Hence, cultural competence might be the key for formal agreements to even take place. Since companies to an increasing extent have

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their most important customers located in foreign countries, the question of culture becomes a burning essential topic in the management of key customer relationships.

Culture reflects the beliefs, traditions and customs of the customer and is thus an inseparable part of international KAM.

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In this chapter we will discuss KAM from a cultural and managerial perspective.

Specifically, we will look at KAM from a supplier perspective. A focal company is regarded as a supplier of products or services. Firstly we offer the reader a starting kit in terminology. Secondly, we look at the actual processes behind managing a key customer relationship. Thirdly, we will discuss the more 'blurry' parts of KAM: trust, value creation and commitment.

12.2 KEY ACCOUNT MANAGEMENT — GETTING STARTED

Key account management (KAM) is relationship management with strategically important customers. Since these customers are seen as key factors for the strategic planning of the focal company, they are often called key accounts. Other terms used are strategic accounts, national or global accounts, important accounts or similar [3].

What defines a customer as a key account, and not an ordinary account, is not written in stone. A key account is one of the strongest links in the business chain of the focal company. A key account is thus characterized by the relationship in question, rather than by any absolute terms [3]. A customer can be the key account for one firm, while an ordinary account for another. For instance, Spencer [3] underlines that a change of strategy in the supplier company can lead to rearrangements in the hierarchy of the customers, making a key account a normal account.

Key account management involves strategic planning. All customers cannot be treated as key accounts. Choosing the right key accounts is crucial. The practical procedures with KAM will be discussed in this chapter, but generally speaking, KAM is not limited to only a few functions or actions. It can be seen as an entire, fairly complex entity and as a part of a bigger whole. A key account manager is often managing a team, or even several teams, in order to divide the work around a customer in an effective way. An individualized KAM program is set up for the specific key customer, containing decisions on the further procedures in the relationship. KAM can be considered as the connection both within firms (internally) and between firms (externally), as well as between firms and other market actors. In KAM the main focus is on market research, marketing strategy and to some extent marketing organization.

KAM requires thorough information gathering to serve the customer.

Today, KAM is facing a situation where companies are much more interconnected and the boundaries that separate one firm from another have become blurred. In the past a company’s business activities were predominantly concentrated ‘under the same

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roof’, while firms of today are much more integrated and dependent on one another.

Large–scale outsourcing and other efficiency programs between firms have become common practice, which has resulted in inter–firm alliances, internationalization, as well as external product and process innovations [4]. KAM nurtures the relationship with the most crucial customers and suppliers, and at the same time secures the business activities of the company. This has increased the interest for KAM in the last decade and a half [2]. KAM is all about getting under the customer’s skin, knowing his financial and economic situation, his strengths/weaknesses, his demands, everything, in order to be able to adapt to his needs. This is why many key account managers see themselves as managing an internal network of relationships [3].

As a company, in this case as a supplier, you may not only interact and do business with people from your own home country. Today, when in most cases the country borders are open (especially in Europe), travelling, moving and selling your products and services in and to different countries, has become easier. As a company conducting a key account program, you may notice that your customers are not always situated in the same country as your headquarter, not even in the neighboring country. When it comes to KAM and the ability to provide the best possible service to the customers, the supplier has to come up with an efficient plan on how to keep the key customers pleased. It relates not only to customer satisfaction with the service and the company, but also to making customers willing to continue the key relationship—regardless of the geographical and the cultural distance between the supplier and the customer. In today’s business environment going international is not only an option, it is a coercion.

However, it is not only the supplying company that may have to develop new strategies. The customer should also consider whether it is profitable to continue the key relationship with a supplier, which is on the other side of the world, and whether it is reasonable to reorganize its structure so that it fits with that of the supplying company. These are fundamental questions that each company needs to ask itself and to which only it knows the answer.

12.3 MANAGING THE KEY ACCOUNT

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Now that you are familiar with the concept of KAM, it is time to take a closer look on the practical side of it. So, where do you start? How do you know which customers are your key accounts and how can you get the key customers to stay? In this part of the chapter we will introduce you to the various ways of implementing key account

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programs. We stress the importance of selecting your key customers and give examples on the criteria, which may support the selection process. We also provide an overview of the information gathering process and discuss whether it is really as easy as it sounds. Furthermore, we discuss the art of choosing strategies. There are a lot of different strategies out there and as KAM develops, so do the strategies.

After reading this part there is particularly one concept you should remember and apply in all your key relationships—and that is interaction. Interaction is a word we cannot stress enough and after reading this part, you will understand why.

12.3.1 IDENTIFYING YOUR KEY CUSTOMERS — SETTING CRITERIA

A key account is not necessarily the largest customer on the market, but strategically the most important and attractive one for the supplying company [5]. The company has to decide on the criteria for determining strategically important customers [6].

This requires good skills from the managers, as they are the ones who determine which customers would provide the best long–term benefits and opportunities for the company [7]. That is why the criteria can be divided into both rational and emotional criteria [6]. The rational criteria may include e.g. those aspects that help the company reach its strategic goals, while the emotional criteria are linked to the personal preferences of the decision maker(s). The question is whether the emotional criteria are something that should be included when determining the key accounts? Or should the decision only be based on the rational criteria that are beneficial on the company level?

As mentioned above, in the end it is people who interact with each other. Would it then be helpful, for development and retention of the relationship, if the counterpart were someone the key account manager really enjoys working with? It is up to the managers to decide whether the emotional criteria are seen as disturbing or favorable for determining the key accounts. It could be said that few managers would probably admit that a decision about an important business relationship is based on anything else but rational facts. However, individual emotions cannot be disregarded when it comes to personal interaction in KAM. What brings a challenge into this matter is the intercultural environment where most of today’s companies are engaged in. The challenge lies in the fact that people from different cultures may have e.g. different working styles and divergent preferences when it comes to setting the criteria for the key accounts. Organizing and setting the criteria according to heterogeneous

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preferences may be a huge challenge for many international companies. We should also not forget that the key customers have their own criteria concerning the key suppliers. The customers put equally much effort in selecting their suppliers as the suppliers in choosing their customers [5].

Examples of criteria for key accounts can be the company’s •

size

•

growth potential

•

financial stability

•

easy accessibility (geographical location)

•

already existing relationships

Some also appreciate if the customer shares the same worldview and the same values as the supplying company [5]. Also, the ingenuity of the customer may have an impact when choosing the key account. Customer’s ingenuity considers the future possibilities of the supplier to develop its products and services in interaction with the customer as well as the possible learning process that will take place within the relationship.

It is also possible that, e.g., revenue managers and key account managers have different criteria for the key customers [8]. Revenue managers may merely focus on the short–term benefits that relate to the actual selling of products and services, whereas key account managers are often more focused on the long–term benefits that emerge from the successful relationship between the supplier and the key customer. A company’s different types of managers have to have a balance between their criteria; the criteria have to enable a profitable long–term relationship but also ensure the cash flow of the supplying company. Focusing too much on the revenue may damage the trust and the commitment that are needed in the key relationship between the two parties.

If balancing the criteria is difficult for one company, how is it when the company has several subsidiaries around the world? Nowadays, many companies have to deal with

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global account management. Companies’ subsidiaries in different parts of the world may have peculiar preferences concerning the selection of a key account. How can managers make sure that the same customer has the same position in every country the supplying company is active in? Therefore, global account management requires

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an organization structure that allows effective communication within and between the subsidiaries.

The most important thing managers have to keep in mind when they determine the key customers is, that not every customer can or should have the position of a key account. [9] Providing key account services requires a lot of resources and, therefore, not every customer receives this kind of special treatment. The problem with a lot of today’s managers is that they see too many of their customers as key accounts, without a proper justification of the chosen criteria for the key customers [10]. The 20/80–rule, meaning that 80 percent of the company’s revenue derives from only 20 percent of the customers, could be used as a simple guideline when choosing the key customers [11]. But following this rule is not the only option. Depending on the company’s business model and its resources for KAM, the company can develop its own set of rules. By positioning the customers according to the criteria, the company can provide the appropriate treatment for the right customer and thus reduce the costs that arise due to the loose use of resources [10]. Key account relationship requires a lot of commitment from the counterparts and that is why the ideal key relationship should be seen as a two–way–street where both parties have responsibilities towards the other part and where they both learn and benefit from each other.

12.3.2 INFORMATION GATHERING AS THE BASIS FOR A KEY RELATIONSHIP

When the supplying company has identified its key customers, it is time to gather thorough and detailed knowledge on the customer company and the market the customer is active on. It is not enough to know the customer only in outline. A key account manager should really understand and know the customer’s company even better than its own employees do. Without thorough customer specific information, the supplying company will not able to provide the right service offerings, to be proactive, innovative and to retain and develop the long–term key relationship with the customer [12]. The supplier, i.e. the key account manager, has to organize the information gathering process in a way that can be seen as a natural and value creating part of the key relationship [13]. When the key account manager knows how to gather and apply the customer knowledge effectively, it may even provide a competitive advantage for the supplier [14].

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The best way to gather specific customer knowledge is through interaction with the customer. Moreover, interaction helps in the value creation process, which takes place between the supplying company and the key customer. The interaction process is a dialogue between the business partners, where the both parties try to understand the counterpart and their special needs and wants, rather than a communication exchange where the parties use the tools of persuasion and manipulation [15]. It is necessary that information reach every person in the key account team so that they can improve the level of customer understanding. Internal communication becomes extremely important when the key account manager tries to get team members to share a common understanding for the information provided [13]. The information should contain specifics concerning the customer needs, customer characteristics (the company itself, its products and services etc.), its history and future potential [12]. Moreover, when dealing with an international supplier and/or key customer, in particular, one needs to be aware of the difficulties that may arise due to the Things you need to know about your customer:

geographical and mental distance between the business partners. It should be noted, that in such countries as China and Russia, companies are not as

customer needs

transparent as, e.g., Nordic companies. Therefore, information gathering

customer characteristics

is to a great extent based on tacit knowledge [16]. To create an accurate

history

picture of an international key customer, the company information

future potential

should be gathered from multiple countries and culturally heterogeneous

market characteristics (ex. competitors)

group members [17].

Interacting with the key customer is not the only way to gather information; managers can also obtain information through market research.

However, it is argued that only by interacting with the actual customer the supplying company will get an accurate picture of the customer company’s products and services, competitors and the business markets in general [13]. To make this possible, the counterparts need to keep the communication channels open; they have to have an efficient communication program or software, which will enable effortless interaction at all company levels. It could be a good idea for the key account manager or another supplier’s representative to be situated in the customer company for a short (or even longer) period of time. Nonetheless, it is not always possible, as the

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key account manager may be responsible for several accounts around the world and being unavailable for the other key customers would be unprofitable for the supplier.

Occasionally visiting the customer on site might be a solution for the manager to get a closer view of the company and its everyday life.

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Managing the information flow between the supplier and the key customer, may be a challenge for the key account manager, because of multiple contact points between the two companies [13]. It is up to the key account manager to build functioning communication channels, which enable effective information sharing and co–operation in the organization [18]. Having an international organization makes it even more difficult.

The companies may have one contact point on the top management level, one contact point between the R&D departments and one between the sales and purchasing managers of the both parties. What makes this difficult is that these persons may not even be located in the same country and represent different cultures. If direct interaction is the best way to be informed of, e.g., the changes, how should then the supplying company and the key customer structure their organizations in a way that is most effective and beneficial for the key relationship?

We assume that the key customer is ready to share information with the supplying company because of the willingness to be a part of the key account Reasons for problems:

relationship and because of the commitment that such a relationship requires. But what if the key account manager realizes that somebody or some divisions of the customer company do not want to share

managers’ bad personal relationship

information? Reasons for this can be several. One scenario is that managers interacting between the firms just do not get along, which means that personal relationship between them, or the lack of it,

lack of trust competition within and bet ween organizations

could influence the key account relationship. Other reasons could be

dissatisfaction with the relationship

that business partners do not trust each other sufficiently to share specific company information. There may also be intra– and inter–organizational competition (within and between companies), between different experts, teams and other interest groups, which may affect information sharing process and organizational learning [19]. If the manager comes across this kind of situation, it may be useful to reconsider whether the customer fulfills the set criteria for key accounts. Refusal to share information may also be a sign of dissatisfaction with the current relationship and may require the supplier company to reevaluate the success and efficiency of its key account program.

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12.3.3 CHOOSING AND BUILDING STRATEGIES FOR A KEY CUSTOMER

After identifying the key customer and obtaining detailed information it is time for the supplying company to select the suitable strategies for the key account program. The chosen strategy should be something that keeps the 'the relationship alive for future opportunities' [6, p. 204] and that creates customer value. The strategies define the structure of the organization, its processes and interaction with the key customer [9].

Concerning the key account relationship, the key account team has to combine sales and service strategies, which, among other things, includes determining [5]: •

the frequency, level and depth of contacts;

•

involvement of senior management;

•

commercial and technical openness;

•

nature, terms and pricing of the projects during the relationship.

A central and key aspect of building the strategy for a key customer is communication and interaction. Communication and interaction with the key customer offer multiple opportunities for the supplier. By interacting, when building a strategy, the supplier can design its key account program according to the customer’s special needs [10].

Furthermore, interaction gives the supplying company a chance to communicate its own expectations of the key relationship and let the key customer verify these expectations [20]. What is most important is that the key customer is given a chance to participate in designing the key account program. Still, it should be mentioned that a key account management program can only succeed if the top management of the organization provides full support to the key account manager [21].

In the following two sub–sections we provide an overview of models and approaches to interaction within key account relationships.

12.3.3.1 BOW TIE VS. DIAMOND–MODELS OF INTERACTION

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We have pointed out that it is up to the company how they design interaction in relation to their customers. But it should be designed in a way, which contributes the retention of a key account relationship. The following two models present different ways to implement account management or design interaction, namely (1) the Bow

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tie–model and (2) the Diamond–model [5]. These models differ from each other by the amount of contact points between the two business partners. In the Bow tie–model there is only one contact point between the supplier and the customer company and that is usually between the sales manager and the purchasing manager. This model enables competition between the both parties, at the same time providing control and power over the other counterpart. Nevertheless, the focus of this model is on short–term and transactional relationships, which does not fit the characteristics of a successful key account relationship.

Marketing

Marketing

Administration

Administration Main contact ‘Seller’

Main contact ‘Buyer’

Operations

Operations

Board

Board

Figure 12.2: Bow tie–model for account management. [26]

This brings us to the other model, called the Diamond–model. In this relationship model the counterparts form teams representing collaboration between companies’ different departments. Forming teams may not only contribute to effective knowledge transfer and interaction but also make learning processes between the firms and their different departments possible. In this model there are various contact points between the business

Bow tie: one contact point short–term transactional simple low costs controllable

partners, both on the operational and on the top management level. The key account manager is responsible for coordination of communication between these contact points. The Diamond–model enhances trust building between the counterparts and has an orientation on long–term relationships.

Depending on the designed key account program, the level and depth of interaction between the counterparts may vary. Bow tie is the most common model of supplier– customer relationship [5]. It is simple, it has relatively low costs and it is controllable.

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However, with the Bow–tie model the counterparts’ organizations are not structured in a way that supports the interaction between them. Therefore, this model is not sufficient enough if the goal of the key relationship is to bring value to the other part and support possible learning processes, which is something a successful, fruitful, key relationship should do. But if the goal of the relationship is only transactional, the Bow tie might be a good choice.

R & D Administration Key account manager

Operations Inbound logistics

Selling company

Diamond: Several contact points (coordination difficult) long–term interaction knowledge transfer learning process trust building security expensive

Board

R & D Administration Key supplier manager

Operations Inbound logistics Board

Buying company

Figure 12.3: Diamond–model for team key account management. [26]

To make the key account relationship work successfully we would highly recommend supplying companies to pursue the Diamond–relationship because of the security this model offers to the relationship, as well as other benefits listed above. It is also possible that, as the key relationship deepens, it will develop from the Bow tie–model to the Diamond. Still, the Diamond– model approach also has its downsides. To make the Diamond–model work, the counterparts have to invest a considerable amount of time and money into

their relationship. In addition, this model requires good leadership considering that the key account manager is responsible for managing the whole, maybe even international, team and its various members. The international key account manager has to coordinate multiple personal level relationships, which may take place on different

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continents, in different languages and between different cultures. This requires a lot of competency from the key account manager and implies that not everyone is suited for this job. The risk here is that the key account manager looses the overview of the relationships and instead of the companies working as a whole team, they will start to

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work in smaller, separate groups which do not interact with each other [5].

12.3.4 WATERFALL VS. AGILE METHODS FOR DEVELOPING THE ACCOUNT

It is not enough for the key customer to be involved only in the beginning of the development process; they should be present in every step of the way. We will introduce you to the two concepts, Waterfall and Agile, which are actually used in software development, but can be applied in KAM and especially in project management relationships, where the counterparts develop new products or services together. In the Waterfall–model the key customer is present only in the beginning and in the end of a product and/or service development process. The risk with this model is that the supplying Satumaa — Advocate of Agile Satumaa, one of Finland´s leading marketing agencies, has developed their strategy towards the Agile approach.

The CEO of Satumaa, Mr. Marko Edfelt, supports the Agile approach because it enables a more open sharing of information and cooperation between the counterparts. Edfelt mentions that Western consultant firms are using this strategy more and more because it allows customers to be embedded in shared projects to a higher extent.

The biggest Agile project of Satumaa in 2011 was with Helsingin Sanomat, a Finnish newspaper. Their task was to design the newspaper’s internet presence which was done in several sprints during 3 weeks. Between these sprints, Satumaa had meetings with their customer where they discussed the developments of the project and made sure that the set common goals are followed throughout the project.

Edfelt points out that in the more traditional Waterfall model the customer gets involved too late. And even though the outcome might be the same with both approaches, the customer would still be more satisfied in the end when using the Agile model. Several meetings between the sprints help the customer to adjust to the project’s developments and not to get surprised by the end result [23].

company has misinterpreted something in the beginning and due to lack of interaction during the actual development phase the key customer could not correct the misunderstanding. Ignoring the importance of the actual development phase may result in key customer dissatisfaction, as the delivered product does not match the job order [27].

In the Agile–model the key customer is involved during the whole development process. In this way the supplying company can have a constant overview of the customer needs and therefore develop the product or service according to the customer preferences.

Most important, since constant interaction between the counterparts takes place, there can be only little confusion between them [28]. Though choice of strategy highly depends on the situation and a company’s resources, we would suggest to use the Agile–approach as it offers possibilities. There is lots of room for learning processes, building trust and creating value.

Depending on the situation most of the interaction might take place, e.g., per telephone or e–mails, which can stir things a little bit. It is extremely easy to misinterpret someone when writing only e–mails or

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talking on the telephone. The CEO of Satumaa, Marko Edfelt, claims that the most of the problems arise because of misunderstandings in communication. Even small spelling mistakes can stand behind bigger misunderstandings. According to Edfelt [23], Satumaa has recently invested into a communication program, which has reduced the misunderstandings in their communication practice.

12.3.5 ENDING A KEY ACCOUNT

When the supplying company considers ending the key relationship they have to evaluate and compare the attractiveness of the alternative partners to the existing ones and decide whether continuing the relationship would bring added value or not. However, it is not necessarily the supplying company who decides to end the key relationship. The customer can, e.g., be disappointed with the implementation of the key account program or maybe (because of an organizational change etc.) the supplying company does not just fulfill the set criteria for the key supplier anymore. Decision on relationship ending can come from either one or both sides of the relationships. Some additional reasons, which may stand behind the company’s decision to end a key relationship are the following [38]: •

changes in either company’s personnel;

•

dissatisfaction with partner’s performance (e.g. poor implementation of the key account program, inadequate interaction between the counterparts, lack of understanding of the other part’s needs etc.);

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•

changes in ownership of the company;

•

company’s financial difficulties;

•

changes in the larger network of relationships or in the economy;

•

mergers and acquisitions.

Reputation to think about: One example of a bad exit strategy is when Finnish mobile manufacturer Nokia closed its factory in Bochum, Germany in 2008. The company notified the employees in January 2008 without a warning that they are going to close the German factory in the summer and move their manufacturing to more cost– efficient Romania. The announcement came as a shock to the 2 300 employees who would naturally lose their jobs. But additionally because of the spillover effect closing the factory would also indirectly threaten the job of many other people.

Giving the announcement shattered Nokia’s image in Germany for a while, leaving the company with a reputation of a bad employer. Nokia lost its image as the socially responsible company. [35] It was not only the short notice that shattered Nokia’s company image. Nokia had received public investment aid (40 million euros) during 1998–1999 from the state of Nordrhein–Westfalen, which were meant for the creation of stable jobs in Bochum [36]. Three months after the announcement of closure, Nokia notified their employees that they will compensate their loss of jobs with an aid package worth of total 200 million euros. This package would cover the retraining of the employees and other feather–bedding [37].

It is most likely that Nokia understood the size of their mistake they made in Bochum and had to rethink their strategy.

That is probably why they did not notify about the aid package immediately in the beginning but first after three months.

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To be able to end a key relationship with care and to retain company reputation, the company has to develop effective exit and dissolution strategies. The way the company ends the key relationship may have effect on the way the other key accounts and key account candidates perceive the supplier, and influence the decision whether to stay as or to become a key account.

