17.12.13

INTERNATIONAL BUSINESS ENVIRONMENT




Environment of International Business and its significance

            The international business environment plays a very important role in shaping the international business strategies of a company.  There are five competing concepts under which organizations conduct their marketing activity.
·         The production concept:
            This is one of the oldest concept of marketing.  It was very famous in 1900s.  The production concept holds that consumers will favor those products that are widely available and low in cost.  Henry Ford is a pioneer who perfected this concept.  Ford put all of his talent into perfecting the mass production of automobiles to bring down their cost so that Americans can buy it.

·         The product concept:
            In this concept the focus is on making superior products.  According to this concept, customers will favour those products that offers the most quality, performance, or innovation features.  Product – oriented companies often design their products with little or no customer input.  Too often they don’t even look at the competitors products because “they were not invented here.” Product concept leads to marketing myopia (marketing blindness) which means concentrating more on products and less on customer needs.  The best example for marketing myopia is DuPont.  In 1972, DuPont researchers invented Kevlar which they consider as its most important new fibre since nylon.  Kevlar has the same strength as steel with only 1/5th weight of steel.  DuPont asked its division to find applications for this miracle fibre.  DuPont’s executives imagined  a billion-dollar market for Kevlar.  Now, after years later Kevlar is still waiting for a break through.  True, Kevlar is a very good fibre for bullet proof vests, but there is no very high demand for bullet proof vests.  This is a proof for marketing myopia.
·         The Selling Concept:
            In this concept focus on aggressive selling, and promotional effort.  The concept assumes that customers are resistant to buying and they have to be coaxed into buying with whole battery of effective selling and promotional tools.  The selling concept is practiced most aggressively with ‘Unsought goods’ those goods that buyers normally do not think of buying, such as insurance, encyclopedias and funeral plots.
·         The marketing concept:
            It aims to satisfy the needs and wants of the customer and his needs.  It assumes that customer is the king of the market and to satisfy his need and wants gives profit through customer satisfaction.  This concept which appeared in 1960 stresses more on marketing environment and satisfying the customer needs.
            But by 1990’s the marketing concept has become outdated and a new marketing concept got evolved called strategic marketing concept.
·         Strategic Marketing Concept:       
            This concept shifts its focus from the customer or the product to the customer in the context of the boarder external environment.  Hence to succeed in this modern era of strategic marketing it is not just satisfying needs and wants of a customer yields profit for a company.  To generate profit in this new thought of marketing, a company has to have a thorough understanding of the customer in relation to his external environment which includes competition, government policy, rules and regulations, political & economic changes etc.  In other words, the marketer has to think globally.  There are two main factors which have caused this ‘new’ evolution of strategic management thought.  They are
A  Globalization
A  Fast development in the fields of communication and technology.
            Hence, strategic marketing places more importance to external environment of business.  A firm in international business, encounters different sets of environment.  They are.
A  Internal Environment
A  Domestic environment
A  Foreign Environment
A  Global Environment
            The internal environment consists of mission and vision of the firm, organization structure, top management commitment to quality, decision making cost competitiveness, innovativeness etc.  The home country environment is called as domestic environment of the company.  It includes government policies, rules and regulations.  Foreign environment here refers to the relevant foreign market.  The global environment refers to those global factors which are relevant to business such as the to principles and agreements, other international conventions/ treaties/ declarations/ protocol etc, economic and business conditions in other countries.  A company which has to do business globally must follow two important things
Adopt Internationally acceptable standards and practices.
A  Avoid Self Reference Criterion.  (SLC) Self reference criterion refers to an unconscious reference two one’s own cultural values, experiences and knowledge as the basis of decisions.  The SRC is one of the most difficult to break.  Lee proposes a systematic four step framework for eliminating this form of myopia.
1.      Define the problem in terms of home-country cultural traits, habits and norms.
2.      Define the problem in terms of foreign cultural traits, habits and norms.
3.      Isolate SRC influence in the problem and examine carefully to see how it complicates the problem.
4.      Redefine the problem without the SRC influence and solve the foreign market situation.
There are a number of examples of mighty multination seriously burning their finger became of the failure to adapt to local market conditions (For example) Procter and Gamble (P&G) stormed into the Japanese market with American products, American managers, American sales methods and promotion strategies.  The result was disastrous.  P&G which entered Japan in 1973 lost money until 1987, but by 1991 P&G because Japan’s second largest foreign market.  This is because it avoided SRC and adapted its business strategies to suit Japan’s market.
Hence, in short, the business environment is very important determinant of business strategy.  When the business environments of different countries are dissimilar, an international firm will have to design different strategies to suit the environments of these markets.  The various environmental factors that affects international business are discussed below:

Economic Environment

            It includes the following economic factors
Nature of the economy:  The general level of development of the economy has lot of implications for business countries, and even different region with in a country, show great differences in the level and pattern of economic development.
            The classification of the economic is done on the basis of the per capita income (ie the average annual income per person).  Accordingly, countries are broadly classified as low income, middle income, and high income economies.
Low income economies:  These are the economies with very low level of per capita income.  All economies with per capita GNI 825 us dollars or less in year 2004 are main regarded as low income economies.
High income economies:  Those with a per capita income of 10,066 Us dollars and above fall in the category of high income economies.  There are two main types of high income economies namely industrial economies and oil exporters.
Middle income economies:  Those with a per capita income ranging between US 826 and 10,065 dollars fall into middle income economies.
            The low income economies are also referred to as the third world.  The high income and middle income economies represent the first and the second world respectively.
            The low income and middle income economies are developing economies.  They are referred to as the south as most of them are in the southern hemisphere.  The developed economies are referred to as North, as most of them are in Northern hemisphere.  Exception to this includes Australia and New Zealand.
            Classification by income does not necessarily reflect development status.  In the group of high income economies, the industrial economies are developed economies.  All the oil exporters (Kuwait, UAE etc) are not developed economies.  They are regarded as developing economies.  Besides income, other criteria such as employment generation, standard of life are applied to judge whether an economy is developed or not.  All developed economies have certain common features.  They are
A  Sophisticated technology.
A  Continuous innovation.
A  Low share in primary sector (agriculture) and dominance in tertiary (service) and secondary (industry) sectors.
A  Market-friendly economic policies.
A  Open trade and investment policies.
A  Democratic rights.
A  Consumer choice etc.
            Sometimes the terms less developed countries (LDC) and more developed countries (MDC) are used to refer the developing and developed countries.  The use of the term under developed countries to refer the developing countries is also common.
            Further, in the developing economies, the inequality in the distribution of income is very high and as a result, a large proportion of the population lives in abject poverty.  They are also characterized by high birth rates and population growth rates.  Death rates are also higher than in developed countries.
            Within the category of low income economies, some times a special category, namely least developed countries is identified.  These countries have very low GNI and usually face Geographical isolation or exposed to natural disasters.  There are about 50 least development countries including Bangladesh, Bhutan, Nepal, Maldives, Mali, Uganda, Myanmar, Sudan, Zambia, Zimbabwe and Yemen.
            There are, on the otherhand, developing economics which have been experiencing rapid industrialization such as Hong Kong, South Korea, Singapore and Taiwan (Taipei, china) – Asian tigers.  They are sometimes referred to as newly industrializing economies.  These countries show high growth rate over a consistent long period and per capita income.  Those economies which are in transition from centralized economic system to the market economy are referred to as transition economies (eg) USSR.
            International comparison of GNI or GNP alone does not give a true picture of nature of economies of nations.  A more accurate picture is given by assessing percapita income at purchasing power parity (PPP) too.  For example, in 2003 per capita income of India was estimated at 530 US dollars in PPP terms.  It was estimated at 2880 us dollars.  What it means is that a bundle of goods which cost 530 US dollars in India will cost 2880 US dollars in USA.  In other words, having 530 us dollars in India is equivalent to having 2880 dollars in USA.
Structure of economy:  The structure of economy consists of
A  Primary sector (Agriculture)
A  Secondary sector (Industrial)
A  Tertiary sector (Services)
            Usually as the economy develops, the share of the primary sector in the (GNP) declines.
GNP (Gross National Product):  The dollar value at current market price of all final goods and services produced annually by the nation’s economy.  All developed countries have very low share of primary sector.  The contribution of service sector to the GNP and employment is high in developed countries.  On the other hand, developing countries show a high share of primary sector (Agriculture) in its GNP.
