Chapter 3 PowerPoint
- 1. Chapter 3 History and Geography: The Foundations of Culture Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 2. Learning Objectives LO1 The importance of history and geography in understanding international markets LO2 The effects of history on a country’s culture LO3 How culture interprets events through its own eyes LO4 How long-past U.S. international policies still affect customer attitudes abroad LO5 The effect of geographic diversity on economic profiles of a country LO6 Why marketers need to be responsive to the geography of a country LO7 The economic effects of controlling population growth and aging populations LO8 Communication infrastructures are an integral part of international commerce 2 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 3. Historical Perspective in Global Business History helps define a nation’s “mission.” how it perceives it neighbors how it sees its place in the world how it sees itself Knowing the history of a nation helps in understanding: • attitudes about the role of government and business • the relations between managers and the managed • the sources of management authority • attitudes toward foreign corporations 3 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 4. History and Contemporary Behavior Historical events between nations influence business and history. Any nation’s business and political culture is shaped by history. James Day Hodgson, former U.S. Labor Secretary and Ambassador to Japan, suggested that anyone doing business in another country should understand at least the encyclopedic version of the people’s past as a matter of politeness, if not persuasion. 4 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 5. China: Vigilant of Foreign Influence First Opium War and the Treaty of Nanjing (1839– 1842) • British traders forced a gateway into xenophobic China Second Opium War (1857–1860) • British and French forces destroyed the summer palace in Beijing • Signaled more freedom for foreign traders • Allowed Christian evangelism throughout the country Taiping Rebellion (1851–1864) • Loss of confidence in the Chinese government 5 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 6. Understanding Japanese Behavior Japanese went through • seven centuries under the shogun feudal system • isolation before the arrival of Commodore Perry in 1853 • threat of domination by colonial powers • rise of new social classes • humiliation of World War II Confucian philosophy emphasizes the basic virtue of loyalty “of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord,” that is, to country. A fundamental premise of Japanese ideology reflects the importance of cooperation for the collective good. 6 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 7. History Is Subjective Subjective perception of its history is crucial in understanding a nation’s business and political culture. In the case of U.S.–Mexico relations, perception of history presents two sides: “Geography has made us neighbors, tradition has made us friends.” –President John F. Kennedy “Geography has made us closer, tradition has made us far apart.”–Mexicans When the U.S. Marines sing with pride of their exploits “from the halls of Montezuma to the shores of Tripoli,” the Mexicans are reminded of how U.S. troops marched to the center of Mexico and extracted as tribute the area that is now known as Arizona, California, New Mexico, and Texas. Exhibit 3.1 gives an overview of the expansion of U.S. territory from 1783. 7 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 8. Exhibit 3.1 Territorial Expansion of United States from 1783 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 8 Source: Oxford Atlas of the World, 18th ed., 2002. Reprinted with permission of Philip Maps. back
- 9. Manifest Destiny and the Monroe Doctrine The basis of U.S. foreign policy in the 19th and 20th centuries • Manifest Destiny means that Americans were a chosen people ordained by God to create a model society. • Referred to the territorial expansion of the United States from the Atlantic to the Pacific • Justified the U.S. annexation of Texas, Oregon, New Mexico, and California, and U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines • The Monroe Doctrine is the cornerstone of U.S. foreign policy, proclaiming that • No further European colonization in the New World • Abstention of the United States from European political affairs • Nonintervention by European governments in the governments of the Western Hemisphere 9 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 10. Roosevelt Corollary An extension of the Monroe Doctrine stating that not only would the United States prohibit non-American intervention in Latin American affairs, but it would also police the area and guarantee that Latin American nations met their international obligations. Using this in: • 1905, the Dominican Republic was forced to accept the appointment of an American economic adviser, who quickly became the financial director of the small state • 1903, the Panama Canal Zone was acquired from Colombia • 1906, Cuba was forced to accept the formation of a provisional government Exhibit 3.2 highlights U.S. interventions in Latin America since 1945. 10 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 11. Source: Oxford Atlas of the World, 18th ed., 2002 Preprinted with permission of Philip Maps Exhibit 3.2 U.S. Intervention in Latin American since 1945 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 11 back