12.4 INTANGIBLE DIMENSIONS OF KAM

In this section we will take a closer look at some intangible dimensions in key account relationships: trust, value creation, commitment and social skills.

Trust has a crucial role in business relationships formation and development.

Personal trust is something that a firm should develop, in order to function in the best and the most effective way. Trust is the key to the entire interaction between two parties. Forming contracts, assisting people, working together, and other forms of collaboration—all this requires trust between the counterparts. Building trust takes time and it all goes back to the following [31]: •

Listening

•

Engaging

•

Framing

•

Committing

Listening is often taken for granted, but caring for a key customer really requires that the key account manager has the ability to put him or herself in the customer’s position in order to understand the concern, vision and desire of the customer. This is not easy in an intercultural context, where the same message can be perceived quite differently.

It also includes respect for the other culture in question and it takes cultural understanding to read the other part entirely. Engaging the customer does not always mean offering the most profitable solutions from the supplier’s perspective. 'In sickness and in health'—the relationship should be strong enough to endure difficulties. Honesty and openness are two keywords in this context. Framing is also an essential ingredient in KAM, which includes building a complete understanding of the customer and identifying his true needs and issues. This brings clarity to the key account relationship and works as a good basis for trust building.

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Figure 12.4: 'In sickness and in health' — a key account relationship as a marriage.

Although virtual technologies ease interaction between companies, one should not underestimate the importance of face–to–face encounters in the trust building process. In many cultures, interpersonal skills may be even more important than the procedure–based approach.

Customers are more informed, powerful and demanding than ever before. The intensified power of key customers extremely affects the work environment of a key account manager today. It requires high professionalism, new–thinking and creative ideas from the supplier, in order to be able to create value for the customer. Value creation is very important for maintaining a long–term business relationship, and this requires high awareness of the customer’s needs [2].

One of the biggest challenges with KAM is simply to care for the general alignment in the key account relationship [2]. The supplier needs to be clear with the strategy internally, and the customer should be able to communicate his needs externally in order to keep everybody on track. The basis for value creation process is to keep everybody on the same page. High customer involvement, as well as setting directions

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and discussing difficult issues, is one of the corner stones in value creation process [2].

When managing a key account relationship this can easily turn out to be something that slows down the work process, or even undermines it. The agile model that was

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discussed earlier, has advanced openness between counterparts, especially in Western consultant companies [23]. Openness in a key account relationship allows the supplier to know his customer in and out and provide him with the best service value.

Good KAM is when you really know more about the customer than he knows about himself. [23] By keeping the customer constantly updated, the relationship can be nurtured and given a higher guarantee it will last on a long–term basis. By enhancing engagement in the business relationship, participants feel that they can actively participate in the development process. KAM is often considered as the relationship between one key account manager and the representatives from the customer firm. However, it should be seen as management of a complex communication system between the key account management team and the customer, as well as other actors indirectly involved in the relationship (e.g. technical and commercial people, the customer’s clients, the colleagues within the company etc.) [29]. By doing this successfully, a relationship can create value. One common problem in global account management is lack of internal alignment within the focal company. Quancard [24] underlines the importance of a unified voice within the company, and not, e.g., the North American division Close, but not too close: Hertz and Vilgon [4] present a case about a merger between the Swedish car manufacturer Volvo Car Corporation and the French car maker Renault in the early 1990s. Volvo adapted their deliveries to shorter time margins and thus cut down the operation time for roughly 1 000 smaller suppliers. This raised loud protests within the supplier network and some relationships even ended.

Eventually, the merger with Renault was abandoned. Even if this merger could have resulted in many positive effects, the negative effects overshadowed the profits from the relationship. From a KAM perspective, this case illustrates an important point—not to build a relationship for the sake of building it.

Even if Renault in this case was a promising partner for Volvo, the relationship did not turn out as expected. Volvo was driven into a narrow niche market and then abandoned by their key customer.

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promoting different values than the European.

One of the basic notions of marketing is that it always costs more to gain new customers than it costs to retain the old ones [32], which means that commitment is very important. This is also true in the case of KAM on a B2B level. The aim is to create commitment, loyalty and retention. And all of them go hand in hand with each other. Customer loyalty can be defined as a commitment to continue doing business repeatedly, which is based on the presence of retention.

Even though the key account manager has a wide range of responsibilities, his/her position does not often involve much authority to tell people what to do.

According to Farrington [29], this is where social skills carry a very important role. He argues that a key account manager needs to 'influence and persuade' in order

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to get where he or she wants. The key account manager really needs to be the spider in the web and have many key skills and competences in order to serve the clients from all over the world in the best possible way. The key account manager must have the skills to look at everything from the customer’s perspective and have a thorough understanding of, e.g., the financial and legal details of the account, the business objectives and the commercial policies.

12.5 CHALLENGES AND RISKS IN KEY ACCOUNT MANAGEMENT — CAN A KEY ACCOUNT RELATIONSHIP BE A BURDEN?

In the following part we will study the dark side of key account management, or the problems that may arise due to a close business relationship. Little research deals with the downside of KAM and long–term relationships, which is why we have decided to discuss these negative effects here. Giving the customer the status of a key account does not mean that the company has to retain the key relationship forever. Things change, and so do relationships. There may come a time when the supplier or the key customer notices that the key relationship does not bring the added value and benefits that it should have. When the time comes the only way out is for the counterparts to end their key relationship. Even though we here focus on ending relationships, the relationships may be activated later. When the key relationship ends, the supplying company may only downgrade the status of the customer but retain the company as a normal account.

One of the main risks in key account management is that the supplying company is too dependent on only few customers. This may restrict supplier’s strategic freedom because so much of its resources are focused on few key relationships. The key customer is someone who should have a better position compared to non–key customers but that does not mean that the relationship will always be profitable and bring the best revenue possible. When the supplying company or the key customer changes its organization structure or strategies, the importance of the existing business partners may change [34]. “It is not unusual to discover that many of the interactions that were once of high value have ceased to be so” [5, p. 293]. In this case, without any

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dissatisfaction towards the relationship, the other part may not see the strategic value of the relationship anymore and wants to end the key relationship. Although there is no drama per se, ending a relationship may bring additional costs to the companies.

Because of the supplying company’s high dependency on the few key customers, losing

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one customer may in worst case scenario mean losing the whole business [34].

Building long–term relationships may lead to the friendship of the interacting parties. However, the danger of close relationships and friendship is that, e.g., the key customer can start to use it as a weapon towards the supplying company. Managers need to develop strategies, which exclude emergence of such scenarios, at the same time enabling the company to achieve its organizational goals. To prevent managers’ relationships of becoming too close the company can, e.g., rotate their managers in their organization [33]. However this approach might be inapplicable in cultures where close relationship between the managers may be the only possible foundation for future business transactions (e.g. in Japan and Russia).

The overall risks to key account management and sources of failure of key accounts relates to selecting the right customers as well as receiving top management support.

As mentioned earlier in the chapter, it is of outmost importance for the supplying company to make sure that they have the right customers as key accounts. Misplacing resources may lead to a situation where a non–key account receives too much service, while the actual key account is disregarded. This naturally leads to disappointment of the actual key account and to the shattered reputation of the supplier. In order to estimate the right amount and level of service the key customer should have, the supplying company can design a system for measuring the individual Jonathan Farrington [29] brings up a study in a company where managers were asked who the 10 most important customers were. The result was 56 different answers from 10 senior managers!

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customer profitability [5]. Furthermore, everyone in the organization should know who the key accounts are in order to avoid misplacement of resources. However, this is not always made clear, as seen in the example (info 12.6).

To succeed, top management need to support the key account program. The key account manager also need

to check whether organizational structure is the right one, meaning that it supports the execution of the key account program [30]. Additionally, determining the focus of the key account program is crucial. Concentrating too much on revenue management instead of relationship management may lead to the failure of KAM program.

The key account manager must also identify the key actors in the customer firm, in order to manage a good top level communication [29]. The key account manager need to remember to agree on the details of the program with the key customer;

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the agreement will point out what kind of treatment the key customer should have.

It also has to be clear for the different parts of the supplying company and for the key customer as well, whether the special treatment and the service can be seen as part of the business deal or if the company charges for the service

Key to success: right customers as key accounts

separately [5]. In other words, key competences of a key account manager are delegation, consultancy and team management [29]. One

support from the top management

of the most important competences without a doubt are interpersonal skills.

customer embedded in designing process right organizational structure

12.6 INTER–CULTURAL ASPECTS OF KAM

effective communication focus on relationship management NOT revenue management

As we already have learnt, cultural differences can bring their own kick to the any business matter. Culture is often perceived as something ‘wholly’ that is hard to grasp and does not belong in formal business relationships. However, having cultural competence (CC) can be a huge

competitive advantage even in the most transactional kind of business. In short, CC is the individual ability to operate in a foreign culture in an effective way [32]. In international KAM this is an absolute must; you have to be culturally smart and be able to read between the lines.

Since KAM to a large extent is about engaging in personal relationships, creating value is also tied to the cultural competence of the key account

Groundwork in intercultural KAM:

manager. This involves a genuine interest shown for the foreign culture and having both factual, conceptual and attributional

learn about foreign culture’s tastes, trends, technologies, business behavior

knowledge about it. Factual knowledge includes an understand-

get used to working in multicultural teams adapt to living in different cultures know how to interact with foreign colleagues as equals

ing for the country’s history, political and economic systems etc. Conceptual knowledge, as cultural group’s value systems or customs and behavior tied to culture, is also possible to obtain beforehand by reading. Attributional competence, however, is all about reading between the lines. This means gaining tacit knowledge about the culture through e.g. frequent visits or establishment of cross–

cultural teams [1].

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When an international supplying company wants to implement its key account program they have to choose an approach according to which they will act and conduct business around the world. Here we present four strategies to choose from [7]:

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•

home replication strategy

•

multi–domestic or multinational strategy

•

global strategy

•

transnational strategy

The home replication strategy suggests that people on all international markets share the same customer tastes and preferences. This implies that the supplying firm does not make any adaptations to the local way of doing business. The multi–domestic or the multinational strategy, is most often chosen by companies, which have relatively independent subsidiaries, each of them concentrating on a specific local market. This approach requires a high level of adaption on the behalf of the company and may not be that effective when it comes to information sharing between headquarter and subsidiaries. The third strategy is called the global strategy. Here the company tries to design a way of doing business, which will fit for all the countries the company is active in. The ultimate goal is to produce standardized products and services, which are applicable in every country. Designing such strategy requires in–depth information concerning various local markets. Finally, the transnational strategy, tries to combine the multinational and the global approach. The idea is to save resources by “Fragile” trust in CIS countries When working with key customers in CIS countries (former Soviet states), the Finnish marketing agency Satumaa always follows an ad hoc model. According to the CEO, Marko Edfelt, situations are very likely to change on a daily basis in these markets. Thus, a flexible model adapted to the specific customer is the best way to handle relationships in many CIS countries. Usually there are no established frameworks for action, except when dealing with multinational or global customers (much like the Western model). Hence, trust is to a great extent built on money paid before delivery. Edfelt [23] underlines that in CIS countries Western suppliers are often hired on a transaction based agreement because of their competitiveness in know–how and well–advanced technology.

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having a global strategy, while being able to adapt to the local requirements if needed.

Culture also plays a significant role in the way the key account managers build their strategy. There are, e.g., country specific regulations concerning bribery and these regulations can restrict key account managers’ work and implementation of the key account program [22]. Most exchange–listed companies, and especially western companies, have a corruption rule, which gives guidelines on the amount and kind of treatment the customer company can be given. If the supplier company crosses a specific limit (money value etc.), implementing the key account program can be seen as bribery [23].

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Finally, as a part of determining its international strategies, the company has to decide on which level they will interact with the key customer. The company has to choose between the (1) central headquarter to headquarter interaction, (2) the balanced interaction, or (3) the decentralized local–to–local interaction [25].

In the first scenario, central headquarter to headquarter interaction, the product and the service in matter are standardized and the interaction takes place on top management level. The second scenario, balanced interaction, includes interaction not only on top management level but also locally, on one specific market. In this case the company may have to make some adaptations to the products and services so that they meet up the local country specific expectations. The last scenario, decentralized local to local interaction, takes place only in the local subsidiaries. This kind of approach requires a high degree of adaptation, which is based on country specific requirements.

This strategy leaves headquarters out of the interaction and gives each subsidiary more power and responsibility of its own business.

12.6.1 INTERACTING WITH A FOREIGN KEY ACCOUNT

The following section outlines some concrete examples, which may arise when interacting in an intercultural context. These moments of interaction and communication matter most of all when building trust, commitment and loyalty for your company in an intercultural context. The situations focus on actual interaction moments, interpersonal interaction within intercultural KAM and which problems can arise along the way.

Example 1. First meeting with your key account from the different country So this is it. You have obtained all the preliminary information about your key account’s culture, as well as his company and you are ready to go in there. Let us imagine that you are from Finland and are going to Russia. Russians like sauna, called banya, like to drink some alcoholic beverages, and like fishing. But can such activities really help in managing your Russian key account? You’ll be quite pleased to know that during the first meetings in Russia it is quite common to have dinner or some out–of–office activities in order to get to know each other better. You will need to get

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used to the fact that you should become actual friends with your Russian partner. It is not all about business. And it is not only about small talk during a business meeting, but also about interaction out–of–office. Perhaps you will randomly speak about business matters, but be ready to relax and have some fun. On the other hand, do not

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expect to have a meeting which is too relaxed, because business still comes first. So you should not evaluate your trip as a holiday. On the other hand, you will need to open yourself personally, since Russians sure will. They can tell you about their child getting a diploma or how they got into a car accident lately or even about relationships with their wife/husband.

In this scenario we can quite clearly see the role concept in play. For example in Russia it is not only the professional role that you should play when interacting with your key account. To gain trust, you should also play a simple social friendship role.

Furthermore as the relationship goes on do not be surprised if your Russian partner calls you in the middle of your idyllic soirée with your wife/husband—Russians expect you to be there for them 24/7. So, which role to take depends on the situation you’re in. The same goes with other intercultural contexts; you should distinguish which role is acceptable to take on in certain situations, so that it will help your relationships with the key account.

Another thing to keep in mind especially in the first interaction moments is not to overadapt on the basis of preliminary information of the different culture. There is this story about a Finnish team going on their first meeting with their potential Japanese account, which was of high importance for them. Both of the parties read a lot of cultural based information on each other and tried to adapt to it as much as they could. The outcome was that the Finnish party acted like Japanese and on the contrary the Japanese acted like Finns, which lead to confusion on both sides and influenced their relationship in a negative way. Adaptation should not equal imitation; one should retain the traits of his original culture as well.

Example 2. Arranging interactions or the perception of time What comes after the first moments of interactions? You can be sure that, as in any interaction process, you will learn a lot during your continous interactions with the key account. The knowledge of your 'cultural vocabulary' will expand dramatically. Let us take some possible situations from ongoing interactions with a key account.

The perception of time can have a considerable influence on your intercultural interactions with your key account/ partner. In Western countries the perception of time is mostly monochromic (see chapter 1 for definition) and things go as they are planned. In for instance Russia the perception of time is polychromic and figure 12.5, taken from a Russian blogging network 'Livejournal', vividly depicts it. Planning does

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not really go perfectly smooth, and possible reasons are that things might change in a minute in turbulent markets and there is a strong influence of the institutional context.

Planning

Urgently!

Quick!

Thinking

Doing Aaaaa!

Move on!

Checking Business in Europe

|

Business in Russia

Figure 12.5: Perception of time (Russia and Europe).

You might ask how different perceptions of time can influence your intercultural interactions with the key account? It will and in many ways. Just to mention one example, when planning to meet your partner in Russia—call in advance!!! Once a Finnish manager told a story about his first experiences with Russian business. He mentioned that he agreed on a meeting around a month or so in advance. In Finland you do not in most cases need to verify the actual meeting if you have previously agreed on it. So the Finnish manager felt quite sure that he could go to Russia and have the planned meeting. He was not anticipating hearing the Russian CEO’s secretary stating that “He is not on the place at the moment”. But, as said before, in Russia, things can change in a matter of a second. The Finnish manager was unfortunate to experience it firsthand. When coming to the Russian office the Finnish manager found out that the Russian CEO was not there, because some other important thing had came up and / or the CEO might have forgotten about the meeting.

Example 3. Negotiations and cultural frames In matters of decision–making in an interactive manner together with your key

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account, the terms of consensus vs. compromise cultures arise. You can reach a consensus, when you talk over different options and come up with a mutually desirable one, so that none of the parties is in way offended. In a compromise situation, it is the option of one of the parties that is given priority. Although the other party may be

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ok with this option, it is the party whose option was chosen who 'wins'. For example the Finnish culture is more about seeking consensus in interaction, while in Russian culture it is more about compromise, where the Russian side needs to 'win'. Russians are to a big extent opportunistic and if there is a competitor who offers a better price, they can transfer to him, even if they have developed relationships with you. In case this kind of a situation occurs you will have to come to some sort of compromise, which in most cases refers to reducing the price.

The conceptual thinking of managers across cultures differs, therefore affecting their understanding of things and actions. This relates to a concept called cultural frame, which refers to the cultural meaning of a certain situational context; how an individual perceive it, what norms and rules are attached to this situation, all of which form the basis for individual actions. Adair and Brett, relating to negotiations context, state that eastern managers frame negotiations as relationships, whereas westerners frame it as a distribution of resources [42]. There is no doubt that because of different cultural framing, different interaction styles and cultural norms are applied.

When interacting on a day–to–day basis you will surely need to learn about certain situations’ cultural frames and need to switch to this frame yourself. Although cultural frame switching in literature is mainly used in relation to bicultural managers, being a key account manager in this multicultural word requires you to become to some extent bicultural.

Example 4. Different ideas about trust, commitment and social skills Most literature on intercultural marketing discusses the importance of trust, commitment and social skills when building and maintaining key accounts. Yet there is little discussion about the fact that people from different cultures might have different ideas about what for instance trust is and how it is developed. For instance trust between firms in the Nordic countries is perceived as organizational and professionally based. In these countries a company representative always enter interaction as an official, and has a professional role. But for instance in the Chinese context, business people tend to have a more holistic thinking. A business person functions foremost as an individual and his or her role is usually personal and private. Trust is therefore individually based and not organizationally and professionally based [39].

Since the Chinese live in a society where emphasis is strongly placed on behavior, trust exists when someone is able to behave over a long time in a way that the partner has expected. Thus, a requirement for trust is to understand your key account and his or

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her values, and to be sensitive to and adopt the key accounts culture.

Trust in the Chinese context is not a result of the interaction process; it needs to be established prior to starting the business relationship. If you are a western business person and intend to establish trust with a Chinese business person, you will need to establish trust either through a recommendation from a trusted person, through a friend or friend’s friend, or through its track record of accomplishments.

Commitment might also have different meaning and be formed on different grounds for people from different cultures. In Finland commitment can be related to a firms ability to stick to mutually agreed and signed contracts. In the Chinese context commitment involves more than the business side of the relationship. If you have a Chinese customer as a key account, the expectation of your Chinese key account is that you show empathy, or to 'get personal' with your account. Empathy is defined as the ability to understand someone else’s desires and goals. You have to be willing to acquire in–depth knowledge of your key account and to know what appeals to his or her needs. A Chinese partner will expect you to anticipate his or her needs or to know his or her feelings without asking or being told [40].

In the Southeast Asian context, business relationships are built on social relationships, and personal relationships are often a prerequisite for developing other types of business activities. Since the world of business cannot be separated from social aspects, gaining legitimacy through social behavior is as important as efficiency.

Furthermore, relationship in the ethnic Chinese context does not only develop as a result of acts and counteracts. It develops as result of the individual being able to act in a respectful manner, and showing respect for local traditions and rules. In other words, the firm’s strategic orientation is legitimacy in this context, meaning that it adheres to number of rules, regulations, values and norms in order to maintain environmental support [41].

If you are managing a Chinese key account, you will quickly realize that he or she is sensitive for personal characteristics. For a Chinese, human character and personal chemistry have a determining influence on the continuation a relationship. The personal relationship comes first, and the business relationship builds on a strong

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and common personal relationship. Finding commonalities and common interests are central elements of social relationships.

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12.7 SUMMARY

KAM is a really interesting topic especially when you take the cultural aspect into consideration. As you have noticed reading the chapter, culture affects everything. It is not only the geographical distance, which makes things a little bit complicated, but also the cultural distance, i.e. differences in values, beliefs, norms and customs, which may affect the success of the key account program. Cultural competence is something the key account manager must have and which he/she will hopefully spread to the other key account team members as well. We pointed out in the chapter that the main reason for international business failures is the fact that the companies lack the ability to function in a foreign culture. Better cultural competence of key account managers can help in avoiding these failures.

To a certain extent, KAM is about choosing strategies. If you choose the wrong strategy or in the worst case, do not have one, you will most likely fail to implement the key account program sufficiently. This may cost you your key customer and even your reputation. So concentrate on the most important things: selecting the right key customers, choosing an approach and strategic goals, which are best for your company and implementing the approach consistently in every cultural setting. When you have these things in order, you may have a shot to succeed.