Economic Policies:  It includes Industrial policy, Trade Policy, Foreign exchange policy, foreign investment and technology policy and fiscal policy.
            Trade policy and Industrial policy are integrated.  Both are governed by international organizations like WTO, WB, and IMF.  Any industrial / Trade Policies formulated must have compliance to WTO rules and regulations.  Trade policies can easily affect the business of a country.  A country adopting restrictive import policy, will protect its domestic industries from international competition.
            Exchange policy also affects business.  With the abolition of exchange controls in 1970’s, have encouraged countries like India to invest in business abroad.  This is achieved by cross – border movement of capital from one country to another.
            Foreign investment and technology also affects business.  Before 1980, flow of funds, foreign investment, and technology is highly restricted.  But after 1980, due to globalisation there is a rapid flow of foreign investment and flow of technology a cross borders.
            Government’s strategy in respect to Public expenditure and revenue is called as fiscal policy.  Government usually use tax incentives to encourage certain activities.  For example, when an industry suffers from recession, a reduction of tax like excise duty or sales tax or corporate tax may help to rebuild the industry.
            The Monetary policy also affects business.  The central bank by its policy towards availability of credit to its customers can expand or contract business.
Economic Conditions:  General economic conditions affect business.  An economic boom is characterized by high level of output, employment, rising demand and prices.  A recession has the opposite of these characteristics.
            For example US economy accounts for well over ¼th of the global economy.  This implies that the growth trend in US economy can affect the overall growth trend of global economy by more than 25%.  This can be understood from the following example.  The  slowdown of US economy in 2000 – 2001, greatly affected India.  The IT industry in US was so badly hit during this period that the companies, in order to survive the recession period, resorted to massive lay- offs.  During Feb – March 2001, CISCO laid off 8000, Lucent 10,000 of its employees.  Besides, a number of people were benched – people currently without work in the company waiting for projects.  As the US IT firms were major clients of Indian IT majors, companies like Infosys, Wipro, HCL and many others were hit hard.  The American tech flue thus affected the business of Indian firms, their share prices, the nation’s export earnings and the lucrative employment market.
            Then the question comes how to judge the economic conditions/ nature of a country?.  Great economists like Gorden Wu and Kenichi ohmae have developed some economic barometers.  Gorden Wu’s economic barometer works well in developing countries.  It is spilt in to 5 phases.  Accordingly, as a developing country begins to experience real economic growth.
A  Step1:     People start to eat out.
A  Step2:     They start to buy new cloths.
A  Step3:     Consumers start accumulating new appliances.
A  Step4:     they buy motor cycle, a Car, or apartments
A  Step5:     People start travelling overseas.
            Kenichi ohmae also speaks of the differing demand pattern as a region state moves up  the ladder of economic development.  For example, at about 3000 dollars per capita GNP, a region desires to get more involved with the global economy, both as a market for and as a supplier of basic  consumer goods, usually increases steadily.  Below that level, - between, say 1500 dollars and 3000 dollars per capita the emphasis is more on motorbikes as it is today in Thailand.  At 5000 dollars demand for better quality of products, infrastructures and services and quality of life considerations such as environmental considerations emerge out.
Hence nature of economy, its policies, structure economic conditions greatly affect the business decisions.  The following is a classic example.
In the 1970s, the sales of Boeing 737 began to decline as a result of decline in orders from developed economies like the US.  Therefore, the company turned its attention to the under developed countries, mainly the Middle East, Africa and South America.  But it need to modify the plane to the third world aviation.  The company redesigned the wings to allow shorter landings and added thrust to engines for quicker take offs.  It also redesigned its landing gear and installed low pressure tyre so that the plane can stick to the ground when it touched down.  The gamble worked.  The company started selling two or three 737’s to developing nations throughout the world compared to batches of 20 or 30 to the us airlines in the past.  This made boeing 737 as the best selling commercial jet in the history.