- 12. Geography and Global Markets Geography • The study of Earth’s surface, climate, continents, countries, peoples, industries, and resources • Includes an understanding of how a society’s culture and economy are affected as a nation struggles to supply its people’s needs within the limits imposed by its physical makeup • Involves the study of: • Climate and topography • Nature and economic growth • Social responsibility and environmental management • Resources 12 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 13. Climate and Topography Marketers need to be aware of a country’s climatic features that can affect the uses and functions of products and equipment. • Extremes in altitude, humidity, and temperature • Products that perform well in temperate zones may deteriorate rapidly or require special cooling or lubrication to function adequately in tropical zones • Within even a single national market, climate can be sufficiently diverse to require major adjustments • Different seasons between the northern and southern hemispheres also affect global strategies • Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments to economic growth and trade 13 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 14. Marveling in Machu Picchu? Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 14 This advertisement provides the only time we have seen a human vomiting to market a product. The product advertised treats altitude sickness. The billboard appears in the Lima, Peru, airport, targeting tourists traveling from sea level to Cuzco and Machu Picchu (pictured in the scenic background). Cuzco, the old Inca capital, is at more than 11,000 feet in altitude, and many foreign tourists visiting there suffer this particular sort of tourista. ©JohnGraham
- 15. Geography, Nature, and Economic Growth Climate and topography coupled with civil wars, poor environmental policies, and natural disasters push these countries further into economic stagnation. • Without irrigation and water management, droughts, floods, and soil erosion afflict them, often leading to creeping deserts. • Population increases, deforestation, and overgrazing intensify the impact of drought and lead to malnutrition and ill health. • Cyclones cannot be prevented, nor can inadequate rainfall, but means to control their effects are available. 15 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 16. Pollution in Angkor Wat Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 16 Two kinds of pollution in Cambodia. The monkey with the Coke can may seem kind of funny, until you think about it as an eyesore on the steps of the pristine Angkor Wat temple grounds. We’d also guess that caffeine, sugar, sharp-edged aluminum cans, and monkeys don’t mix too well. The land mines still in the ground from a decade’s past war are not funny. Here, Germany is helping clean up the deadly mess. ©JohnGraham ©JohnGraham
- 17. Social Responsibility and Environmental Management Environmental protection is NOT an optional extra; it is an essential part of the complex process of doing business. • Global issue rather than national • Poses common threats to humankind and thus cannot be addressed by nations in isolation • Ways to stem the tide of pollution and to clean up decades of neglect are special concern to governments and businesses Exhibit 3.3 shows a comparative analysis of several countries’ rates and pledges for the reduction of greenhouse-gas emissions. 17 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 18. Exhibit 3.3 A Comparison of Greenhouse-Gas Emission Rates and Pledges for Reductions Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 18 Source: EuroMonitor International, 2012; Intergovernmental Panel on Climate Change back
- 19. In São Paulo, motorists have a choice! Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 19 Here in São Paulo, Shell sells two kinds of fuel: alcohol made primarily from sugarcane and gasoline made from dirtier fossil fuels. Flexible-fuel engines in Brazilian cars can burn either kind of fuel or any mixture of the two. Although the price per liter is quite different, so is the mileage per liter. Brazilians make their choice of fuel based on the kind of driving they anticipate, city versus highway. ©JohnGraham
- 20. Resources A nation’s demand for a particular mineral or energy source does not necessarily coincide with domestic supply. In the underdeveloped world, human labor provides the preponderance of energy. The principal supplements to human energy are • animals • wood • fossil fuel • nuclear power • to a lesser and more experimental extent the ocean’s tides, geothermal power, and the sun Exhibit 3.4 shows Total World Energy Consumption by Region and Fuel Source ©narvikk/GettyImages 20 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 21. Sources: BP Statistics Review of World Energy 2014 and International Energy Outlook 2014, U.S. Department of Energy, both accessed 2015. Exhibit 3.4 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 21 back
- 22. The Good News China is beginning to curtail its use of coal in favor of renewable resources as their demand is expected to peak before 2020. United States and China recently agreed on targets to cut carbon emissions, spurring the global efforts for cutting greenhouse gases. Countries in Asia and Africa have started using alternative resources for a more sustainable lifestyle. 22 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 23. Use of Alternative Resources (1 of 2) This Masai woman of Tanzania put to good use both cow dung and urine in building her hut, pictured here in her family village (or boma). The semi-nomadic Masai graze their cattle during the day but enclose them within the acacia bush boma at night to protect them from predators. Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 23 ©JohnGraham
- 24. Use of Alternative Resources (2 of 2) Cattle dung, which is used both as farmyard manure and, dried into cakes, as household fuel, is being carried to a local market in India. India’s cattle produce enormous quantities of dung, which some studies suggest provide the equivalent of 10,000 megawatts of energy annually. The Chulha stove described at the beginning of this chapter is designed to safely burn the cattle dung pictured on this fellow’s head. Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 24 ©JohnGraham