But also remember that KAM is not all about the strategy, it is about the ongoing interactions and situations arising along the way, and intercultural account managers should be flexible, eager to constantly learn and be ready to solve unexpected issues.

When preparing, it useful to learn not only about strategies employed by different companies, but about actual interaction situations. If you are a key account manager with little experience from managing intercultural accounts, it might be advisable to ask advice from other companies and people in your own country. If you are lucky they might even tell you their failure stories. But remember that other peoples’ stories will be highly subjective and the information should be carefully filtered. Moreover, it is not a given fact that the situation and context will be the same in your case. Going into a new culture is like making an archeological trip, you never know what will be in there, but be sure that you will find something that will enrich your and your company’s knowledge. So the main advice would be: explore and act!

In this chapter we have emphasized the importance of long–term relationship creation and how a supplying company should define the goals of the relationship

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in interaction with the key customer. The magic words trust and commitment can only be achieved if the key relationship provides value to both parties. Building trust, commitment and value is something that takes time, but it is also something might need to be done differently in different cultures. In the best窶田ase scenario these three concepts will provide a fruitful relationship and as a result lead, for instance to product innovations.

We have provided you here with the some tools and examples for managing international key account relationships. All you have to do now is to collect these tools into your tool box and start to manage!

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REFERENCES

[1] Johnson, James P.; Lenartowicz, Tomasz & Apud, Salvador (2006): Cross–cultural competence in international business: toward a definition and a model, in Journal of International Business Studies, Vol. 37, No. 4, pp. 525–543.

[2] Guesalaga, R. & Johnston, W. (2010): What’s next in key account management research? Building the bridge between the academic literature and the practitioners’ priorities, in Industrial Marketing Management, Vol. 39, Issue 7, pp. 1063–1068.

[3] Spencer, Robert (2005): Strategic Management of Customer Relationships.

A Network Perspective on Key Account Management [doctoral thesis], Uppsala University, Department of Business Studies: Uppsala.

[4] Hertz, Susanne & Vilgon, Mats (2002): The ‘Burden’ of Key Customer Relationships, in IMP Group, URL: http://www. impgroup.org/uploads/papers/510. pdf (accessed February 13, 2012).

[5] Cheverton, Peter (2008): Key Account Management: Tools and Techniques for Achieving Profitable Key Supplier Status, London: Kogan Page Ltd. [6] Ojasalo, Jukka (2001): Key account management at company and individual levels in business–to–business relationships, in Journal of Business & Industrial Marketing, Vol. 16, No. 3, pp. 199–220.

[7] Raab, Gerhard; Ajami, Riad A.; Gargeya, Vidyaranya B. & Goddard, G. Jason (2008): Customer Relationship Management: A Global Perspective, Hampshire: Gower Publishing Ltd. [8] Wang, Xuan Lorna & Bowie, David (2009): Revenue management: the impact on business–to–business relationships, in Journal of Services Marketing, Vol. 23, No. 1, pp. 31–41.

[9] Gosselin, Derrick Philippe & Bauwen, Guy André (2006): Strategic account management: customer value creation through customer alignment, in Journal of Business & Industrial Marketing, Vol. 21, No. 6, pp. 376–385.

[10] Rubanovitsch, Mika D. & Valorinta, Ville (2009): Älykäs myynnin ohjaaminen, Keuruu: Johtajatiimi.

[11] Rope, Timo (2004): Business to Businessmarkkinointi, Helsinki: WSOY. [12] Nätti, Satu; Halinen, Aino & Hanttu, Nina (2006): Customer knowledge transfer and key account management in professional service organizations, in International Journal of Service Industry Management, Vol. 17, No. 4, pp. 304–319.

[13] Salojärvi, Hanna & Sainio, Liisa– Maija (2010): Customer knowledge processing and key account performance, in European Business Review, Vol. 22, No. 3, pp. 339–352.

[14] Ala–Mutka, Jukka & Talvela, Erkki (2004): Tee asiakassuhteista tuottavia: Asiakaslähtöinen liiketoiminnan ohjaus, Jyväskylä: Talentum Media Oy. [15] Catulli, Maurizio & Gander, Jonathan (2004): Relationship management versus brand management in SME Business–to–Business marketing, in IMP Group, URL: http://www. impgroup.org/uploads/papers/4522. pdf (accessed February 13, 2012).

[16] E24 (2011): Alla måste ha en Kinastrategi, in E24, 17 November, 2011, URL: http://www.e24.se/karriar/ alla-maste-ha-en-kinastrategi_2930456. e24 (accessed February 19, 2012).

[17] Salojärvi, Hanna; Sainio, Liisa–Maija; Saarenketo, Sami & Tarkiainen, Anssi (2010): What factors enhance intra–organizational customer knowledge sharing in international key account management?, in IMP Group, URL: http://www. impgroup.org/uploads/papers/7462. pdf (accessed February 13, 2012).

[18] Grant, R. (1997): The knowledge– based view of the firm, in Long Range Planning, Vol. 30 No. 3, pp. 4504–54.

[19] Nätti, Satu & Hanttu, Niina (2003): Knowledge Transfer Through Key Account Management Systems In Expert Organizations, in IMP Group, URL: http:// www.impgroup.org/uploads/papers/4395. pdf (accessed February 13, 2012).

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[20] Smith, Stacey (2011): Do Account Planning WITH Your Customers, Not TO Your Customers, in CEB Sales Insights Blog, December 6, 2011, URL: http://saleschallenger.exbdblogs. com/2011/12/06/do-account-planningwith-your-customers-not-to-your-customers-2/ (accessed February 13, 2012).

[21] Capon, Noel (2001): Key Account Management and Planning: The comprehensive handbook for managing your company´s most important strategic asset, New York, NY: The Free Press.

[22] Freeman, Susan (2001): Conflict management and exit strategies in buyer–relationships in foreign markets: a case study of an Australian citrus fruit exporter, in IMP Group, URL: http:// www.impgroup.org/uploads/papers/180. pdf (accessed February 13, 2012).

[23] Edfelt, Marko (2012): Interview with CEO of Satumaa, conducted

by Partanen, Johanna & Vidjeskog, Josefin, January 23, 2012.

[24] Quancard, Bernard (2011): Presenting a Unified Voice to Your Global Customers, in SAMA Strategic Account Management Blog, November 28, 2011, URL: http:// www.strategicaccounts.org/about-sama/ blog/2011/presenting-a-unified-voice-to. html (accessed February 13, 2012).

[25] Hollensen, Svend & Grünbaum, Niels N. (2006): The Organizational Set–up of Global Account Management, in IMP Group, URL: http://www. impgroup.org/uploads/papers/5700. pdf (accessed February 13, 2012).

[26] McDonald, M., Millman, T. & Rogers, B. (1996): Key Account Management: Learning from supplier and customer perspectives, Cranfield University School of Management.

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[27] Lecky–Thompson, Guy (2005): Corporate Software Project Management, Hingham, MA: Charles River Media, URL: http://site.ebrary.com/lib/abo/ docDetail.action?docID=10078507&p00 (accessed February 13, 2012).

[28] Schuh, Peter (2004): Integrating Agile Development in the Real World, Hingham, MA: Charles River Media, URL: http://site.ebrary.com/lib/abo/ docDetail.action?docID=10078511&p00 (accessed February 13, 2012).

[29] Farrington, Jonathan (2011): Key Account Management — A Fresh Approach, URL: http://www.jonathanfarrington.com/ downloads/ebooks/JFC_KAM_EBook_6. pdf (accessed February 12, 2012).

[30] Staples, John (2011): Top 5 Reasons Key Account Programs Fail, in Sales Benchmark Index´ Sales Force Effectiveness Blog, December 14, 2011, URL: http://www. salesbenchmarkindex.com/bid/74129/ Top-5-Reasons-Key-Account-ProgramsFail (accessed February 13, 2012).

[31] Moment, Robert (2006): How To Cultivate The Trust Factor In Business, Articlesbase, July 13, 2006, URL: http://www.articlesbase.com/affiliate-programs-articles/how-to-cultivate-the-trust-factor-in-business-41129. html (accessed February 14, 2012).

[32] Zineldin, Mosad (2000): Total Relationship Management, Studentlitteratur: Lund.

[33] Ivens, Björn S. & Pardo, Catherine (2005): When a Relationship is ‘Transactionalized’; The Introduction of Reverse Auctions in a Key Account Relationship, in IMP Group, URL: http:// www.impgroup.org/uploads/papers/4703. pdf (accessed February 13, 2012).

[34] Piercy, Nigel F. & Lane, Nikala (2006): The hidden risks in strategic account management strategy, in Journal of Business Strategy, Vol. 27, No. 1, pp. 18–26.

[35] Ahtiainen, Ilkka (2008): Tehtaan lopetus sokki Bochumin nokialaisille, in Helsingin Sanomat, January 15, 2008, URL: http:// www.hs.fi/talous/artikkeliTehtaan+lopetus+sokki+Bochumin+nokialaisille/1135233304605 (accessed February 18, 2012).

[36] Taloussanomat (2008a): Nokia ei aio maksumieheksi, URL: http://www.taloussanomat.fi/tyomarkkinat/2008/02/19/ nokia-ei-aio-maksumieheksi/20085172/12 (accessed February 18, 2012).

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[37] Taloussanomat (2008b): Nokia lupaa Bochumiin 200 miljoonan korvaukset, URL: http://www.taloussanomat.fi/ it-viikko/2008/04/08/nokia-lupaa-bochumiin-200-miljoonan-korvaukset/20089887/133 (accessed February 18, 2012).

[38] Tähtinen, Jaana; Matear, Sheelagh & Gray, Brendan (2000): The reasons relationships end: A literature integration and extension into an international channels context, Oulu: Faculty of Economics and Industrial Management University of Oulu.

[39] Whitley, R.D. (1999). Competing Logics and Units of Analysis in the Comparative Study of Economic Organization. International Studies of Management and Organization. No. 2.

[40] Yau, O.H.M., Lee, J.S.Y., Chow, R.P.M., Sin, L.Y.M & Tse, A.C.B. (1994).

Relationship Marketing the Chinese Way. Business Horizons, Vol. 43, Issue 1.

[41] Jansson, H. (2005). International Business Strategy in Emerging Country Markets — the Institutional Network Approach. Baltic Business Research Institute, Baltic Business School, University of Kalmar, Sweden.

[42] Adair, W. A. & J. M. Brett. 2004.

Culture and negotiation processes. M. J. Gelfand, J. M. Brett, (Eds.) The Handbook of Negotiation and Culture. Stanford University Press, Stanford, CA, 158–176.

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13. Corporate Social Responsibility: The intercultural manager’s headache?

Victoria Mäkimartti, Paulina Veit — with contributions from editor Joachim Ramström

13.1 Introduction 13.2 What is Corporate Social Responsibility?

13.3 CSR from a management perspective 13.4 CSR from a marketing perspective 13.5 CSR in a intercultural perspective 13.5 Summary

References

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13.1 INTRODUCTION

In this chapter we will discuss corporate social responsibility (CSR) within the context of intercultural marketing management. CSR is not easy to grasp due to its many dimensions. Also, opinions on CSR and ethics differ quite much between people, regions and cultures. The meaning of ethical concepts and how these concepts are used are very much affected both by cultural and emotional factors [1]. CSR and business ethics as a field of research continues to grow and is becoming increasingly important.

The discussions are going wild and a common ground is hard to find as many different stakeholders are affected by CSR decisions. We argue that no manager during their career will be able to avoid making decisions about CSR, and the decision might put personal moral values at stake as well. This is why we want to give an overview of CSR and business ethics and hopefully make it easier for managers to evaluate the situation and be able to understand differences in cultural behaviour when it comes to CSR and ethical views.

Therefore, we will pinpoint what we see as the most important aspects a manager should consider when dealing with CSR in an intercultural context. Companies and especially their managers have to take many factors into consideration when dealing with CSR; they may not always be able to find a solution that pleases everyone. A worst case scenario would be that no matter which solution the manager chooses, someone may always be left unhappy, especially when dealing on an intercultural level.

13.2  WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

Corporate social responsibility reaches back to the 1950s and was developed in order for firms to create guidelines for ethical management [2]. Ethical management or ethics is the concept used to describe what is generally considered 'right or wrong', and defined as values of practices and principles that define right from wrong [3].

Naturally, ethics is not always the same as the law, but laws are made reflecting on the attitudes of the society and what kind of culture people like to exist in. In the context of CSR, ethics can be explained as the 'optional' responsibilities a company has decided to

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take.

There is an inconsistency in literature when using the terms Business ethics and CSR. They are defined differently, and sometimes the two terms are used interchange-

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ably and other times CSR is not part of the index on business ethics. However, in management literature the difference between ethics and social responsibility is often understood as people 'have ethics' while corporations 'have a social responsibility' to protect and improve the society in which they are operating [4]. When we talk about the two concepts in this chapter we regard business ethics as the view of the individual and CSR as the view of the companies.

Author

Definition

Year

WBCSD

“[...] the continuing commitment by business to behave

1998

(World Business

ethically and contribute to economic development while

Council for Sustainable

improving the quality of life of the workforce and their

Development) [5]

families as well as of the local community and society at large”.

WBCSD [6]

“[...] the commitment of business to contribute to

2002

sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life” European Commission

“[...] a concept whereby companies integrate social and

[7, p. 5]

environmental concerns in their business operations

2002

and in their interaction with stakeholders on a voluntary basis” Löhman & Steinholtz [8]

A combination of three separate agendas: Sustainability,

2003

Corporate Accountability and Corporate Governance.

McWilliams,

“[...] when a company does more for the social good than

Siegel & Wright [9]

is required by law or is beyond the interests of the firm”

Vaaland, T. I., Heide, M.

“Management of stakeholder concerns for responsible

& Grønhaug, K. [10]

and irresponsible acts related to environmental, ethical

2006 2008

and social phenomena in a way that creates corporate benefit.”

Table 13.1: Some definitions of corporate social responsability (CSR).

As can be seen there are a lot of different definitions for CSR, and the vagueness of the CSR concept limits the usefulness, both as a methodological tool and as a guide for making decisions [11].

There are also a number of other concepts related to CSR. The concept sustainability aims at describing how people are going to manage and balance social and economic, as well as environmental issues in the world, so that the long–run survival of mankind is not threatened. Corporate Accountability focuses on the reliability and a company’s

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way of handling different situations. Corporate Governance is used in discussions regarding the openness and extended reliability of a company. In this chapter we mention terms like green and sustainability when discussing CSR. Sustainability could be understood more as related to the overall quality of human life [12], while green could be understood more as the environmental aspects related to protecting our planet. When discussing the environmental aspects of CSR we also mention 'Ecological Footprint' which is understood as the metric that allows us to calculate human demands on our planet [13]. When it comes to international cooperation and business, many companies use 'CSR' to cover all different concepts [8].

So why is CSR important?

From a strictly human point view, it is quite obvious why CSR would be important, but what can CSR do for business? It has been suggested [14] that there is a connection between cost efficiency and reputation. Recent work suggests that reputation plays a significant role regarding the relationship between the company’s overall performance and CSR initiatives. Results from other studies implicate that companies who have a good reputation are also able to catch the attention of efficient and productive employees [15], who are more committed [16]. Also when a company knows it can improve its reputation it often drives the CSR activities. Among many things, socially responsible investments have been increasing [17] and have helped to make sure that CSR has become an essential part of many higher managerial agendas [18]. CSR is not a competition that companies have to win, but it is a competition where everyone is participating, regardless whether they want to or not. During the last 20 years or so, initiatives towards CSR have increased noticeably in many companies and CSR has become a significant strategic concern for companies in most industries.

13.3  CSR FROM A MANAGEMENT PERSPECTIVE

As outlined at the start of the chapter there are many different ways to approach CSR. A fairly common way of approaching CSR is to divide it in four different topics, namely (1) social, (2) environmental, (3) ethical and (4) economic issues.

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Social issues The 2005 UN Report on the World Social Situation [19] reported that 80 percent of the world’s GDP belonged to the one billion people who live in the developed world.

It remains a question mark how exactly businesses should respond to the challenges of social issues [20]. Dobers and Halme [21] argue that corporate actions should attempt to solve problems such as fraud and corruption. Making a positive input to a community is a long–term investment in the sense that the community becomes safer, more educated and fair. This will benefit the company by creating a better and steadier business environment [20]. The role of management is big, partly because management has the authority to work on various social problems and can incorporate CSR, and partly because the way the manager decides to approach CSR is also most likely to affect the way the employees see CSR.

Environmental issues A study by the Boston College’s Centre for Corporate Citizenship [22] showed that over 80 percent of executives said that social and environmental matters were becoming more essential to their company. While some companies implement ecological actions purely to meet the requirements of the law [23], other companies such as Toyota’s hybrid car Prius, has had great success in tapping into growing consumer concerns about the environment. Such companies have gone further than the minimum the law requires and minimizing their 'ecological footprints' [24].

When it comes to ecological innovations there are ways for management to the make employees more interested in how the company acts on environmental issues.

Employees that recognize signals in the form of encouragement from their managers are more likely to develop and implement creative ideas—'ecoinitiatives' [25] —that have a positive impact on the environment. When support from management is absent, 'ecoinitiatives' from employees become fewer.

Ethical issues The ethical aspect is probably the vaguest of the four topics of CRS. Murphy and Laczniak [26] suggest that there are three different levels that should be taken into consideration. A manager is first of all obliged to follow national and international laws and agreements even if they are not necessarily compatible with what the

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company does. Second, the organization is bound to have its own set of moral and ethical standards, which should be followed. The third level is the managers’ personal moral values. An optimal situation is if the managers own morals are attuned with the company’s morals and values.

It can be difficult for managers to actually evaluate whether or not a marketing tactic is ethical. Schlomo Sher [27] offers a framework for evaluating the morals of marketing. He approaches the issue by asking three questions, namely (1) is the tactic manipulative, (2) is the tactic deceptive and (3) is the tactic immorally manipulative?

A marketing tactic is manipulative if it intends to motivate by undermining what the marketer believes is the audience’s normal decision–making process either by deception or by playing on a vulnerability the marketer believes exists in his/her audience’s normal decision–making process. Since manipulative action is prima facie wrong, the tactic is immorally manipulative unless it has sufficient ‘‘redemptive’’ (positive) moral considerations that outweigh what is morally objectionable about the action [27]. If the manager’s intention is to in any way misinform the consumer or in any way play on the consumers’ perceived vulnerability (along with some other factors), then the intention is not in line with CSR principles.

Economic issues The economic aspect of CSR is a controversial issue because a company cannot function without making a profit. Decision making regarding profitability can lead to difficult CSR issues, for instance, whether or not to move production elsewhere to save labour costs, how to avoid or minimize taxes, monopoly, oligopoly, competition, bribery etc. To many people CSR might seem like merely a talent that does not make much commercial sense. Such issues, also known as external economic responsibility, are increasingly getting more attention in media and consumers are getting more aware of what companies are doing throughout the whole production line.

Consumers are also demanding more visibility and transparency in companies. Hence, when it comes to CSR it is important for the company and especially the manager to consider the revenue side of business and at the same time think about managing the reputation of the company. Ferrell and Gresham [28] point out that especially middle

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management is pressured to show good economic results because it is the most visible way for the top management to evaluate how business is going. When focus is strongly on economic result, it can have an impact on the ethical behaviour of middle managers (internal economic responsibility). Another survey [29] of 171 managers demonstrated

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that the tendency of acting in an ethical manner was reduced when personal economic welfare came up.

A company’s success is measured by growth and revenue and the core of many businesses is how well it holds up against other companies on the stock market.

Previously a lot of ethical issues have been set aside in decision making because ethicalness and economic growth have not usually been perceived as compatible. A new trend seems to be emerging, where companies make internal moral decisions even though laws do no require it. Research shows that an extrinsic view of CSR does not have to exclude and intrinsic view of CSR. Intrinsic means that the company is seen as attempting to increase its profits and extrinsic means it acts out of a genuine concern for the focal issue. A company (or manager) is able to actually act out of general concern for ethics and morals (intrinsic) while increasing its profit (extrinsic).

An example is different Fairtrade products. Fairtrade–coffee has raised awareness amongst consumers to act more ethical in their buying decisions, which has led to an increase in sales of Fairtrade coffee [30].

13.4 CSR FROM A MARKETING PERSPECTIVE

When considering CSR and marketing, there are two ways of approaching the topic. One approach concerns the brand and image of a company and the second approach concerns how CSR is promoted throughout the company. So while the strategic approach is about creating an organizational atmosphere for supporting CSR initiatives in the company, the marketing approach is about how to effectively communicate different company CSR initiatives and efforts to the market and customers.

It has been suggested [31] that the boundary between corporate strategy and marketing is becoming increasingly blurred. Traditionally marketing has focused on the marketing mix, i.e. the product, price, promotion, its availability and customer service, but little more. However, the sustainability concerns of today’s customers have shown that customers are also interested in and can be influenced by the company behind the product and the brands that customers buy. The customers are interested both in the social and environmental impact of the firms’ production processes, as well as how companies treat their workers, where they invest their money and in what way they conduct business. This implies that customers are not only interested in hearing about a specific brand but also about how the company implements and works

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with CSR issues. Therefore CSR from a marketing perspective is both about what a company does and in what way it tells about it.