Social and Cultural Environment

The social or cultural environment consists of language, customs, traditions beliefs, tastes and preferences, social stratifications, social institutions etc. what is liked by the people in one culture may not be liked by people in another culture.  Many companies modify their tastes and preferences to suit a particular population.  Significant tastes and preferences also varies within the same population for example India.  India is a country of different states.  Each state representing a specific culture and language.  The culture and tradition of North Indians greatly vary from that of South Indians.  South Indians prefer to have more of rice with curd and curry as food where as diet preference of North Indians includes more of dhal (magu) with chapatthis (roshi).  Another example is Nescafe.  Nescafe has about three fourth share of the Mumbai market (North Indian – city) where as its share in south Indian cities like Bangalore and Chennai is insignificant.  On the other hand Bru - a coffee brand, has its large share in chennai and Bangalore cities where as its sales and profit in Mumbai city is less.  It may be noted that while Nescafe advertisement projects an international/cosmopolitan image of the product, the Bru advertisement has its backdrop of south India, particularly Tamil Nadu culture.  This is a typical example that tastes, preferences varies with different regions and culture within the same country.

What is culture?

Culture is a set of learned core values, beliefs, standards, knowledge, morals, laws and behaviours shared by individuals and societies that determines how an individual acts, feels and views oneself and others.  A society’s culture is passed from generation to generation.
            The culture consists of three elements
i.  Knowledge and beliefs
This refers to the people’s prevailing notions of reality.  It includes myths and metaphysical beliefs as well as scientific realities.
ii.  Ideals
It refers to the standards or norms of the society.  It is used to judge what is right or wrong in a given situation.  Norms are enforced by sanctions (ie) by rewarding the right behaviour and punishing the wrong behaviour. 
iii.  Preferences
            It refers to those things in life which are attractive unattractive as objects of desire.
            Cultural characteristics are very important in the formulation of business strategies.  The cost of ignoring customs, traditions, taboos, tastes and preferences etc can be very high.  For example in Italy, a US company that setup a corn-processing plant found that its marketing efforts failed because Italians thought of corn as ‘pig food’.

Cultural adaptation

            Adaptation is very essential for survival.  The type of clothing, food and dwelling, suitable for the climatic and weather conditions are forms of adaptations.  The term cultural adaptation refers to ways in which an individual fits into a particular social environment.  It is often necessary to know the process and nature of the cultural adaptation for successful formulation of business strategies.  (for example) while introducing new ideas, techniques, products in a new market segment it is always necessary to analyse how different consumers adapt to new things and factors favouring and disfavouring adaptations.

Cultural shock

            Changes in cultural changes produces cultural shock a feeling of confusion, insecurity, and anxiety caused by strangeness of new environment (For example) If a youngster, born and brought up in a large city, is posted to a bank office in a remote village, he may experience a cultural shock.  Similarly, a villager may experience a cultural shock when he takes up a job in a large modern company.

Cultural transmission

            The elements of culture is transmitted from one generation to another.  The transmissive quality of culture is cumulative.  Every generation in a culture accumulates a set of new values, ideals, knowledge & preferences which is passed on to the next generation.  The reference group which includes parents, teachers and elders play a vital role in transmission of cultures.  Literature, film, T.V and some other electronic gadgets, social institutions, advertising and marketing techniques, also on play very important roles in cultural transmission.  Cultural transmission also promotes cultural diffusion (ie) spread of culture from one place to another.
            During the formulation of business strategies of a new product, it is very essential to know about cultural transmission.  This enables the company to find out the best communication channel to attract that cultural group.