From a marketing management point of view, CSR is challenging. For example, recent research involving Procter & Gamble, General Mills and Timberland revealed that many of the firms’ stakeholders had no idea of the companies’ corporate responsibility initiatives, or had a very limited understanding and did not find them personally relevant [32]. While today’s consumers look for brands that are ethical/sustainable/ responsible, they rarely even bother to read brand label, even less bother to read company CSR reports [33]. In other words, communicating the company’s CSR efforts to customers is key.

In many cases a company is represented by its brand. Consumers are increasingly expecting that the brands they buy take responsibility for the social, environmental, ethical and economic impact of their operations. For instance, Globescan’s CSR Monitor reports that 80 percent of Canadians say they are willing to pay For a marketing manager, CSR basically comes down to three issues, namely (1) brand, (2) reputation and (3) communication. The benefits of communicating CSR are enhanced brand image and reputation.

more for products produced in a socially and environmentally responsible manner [34]. Through CSR initiative and efforts a company is able to differentiate the brand and give the company a competitive edge. Yet companies tend to be unaware of the “deeper psychological needs that corporate responsibility can answer for stakeholders, such as the self–esteem and pride that a consumer can draw from affiliating with a socially responsible company” [27].

With the rise of social media, more and more customers are paying

attention to the company’s reputation. Research shows [31] that consumers are more likely to buy from companies they perceive as having a good reputation. A good reputation results from the actions and efforts the company takes and how the company communicates these actions. And unlike for instance logistics and manufacturing, reputation is hard to mimic by competitors [35]. Building a good reputation is, however, no easy feat, one reason being that consumers are today quite sceptical about what a firm is saying. This is in part because of greenwashing by some firms. Greenwashing takes place when a company or organization spends more time

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and money claiming to be 'green' through advertising and marketing than actually implementing business practices that minimize environmental impact [36].

Another reason why building a good reputation is challenging is because customers can, for instance, easily monitor various companies’ claims about their involvement

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in social issues on different social media platform [37]. One such a platform is the Greenwashing Index [36] where users are rating companies and different commercials.

These days few companies get away with greenwashing. Only consistent and believable contributions, not one–shot efforts, can help build and shape the company’s reputation.

While social media can put a spin on a company’s reputation, social media has, in turn, allowed companies to engage in dialogue with their customers. For instance, Timberland invites the public to comment on its CSR initiatives on a website. In this way Timberland aims at fostering a dialogue in discussion groups [31]. It is important to remember that consumers do not require companies to be flawless, but open and showing an ongoing commitment to CSR. Social media can also be used as a marketing tool to make a company more transparent and open. Increased transparency typically generates and builds trust, which in turn translates into transactions. Companies such as Nike, Gap and Hewlett– Packard have led the way by making information available online regarding their supply chains. Another company, Patagonia, allows consumers to follow the supply chain of their garment online. Consumers are also allowed to dicuss and bring forward negative aspect. This communicates to the consumers that the company is transparent and is committed to sustainability [31]. At the same time, customers can give the company invaluable feedback about what makes them connect favorably with a given brand, which in turn improves the company’s image and increases business value of committing to corporate social responsibility [32].

Marketing has a central role in building stronger connections with stakeholders since it can help improve communication in order to build active participation and engagement in the company’s CSR initiatives [32]. But studies show that many companies communicate their CSR efforts in a too conspicuous way [31]. Big ads, PR campaigns, press releases and/or bold press statements might be counter–productive.

The message might be better spread through word of mouth, or a story in an industry association or local business magazine [34]. Strategically placing small, real, relevant and responsive message throught the organisation will allow consumers to validate that the company is actually doing what it is saying. For instance, Coca–Cola in Sweden has educated the drivers in its delivery fleet on ‘eco–driving’, saving fuel and reducing CO2 emissions. The effort was not communicated in paper ads, nor in the environmental press nor in media releases, but on small stickers on the doors of the

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delivery vehicles, stating that eco–driving education is one of the many ways Coca– Cola contributes to the environment in Sweden. The target audience is the commuter sitting next to the delivery vehicles in traffic jams [31].

The best communication includes concrete examples about how much water, energy or material the company has saved, how much waste has been diverted, or greenhouse gases that have been reduced through the environmental programs. On the social side, the marketing efforts might consist of communications on innovations to make products more accessible to underserved communities [34]. A well–planned CSR program can attract the best forms of media advertising [38]. A company’s CSR achievements are great opportunities for media attention referred to as 'earned media', which can also be free of charge and can provide free advertising. Earned media will help to build public awareness of the company being a green and socially responsible brand [34]. Some well–known brands have risen to prominence almost exclusively on their ethical values [38].

To conclude, branding, reputation and communication play a very important part in delivering the company’s CSR efforts and initatives. And in executing CSR efforts marketing has a central role. However, communication nor brand or reputation will deliver in itself, since there need to have substance behind the message. Any marketing campaign needs a long–term strategy behind it. “Anyone can come up with messages, but it is harder to deliver on them.” [39] Hence, marketing and corporate strategy needs to go hand in hand. Corporate strategy outlines and executes the CSR initiatives and marketing has the knowhow to conduct campaigns and measure return on investment. Marketing can also coordinate how a CSR programe is presented to those it wants to influence. Marketing can help in capitalizing on CSR to strengthen to corporate brand [32]. After all, what is the point of a business behaving well and responsibly if it does not actually generate more profit? [40]

13.5 CSR FROM AN INTERCULTURAL PERSPECTIVE

Promoting CSR issues in foreign countries can be challenging, since there is a link between ethical beliefs and culture [41]. There are different legal requirements

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in different parts of the world, and different national laws may approach ethics differently [42]. Business has also become more multifaceted through organizations extending their businesses into new cultural environments. In developed countries people in general are concerned about CSR issues. Managers’ typically would feel

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that it is standard to at least aim at applying CSR when doing business. However, a manager from a developed country can, for instance, become in charge of establishing a subsidiary in a country where employees might not be familiar with the concept of CSR. Hence, the manager needs to find ways to express CSR issues so that it cannot be misinterpreted or seem illogical.

When discussing intercultural business ethics, the controversy of globalization has a very central role. Corporations, especially multinational corporations (MNCs), have received criticism from the public. Among other things, they have been accused of exploiting workers in developing countries and ruining the environment. They have been accused of misusing their economic power, by putting developing countries against each other by giving out foreign investments to the countries who can offer the 'best' conditions in the form of low taxes, low levels of environmental regulations and limited workers’ rights. There have been repeated complaints against companies exploiting both social and environmental conditions in developing countries.

Whether these allegations are true or not, globalization is without a doubt the arena where corporations have to define what is 'right or wrong' regarding their actions [20]. Because of the power that large MNCs might have over fragile communities in developing countries, it is of crucial importance that managers and MNCs take their responsibility. A responsible company would be ready to invest some resources into supporting the local society were they are active. In the end both parts can gain from it. Frynas [43] points out that especially in developing countries, many CSR problems could be avoided if the companies provided true self–help initiatives, using local skills, knowledge and tools. Foreign companies should help locals enough so they can reach the desired CSR standards.

On the other hand, it can be difficult for some local actors in developing countries to apply CSR standards, because they might not be able to put provided global models into practice. It might also be difficult due to a lack in required resources or not possessing enough knowledge of what is actually required from them [44]. Therefore, there are aspects, which demand different solutions in developing countries [11]. On the other hand, when it comes to the environmental aspect of CSR, MNCs need to apply the same rules no matter where in the world the company is located.

The relationship between a firm’s headquarter and a subsidiary is fundamental to the CSR strategies of a MNC located in countries with different cultural traditions [45].

As was outlined previously, CSR from a marketing point of view needs to build on a

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strategic CSR plan by the company. Transferring and translating such strategic plans to, for instance, a subsidiary in a foreign country needs to be carefully considered. It is not uncommon that a manager of a foreign subsidiary may act in a way that is right and ethical in their own culture, while it opposes the values and ethics of the parent company they work for. And while the subsidiary may officially adopt certain CSR codes, it will not make the foreign country more ethical and therefore employees will not follow the rules unofficially [20].

A manager has to understand that cultural differences will have an affect on personal views on ethics and morals. This is why intercultural marketing management from a CSR perspective needs tolerance from both parties involved. Ethics can be seen in extremely different ways and what is considered as ethical behaviour in one culture may not be viewed in the same manner in the other culture [46]. A manager has to be able to understand differences between cultures and views on ethics in order to be able to communicate and make useful decisions.

It is never easy to create ethical solutions that all parties involved can accept and be pleased with. A key issue might be something as fundamental as convincing and motivating local employees about the need for implementing CSR initiatives.

Discussing and explaining the benefits of CSR is a starting point. The process can be made easier if the subsidiary already has some clear rules and values that determine how work should be done. Implementation and control are important parts of the process. The ethical culture, especially of leaders, can have a big effect on the decision– making and ethical issues in the organization, no matter what kind of approach the company has to ethics. Therefore the manager (or leader) plays the most important role here, being responsible for the ethical 'tone' in the company [47].

Managers can make sure that employees get paid reasonable salaries and that they work reasonable hours. They also may need to explore the environment in connection to the subsidiary to find out, if any of the subsidiaries actions are causing unreasonably much waste or pollution, or if the subsidiary is negatively affecting the people living near by. Of course, in reality this is not always the case.

Still, a manager is obliged to follow national and international laws and agreements

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even though they are not necessarily compatible with what the company does. Laws in one country can differ from laws in another, which might for instance affect production. If there is a conflict then it is up to the manager to decide how to arrange the issue and take a responsible action.

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Since MNCs can move production from one country to another, they need to realize that it can have both good and bad effects on the local economy. On the positive side it can be argued that MNCs bring knowledge and jobs, generate tax revenues, incorporate the local economy into an international business environment, improve safety, health standards and so on in the target country [11]. On the other hand, Oxfam, a non–governmental organization (NGO) working to bring light to these kinds of issues, has listed the negative aspects [11, p. 268].

Although MNC jobs brought poor workers into the value chain, they were unable to capture sufficient value from it; the provision of services to the poor by MNCs, though on the increase, were often unevenly distributed and hence compounded inequalities; MNCs have not always transferred technology, in effect locking the poor into low–value–added jobs that continue to pay poorly; with aggressive marketing and predatory pricing of goods, MNCs frequently increased poverty as they promoted goods for which the poor had little need; because of lax on industrial standards, MNCs contributed to the degradation of the environment; although MNCs invested in poor countries, they often did so by forcing local governments to bargain away tax gains, environmental and other standards that in general worsened poverty.”

For a manager these are crucial issues. A manager has to be able to evaluate different aspects of a decision and the possible outcomes of it, for example, by analyzing reports and having a good overview of the local environment. On the other hand, especially middle management may not always have the authority to change the way a company or corporation is functioning in a foreign market. Top managers should therefore be aware of the different effects of decisions, so that changes can be made if it necessary.

Unfortunately at the moment it is still easy for businessmen to avoid these kinds of responsibilities in intercultural marketing management. But the increasing availability of social networking platforms in developing countries might start having an impact on poor CSR practices. More and more customers also want to have a clean conscience when buying product that have been produced abroad. Customers are prepared to boycott corporations who do damage to people, animals, the environment or societies.

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It is also increasingly in the interest of MNCs to adopt CSR policies because as we mentioned earlier, companies can actually gain by keeping up a good reputation.

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13.6 SUMMARY

In this chapter we have discussed corporate social responsibility with an intercultural approach. A company will of course also have responsibilities to its home country and local environment, but in this case we have tried to focus on intercultural problems that a manager may face when dealing with CSR. The problem with CSR is that personal views are a big part of decision–making and many decisions may be based on quite biased grounds. That is why it is up to managers to be aware of different issues in the new environment in order to be able to make fair decisions that hopefully would support not only the company but also the environment and society in which it is active.

So, as can be seen there are a lot of ways to discuss the term corporate social responsibility and the problem with managing CSR usually lies in different views on the matter. Managers have a big responsibility to many different stakeholders, which puts them in an intricate position. Top managers have the authority to decide how the company should be run and which actions the company will take to improve their corporate social responsibility. It may not always be easy to evaluate which solution would be the optimal one for every party involved since decisions may affect stakeholders differently. Sometimes managers have to make decisions, which might not be compatible with his/her own moral standards, just to please a higher power.

As the world has become increasingly globalized, so has CSR. Companies have a bigger responsibility towards more stakeholders than before and the responsibilities grow as a result of internationalization and because different cultures are interacting more than ever before. In other words, globalization is a huge factor in the demand for developments in CSR and one thing is for sure, it has come a long way since the birth of the subject. The political climate and the interest in ethical issues seem to have had an impact on the popularity of CSR. Corporations do not have the same chances of getting away as they used to. In other words, we do not think that companies can afford to ignore CSR. At the moment there are some visible trends that multinational companies seem to put a lot of effort into revising their marketing tactics by focusing more and more on eco marketing and green management. Creative and innovative managers will be able to find new successful ways of doing business on intercultural markets by focusing more on CSR. For example, crowdsourcing is a future growing trend. It is a way for

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companies to outsource small tasks to people who might not otherwise be in the workforce. At the same time this would gain the company by giving management new ideas from people who would not have the chance to express themselves otherwise.

These so called micro jobs provide employment and could be developed in many ways.

The most important thing for a manager to remember when dealing with issues like CSR is to always be aware of differences between countries and regions and to try to solve problems by taking as many aspects into account as possible. A perfect solution may not always be possible which means that the manager has to be able to evaluate which option could be considered as being the best one in a specific situation. As more emphasis is put on CSR issues in general, more research is also done in this field. Some researchers have thus provided literature, which may help managers in their decision– making and gives managers a guideline for assessing the ethical framework of different options. Hopefully, CSR will continue to grow as a part of doing business, and that it will be a self–evident part of managing in the future.

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[42] Koehn, D. (1999): What can Eastern Philosophy tell us about Business Ethics?, The Journal of Business Ethics, Vol. 19, No. 1, pp. 71–79.

[43] Frynas, Jedrzej G. (2005): The false developmental promise of Corporate Social Responsibility: evidence from multinational oil companies, International Affairs, Vol. 81, No. 3, pp. 581–598.

[44] Meyer, John, John Boli, George Thomas & Francisco Ramirez (1997): World Society and the Nation–State. American Journal of Sociology, Vol. 103, No.1, pp. 144–181.

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[45] Cruz, Luciano B. & Pedrozo, Eugênio A. (2009): Corporate social responsibility and green management Relation between headquarters and subsidiary in multinational corporations, in Management Decision Vol. 47, No. 7, pp. 1174–1199.

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14. Golden Screw Ups Manuela Geser & Theresa Lotz

14.1 Introduction 14.2 Why Business Blunders Happen 14.3 Different Kinds of Business Blunders

14.3.1 Language and Translation Blunders

14.3.2 Product and Service Blunders

14.3.3 Advertising Blunders

14.3.4 Distribution Blunders

14.3.5 Internal International Blunders

14.4 Consequences of Business Blunders 14.5 How to Deal with the Consequences of Business Blunders

14.5.1 The Mistakes of Wal–Mart in Germany

14.5.2 What Wal–Mart Could Have Done Better

14.6 Current trends on managing business blunders

14.6.1 Taking Business Blunders as Opportunities

14.6.2 More Social Media Blunders to Come

14.6.3 Consulting Agencies for Business Blunders

14.7 Summary

References

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14.1 INTRODUCTION

In July 2006, after almost a decade of struggling to live up to its incredible success in North America, the American multinational retailer corporation Wal–Mart–Stores Inc. had to withdraw its participation from the German market due to continuous losses.

The story of Wal–Mart’s failure in Germany started at the end of the 1990s, after the company had decided to follow an ambitious internationalization strategy to keep up with the previous fast growth of the company. In 1997 Wal–Mart bought the German supermarket chain Wertkauf with its 21 stores and also took over 74 Interspar stores in 1998. During the following years Wal–Mart tried to continue its earlier thriving achievements by applying its American corporate culture to the German subsidiaries.

This strategy had proven to be successful not only in North America, but also in the United Kingdom, South America and China. But what works in other countries, might not work in a particular one, which in this case was Germany. Ignorance of adapting corporate culture was not the only mistake Wal–Mart made in all these years, as we will point out later. Finally, after nine years of fighting against competitors with no real competitive advantage and obtaining a bad reputation among German customers, Wal–Mart decided to sell its stores to one of its competitors and leave the German market. Even though the corporation never disclosed its losses, experts estimated them around €3 billion [1].

If you have a look throughout history, the failure of Wal–Mart is not an exceptional case. There are numerous examples of companies who have made mistakes regarding their decisions on intercultural issues. A wider public may even not have noticed some of these mistakes, that we call business blunders, if the companies were able to fix them before they caused bigger damage. But some of them could be called golden screw–ups, because they have badly harmed the companies’ reputation or financial situation. The questions here are how this could happen to a big and

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experienced company like Wal–Mart and why the management was not able to find a way to deal appropriately with the problems that led to Wall–Marts downfall.

Potential ways to avoid business blunders: • By working for future success instead of relying on old achievements • By treating cultural differences with respect • By knowing and conducting generally accepted rules • By observing opportunities in a changing market • By checking every single aspect of a plan before putting it to action • By having a proper rescue plan in case the original plan fails • By knowing how to deal with the aftermath of business blunders Info 14.1

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And what could they have done better, respectively?

Reviewing those mistakes in retrospective, it is possible to point out what was done wrongly and how it could be done in a different way. Therefore, the only good thing about business blunders is that other companies can learn from them and try to avoid problems that others have failed to manage properly. However, it actually seems like companies keep making the same mistakes over and over again. The reason for that is that companies could only learn something, if they were aware why business blunders could actually happen and were willing to change their own behavior and actions.

Otherwise history will repeat itself without anyone benefiting from it.

This chapter is organized as follows. First, we provide an overview of the general reasons why business blunders happen. Second, we review specific types of business blunders, which might happen in an intercultural context and advise ways on how they could be avoided. Third, we describe consequences of business blunders, if the blunders still were to happen. Fourth, we dig deeper in the case of Wall Mart, pinpoint the mistakes made, propose what could have been better and suggest ways of managing business blunders. Finally we make an attempt to spot some possible trends regarding the management of business blunders.

14.2  WHY BUSINESS BLUNDERS HAPPEN

The cases of companies, which goldenly screwed up, show that these companies mainly neglected six important issues (see [2]). First, companies were ignorant or even arrogant by assuming that the success of the company in the past automatically ensures a good performance in the future. Many companies have made the mistake to think that because of their positive reputation they can do whatever they want and customers will accept their behavior. But this pride leads to a misperception of their actual situation. Sooner or later the company will unexpectedly find itself in an awkward position—simply because it did not think about it. So doing the homework instead of resting on its laurels is important for a company.

Second, what many companies do not consider is to understand and act on customer diversity. There will always be a vast number of factors that characterize customer diversity such as culture, history, religion or politics. All of these factors need to be taken into account and handled with respect when dealing with intercultural issues. The offer with which the company was successful in its domestic country may

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not be efficient abroad. Therefore, the company should understand that it has to adapt its offer to the needs and wants of the customers in order to be successful.

Third, the companies often forget to play by the rules of the ‘business game’, which implies knowing and complying the generally accepted rules. Even though a company might be very big and may have a good reputation this does not mean that this company has a free pass on making its own rules or simply pass over established guidelines. At the same time, the company should not expect that others necessarily follow these established rules.

Fourth, many companies struggle to deal properly with changing markets, which results in missing opportunities, possibly leading to losing the competitive edge. As a consequence, many companies are not able to compensate the losses arising from neglected changes and therefore risk losing everything. Companies need to understand that the way they deal with missed opportunities and keeping a competitive advantage is important for the future of the company.

Fifth, a large amount of companies do not check each aspect of their action plan before implementing it. Moreover, they are not prepared for the unfortunate situation when the plan goes wrong. Companies simply have no proper rescue plan that helps them to deal with unforeseen problems.

Sixth, companies neglect to think about how to deal with the aftermath of possible business blunders, especially when it comes to dealing with the public. Many companies do not know how to gain back the trust of the customers or their former good reputation. A rescue plan that points out how to deal with different aspects is essential for companies that do not want to be left with the deep scar of a business blunder.

14.3 DIFFERENT KINDS OF BUSINESS BLUNDERS

Business blunders can be categorized into five different types [2], namely (1) language and translation blunders, (2) product and service blunders, (3) advertising

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blunders, (4) distribution blunders and finally (5) internal international blunders.

How to avoid language and translation blunders: • By using native speakers for translations.

• By not only translating the language but also comprehending the meaning of marketing material.

• By knowing about possible connotations and avoiding bad ones.

• By checking translated material before it goes public.

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14.3.1 LANGUAGE AND TRANSLATION BLUNDERS

Language differences and ways of translation from one language into another have an important impact on marketing that should not be underestimated. There are numerous examples of language and translation blunders out there. They can appear hilarious for an observer, although, were not perceived as hilarious for companies at the time of making the blunders.

Examples of language and translation blunders: •

Pepsi translated the slogan 'Come alive with the Pepsi generation' in Taiwan into 'Pepsi will bring your ancestors back from the dead', which of course shocked the customers [2].

•

The Australian Airline EMU Airways had to learn the hard way that non– verbal communication is an important issue. They were associated with the Emu, a bird that cannot fly, which is not the best connotation for an airline [2].

•

Chevrolet named a car Nova, which sounds like 'no va', meaning in Spanish that it does not work [3]. This is of course an unfavorable name, especially for a car.

•

Nokia gave the name Nokia Lumia 800 to one of its new smart phones.

The name sounds melodious and mysterious. But the word has a controversial connotation in an intercultural context, as in Spanish it means 'prostitute' [4].

•

The Swedish multinational home appliance manufacturer Electrolux marketed his vacuum cleaner with the slogan 'Nothing sucks like an Electrolux'. The slogan intended to describe that nothing does the hoovering as good as this vacuum cleaner. But 'to suck' is also a colloquial expression for being of bad quality, which led to changing the slogan [3].

Language and translation blunders happen, because companies lack market research and careful checking of translated material. A company that wants to bring its product to another country has to consider that there are different meanings of sounds and words in different languages. Moreover, a common language does not necessarily imply a single accepted meaning. Therefore, for the purposes of translation, it is essential to use native speakers, who are able to tell if the desired name for a product

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might have an undesirable connotation. Translation of marketing material should not simply involve a literal change of a name, slogan or description from one language into another. The key to avoid language and translation blunders is translation combined with meaning comprehension. But companies should also not forget about non–verbal communication, which means that proper verbal translation of marketing messages still could lead to unwanted connotations.

14.3.2 PRODUCT AND SERVICE BLUNDERS

The essential task of marketing is to understand the customer. Based on customer knowledge, the company should provide a product or service, which is better than that of domestic and global competitors. Nevertheless, the most important issue, particularly in intercultural context, is to understand how to customize the product or service according to customers’ tastes, preferences and requirements. It is not about selling an existing product to people who might or might not need it, but in create a product that caters customers’ needs perfectly [2].

Examples of Product and Service Blunders: •

The American company Campbell Soup offered condensed canned soup on the British market but the British customers were not used to this form of soup. To keep

How to avoid product and service blunders: • By knowing and understanding what customers need and want • By adapting products to those needs and wants Info 14.3

up with the competition, Campbell simply had to modify the product and offer it with added water [2].

•

In the 1990s IKEA entered the American market and sold curtains, which were too small for the size of the American windows. Moreover, IKEA offered glasses, which were too small for the customers,

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who like to drink their drinks with ice cubes. In addition to that, the offered kitchens were in European style and had a wrong size for the US market [5].

How to avoid advertising blunders: • By knowing and understanding the cultural background of the target group • By adapting advertising material to those cultural differences • By choosing a competent advertising agency and developing a proper advertising campaign which suits the given purposes Info 14.4

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•

When Wal–Mart opened their first store in São Paulo, Brazil, in 1995, they ran a lottery where customers could win football balls and baseball bats. But as Brazil is more of a soccer nation, the customers had no use for the ‘free gifts’ [6].

Many companies have made the mistake to take a product designed for the special needs of domestic customers to a foreign market without adaptation. Just a small adaptation can make a big change and help to get customers to buy the offered product or service. Nevertheless, simply adapting the product or service to a specific market might be insufficient.

14.3.3 ADVERTISING BLUNDERS

As already pointed out, a manager’s lack of cultural background or understanding can lead to all kinds of business blunders. When it comes to advertising, it is also essential to know about cultural differences and understand them, in order to avoid a big failure

Examples of advertising blunders: •

The American company Gerber entered the African market by launching a baby food product. The company applied the strategy, which it had in the United States [7]. Gerber promoted its products with a smiling white baby on the grocery’s label, which led to confusion. Due to the fact that a lot of Africa’s inhabitants are illiterate, it is common to print a picture of the grocery’s content on the label, instead of describing it with words.

As a consequence, the target group thought they should feed their babies with food made of babies. Of course, that was not what the woman wanted to feed their babies with. Accordingly, this shocking blunder led to brand failure [2].

•

The American multinational telecommunications corporation AT&T used the 'thumbs up' sign in the advertisement campaign aimed at the Eastern European markets. They applied it on their domestic market, as it had a positive connotation among Americans and on most foreign markets as well. But for Russians and Poles the visible palm of the hand has an offensive meaning and therefore the ads had to be reshot so that

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ultimately they pictured only the back of the hand [8].

•

One American washing powder producer tried to launch its products to the Arabian market. Nevertheless, the company promoted the product considering only the European way of thinking. The advertisement showed the dirty laundry on the left, the washing powder in the middle and the cleaned laundry on the right. The company forgot an important intercultural aspect. The direction of reading in Europe is from left to right, whereas the people in Arabian countries read from right to left [7].

No customer would like to buy a product, which transforms clean laundry into a dirty one.

Before going public with an advertising campaign in a foreign country, a company needs to have its mind made up about several essential issues. The first and most important is the purpose of the campaign and the outcome the company expects from it. Is the aim of the campaign to create company or brand awareness or customers’ identification with the brand or maybe something else? The next issue that needs to be thought through is what medium shall be used for the campaign and how to use media in general. Another important issue is the choice of the advertising company the company is going to cooperate with. The selection process includes checking the reputation of the advertising company in the targeted country and the products it promotes [2]. The best way would be to hire a local advertising agency, because they have an outstanding knowledge of the market.

How to avoid distribution blunders: • By choosing the distribution channels carefully.

• By planning every detail of the distribution process.

• By being informed about influencing factors.

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• By adapting the distribution channel to the respective country.

• By teaming up with local suppliers or retailers.

Info 14.5

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14.3.4 DISTRIBUTION BLUNDERS

A product may be perfect to cater the needs of a customer, be better than the competitor’s offer and advertised properly, but all this is worth nothing if a company is not able to deliver the offer to the customers at the right time and place. To prevent this inadvertent situation, a company has to choose its distribution channel carefully.

This is especially true for international business, when goods have to cross borders to get to the customers [2].

Examples of distribution blunders: •

The Japanese company Fujitec sold elevators and entered the American market. Instead of focusing on one region, it decided to sell everywhere in the United States at the same time. Due to country’s large size, the American market is widely heterogeneous. Nevertheless, the company did not consider this fact. It turned out, that the U.S. customers favored regional brands, and due to the uncontrolled entry, Fujitec failed [9].

•

Wal–Mart had to struggle with distribution in Mexico. The Mexican infrastructure and the condition of the roads were bad, compared to European standards. Also, the relationship with the suppliers was demanding. All these factors complicated the company’s daily business activities. The solution to the distribution problem turned out to be cooperation with a local trucking company [5].

•

One American beauty company failed when it chose to enter the French market through an unsuitable distribution channel. The company tried to distribute its products through chain stores. But in France, the customers prefer going to perfumers, small specialized perfume shops where they can get individual consulting. These shops are opinion makers and recommend new perfumes [9]. But they refused the American fragrance, which was the main reason for product failure.

Many distribution blunders happen because a company has not thought over the details or problems that might occur along the way. Therefore, planning every detail is essential. While having a backup plan protects a company from unpleasant

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surprises. It is always beneficial to be informed about important influencing factors, such as the infrastructure or the tax system in the target country. Furthermore, “each country requires its own customized product distribution scheme” [2, p. 92], since the influencing factors vary from country to country. So it might be a good idea to team up with local suppliers or retailers and benefit from their experience and detailed knowledge of their country’s distribution peculiarities.

14.3.5 INTERNAL INTERNATIONAL BUSINESS BLUNDERS

One often–neglected issue is the diversity within domestic markets. White [2] names the United States as an example for the phenomenon of heterogeneity. As a country consists mainly of immigrants from different countries, there are new target groups that need to be considered. Many companies have already realized that there are new target groups within the domestic market, for example minorities or immigrants.

A good example for internal international marketing is Mecca Cola. Mecca–Cola, a competitor of Coca–Cola, has the aim to attract immigrants. The company mainly targets Muslims living in France and USA, who are keen of boycotting American brands and are in need for an alternative [10].

Examples of internal international business blunders: •

The U.S. Hispanic population consists of more than 20 Spanish– speaking nationalities. Those nationalities do not speak a common Spanish language; every group has their own idioms. The instant breakfast drink Thang billed itself as 'jugo de china', which means orange juice in Puerto Rican. All other Hispanics were not able to understand the phrase. The company would have done better if they would have promoted the juice as 'jugo de naranjas', which means orange juice and would have been coherent for all Hispanics [11].

How to avoid internal international business blunders: • By knowing about minorities in a domestic market

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A company needs to address minorities in a way the people can understand their message, without generating bad connotations. Moreover, the company has to be careful with using stereotypes that can be

• By addressing those groups appropriately • By avoiding insulting stereotypical marketing material Info 14.6

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insulting to those minorities [2].

It should be noted that there are also other cultural groups, organized around shared professional or personal interests, hobbies, etc. When planning its marketing the company should now about these potential markets and be able to manage them as well. You can read more on this topic in chapter Tribal Marketing.

14.4 CONSEQUENCES OF BUSINESS BLUNDERS

After having discussed different types and reasons for business blunders, some of the possible consequences of business blunders will be pointed out. It is not possible to name all consequences, because each company’s mistake is specific, each manager has his own character and each managerial implication is different. On the one hand, consequences are often considered only as negative, but on the other hand, there are also consequences, which can be considered as positive.

One negative consequence is the loss of consumers’ trust in such cases where the company damaged its relationship with the customer. Another example of negative business blunders’ consequences is the possibility of a financial disaster. The worst– case scenario is that the loss of consumers will lead to the bankruptcy of a company.

When Wall–Mart went bankrupt, it had to sell its 85 remaining stores in 2006 to one of its main competitors Metro [12].

Regarding the positive consequences of business blunders, one of them is the development of a new approach to handling mistakes. Managers can create new guidelines, which should include a 'crisis management code'. This code should describe the behavior of the managers and their employees, in case of a screw up. Another positive consequence, which relates to this code, is to offer the employees trainings on how to handle possible mistakes, e.g. dealing with the press.

White [2, p. 148] points out, that 'blunders teach lessons'. It is the managers’ task to register a mistake and avoid it or react after the business blunder has happened in an adequate way. Another managerial option is to reverse the mistake and if possible, continue as before. For example, in 2000, the American company Procter & Gamble renamed its brand name 'Fairy' to 'Dawn' in Germany. As part of internationalization, Procter & Gamble used the same brand name in all countries it operated. A few months later, the sales turnover fell because the customers did not welcome the new name.

The managers reacted and though they had big investment in advertising campaigns,

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they reversed the mistake by changing the name back into 'Fairy', which was the right decision [13].

Customers read about the mistakes in the press and they discuss them with their friends. Positive crisis management by means of mass media, after a business disaster, can arouse consumers’ interest and support the buildup of a good image. To name an example, in 2003, after a girl ate a piece of a 'Coppenrath und Wiese'–cake, she died.

The food inspection showed that there was no connection between the death of the girl and the cake. So, everything was fine with the cake. Nevertheless, the customers were still concerned. 'Coppenrath und Wiese' reacted immediately and started a recall campaign for this cake. It organized a press conference and installed a hotline, where customer could ask questions, even though the company knew that the cakes were all right. The public awareness for this product rose and had a positive impact on the turnover [14]. But it is not only the company, that make the mistakes, who gains from them. Other companies can also benefit, if they take into account the company’s positive risk management decisions and consider it as a role model.

Finally, it can be concluded that the consequences of business blunders can be valuable. Managers, who have passed the whole crisis management learning process, will be able to cope with difficult situations in the future and make right decisions concerning their actions. There is no denying, that business blunders happen. It is humans who manage companies; blunders will always be part of the marketing process. To sum it up, to err is human. But there are options to handle it.

14.5 HOW TO DEAL WITH THE CONSEQUENCES OF BUSINESS BLUNDERS

Now that we have discussed the topic of business blunders, we set the focus on the particular example of Wal–Mart in order to answer the following questions: Why has Wal–Mart failed in Germany, despite the success in the United States? And what could the company have done better?

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14.5.1 THE MISTAKES OF WAL–MART IN GERMANY

According to Knorr and Arndt [15], the management mistakes of Wal–Mart, since they entered the German market, can be tracked back to four inaccurate management strategies: •

The market entry strategy of Wal–Mart was acquiring.

•

The management ignored and underestimated the impact of culture.

•

Wal–Mart’s positioning as 'low price' and 'good service quality' hyper store failed in Germany.

•

Company’s image suffered because the managers were in conflict with the law and disregarded legal restrictions.

The first business blunder that happened was caused by the fact that Wal–Mart tried to enter the German market through acquisition. First, the management decided to buy 21 Wertkauf–stores, which was quite a good stroke of business, due to adequate size and location of the stores. But later Wal–Mart made a big fault. They additionally acquired 74 Interspar stores, which was a loss–making operation. In some cases Wal–Mart managers agreed to have a subtenant status instead of buying the stores themselves, which meant that they had to run their business in bedraggled properties.

Also, bad location of the Interspar stores had a negative impact on Wal–Mart’s business. In addition to that, the managers refused to get advice from Wertkauf managers, the former owners of several Wal–Mart shops.

The second screw up was that Wal–Mart tried to apply its US strategy in Germany and obviously underestimated the impact of cultural diversity. Manager fluctuation in Germany was extremely high; four managers in four years led the company. Due to the fact, that the first manager Rob Tiarks did not speak any German and refused to learn it, the corporate language became English. In addition to that, the managers were not familiar with legal restriction concerning the retail sector in Germany, which led to many problems.

Third, Wal–Mart had problems in Germany to vie with its main competitors Aldi, Lidl, Rewe and Edeka concerning the 'low prices' offer. The value proposition 'everyday low prices' was not credible anymore and Wal–Mart lost customers. Furthermore, according to surveys, Wal–Mart did not have good customer satisfaction. The concept of customer service was inspired by the American model of customer service. The

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approach towards customers was much more 'aggressive' than it is usually in Germany.

'Greeters' had the task to welcome the customers at the entrance and inform them about the special offers. German customers felt uncomfortable and had a reason to complain. Moreover, the package sizes Wal–Mart sold were too big for German customer tastes [16].

Last, Wal–Mart permanently ignored of the legal restrictions in Germany. One of these restrictions is the disclosure of the profit and loss account. Despite the payment of financial punishment, violations against legal regulations happened. This refusal to provide transparency had a bad impact on the public image of Wal–Mart. The customers’ trust was broken and Wal–Mart lost a lot of customers. Moreover, the legal restrictions in Germany prohibited Wal–Mart stores to be open as long as they were in the U.S. The company lost its unique selling proposition, because the stores were not open longer than those of its competitors.

In addition to that, in 2003, the obligatory deposit

• Info 14.7:

regulation for cans was launched in Germany and in the

• Be honest and admit that you made a mistake

beginning Wal–Mart struggled to introduce a deposit– refund system.

Furthermore, Wal–Mart’s managers published a binding ethic code for their employees. This ethic code prohibited the employees to have a relationship or romances with colleagues or someone working for Wal–Mart. According to the management, these relationships were forbidden in order to protect the employees, because romances could influence the working performance in a negative way (Stern 2005).

Moreover, the code contained a clause, requesting employees to call a hotline to report colleagues’ violations against the law or the ethic code [17]. The case was taken to court and the judge criticized that the ethic code was translated into German and published, without

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Managing business blunders:

consulting the works committee [17]. Moreover, the

• Transparency is the key to customer’s trust • Observe other managers as well as their mistakes and learn from them • Making mistakes is okay, but do not forget to learn from your own mistakes • Do not underestimate the impact of culture • Market research is crucial — information is everything • Hire intercultural, experienced experts • Work in an intercultural team — diversity and different opinions are important • Continuous strategy is important — sudden, unconsidered action will not be helpful • Be prepared for the worst case • Have a backup plan • After a screw up happened, talk to your crisis unit

clause about relationships among Wal–Mart employees

• Be fast, otherwise the media will publish negative articles first

has been discussed in the regional labor court. The judge

• Keep a positive attitude Info 14.7

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decided that this clause violated paragraphs 1 and 2 of the basic law. Personal rights were limited, by this 'ethic code' restriction [18]. This was of course bad press for the company and therefore, had a big impact on Wal–Mart’s image.

14.5.2 WHAT WAL–MART COULD HAVE DONE BETTER

The management of Wal–Mart made a lot of mistakes in Germany from 1997 until 2006 and it is not surprising, that the company finally failed. But, let us now speculate, what Wal–Mart could have done better and how it could avoid this unfortunate situation.

First, the company should have done better and more thorough market research.

Knowledge of the customers’ needs and wants is one of the most important factors for success. Wal–Mart’s business model of a supermarket combined with a department store was not common for Germany. Back then, customers did not buy fruits and clothes at the same time [19]. Wal–Mart should have thought of the customer like this type of store, instead of directly implementing its U.S. business model.

Second, Wal–Mart did not adapt its management style to the German culture [12]. The concept was the same they used in the United Stated. An intercultural team could have been a feasible option for the company. Some multinational companies are organized with an intercultural leadership, consisting of three or more managers, to get different perspectives of the issues and to avoid intercultural screw ups. It is always nice to have more opinions.

Third, the customer service was too aggressive. In Germany, the customers generally do not want a 'greeter' to talk to them and inform, e.g., about special offers.

This explains why some customers complained about the 'greeter' and felt uncomfortable. Also the 'ten–foot–rule' was not common in Germany. This rule forced the employees to greet, talk and inform about the special offers, staying 'ten–foot' away from the customers [15]. Wal–Mart employees could just greet the customers friendly and offer less aggressive strategies, as help with packing the products for the customer.

Furthermore, Wal–Mart’s strategy was not continuous, due to high fluctuation of staff and managers [12]. The company would benefit from long–term strategic coherence, as proper strategies are developed over a certain period of time.

In addition to that, Wal–Mart was not able to learn from its own mistakes. For instance cultural ignorance, as that of not learning German, was not only the first

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manager’s mistake, but the following second manager’s as well [12]. Furthermore, Wal–Mart management should have publically admitted its mistakes, like that of ethic code clauses, and apologize to its employees.

Finally, it seemed that Wal–Mart had no backup plan due to its overwhelming confidence in success. But unfortunately it did not face any success. A backup plan with a new strategy and new ideas could have save their business.

All in all, Wal–Mart could have done a lot of things better, if there was an intensive market research and they were able to adapt to German culture. Nevertheless, there will never be any guarantee against screw ups. Therefore, the most appropriate solution to this problem is to manage the arising mistakes. It is necessary to know what has and has not to be done, and what may or may not be done. Moreover, managers need a deep understanding of the other’s culture to control the screw–ups [9].

It is necessary to mention, that there is no checklist fitting all businesses and situations. Every case is specific and every problem needs a suitable solution.

Therefore, the following checklist represents itself general guidelines, which might be fine–tuned according to particular businesses and situations (info 14.7).

Nevertheless, the most important thing is to remember, that screw–ups are not the end of the world. Sometimes, you need to make a mistake, to realize, that you were on the wrong track.

14.6 CURRENT TRENDS ON MANAGING BUSINESS BLUNDERS

In the last section of this chapter we discuss current trends regarding the management of business blunders. At this moment, you might ask whether it is possible to talk about a trend when discussing screw–ups. A logical answer would be no. However, we will here point out three trends.

14.6.1 TAKING BUSINESS BLUNDERS AS OPPORTUNITIES

As we already pointed out, there is a high possibility that business blunders will happen now as well as in the future. Screw ups are made by persons, and to err is

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human. But maybe in future, screw ups will be seen as the best thing that could happen to a company. Why? A business blunder can be a chance for a new start with big media interest guaranteed. Therefore, here we see a trend for an innovative mistakes

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management.

The story of the business blunder will appear in the media and hopefully, after the crisis, the process of coping with it, will be named and portrayed as a role model.

Possible headings could be: 'Such great employees, who supported the company' or 'Such skilful managers, who helped the company to rule out this disaster' or 'Such a fantastic crisis unit, which managed the happenings'. This case will arouse consumers’ interest and point out all the positive aspects of the company. In other words, this can be like an advertising campaign for free, which can have a positive influence on the company’s image.

14.6.2 MORE SOCIAL MEDIA BLUNDERS TO COME

Nowadays, more and more companies use social media to promote themselves.

Consumers can take part in this interaction and easily observe the screw ups if they happen. But due to the fast spreading nature of social media and the anonymity of the internet, business blunders can cause a so called 'shitstorm'. When internet users feel offended by companies’ statements or public figures, their outrage can reach worrying levels, which can lead to immense damage for those who released the statement.

To name an example, Kenneth Cole, a design company, used Twitter to communicate with its customers. The company had obviously the intention to shock with its tweet: “Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online at http://bit.ly/KCairo –KC” [20]. Kenneth Cole connected the political unrest in Egypt with the promotion of his new collection, which was not acceptable. The reaction was anger, violation of feelings and ethical border– crossing. As soon as he recognized his fault, Cole had to apologize for this unethical promotion with the tweet 'poorly timed and absolutely inappropriate' [20]. This example shows the importance of acting ethically in the social media sphere.

Social media happens in real time and cannot be revised before someone else sees it.