Cultural conformity

            Conforming to a cultural norms is called as cultural conformity.  The knowledge of the nature and extent of cultural conformity and its deviance will sometimes be helpful in business decision – making.  If a society is, by and large, charaterised by blind conformity, it would be very difficult to market new revolutionary ideas in such society.  Special efforts may be required in such a society to change the attitudes of the people in favour of unconventional ideas.  Cultural deviances sometimes provide excellent opportunities of growth of new business (for example) In England and Japan the younger generation took up coffee drinking in order to defy their tea -drinking parents.

Cultural lag

            Cultural changes do not take place at the same rate.  A rapid change may take place in one part of the culture may require readjustment to changes in other parts of the culture.  In other words, the other part is experiencing a cultural lag.  Cultural lag is caused by factors like ignorance, resistance to changes, religious sentiments, wrong notions, conservatism, political factors etc.
            To successfully market a new idea or a product it is necessary to identify the factors causing the lag and to overcome them by taking appropriate measures.

Cultural traits

            The characteristics of a culture is called as cultural traits.  The following are some of cultural traits.

Low-context and high context cultures

            A high – context culture is one that places great value on the intangible aspects of a negotiation or business deal.  Individuals from such cultures look beyond the facts and figures and take into considerations such factors as personal relationship, attitudes towards respect, religion and trust.  A low-context culture on the other hand gives more importance only to tangible aspects of Business (ie) only to facts and figures of business and not on the personal attributes or personalities.

Masculine and Feminine cultures

            Societies with so-called masculine values appreciate aggressiveness and assertiveness while respecting the goal of material acquisition.
            A Feminine culture on the otherhand appreciates inter-personal relationships, puts quality of life before material acquisition and applauds concern for individuals and less fortunates.
            Business people from feminine cultures are often more reserved and less time – driven than those from masculine cultures where achievements are more important than building a long-term relationship.  The masculine culture has a leader and followers.

Monochronic and polychronic societies

            In a monochronic society, time is used for ordering one’s life, for setting priorities and for doing tasks in a sequential order – one thing at a time.  Most of the societies of the developed world are monochronic.  In contrasts, in polychronic society, which uses time to accomplish diverse goals simultaneously.  It is characteristics of emerging societies.

Universalism Vs particularism

            Universalism is a belief that an idea or practice can be applied as it is universally.  It is very similar to self-Reference Criterion (SRC).  On the other hand, particularism holds that the environment dictates how ideas should be applied.
            In cultures with high universalism, the focus is more on the rules than on relationships.  Business contracts are adhered to very closely, and people believe that a deal is a deal.  In cultures with high particularism, the focus is on relationships and trust than on formal rules.  In a particularist culture, legal contracts are often modified, and as people get to know each other better, they often change the ways in which deals are executed.
            It is recommended that when individuals from particularist culture do business in a Universalist culture, they should be prepared for rational, professional arguments and a “let’s get down to business” attitude.
            Conversely, when individuals from universalist cultures do business in a particularist environment, they should be prepared for more personal meandering in business.