Therefore in order to avoid mistakes, one should think about the statement he or she is going to make on social media platform before releasing it. Many screw–ups could be avoided if someone thought about possible reactions beforehand instead of just writing down what is on his mind. But if the questionable statements have are out, the only way to handle social media blunders is to apologize immediately, so that people feel that their voice matters to the company. Simply deleting the statement is the wrong

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way and can cause even worse reactions [21].

Compared to other communication tools, social media is relatively new. Therefore, many companies still need to obtain experience in this new communication field.

Negative as well as positive customer feedback posted on social platforms can be seen by others and influence the image and reputation of the company. Hence, companies have to cope with this new situation, which can be quite complicated.

It is easy to imagine, that business blunders in social media sphere will happen more often in the next years. But if the reaction of the company is quick and effective, such business blunders can also be positive for company’s image. Handling these new forms of business blunders could be supported through special agencies.

14.6.3 CONSULTING AGENCIES FOR BUSINESS BLUNDERS

Analyzing and developing strategies for avoiding and solving business blunders is easier, when not being closely involved with the company. 'How to avoid screw ups' or 'No to business blunders' (NtBB) agencies could be the new trend in companies’ daily business. As far as our research has shown, there is not yet such an agency, but we are of the opinion that there is a market for this and we see a clear trend in demand. There has been a boom in the 1990s for consulting agencies [22]. The need of consulting agencies rose in 2011 but nevertheless, happenings as economic crisis have an impact on the success of these companies. Specializing in business blunders could be a new fruitful niche for consulting agencies. Moreover, social media expertise will be of course a part of these new consulting agencies. These agencies would represent themselves intercultural teams and therefore, have an advantage of being viewed as a more objective company.

Knowing theory of failing, knowing each screw–up that has happened in the business, having backup plans, intercultural context, native speaker, work together with market research teams to avoid screw–ups —all this will be in the service package of NtBB agencies. The idea is that these agencies support a company during the whole process and prevent business blunders to happen. In case unavoidable mistakes happen, these consulting agencies will support the crisis units and develop strategies

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for ruling out of the unfortunate situation.

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14.7 SUMMARY

The case of Wal–Mart in Germany as well as many other golden screw–ups can show companies how business blunders should not be handled and how they can be avoided.

Nevertheless, when it comes to avoiding or handling screw ups, there is no such thing as a royal road every company can follow in order to be successful.

Avoiding intercultural screw–ups is not about knowing everything from the beginning because no one can do that. The point is to ask questions, learn and adapt instead of relying on plans that have worked in the domestic country. There is a danger of underestimating cultural influence. Therefore, managers should not forget that culture plays quite an important role when going on a new market. However, a blunder can still happen to a company even if its managers tried to think over all the possible problems. The essential thing is to be entirely prepared. If a plan fails, the management needs to know how to handle the mistakes and be organized to face the aftermath of the blunder.

Social media and how to avoid or handle business blunders is this area will become a big topic in the next few years. A new form of communication has arisen and the customers become a network. As the internet really fast, there are will be more and more obstacles, companies can fall over and a good managements need to keep up with these developments.

To conclude, no one can say what kinds of business blunders will happen in the future. Neither one can say where they will happen, nor how to avoid them at 100 percent. The only thing that can be stated for sure is that they will happen and that they will amuse us and disappoint the companies. Thus, the main advice for the companies would be to handle business blunders with adequate care.

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[10] Tagliabue, John (2002): They Choke on Coke, but Savor Mecca–Cola, in The New York Times, December 31, 2002, URL: http://www.nytimes.com/2002/12/31/ international/europe/31FRAN.html (accessed February 21, 2012).

selbst kaum eine Zukunft, in Manager Magazin, July 28, 2006, URL: http:// www.manager-magazin.de/unternehmen/ artikel/0,2828,429057,00.html (accessed February 21, 2012).

GOLDEN SCREW UPS

[20] Inc (2012): Top 12 Social Media Blunders of 2011, URL: http://www.inc.com/ss/caitlin-berens/top-12-social-media-blunders-2011#3 (accessed February 21, 2012).

[21] Joel, Mitch (2011): How to Recover from Social Media Blunders, in The Huffington Post, December 13, 2011, URL: http://www. huffingtonpost.ca/mitch-joel/social-mediafail_b_1144200.html (accessed February 21, 2012).

[22] Plunket Resarch (2012): Consulting Industry Research, URL: http://www.plunkettresearch. com/consulting-market-research/industry-and-business-data (accessed February 21, 2012).

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Epilogue: Learning intercultural marketing management Joachim Ramström, Anna–Greta Nyström & Maria Ivanova

15.1 Introduction 15.2 The pedagogical foundation of the course 15.3 The course Intercultural Marketing Management (ICMM)

15.3.1 The outline of the course

15.3.2 The first module of the course

15.3.2.1 Aim and structure of module 1

15.3.2.2 Pedagogical foundation of module 1

15.3.3 The second module of the course

15.3.3.1 Aim and structure of the module

15.3.3.2 Pedagogical foundation of module 2

15.4 The course in hindsight — What actually happened?

15.5 Lessons learned

15.5.1 Choosing themes

15.5.2 Planning and organizing

15.5.3 Facilities

15.5.4 Guest lecture

15.5.5 About the writing process

15.5.6 Cooperation

15.5.7 Work tasks

15.6 What about the next course?

References

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15.1 INTRODUCTION

When dealing with an undergraduate course with the topic 'intercultural marketing management' the instructor or teacher of the course is put to the test for several reasons. First of all, considering that it takes years and years for marketing practitioners to learn the rules of intercultural management, how can you help students to get a deep and rich understanding and feeling of the challenges and difficulties in managing anything that is cross–cultural? Second, given that it takes practitioners a lot of time to learn to operate in a intercultural environment, how can you accomplish something that will prepare students for cross–cultural work when you only have four months and ten ECTS study points at hand?

Furthermore, from a pedagogical point of view, a few additional challenges can be identified. First of all, how can you design a learning environment that allows students to deepen their knowledge and skills of communication and strategy in a global and multicultural setting? Second, how do you accomplish meaningful and effective learning on such a topic? Traditionally university courses tend to consist of such activities as taking part in a number of lectures, writing one or several essays and possibly writing an exam (based on books and articles chosen by the teacher).

Sometimes there might even be a case study involved. Thirdly, intercultural marketing, from a practitioner’s point of view, is all about communication and social interaction with people who possess different worldviews and understandings of business.

Therefore, one can ask whether traditional courses provide the students with the communication and interaction skills and competences for working–life in an intercultural business world? Lastly, school systems in different countries tend to have different learning styles and techniques.

Given all these challenges, the course instructors wondered while planning the course if it would be possible to create a context where students would be allowed to practice social interaction skills in a multicultural environment? Could tasks be designed in such a way that it would require in–depth and deep interaction between the students? The instructors also thought about what kind of tasks would be

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challenging enough to allow students not only to practice writing and memorizing skills, but also communication and organizing skills? And finally the teachers wondered if it would be possible to give the students power over their own learning, in the sense that the students would be allowed to choose freely which topics to cover,

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which books to read and how to organize the learning environment. What would happen if the teachers would not predetermine which topics to cover, what to read and which assignments to do? What would happen if the teachers did not determine what is interesting and relevant knowledge, and instead let the students choose information that feels relevant and interesting to them and to their future careers.

What if the teachers would give the students the power to design the course and the content; in other words, give the students the power over the learning outcomes?

Finally, would it be possible, in line with the thoughts of Hendry (2006), to create a learning environment where students are able to focus on preparing for their futures, both as active, thinking citizens and as entrants into the workforce. Today’s business conditions emphasize blending technical and social competence, conceptual capacity and interpersonal, even ethical, dispositions.

In this chapter we describe how the course was designed and executed and which leading pedagogical thoughts we base the design on. We conclude this chapter by offering some thoughts on how teaching based on a social constructivistic approach to learning can be organized. We especially discuss how teachers can organize a course where the end result is a book written, planned and designed completely by the students.

15,2 THE PEDAGOGICAL FOUNDATION OF THE COURSE

The intercultural marketing management course had been offered every year for many years. In 2011 the course instructors decided to re–think the course completely.

Previously the course was build around lectures, article–studies and discussion seminars. After many hours of planning, the teachers decided to completely rule out lectures and written exams from the course. The instructors wanted the course to be a means for the participants to develop unique and specific competences required for future business practitioners both nationally and internationally. The course instructors therefore set out to meet this requirement by rethinking and redesigning our course on intercultural marketing management. The new course rested on three main learning theories or models and pedagogical foundations.

1) The first foundation of the course is Nonaka & Takeuchis theory of organizational knowledge creation [1].

Nonaka & Takeuchis model focuses on how new knowledge is created. New

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knowledge creation is interplay between tacit and explicit knowledge. According to the model, new knowledge is created in a process where tacit knowledge becomes explicit trough dialogue and explicit knowledge becomes tacit knowledge through doing/ action.

Empathy

Tacit

Tacit Socialization (sympathised knowledge)

Tacit

Dialogue

Externalization (conceptual knowledge) Explicit

Tacit Internalization (operationalised knowledge)

Action

Explicit

Combination (systematised knowledge) Explicit

Explicit

Linking

Figure 15.1: Based on Nonaka and Takeuchi’s theory of organizational knowledge creation. [1]

In the model there are four types of knowledge (symphatised/empathic, conceptual, systemic and operational knowledge) and four modes of knowledge conversion, i.e. socialization (from tacit to tacit knowledge), externalization (from tacit to explicit knowledge), combination (from explicit to explicit knowledge), and internalization (from explicit to tacit knowledge). There are also four core activities through which tacit knowledge becomes explicit, that is, dialogue, linking , learning by doing and field building. During a university course dialogue, linking and, to some extent, learning by doing is achievable. Field building is more challenging, and would most likely require project work where students plan and carry out a project on location at some company.

When looking at the model from a university course perspective, socialization

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involves such activities as sharing experiences, observing, imitating and brainstorming without criticism. Brainstorming, or discussing in general without criticism seems to be a huge challenge for many individuals.

Externalization involves activities such as creating metaphors and analogies, as

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well as modeling. When given a chance, students are very capable of creating models, metaphors and analogies; it most often more a question of using the right teaching tools than 'teaching' students to actually create models. Externalization can take the form of written reports, where students organize their thoughts and knowledge in written form and, thus, make it available to others.

Combination includes activities such as sorting, adding and categorizing information. Creating methodology is also an important aspect, as well as identifying best practices. There are a lot of good facilitation tools to help students with these activities. These tools are most often needed; students tend to easily skip this part, as it often requires a bit of tedious work. On the other hand, it also helps students to improve their holistic skills. The writing process is important for combination as well as during externalization. However, teachers need to be careful when providing guidelines for the writing process. The reports should not be merely summaries of books or literature, but should be a presentation of how the student has understood something and what the students own thoughts and conclusions are. The student needs to show how he or she has combined his or her own previous knowledge with new knowledge and provide a presentation of his or her understanding of a topic.

Internalization might be, practically, the most challenging part of any university course, since it involves activities such as goal based training as well as access to codified knowledge. Internalization needs to involve actual doing and action, not only sitting in classes and talking or listening. In universities of applied sciences (at least in Finland) students are required to have 60 ECTS credits of on–the–job training, but students in universities seldom have this option. Since we are not able to provide on–the–job training, we designed the course so that the students had to create manuscripts, lead fellow students, plan and carry out meetings, negotiating and cooperating with a graphics designer, structuring the book writing process and so on.

In other words, the students had to plan and carry out all the work needed to get a book written and published.

During the course we, in a way, overemphasized dialogue, since we felt student would benefit greatly from a large proportion of interaction. We have on many occasions observed that students tend to be weak in skills involving interaction with the aim of creating new ideas and sharing thoughts. Therefore, we designed the course in such a way that students would almost daily need to come together to discuss and share ideas, thoughts, insights or questions. During these interactions and discussions

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students both share their knowledge as well as organize their own thoughts. For true dialogue to happen, people need to meet in groups face to face. In other words, the social aspect is very important. Even though social interaction is natural to human beings, we are not always good at structured dialogue. Therefore, the instructors’ or teachers’ role in guiding the dialogue is central and important. The dialogue needs to be facilitated.

According to Nonaka & Takeuching knowledge creation is a five–phase process: 1) sharing tacit knowledge, 2) creating concepts, 3) justifying concepts, 4) building an archetype, and 5) cross–leveling knowledge.

Socialization

Sharing tacit knowledge

Externalization

Creating concepts

Combination

Justifying concepts

Building an archetype

Cross– leveling knowledge

Internalization

Figure 15.2: Five–phase model of the Organizational Knowledge–Creation Process (Nonaka & Takeuchi, 1995, p. 84)

From a teacher’s perspective, this knowledge creation process is in many ways the opposite of traditional lecture based learning. It assumes that students already have a lot of knowledge about the topic studied. When applied on a university course, the knowledge creation process starts with discussions, where students share the knowledge they possess and start forming an understanding of the topic. Next, they create different concepts of the topic, usually without reading any books or other literature. Many times teachers will be amazed with how many concepts students can create, and the concepts are typically the same concepts that can be found in the textbooks. The following phase is about finding evidence in the literature concerning the concepts they have created. It is also about enlarging the understanding and

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identifying misconceptions. Students often have strong mental models about various subjects and topics, which makes it important for the course instructor to challenge such mental models. The fourth phase is about creating a larger picture or model of the

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topic under study. It is about students creating their own model and understanding of the topic and relating it to previous knowledge. The final phase is about applying new knowledge in different circumstances, spreading the knowledge in different parts of the curriculum and studies. This often requires coordination with different teachers in different courses.

One huge realization when applying Nonaka & Takeuchi’s model on a university course is that a great amount of student autonomy is needed and required. There also needs to be room for creative chaos and fluctuations. Fluctuations and creative chaos imply that teachers must refrain from creating a linear course plan/structure and instead allow the content and plan to fluctuate depending on what actions students make. This is not easy for teachers or students. Sometimes teachers might feel a strong need to intervene in the 'chaos' created by students. But teachers need to remember that chaos is often the prerequisite for new insights and knowledge. How teachers can manage chaos and turn it into a positive force is perhaps the key issue.

2) The second foundation of the course is Hakkarainen, Lonka & Lipponen's learning model of 'Tutkiva oppiminen'.

There is no precise English translation of the model, it is perhaps best translated as 'inquiry based learning' or 'research based learning'. An underlying principle of the model is a realization that creating new knowledge in a learning environment is on a psychological level a similar process as creating new knowledge in science of innovation. When learning a new topic, a student will, with the power of imagination, go through similar processes as a scientist creating a new theory. Therefore, this learning model aims at creating and organizing the learning environment is such a way that it mimics the knowledge creating practices typical for expert– or scientific organisations.

Research based learning is understood as a principle where completed information is not absorbed from the teacher or textbook. Instead, the learner guides his or her own learning through a process of defining problems, forming own opinions and perceptions as well as explanations, searching for information independently, and finally building a larger entirety / big picture of the knowledge formed out of this process.

One core element is that the group shares the process and that there is a continuous

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dialogue between the group members. This supports the achievement of high–level learning results. The instructor or teacher has an important role in coaching the process, but not in supplying information.

Creating Working Theories Presenting Research Problems Critical Evaluation

Setting up the Context

Distributed

Expertise

Searching Deepening Knowledge

New Theory Developing Deepening Problems

Figure 15.3: The model of research based learning. [3]

Some basic principles of research based learning are: a)

The aim of the activities are to understand and explain topics or subjects studied, not only to accomplish a given task or achieve a grade. Students need to commit cognitively to achieving a set of goals.

b)

Learning is a problem–solving process, meaning that it is relevant to discuss and focus on the problems under investigation rather than moving from one topic to the next. The teachers’ role is to guide the discussion towards the problems that the students are seeking knowledge and substance about.

c)

Discussing preconceptions and discussing them openly. Students are guided to form their own conceptions and comparing them among each other as well as evaluating them against scientific theories. The aim is

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to make students aware of their own conceptions and to notice possible conflicts between own conceptions and new knowledge. d)

Focus on core concepts and grand ideas, to master deep principles

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and key concepts. The focus is on a few selected concepts and a deep understanding of them, rather than a shallow discussion of a lot of topics. e)

Students are systematically guided to take part in a collaborative knowledge creation process. Students will together systematically produce and improve knowledge in the form of hypothesis, theories, explanations or interpretations.

For the teachers using this model, one of the critical phases lies in the early parts of the process. If students formulate questions they already know the answers to (which tends to happen) or do not adequately probe their preconceptions, they usually end up with quite disappointing results. Another critical point is searching for knowledge.

Unless students put effort into reading a large range of different literature and using many sources of information, their understanding and knowledge tends to become shallow and more or less prevents the process from continuing. It is when students dig deeper into a topic that they find areas that interests them, gives them fresh and inspiring new insights and helps them find the next question to research. They will also realize that their expertize increases, which gives them more confidence as well as a sense of accomplishment.

3) The third foundation of the course is the notion of the social nature of learning, according to Vygotsky’s theory of zone of proximal development [4].

Throughout history, humans have learned by talking to each other, and in this talking much of the learning occurs [6]. One outcome of Vygotsky’s theory on learning is the idea of collaborative learning. The main idea with collaborative learning is that knowledge is created in a population when members interact and share experiences.

This means that each individual depends on and is accountable to all other individuals.

Central to collaborative learning is the notion that learning is influenced by the context and activity in which learning is embedded [5]. Collaborative learning aims at producing rich contexts where students are not only observers of questions and answers or problems and solutions. Instead students should be immediate and active practitioners. Mutual stimulation and engagement in a common endeavour will result in mutual exploration, meaning making and feedback, which often lead to better creation of new understandings. It also allows students to develop higher order reasoning and problem–solving skills [2].

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There is also a strong inter–social component to collaborative learning. “In collaborative endeavours, students inevitably encounter difference, and must grapple with recognizing and working with it. Building the capacities for tolerating or resolving differences, for building agreement that honours all the voices in a group, for caring how others are doing — these abilities are crucial aspects of living in a community.

Too often the development of these values and skills is relegated to the 'Student Life' side of the campus. Cultivation of teamwork, community building, and leadership skills are legitimate and valuable classroom goals, not just extracurricular ones.” [2] Collaborative learning is a sort of umbrella for different learning approaches. One of the more structured approaches is cooperative learning, which is based on the social interdependence theories of Kurt Lewin [7] and Morton Deutsch [8]. Using cooperative learning, teachers use small groups of students who work together to maximize their own and each other’s learning. During group work, social interdependence and individual interaction is recognized as having an influence on the outcome of interaction. In other words, the development of interpersonal skills is as important as learning itself, and both academic and social skills are highlighted. “Many of the strategies involve assigning roles within each small group (such as recorder, participation encourager, summarizer) to ensure the positive interdependence of group participants and to enable students to practice different teamwork skills. Built into cooperative learning work is regular 'group processing', a 'debriefing' time where students reflect on how they are doing in order to learn how to become more effective in group learning settings” [2].

While there surely is no lack of group work in universities, this course was on purpose designed around activities that require students to collaborate in order to accomplish the task of writing and publishing a book. When writing and publishing a book, there are many activities that need to be coordinated and organized. Graphical work needs to be integrated into texts, texts need to be edited and proof–read, layout and formatting needs to be consistent with all chapters written by different authors, deadlines need to be decided upon and checked. Not to mention practicalities such as deciding on styles of referencing, making sure that each author understands and uses them, cross–linking chapters, using a common way of structuring chapters and so on,

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planning meetings and work–days, photo shooting sessions and so on. Quite early on there was a lot of frustration among the students when they realized how dependent they were upon each other’s efforts. Frustration also arose from negotiations on what

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referencing style to use, how to write introductions, how to write methodological sections for each chapters. And surprisingly much frustration arose from the mere task of arranging meetings and setting up timetables and deadlines. In fact, the students spent well over a third of the whole course on just planning timetables and deadlines as well as coming to a conclusion on what style of reference to use.

15.3  THE COURSE INTERCULTURAL MARKETING MANAGEMENT (ICMM)

The main goal of the course was to encourage students to take ownership of their own learning. It was decided that the course instructors would coach the learning process, but not get involved in the knowledge creation process. The course instructors wanted to move away from the idea that it is the teachers who know all the important facts and topics and should transmit it to the students. If given the responsibility and tools, students are fully capable of creating knowledge by themselves. There was also an idea to allow students to decide on the substance of the course and allow them to choose the topics they wanted to cover (related to marketing management).

The pedagogical principle underlying this idea is that motivation for learning tends to be higher when students themselves can control the content of their learning.

Having control of ones own learning is about ownership of learning, which according to the course instructors cannot be shared. Either a student has ownership of his or her own learning process, or the teacher has, but both cannot have it. Teachers can provide and create a learning environment that encourages the students to take ownership of their learning, but in doing so, the teacher must also be willing to let go ownership of the students learning. It is a little bit like driving a car. Either you let somebody drive the car, or you drive it yourself, but you cannot sit in the passenger seat and drive the car, because then again the driver is only the passenger. Giving students the possibility to take ownership of their learning requires a bit of radical adaptation from teachers. For instance, it means that teachers cannot tell students anymore what books they must read (or should not read). The teacher can provide literature lists, but the students themselves must decide which books they read and choose not read.

Another goal of the course was to create an environment where participants not only practice writing and reporting skills, but also other important working–life skills.

Since many exchange students attend the course, an idea was put forward to attempt to create more authentic intercultural exchanges and meetings. From a socio–cultural perspective, learning always takes place in a social context and new knowledge is

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created in a cycle evolving around dialogue and learning by doing. Since there were no possibilities to have students work with real companies in real projects, and the knowledge creation process requires 'doing' and 'field building', the course instructors came up with the idea that writing, editing and publishing a book was a good project that would require students to do some of the activities, such as negotiations, working with a professional graphic designer, team–work, time management, planning and executing, negotiating with the publishing house and so on.

Another motive for having students produce a book was related to preparing them for the process of writing their masters thesis. The instructors wanted to imitate as closely as possible the process of writing a masters thesis, where students independently have to choose a topic, research the topic, find literature, decide on what to include and not, and of course the iterative writing process in itself.

15.3.1 THE OUTLINE OF THE COURSE

Intercultural marketing management is a 10 ECTS course. The course is an advanced level course, typically attended by 4th year students. The course was divided into two 5 ECTS modules. The duration of the first module was seven weeks and the module started on November 3rd, 2011 and ended on December 21st. The second module started on January 17th, 2012 and ended on 16th of March 2012, taking all in all eight weeks. A little over 40 students attended the first module and 33 students attended the second module, of which roughly half were exchange students from countries such as Germany, France, Belgium, China, the Philippines and Spain. There were two teachers on the courses. The teachers often named themselves course instructors, because they felt the word 'teacher' did not resonate well with the pedagogical models used. Words are powerful tools for framing our thoughts.

From a substance point of view, the first module focused on identifying relevant themes of intercultural marketing and getting a solid overview of the topic. The second module focused on getting in–depth knowledge of the chosen themes. From a pedagogical point of view, the first module leaned mostly on the research based learning model as well as the social nature of learning. The second module leaned mostly on

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the Nonaka & Takeuchis model as well as social nature or learning. From a general learning point of view, both modules focused strongly on providing the students with the opportunity to train, e.g., inter–personal skills, interaction skills, communication skills, leadership skills, time management skills, team–working skills, and inter–cultural skills.

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15.3.2 THE FIRST MODULE OF THE COURSE

15.3.2.1 AIM AND STRUCTURE OF MODULE 1

The aims of module 1 were: a)

To introduce the students to intercultural marketing management (ICMM)

b)

To get an overview of different aspects of intercultural marketing management

c)

To identify core and central themes of intercultural marketing management

d)

To deepen the knowledge on a few themes

e)

To reflect about own learning.

From a process point of view the course consisted of students (a) creating an overview of ICMM, (b) selecting and by themselves writing a case, (c) analysing the case and finding themes, (d) writing a theme report, and finally (e) reflecting on learning. The module also involved a course evaluation at the end of the module. The participants had roughly two weeks for each part of the process. Seven four–hour workshops (one per week) supported the process in various ways, meaning two workshops for each phase. There was only one lecture by one of the course instructors during the course.

The lecture focused on providing perspectives and ideas on some challenges the students had with writing the case.

Writing case

Workshop

Workshop

Analysing case

Workshop

Figure 15.4: Process of module 1.

Theme report

Workshop

Reflection paper

Workshop

Course evaluation

Workshop

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a) Creating overview of ICMM During the first workshop, the course instructors used collaborative and action–based techniques, such as nominal group technique, open space technology, pro action café, learning café, and so on. With the help of such techniques the teachers guided participants to map their knowledge about intercultural marketing management as well as creating an overview of the topic. The course instructor had not pre–chosen any themes and topics, rather the participants identified and chose the themes. The course instructors had for themselves a list of topics they thought were relevant, and the instructors would have coached/ guided the participants into the direction of those topics if it looked like the students were totally sidestepping them.

In the end the list was unnecessary and no coaching was needed. The participants identified more than two dozen aspects related to ICMM. b) Selecting and writing the case The course participants researched and wrote a case in groups of 3–4 people, all in all 12 groups. The groups were allowed to choose their own cases. The instructors provided guidelines for the structure of the case, but not guidelines on the content. The main idea with not providing guidelines on the content was to allow students to focus on issues that interested them the most, not to lock the case into a certain model, and to allow new and surprising issues to arise. The instructors wanted the participants to find as much information as possible, and the more ideas and topics, the better for the next phase. Giving too detailed guidelines on content usually narrows down the students focus and tend to cause them to look for only the things they are asked to

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look for. The instructors were confident that the groups would find much more than the instructors could come up with. Instructions can be found in info box 15.1.

Instructions for the case The case is written in groups of 3–4 persons. The group must consist of both exchange and non–exchange students.

The company (case) must be a small or medium–sized enterprise, having some aspect of international business. Preferably, choose a company that is somewhat close by. If needed, visit the company and make use of any contacts you might have in the company. Before choosing the company, consider the following issues: • Does the company have a good webpage? (“good” meaning containing useful information) • Does the company have an annual report? (source of useful information) • What kind of international aspects does the company have? (only exporting abroad? the more international the more fun you will have) The structure of the case should be the following (5 % over and under is accepted): 1. Executive summary (250 words) 2. Introduction to the subject / theme (250 words) 3. Description of the case company (300 words) 4. The business environment of the company (600 words) 5. Business operations challenges (1200 words) 6. Managerial implications (1200 words) 7. Conclusions (300 words) 8. References Info 15.1

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Initially the student found it challenging to define what points 4, 5 and 6 should be, and therefore we used half a workshop to sort out, for instance, the difference between managerial challenges and business operations challenges. We used learning café as one method for sorting the topics out. The course instructors prepared the learning café by formulating a few open questions for each table/café. At the end of the workshop the students came to the conclusion that business operations challenges related to the strategic aspects of business operations, often external factors influence company operations, such as for instance competition, economic factors, and government regulations. The students defined managerial implications as the tactical aspects of the company, often related to concrete and practical management issues, such as ways of negotiating with for instance suppliers, or issues related to managing a company’s brand, such as who does what, how is information collected, responsibilities, tasks and so on.

Each group presented their case using the pecha–kucha presentation technique.

Using pecha–kucha, the presenter (or group) is allowed to have 20 pictures and talk 20 second around each picture. The main idea with pecha–kucha is that it does not allow a thorough explanation of each detail of the topic, rather leaving many questions unanswered. These questions are then the basis for a following discussion. c) Analysing cases and finding themes As predicted, the groups had identified versatile and diverse topics when writing their cases. The cases were rich with information and contained most of the topics one would find in a table of content of any course book in intercultural marketing management. The instructors also realized based on previous experiences that the content of the cases was much richer than it would have been if the instructors had provided instructions on what to write about. Just giving instructions on the structure of the cases proved to be a good decision.

The aim of analysing the cases was to find themes related to ICMM that would undergo further research and information gathering. This part turned out to be much more challenging for the students, and also for the instructors. The main challenge was in synthesizing many topics and aspects from all 12 cases into fewer and larger themes.

The themes had to be both large enough as well as focused enough and defined.

Again, using various collaborative and action–oriented methods, the participants identified several themes in their company cases. These themes were grouped and categorized into about ten overall themes of ICMM, for instance, managing a global

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brand, product adaptation for international markets, communicating with customers in foreign countries, analysing customer tastes in foreign countries, managing foreign legal environments, and international intellectual property rights management. d) Writing the theme report The next phase of the course was writing a theme report, based on the themes identified earlier. The course participants organized themselves into groups of 3–4 people and each group then chose 2–3 themes out of those identified in the previous phase. Each group decided which themes interested them the most. There was a slight tendency among the groups to select themes they already were familiar with, so the course instructors

Choose your themes. If you are a group of 4 persons, choose 3 themes. If you are a group of 3 persons, choose 2 themes. If you are a group of 2 persons, choose 2 themes.

The structure of the report: 1. Introduction to the subject “Intercultural marketing management” (1 page) • An overview of the subject • Different perspectives on the subject • Why is intercultural marketing management a challenging subject?

• Why is it important for companies to learn about intercultural marketing management?

2. Choosing themes and motivating the choices (1/2 page)

pushed groups to choosing themes they did not have

• Choose your themes

prior knowledge about. Each group then wrote a theme

• Motivate your choice (besides your burning interest towards the themes)

report. The instructions for a theme report can be found in info box 15.2.

The groups were given two weeks to write the

• What makes this an interesting theme?

3. Discuss the themes (3–4 pages per theme)

report. The finished theme reports were presented on

• Deepen your knowledge about the theme

a workshop using the so–called poster–presentation

• Present different aspects of the theme

technique. The technique was modified a little, because traditionally presenters always stand next to their own posters through the whole presentation. For pedagogical and learning reasons the instructors wanted all the participants to both present their own poster as well as visit all other poster presentations. Teaching others is one of the most powerful learning methods, scoring highest on retention rate scales. The idea was that everyone would get a chance to present their own theme,

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Instructions for theme report

as well as learn about all the other themes. Group members took turns at presenting their own poster, allowing everyone in the group to visit the other poster presentations. In addition to presenting the theme

• What can we learn from literature?

• Are there any models?

4. Concluding discussion (1 page) • Highlight 4–5 major issues you think are central • Give recommendations for managers working with your themes 5. Table of references • Each theme discussed must contain at least – 5 references to books – 5 references to journal/ research articles – 5 references from the daily press or trade/profession paper Info 15.2

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report, the theme report would also be the foundation Instructions for reflection paper Write 4–5 pages based on the questions below. Each section (A, B, C) should be roughly equal in length.

A. Insights from literature 1. Based on the literature you read, which are the 5 most interesting things you read?

2. Based on the literature you read, which 5 new things did you learn?

3. Concerning the literature you read, for whom would the literature be useful and for which practical situations would it be helpful?

B. Thoughts about the subject 1. How would you explain intercultural marketing management?

2. Which Human Resource Management challenges can you identify concerning intercultural marketing management?

3. Discuss communication across cultures C. Applying knowledge to a new context 1. If you were a consultant to a firm planning to become international, which 5 things would you foremost recommend?

for the second module of the course. e) Reflection report The final part of the module consisted of an individual reflection paper. The instructors provided the course participants with a set of questions they had to write the reflection paper about. The questions were chosen based on topics that the instructors felt the students would benefit from reflecting further on. If used like this, the content of the reflection paper would vary from course to course. During this course, for instance, communication across cultures was a theme nobody wrote about in the theme reports and therefore this question was raised in the reflection paper. The reflection paper contained both questions related more to the subject but also questions related to the own learning. Instructions for a reflection paper can be found in info box 15.3.

At the end of the module each participant also filled in a course evaluation, focusing primarily on own learning, the methods used, insights as well as emotional responses (see info box 15.4).

2. Which are, according to you, the 5 most challenging issues when doing business in different cultures?

3. If you would right now be hired to a company doing business in several countries and you would be in charge of the “international” department, what would you do in order to learn about how to do the job?

Info 15.3

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Course evaluation A. My own learning • How well have I succeeded?

• What is still unclear, what am I still thinking/wondering about?

• What should I have put more work effort into?

• What has been difficult for me?

• What could I do to solve the difficult tasks or parts?

• Which methods have supported my learning?

• Which methods have disrupted my learning?

• On a scale from 1–5, what grade would I give myself?

B. My group • What thoughts do you have about your group’s way of working?

• How do you feel you have supported your own group?

• If you would be allowed to change something in your group, what would it be • Who do you think has been a good group leader, and why?

• I felt happy in the group C. The work of the group • What went well?

• What did not go well?

• What did I learn?

• What would I do differently?

• What will I take into practice?

D. My peers • Name of peer

________________________________ ( often — sometimes — not at all )

• Provided ideas?

• Asked for information from other group members?

• Asked for opinions from other group members?

• Made summaries based on group members thoughts and ideas?

• Asked for help when needed?

• Helped other group members?

• Made sure everybody in the group understood the assignments?

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• Helped the group to study together?

• Took all group members into consideration when working?

• Encouraged group members to work?

• Encouraged group members to give their ideas and thoughts?

Info 15.4

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15.3.2.2 PEDAGOGICAL FOUNDATION OF MODULE 1

The module was designed around the 'research based' learning model. The learning cycle outlined in the research based learning model started in this module with mapping course participants’ knowledge and ideas of intercultural marketing management. During the first workshop the instructors used selected methods to map what kind of knowledge the participants had, for instance, associations to the name and topic. This activity represented the 'setting up the context' phase of the learning model. The 'presenting research problem' phase of the learning model was to some extent touched upon also during the first workshop, but more clearly present when the students chose and wrote their cases. Since one section of the case was about identifying business challenges, the students were faced with various critical issues of the theme. When the students analysed their cases and identified themes, they were moving into the 'creating working theories' and 'critical evaluation' phases of the learning model. The theme report was used as a tool for the 'searching deepening knowledge' and 'developing deepening problems' phase of the learning model. Finally, the reflection report was used as a tool for the 'new theory' phase of the model. In hindsight, it became evident to the course instructors that the final phase of the learning model, 'new theory', was too briefly touched upon; this part needs to be better carried out next time.

Nonaka & Takeuchi’s knowledge creation model was at all times used as a guideline when planning the workshops. For instance, each workshop always started with some type of brainstorming, knowledge sharing and discussion of different options. In addition to learning from each other and learning dialogue, students also got to know each other well and thus started trusting each other. Each workshop would involve some type of modelling, for instance, linking key concepts into concept maps. While the workshops were too short (four hours) to involve actual doing, students often planned their following actions, planned reports and made to–do lists. The course instructors also often asked the students to link what they had been reading with what they had done, written and discussed, thus asking the students to combine different sources of knowledge and insights.

Vygotsky’s theory on proximal learning was designed into the module in such a way that the cases and the reports were discussed in groups, presented to each other, commented by each other as well as, with the help of dialogue, discussing together

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different options, alternatives and aspects of the themes and topics. One aspect the course instructors emphasized strongly was in having the students teach each other.

A lot of focus was thus placed on creating a learning environment that inspired and motivated the students, encouraging them to take charge of their own learning. They also had to rely on each other and were dependent on each other for different tasks.

Some tasks could not be completed without input from others, sharing knowledge with others. Furthermore, the instructions for the cases and the reports were also designed in such a way that it required group members to negotiate with each other on how to interpret the task, how to design the task, how to divide the work and what to write. By doing so we attempted to create a context where participants had to practice different skills such as communication, tolerance for differences, negotiation, compromising, and so on. Since all group work was carried out with mixed groups of foreign exchange students and finish students on purpose, the intercultural aspect also made group dynamics interesting and challenging.

15.3.3  THE SECOND MODULE OF THE COURSE

During the second module of the course participants did the actual writing and editing work for the book about intercultural marketing management. The course participants decided together on all the aspects of the book, everything from the different chapters, the themes the book would cover, to layout, graphics, styles of writing and references and so on.

For some task, such as editing and graphics work, students worked in groups of 4–6 people. For the individual chapters and writing the chapters, the students worked in pairs of two people. Each pair chose a theme they wanted to write about, and each theme became a chapter. Students made good use of the insights cases and theme reports from module 1 when they decided on the content of the book.

Even though the students were allowed to completely freely choose what themes, chapters and topics to include in the book, the course instructors required that each theme/chapter had to include a trendspotting part. Other than that, the task of the instructors was to comment on the texts the students produced, as well as make sure

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that the students had access to the facilities, equipment and resources needed. The course instructors also chose the graphic designer, and invited the designer to work with us.

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15.3.3.1 AIM AND STRUCTURE OF THE MODULE

The second module had three main aims: a)

To deepen knowledge of intercultural marketing management

b)

To practice the research and writing process of the coming master’s thesis

c)

To focus on working–life competencies

Module 2 included four workshops, a guest lecture, a lot of coaching and feedback sessions as well as a champagne breakfast. The course also consisted of various activities related to the book–writing process, but those activities were chosen and organized by the course participants.

The purpose with the workshops were to guide the participants in the writing process, in the editing process as well as in supporting the process of creating the layout, content and graphical aspects of the book. A professional graphic designer was present on three of the workshops. The first workshop was on the 17th of January and the champagne breakfast was on the 23rd of March. Workshop 2 was on the 7th of February, Workshop 3 on the 21st of February and the final workshop on 29th of February.

The timetable was planned in such way that all workshops would support different parts of the writing and editing process. It should, however, be mentioned that the timetable and course structure was not presented to the students. The main reason is connected to one of the aims of the module, namely practicing working–life competencies. The course instructors wanted the participants to practice organizational skills, time management skills as well as planning skills, and therefore the course instructors did not provide the students with a predetermined time schedule. The time schedule was kept as a guideline for the course instructors to see how the work progressed.

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The course instructors made a plan for the whole eight weeks of module 2. The plan was that during Workshop 1 the participants would create the table of content for the book as well as decide who would write what. The course instructors planned to use various coaching techniques to help the students come up with the content of the book. The plan was also that Workshop 1 would be the start of the literature review process. The course instructors had planned not to provide any rules on what to read or how much to read.

Between Workshops 1 and 2 the plan was to have a guest lecture by a trendspotting expert, as the plan was that each chapter should contain a trendspotting part. At this point the students were to create a preliminary structure and table of content for their chapter as soon as possible, in order for the

Workshop 1 Literature review Chapter structure Guest lecture on trendspotting Comments on chapter structure Workshop 2 Chapter draft 1

instructors to be able to comment. The course instructors would then provide feedback on chapter structures and table of contents.

Comments on draft 1 Workshop 3

The course instructor planned to have a professional graphic designer present on the Workshop 2 to open up the discussion about target audience, writing style, different layout styles and so on. The idea was that after Workshop 2 all groups would start writing on the first draft of their

Forming work groups Chapter draft 2 Comments on draft 2

chapter, keeping in mind the various issues raised by the graphic designer.

Roughly a few days before Workshop 3, the instructors were hoping that they could comment of the first drafts of the chapters. Google docs would be used as the writing tool, as it allows commenting, track changes and everyone would have access to each other’s chapters.

324 Figure 15.5:Â Timetable.

Workshop 4 Graphic, layout, text work Version 1 of the book Champagne breakfast Editing, introduction chapter, printing house

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When the course instructors planned module 2, they were hoping that Workshop 3 would be designated to focusing on issues related to how to work with the text, tables and pictures and how to integrate graphics with the text and story of the book. The graphics designer would also be present on Workshop 3. A bit of time would be spent on discussing the chapters and the comments each group got from the instructors.

The idea then was that after Workshop 3 different groups would be formed to work with graphics, layout, texts and integration and work closely with the graphic designer.

Parallel with working with graphics and layout, the students would also continue the writing process with the second draft of their chapter.

Coming up to Workshop 4, the course instructors were hoping that a few days before the workshop all groups would have the second draft of their chapters ready for the instructors to comment on. Workshop 4 would focus on taking pictures for the book, finalizing various issues with layout, graphics and design, and the graphical designer would work with the different workgroups to get a sample of the book ready.

The course instructors would also discuss with groups about the text and content if necessary.

The original plan set by the course instructors would give about ten days after Workshop 4 for the students to finalize various tasks, such as making possible changes to the text, getting references and tables of contents done, deciding on the name of the book, and so forth. The graphic designer would make a first version of the complete book, sending it to the different work groups for comments.

The course instructors had planned that the course would end with a champagne breakfast. During the champagne breakfast the first version of the book would be ready and pictures of the authors (students) would be taken. Everyone would also give final comments to the graphic designer, and finally, the students would be able to enjoy the work they have done.

After the champagne breakfast, the course instructors would work with the graphic designer to finalize the book. Course instructors would also write an introduction to the book as well as a pedagogical chapter outlining the pedagogical foundation of the course. Finally, the book would be sent to the printing house.

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15.3.3.2 PEDAGOGICAL FOUNDATION OF MODULE 2

The model on research based learning as well as proximal learning were the main models guiding the learning process in module 2. The writing process of the chapters by pairs of two people quite closely resembles the research based learning model.

The course instructors would provide comments on the chapters, which would guide the students to seek more information, evaluate it, critically examine it, seek further, deepen their knowledge and so on. Since the students to a large extent were dependent on each other concerning several tasks in the book project, the ideas of proximal learning was also quite closely followed.

15.4 THE COURSE IN HINDSIGHT — WHAT ACTUALLY HAPPENED?

Sun Tzu wrote "No battle plan survives first contact with the enemy". The proverb pretty much sums up the second module of the course. While module 1 went quite smoothly and by the plan, module 2 did not. Already by Workshop 2 the timetable and structure of the course had to be revised majorly.

The course instructors had thought that the literature review process would have started right after the first workshop on the 17th of January. However, in reality, the students started the literature process around January 27th, which meant that there were no drafts ready for commenting by Workshop 2 on February 7th. The original idea was that the first draft would be the foundation for the graphic designer’s input on Workshop 2, but the delay in the writing process complicated things. The graphic designer really did not have much to work with during Workshop 2. As a result of the delay, the deadline for the first draft of the chapters had to be pushed to the 17th of February, which in turn placed a lot of pressure on the course instructors to provide comments on 14 chapters in roughly two and a half days.