Individualism Vs communitarians

            In Individualism, people regard themselves as individuals while in communitarianism they regard themselves as part of a group.  Countries such as USA, Soviet Union and czechoslovakia have high individualism.  Japan for example follows communitarian culture.  Another best example is Republic of Maldives.
            It is recommended that when people from cultures with high individualism deal with those from communitarianism cultures, they should have patience for the time taken to consent and to consult, and they should aim to build lasting relationships.  When people from cultures with high communitarianism deal with those from individualist cultures, they should be prepared to make quick decisions and commit their organization to these decisions.
Neutral Vs emotional :  A neutral culture is one in which emotions are held in check, whereas an emotional culture is one in which emotions are openly and naturally expressed.
            Japan, UK, Republic of Maldives are regarded as high neutral cultures.  People in these countries try not to show their feelings.  They act stoically and maintain their composure.  Mexico, Netherlands and Switzerland are examples of high emotional cultures.
            It is recommended that when individuals from emotional cultures do business in neutral cultures, they should document things well on paper and then perform business.  They should realize that lack of emotion does not mean disinterest boredom.  On the other Land, when neutral cultures do business in emotional cultures, they should respond warmly to boisterous attitude of people in emotional culture.
Specific Vs diffuse:  A specific culture is one in which individuals have a large public space they readily let others enter and share, and a small private space they guard closely and share with close friends and associates.
            A diffuse culture is one in which both private and public spaces are almost one and the same.  Austria, UK, USA, Switzerland are all specific cultures whereas Venezuela, China and Spain are diffuse cultures.
            It is recommended that when specific people do business in diffuse culture, they should respect a person’s title, age and background connections.  Conversely, when individuals from diffuse culture do business in specific cultures, they should try to get to the point and be efficient.
Achievement Vs Ascription:  An achievement culture is one in which people are accorded status based on how well they perform their functions.  An ascription culture is one in which status is attributed based on who or what a person is.  Achievement culture high achievers whereas ascription cultures accord status based on age, gender, or social connections.
            It is recommended that when individuals from achievement cultures do business in ascription culture, they should make sure that their group had older, senior and formal position holders who can impress the other side.
Cultural Stereotypes:  Assigning image to a group based on their characteristics is called as stereotyping. (For example)
Nationality:  German
Stereotype:  The Germans are rigid people usually humorless and obsessed with order and formality.  They don’t smile easily.
Cultural traits:  Low context culture, monochronic, high risk avoidance.
Nationality:  Japanese
Stereotypes:  Very group oriented hence adopt communitarnism.  Negotiates in groups or teams and avoids criticism of partners or proposals - Japanese will work their whole career at a single company.
National cultural traits:  Japanese culture is collectivist in nature, maintains high - powder distance culture and high risk - avoidance.