One major reason for the crashed timetable was that it took a lot longer for the students to organize themselves than the instructors had anticipated. The participants

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were still discussing the style of referencing on January 27th. And only on that same day the whole group met for the first time to clarify all the issues concerning how to organize the book project—ten days after the course module had started. The course instructors had not anticipated such difficulties in getting organized and it is still

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somewhat a mystery why it took such a long time, considering that the group had worked with each other for seven weeks before Christmas during module 1.

In retrospect, even if the course participants had spent seven weeks together during module 1, the group and the team–process had not progressed sufficiently to allow more rapid self–organization. Because organizing the work was such a challenge, the participants got 'stuck' for a long time with discussing less relevant issues, therefore not getting to the overall organization and division of work and so on. It is perhaps not a big surprise that all those less relevant issues took a long time to decide on, since people tend to react in such a way when more challenging issues need to be dealt with.

The more challenging and difficult decisions are, in a way, postponed by discussing minor issues over and over again. Another issue, which took the students a long time to deal with and preoccupied their time and energy, was the fact that the course instructors did not provide them with deadlines and a time schedule for the writing process. Instead, the students had to do it by themselves. It seems as if students are not used to a lack of clear and precise timetables.

On the 2nd of February the participants had a meeting with one of the course instructors and during this meeting the groups were able to move forward with more pressing issues, such as planning the structure and table of content of the chapters.

Workshop 2 on the 7th of February had to be re–planned. The course instructors’ original intention was that this workshop would involve making decisions on, for instance, what the book should look like and how to adjust the content and writing style to the target audience. Instead Workshop 2 had to focus to some degree on the content of the different chapters, as well as on discussions around the issue of intercultural and managerial aspects of the chapters. The graphic designer was also present on the workshop and he had planned what he would cover during the workshop.

Unfortunately it became evident quite quickly that the graphic designer’s topics were not in line with the current worries and thoughts of the students. Quite a lot of what the graphics designer talked about did not match the current interests of the participants; a lot of the important issues about layout of the book, target audience, styles for tables and figures was therefore quite quickly forgotten. This became evident later on when the students had to figure out by themselves all the issues related to those things.

Some progress was made during Workshop 2. The students formed three work– groups, namely a layout group, a proofreading group and a references–group. This

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surprised the course instructors, as it was unclear what these groups actually would do since nobody had written anything on their chapters yet. The course instructors attempted to bring out this point as well as stress that the major issue right now was the writing process and content of the chapters. The course instructors felt this concern fell on deaf ears.

On February 10th, three weeks later then expected and planned, the course instructors received most groups’ table of contents and chapter structures, and commented on them. At this point in time the course instructors had a crisis meeting in order to try to figure out what to do, and how to provide some structure in the work process without taking over the whole process. The course instructors decided to set a deadline for the first draft of the chapters. Most interestingly the student did not like the idea of a deadline at all, even though some previously had complained about the lack of deadlines. Who ever said the life of a teacher was easy?

February 17th —less than a month from the end of the course—was set as the deadline for the first draft of the chapters. If the deadline would hold, it would have taken the students more than a month to write about 15 pages on their chapter. The course instructors hoped that the deadline, even though very late, would still allow time for the participants to edit their chapters based on comments, re–write and continue writing and finalizing a second draft near the end of the course. Yet it started to look quite much like there would not be a first version of the book ready by the end of the course.

Workshop 3 was held on the 21st of February. Before the workshop the course instructors informed about some major changes. The instructors more or less dissolved the proof–reading, reference and lay–out groups that were formed during Workshop 2. The reason was that all chapters were still half–finished and there would not be any work for most of the work–groups. The course instructors also informed that each group would be editing two other chapters, and in that way the students would help each other with the chapters.

These quite radical changes had to be done, because the instructors wished a shift in the students’ focus into getting their chapters written. The students were using too

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much time worrying on things they could not work on anyway, because the chapters were not ready. If there were any chance the chapters would be ready by the end of

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the course, this had to be done. And these changes were not popular among the course participants.

On a side note, it is interesting no notice that even though students realize and know that once they enter working life in a company or organization, they cannot count on timetables and deadlines never changing. They are fine with the realization and thought that once they start working they have to live with fluctuating and ever– changing deadlines. Yet they are quite unhappy when deadlines or timetables change in the university, during a course, indicating that they do not see the university as a good place to practice such skills as tolerance for uncertainty. On the other hand, our universities seem to be creating a kind of bubble world inside the universities—a world that does not exist outside the doors of the universities. One can only wonder how we as universities help students practice such skills as adapting to changes if we provide students with courses were plans and structures never change?

The graphic editor was to some extent frustrated with the lack of progress by the time of Workshop 3. The editors also had some concerns about the layout of the chapters as well as the coordination of work between the chapters. Even if the editors and all the groups had agreed on a number of common guidelines, each group seemed to make up their own guidelines for naming files, using fonts, color coding, structure of the texts, and so on as they went along. The result was that each of the 14 chapters had unique referencing styles, writing styles, fonts and color codes, and so on. And as a result, a huge amount of work had to be done by the editors and the graphic designer after the course ended. With all other work the course instructors and designer had, it took them in excess of six months to correct all the chapters. After the workshop the course participants actually realized that they did not communicate well enough with the graphic editor, and an improvement was made.

On the 26th of February, three days before Workshop 4 the course instructors received the second draft of all chapters. It was quite intense for the two course instructors, reading and commenting on 1 000 pages of text in three days.

Workshop 4, the last workshop, took place on the 29th of February, ten days before the end of the course. A lot of the chapters, graphical work, layout work and editing/ writing was still under work. Workshop 4 focused mostly on the graphical work. The pictures for the book were taken. During the workshop the instructors commented that almost none of the chapters had any trendspotting, even though this was a requirement. Therefore the course instructors decided to form trendspotting groups,

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and each group would focus on 3–4 chapters and the trends they could spot. The deadline for trendspotting was set for the 9th of March, the same day the course ended.

This was another decision that the students did not like.

Since a lot of tasks were still under work, the last two weeks of the course were very intensive and stressful for most groups. Most chapters needed some major re–writing, and most groups edited their chapters based on comments and feedback from the course instructors. At the same time trendspotting groups were at full work, as was the layout group.

The course ended on March 9th, by which time all chapters were nearly completed.

The chapters still needed work, so the course instructors decided to be editors of all chapters. All the groups gave the course instructors permission to make changes in their chapters if needed. The course instructors arranged a champagne breakfast on the 23rd of March. The graphic designer was also presented, and some final pictures were taken.

After the 23rd of March the course instructors had their work cut out for them. In addition to the two course instructors, a third teacher joined in as editor. Editing the chapters turned out to be quite a tedious task, mainly because most of the students never got the time to revise their chapters a third time as they run out of time. If the original timetable had held, all groups would have had time for a third round of editing the chapters. The editing work for the teachers and course instructors eventually took more than six months, due to a load of other courses and tasks that they had to attend to.

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15.5  LESSONS LEARNED

15.5.1  CHOOSING THEMES

At the start of the second module, during Workshop 1, it became necessary for the course instructors to push quite hard when the groups where choosing themes (chapters) for the book. There was a tendency among all groups to rely on work and knowledge they had acquired and done already in module 1. The course instructors had to challenge the students to select themes they had not covered previously, as well as challenge the students to come up with ideas for new themes. In particular, figuring out the management aspect of intercultural marketing management turned out being quite a challenge. One explanation for the challenge of it might be that the course instructors were not so strict about the management aspect in module 1, while in module 2 it had to be clear and precise. The tricky issue in regards to pushing the students into making decisions is that the border between students making decisions and the course instructors making decisions might be quite thin. One should be ware of who actually makes the decisions. Since the students had a bit of a challenge coming up with themes and topics, could one solution have been to have the students prepare the work somehow before the first workshop? Should they perhaps have browsed through books on intercultural marketing and looked through the tables of contents of several books on intercultural marketing? Perhaps that would have given them more ideas, or would it have led to them just copying the ideas from the books?

The students did not know beforehand that they were going to write a book during the second module of the course. The students found out this only after Workshop 1 when they had already chosen 14–15 themes they thought would be interesting to learn more about during the course. The decision to tell or not to tell the students beforehand is something the course instructors discussed quite a lot. One fear was that the students might become apprehensive towards the module and task if they knew about it beforehand. Perhaps fear would have made the student choose safe and easy themes? This time we chose to reveal the book project only during the first workshop, and with that we hoped that the themes they would come up with during the first workshop would be their own original ideas and not ideas copied from some book.

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15.5.2 PLANNING AND ORGANIZING

Constant changes in plans and timetables during a course always makes students frustrated. But we, the course instructors, feel that frustration is a price we need to pay in order to prepare students for the reality they will face in working life. We feel universities tend to focus too much on academic/science life competencies, leaving out working life competencies. There does not seem to be a way to decrease this frustration, even if the students understand that changes in timetables and plans will be an everyday part of their working life. For some reason this understanding does not transfer into the 'class–room' and it is not seen as a transferable skill or competence that the students can start practicing already during their studies.

Concerning ownership of ones learning, being able to plan and make decisions plays a key role in students’ learning process. While there certainly needs to be some planning in every course, the key question is to what extent the teachers should do most or all of the planning? The course instructors struggled with this question in module 2. At the end, the course instructors decided to allow the students to plan how they use their time and which deadlines they have. The course instructors decided that they would adapt their time–usage to the students’ process. In hindsight it might be worthwhile giving a little thought to the challenges and struggle the students had in setting deadlines, sticking to them as well as allocating their time. What might have contributed to the immense delay the students had in starting their writing process at the beginning of module 2?

An explanation might be that even if the course participants had worked together for seven weeks prior to module 2, they were still not familiar enough with each other.

Even if some team–building had occurred, the team process had not progressed enough for smooth planning of time and organisation. Nobody dared to step up and make the final decision; instead everyone was looking to everyone else to make a decision or take the lead. There was at the end no clear leadership or division or definition of different roles. Another explanation might be that the students were expecting the course instructors to step in and take control if things took too long.

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Perhaps the course instructors should have been clearer about the fact that they would not get involved?

One solution to this situation could be to have a much longer first workshop. The first workshop was only four hours, which did not allow time to create timetables,

deadlines, and decisions on leadership, roles and tasks. It is likely that the course instructors could have used some facilitation tools to help the students make necessary decisions. When the students were left on their own without facilitation and coaching, the process lasted a long time. With coaching and facilitation tools the students would have gotten the structure they asked for to make the needed decisions. The time around the first workshop, unfortunately, focused only on getting themes and a table of content for the book.

Deadlines are overall a tricky issue. Since the course instructors wanted to give complete ownership of the learning process to the course participants, the course instructors did not want to give deadlines nor keep reminding students of deadlines — it then becomes one aspect of control. While it might have good intentions, providing and reminding of deadlines easily leads to students performing to please the instructors rather than learning for their own learning’s’ sake. It most often also leads to a situation where students rely on the course instructors to keep reminding them on when to do different tasks. The students never take complete control if they know that the teachers keep track of their deadlines anyways. During module 2 the course instructors did not plan to take part in any form in the process of making deadlines and keeping them. It was all up to the students. While this might sound radical, the course instructors have many good experiences from courses where the students have planned the course from the start to the end.

This time it did not work out so well, although it was not evident at the start of the module. What could then have been done to support the students? One solution could have been to help the student/group make a GANT schedule for the whole course. The GANT schedule would have contained all the task and activities and how long each activity might take and maximally can take. A GANT schedule is often a good tool to outline and clarify how long different activities might take and what the consequences are to other tasks are if one task is over time. Although the students have to make the GANT schedule themselves, the course instructors can provide insights about how long different tasks can take according to their experience. For instance, how long does it take to edit 20 pages of text, how long does it take to do proper trendspotting, and so on. The graphic designer could also have provided input about how much time some editing or layout tasks typically would take. This way the course instructors do not have to give deadlines, but can help the students get a good overview of the whole course, duration of activities and how missed deadlines affects other parts of the process.

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Additionally the course instructors could add their tasks into the GANT schedule, for instance, reading a chapter and commenting on it, feedback, and how much time it requires. Planning a GANT schedule together would make course planning a nice collaboration between students and instructors.

Another observation, which also relates to organizing work, is about the ability to manage several different processes at the same time. This occurred at the end of the course when the students had to work on several tasks at the same time, both revising and editing chapters, working with layout and graphics, doing trendspotting and finalizing some group work. Having to joggle several processes at the same time seemed to get the students both anxious and frustrated. This raises an interesting issue. How do universities prepare their graduates to handle multiple processes or projects at the same time? We believe it is a very relevant question since working life only extremely rarely allows an employee to work with only one process at a time.

Employees need to be able to handle many processes at the same time and also to switch quickly between different processes. It is a key competence. Yet, universities seem to be experts in allowing students to have one process at a time, linearly. A work case scenario at university might be that a student has a few written assignments or test during the same week. While that certainly might be stressful, it more relates to a lack of time (too few hours in the week) than truly the need to handle and switch between many different processes at the same time.

15.5.3 FACILITIES

How a room is arranged physically has a huge impact on how effective learning is.

Every little table and chair between two people becomes a barrier for communication between people, and affects learning negatively in the worst case. The course instructors forgot to take this into consideration during Workshop 1. The physical environment did not allow for good group work or collaborative learning, since the room was full of tables and chairs, and all of them in rows. If possible, all chairs and table should be removed, leaving just chairs for each student and instructor, and the chairs should be arranged in a big circle called a dialogue circle. The course instructors

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have done this on many, many occasions and the positive effect on communication is remarkable.

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15.5.4 GUEST LECTURE

The guest lecture about trendspotting came much too early, being at the start of the course. Even if the participants knew that they had to include trendspotting in their chapters, their thoughts and energy were on other issues when the guest lecture was arranged. Since it did not occur at a time when the need arose, most of what came up during the guest lecture was quickly forgotten. The guest lecture should have taken place when draft 2 of the chapters were close to ready. Then there would have been an active need for that knowledge and the students would most likely have taken in the information much better.

15.5.5 ABOUT THE WRITING PROCESS

It came as a bit of a surprise to the course instructors that the participants were not better prepared for the writing process, considering the course was an advanced level course and many would start writing their master’s thesis soon. The process of writing, getting comments, re–writing, getting feedback and revising again seemed to be an unfamiliar process to many. Many pairs were taken aback when they received feedback and comments and needed to continue writing and re–writing. The instructors got the feeling that the students felt their chapters/texts were ready and complete after the first draft. Since the process of writing a master’s thesis is about a process of writing, getting feedback and re–writing, it might seem odd that students are poorly prepared for it so close to writing their masters thesis. While there might be many different reasons, we feel one explanation is that students are typically used to writing a course paper at the end of the course, which they hand in and then get a grade for it. The teachers seldom comment upon such end–of–course–papers, and the students are probably never required to re–write — unless they do not pass.

There also seemed to be quite a bit of uncertainty about what editing a text means.

This became clear when the students were asked to read and edit each other’s chapters.

The editing process was more about reading a chapter and giving comments on spelling and grammar than actually editing it and improving the content. The course instructors failed to realize that the participants did not have experience of editing, and therefore there should have been a discussion or short workshop about editing; what is expected of editing, what to edit, and how to edit.

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15.5.6 COOPERATION

Cooperation tends to be one of the main challenges of any endeavor. And it was not different during this course. There were challenges in the communication between the graphic designer and the groups, as well as between the groups. When there were three work–groups (layout, graphics, editing), there was little cooperation between them.

For instance, nobody seemed to send their chapters to the layout group, which meant that at the end all chapters looked very different from each other.

The cooperation between the graphic designer and the groups could have been improved by regular briefings and de–briefings, especially before each workshop when the designer was present. There could have been one or two persons in charge of communication with the designer.

Promoting cooperation between groups is something that the course instructors did not find any solution for. Perhaps this is something that needs a longer time and process and where set–backs are the best recipes—learning by doing and doing mistakes.

15.5.7 WORK TASKS

Course instructors should assign coaching time in order to help students keep focus on different tasks that need to be done, even those that are less inspiring. After Workshop 2 the students got so excited about layout work they neglected the writing work almost completely. And since they did not do any writing work, a couple of weeks later all processes came to a halt since there was nothing to edit, nothing to do layout on, and so on.

How instructors should go about reminding participants about tasks that need to be done is no easy thing. During the course the instructors tried several time to remind the participants to focus on the writing process, although the instructors did not apparently have a large success with it.

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15.6 WHAT ABOUT THE NEXT COURSE?

If you are a teacher who would like to try something like this, you will get many ideas from the section about 'Lessons learned'. As a summary, the course instructors of this course offer the following guidelines, which at the same time are things we would change if we did this course again.

The first module of the course worked pretty well. The main thing to think about in the first module is to more closely connect the beginning of the course with the research based learning model. One suggestion would be to arrange at the start of the course a 4–hour workshop to discuss the topic of intercultural marketing management.

What has been written about it in newspapers? What is it that companies seem to be focusing on right now? How can we understand ICMM? And the other thing would be a GANT schedule. The course instructors and students would in collaboration create a GANT schedule to outline different tasks of the course.

The second module of the course is the one causing most problems. A lot of the problems related to the time it took for the participants to organize themselves. The first workshop should be longer, and include time planning, role and task setting as well as thinking about deadlines in addition to creating the table of content for the book. The first workshop should result in a GANT schedule that is collaboratively created by both participants and instructors. It would perhaps be better to inform students in advance about the goal of writing a book, and it would be good if participants familiarize themselves with different books in ICMM to see what kind of topics there could be in a book, prior to the first workshop. The drawback is of course a risk that participants will only copy a table of content from some other book.

Another thing to improve is communication between the graphic designer and the groups. There should be a structured, systematic and continuous briefing system in place.

The second module would also benefit from being a few weeks longer, which would allow one more round of comments on chapters and re–writing. The course instructors in this course ended up doing a huge amount of editing work on the chapters after the course ended.

If there are guest lectures, the lectures should take place at the right time when there is a real need for the topic of the lecture. It needs to be right after or a little

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bit after the students have started working with the topic. If the lecture, or any information for that matter, comes at the 'wrong' time, students will ignore it because they are occupied with some other matter at that time. It just becomes a waste of resources. The course instructors need to be very intuitive as to when the students seems to start turning attention to the particular task/topic that, and only then provide the resource/information/lecture. This of course requires also a bit of flexibility.

The final book contained 14 chapters, written by 14 pairs. At different times the pairs presented their texts to each other in different ways. We used different presentation techniques, such as poster presentation, open space technique, and expert technique. We found out the hard way that facilities and rooms make all the difference for such presentation techniques. We had either too small rooms, or rooms where chairs and tables could not be easily moved around. We usually had too small rooms. If you have poster presentations with 14 posters, the room needs to be large.

There needs to be plenty of space between the posters. Otherwise the noise becomes so loud that people standing around one poster will not hear what the presenter says.

An even worse solution was to have posters in different rooms. It just made a huge chaos at the end. Also make sure there is a lot of open space to work in group, throw out unnecessary tables and chair and just leave chair enough for everyone and a couple of tables to write on. Facilities are extremely important when collaborative learning methods are used.

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REFERENCES

[1] Nonaka, Ikujiro; Takeuchi, Hirotaka (1995). The knowledge creating company: how Japanese companies create the dynamics of innovation.

New York: Oxford University Press.

[2] Anne Goodsell, Michelle Maher, Vincent Tinto, Barbara Leigh Smith and Jean MacGregor. (1992). 'What Is Collaborative Learning?' in Collaborative Learning: A Sourcebook for Higher Education. Pennsylvania State University: National Center on Postsecondary Teaching, Learning, and Assessment.

[3] Hakkarainen, K., Lonka, K. & Lipponen, E. (2001): Tutkiva oppiminen. Älykkään toiminnan rajat ja niiden ylittäminen. Porvoo: WSOY.

[4] Vygotsky, L.S. (1978). Mind and society: The development of higher psychological processes. Cambridge, MA: Harvard University Press.

[5] John Seely Brown, Allan Collins and Paul Duguid (1989). Situated Cognition and the Culture of Learning. Educational Researcher, v18 n1, pp. 32–42.

[6] Golub, J. (Ed) (1988). Focus on Collaborative Learning. Urbana, IL: National Council of Teachers of English.

[7] Lewin, K. A ( 1935). Dynamic Theory of Personality. New York: McGraw Hill.

[8] Deutsch, M. (1976). A Theory of Cooperation and Competition. Human Relations, In Eble, K. The Craft of Teaching. San Francisco: Jossey–Bass.

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In the 1970s increasing international business made marketing practitioners as well as researchers turn their attention to intercultural marketing management, putting issues such as business negotiations and relationship building in the spotlight. Some 40 years later firm representatives travel around the globe like never before, and their intercultural encounters are supported and facilitated by a multitude of tools, technologies and handbooks. And what has happened? It seems like business practitioners are still struggling. The mysteries identified in the 1970s are yet to be unravelled; how do we successfully manage intercultural marketing processes?

This book deals with the state of intercultural marketing management. It outlines current trends in intercultural marketing management, as well as gives an insight into different ways marketing managers can approach challenges related to managing a global workforce, expatriation and repatriation, global branding and communication strategies, key account management and business networks as well as corporate social responsibility in intercultural marketing management.

Intercultural Marketing Management in the Spotlight; what and why, but what about the how?

ISBN (print): 978-952-12-2788-2 ISBN (digital): 978-952-12-2850-6