Religion

            Different peoples have their own religious convictions, beliefs, sentiments, customs, rituals and festivals.  The cost of ignoring religious affairs can be very high in International marketing (For example) when an American fast food chain was planning to enter India, one political party stated that it would oppose the marketing of beef product in the country by the multinational.  This is because cow is regarded sacred by the Indians.
            Religion may play a vital role in deciding the weekly holidays, other holidays and working hours.  In Muslim culture Friday is public holiday where as in Christian religion Sunday in a public holiday.  Hence people doing business across boarders must take this difference into account.  Moreover, in Muslim countries shops are closed five times a day for prayers.  In countries like India, business decisions are closely associated with religions sentiments (ie) they are made according to astrological mappings.  They are usually done according to astrological calendar which dictates that anything started during ‘Subhamuhurtha’ time will be good and anything started during ‘rahukala’ will end in bad.  Hence most of the business decisions in India which includes decisions like launch of a new product, name of the firm, brand name, starting a new firm are all done at ‘Subhamuhurtha’ time which are based on astrological calendar.
Ethnodomination:
            In many countries, one or other industry or trade is dominated by certain ethnic group or religious group.  This is called as ethnodimination.
            (For example) Automobile spare parts business in India is dominated by Sikhs.
Language:
            It is another important cultural factor which cannot be ignored while doing international business.  It is estimated that total number of world languages ranges between 4000 to 10,000.  For example Switzerland is a country with fairly three distinct cultures namely French, German and Italian.  India is another typical example for differences in language within the same country.  In India, each state represent a specific language and culture.  In Kerala state people speak Malayalam, in Tamilnadu state people speak Tamil language, in Andharapradhesh state people speak Telegu language.  The list goes on.  In India there are 18 officially recognised languages.  The Arabic language is read from right to left and many Arabians sequence things from right to left.  A multinational blundered in the Middle East when in the advertisement of its detergent it pictured soiled cloth on the left, the box of detergent in the middle and clean cloths on the right.
            Language also includes many non - verbal communications, signs and symbols.  For example, the thumbs - up sign, with the thumb held straight up and four fingers kept folder, represents approval in countries such as USA, UK and Russia, it is highly offensive in Iran and regarded rude in Australia.
            The ‘OK’ sign with thumb and index finger forming a circle and other three fingers held straight up means every thing is great in the USA and Germany.  In most of Europe and Argentina, it means an absolute zero or worthless.  It is regarded as vulgar gesture in countries such as Spain, Russia, Brazil and Uruguay.  In Japan, it symbolises money, mostly coins.
Other Social / Cultural factors:
Consumer preferences and habits:
            What is liked by the people of one culture may not be liked by those from some other culture.  Hence, many companies have to modify their products and promotion strategies to suit the tastes and preferences of the population of different countries.
            Bicycles for example, are mostly used as basic means of transportation in India and China.  It is used to carry heavy weights or even families in India.  In Europe and USA bicycles are used for sporting and exercising.  Hence bicycles designed in India have to be made of heavy steel to withstand heavy loads whereas bicycles designed in Europe, USA have too be made of aluminum frames which is less in weight and adds a dimension of aesthetics to bicycles.  This difference in product specification was adopted in Hero cycle company, India while handling its International business.
            Honda company and its strategy in designing motorcycles is another example.  Honda found that in North America, where motorcycles are used primarily for leisure and sports, consumers look for high horsepower and speed.  Low horsepower and low maintenance are scoring points in South East Asian countries where motorcycles are the basic mode of transportation.  High speed and easy maintenance are preferred by shepherds of Australia who use it to drive sheep.
            Eating habits, consumer preferences and the resultant demand pattern vary greatly from one market to another.  For example cola drinks are taken along with snacks in North America, just as coffee or tea in India, but they are promoted as thirst quencher in India.  Moreover, anytime is coffee time in India but in Japan and England drinking coffee is a luxury and is adopted by rebellious young generation against their tea drinking parents.  The best example for handling cultural differences in international marketing is provided by Nestle.  They have what is called as country fact book.  This book consists of thorough analysis and details of the country environment.  The country fact book consists of questions like How do the people of the country rank coffee in the hierarchy of consumer products?  Is the country a high or low per capita consumption market?  How is coffee used – in bean form, ground or powdered?  If it is ground, how it is brewed?  Does coffee beans are roasted.  Do the people drink coffee in the evening?  Do they sweeten it?  At what age do people begin drinking coffee?  Is it a traditional beverage, as in France, or is it a form of rebellion, as in England and Japan, where the younger generation has taken up coffee in order to defy their tea drinking parents.  Nestle’, today brews a large number of varieties of instant coffee to satisfy different national tastes.
            The values and beliefs associated with colour vary significantly between different cultures.  Blue is considered feminine in Holland and is regarded as masculine and cold in Sweden.  White indicates death and mourning in china and Korea but in countries like India its a part of bridal dress.   
            There are similar differences regarding value associations with numbers.  13 is considered a bad/unlucky number in several cultures.  It is very common in hospitals, lodges in America where they skip No: 13 while numbering rooms.
Social trends:
            There are also some social - trends that affects international business environment.  (For example) The percentage of women in workforce is sharply rising.  Both wife and husband is working means less time and energy available for cooking at home.  It is estimated that, in the US, of the three means a day, one and a half are eaten away at home and of the remainder, half are readily prepared.  Hence hotel business flourishes well in US.  Both husband and wife working also means more income to the family.  This increases the demand for variety of house hold items such as appliances, electronic gadgets, packaged food products.
Pepsi Marketing strategy with Baby Boomers:
            Pepsi cola substantially increased its market share and good will by targeting the baby boomers of US.  The baby boomers refers to those born in the US between 1946 and 1964 the period which experienced a very high birth rate.  There are 77 million of them right now.  They represent 1/3rd of US population who control ¾th of the wealth in the country.
            In the 1960s – Pepsi started targeting the teens and youths of the baby boomers – who had high disposable incomes and three times the per capita cola consumption than the average.  1961s Pepsi came out with an ad “Now its pepsi for those who think young”.  In 1964, this idea changed to “Come alive, you are in pepsi generation”.  Then it became the Choice of a new generation”.  The way in which these ads were designed is also worth mentioning they used pop music and used celebrities like Michael Jackson and Lionel Richie in their ad campaigns.

Chapter II CORPORATE STRATEGY

Our principles: We recognize that we must integrate our business values and operations to meet the expectations of our stakeholders. They ...