- 25. Global Population Recent estimates put world population at more than 7 billion people Expected to grow to about 9.5 billion by 2050 Almost all the projected growth will occur in less developed regions 1.2 billion jobs must be created to accommodate new entrants through 2025 Exhibit 3.5 shows that 85 percent of the population will be concentrated in less developed regions by 2050. 25 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 26. Exhibit 3.5 World Population by Region, 2014–2050 (millions) Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 26 Source: World Population Prospects, The 2014 Revision, United Nations Economic and Social Affairs, http:// www.unpopulation.org, 2012. Reprinted with permission. back
- 27. The prerequisites to population control are: • Adequate incomes • Higher literacy levels • Education for women • Universal access to healthcare • Family planning • Improved nutrition • Basic change in cultural beliefs • Procreation is one of the most culturally sensitive, uncontrollable factors. Controlling Population Growth 27 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 28. Religion and Family Planning Religion plays a major role in attitudes about family size and family planning. Many religions discourage or ban family planning and thus serve as a deterrent to control. Case in Point – NIGERIA • The country has a strong Muslim tradition in the north and a strong Roman Catholic tradition in the east, and both faiths favor large families. • Most traditional religions in Africa encourage large families; in fact, the principal deity for many is the goddess of land and fertility. Map 7 shows the different religions of the world. Some of those have beliefs hampering the population programs of many governments. 28 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 29. Rural/Urban Migration 1800 • 3.5% live in urban areas 2015 • 54% live in urban areas Desire for greater access to sources of education, healthcare, and improved job opportunities Tokyo has already overtaken Mexico City as the largest city on Earth, with a population of 38 million, a jump of almost 8 million since 1990 By 2030, 61% of the world’s population will live in urban areas At least 27 cities will have populations of 10 million or more, 23 of which will be in less-developed regions 29 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 30. Population Decline and Aging Birthrates in western Europe and Japan have been decreasing since the early or mid-1960s • More women are choosing career over children • Couples are deciding to remain childless Global life expectancy has grown more in the past 50 years than over the previous 5,000 years • Today, the over-age-65 group is 14%, and by 2030 this group will reach 25% in 30 different countries • The number of “old old” will grow much faster than the “young old” 30 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 31. U.N. Projections for 2050 People Aged 65 to 84 • From 400 million to 1.3 billion (3x increase) 85 years and over • From 26 million to 175 million (6x increase) Over 100 years • From 135,000 to 2.2 million (16x increase) Exhibit 3.6 illustrates the disparity in aging between more developed and less developed countries. 31 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 32. Source: Adapted from “There Will Soon Be Seven Billion People on the Planet,” National Geographic Magazine, January 2011. p. 51; “A Special Report on Japan,” The Economist, November 10, 2010, p. 4. Exhibit 3.6 Age Density for World and Japan Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 32 back
- 33. Worker Shortage and Immigration Free flow of immigration will help ameliorate the dual problems of explosive population expansion in less developed countries and worker shortage in industrialized regions To keep the worker-to-retiree ratio from falling: Europe will need 1.4 billion immigrants over the next 50 years Japan and the United States will need 600 million immigrants between now and 2050 Immigration will not help ameliorate the problem though if political and cultural opposition to immigration cannot be overcome. 33 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 34. World Trade Routes Trade routes link people and economies • Bind the world together • Minimize distance • Break natural barriers • Curtail lack of resources • Bridge fundamental differences As long as one group of people in the world wants something that another group somewhere else has and there is a means of travel between the two, there is trade. 34 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 35. Trading Through the Years 1500 – establishment of trade routes between Europe, Asia, and the Americas The Spanish empire founded the city of Manila in the Philippines to receive its silver-laden galleons bound for China. On the return trip, the ship’s cargo of silk and other Chinese goods would be offloaded in Mexico, carried overland to the Atlantic, and put on Spanish ships to Spain. The same trades routes remain important today and many Latin American countries have strong relationships with Europe, Asia, and the rest of the world. Map 8 shows these traditional trade routes and the burgeoning trade linkage between the developing nations. Land Sea Air Internet 35 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 36. Port of Corinth Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 36 • During ancient times the Port of Corinth was a crucial trading center and port serving Greece and its neighbors. • The isthmus on which the city is built linked central Greece with the Peloponnesian Peninsula by land before the 6-kilometer canal pictured was completed in 1893. • In ancient times ships were unloaded in Corinth and literally dragged across the 6-kilometer isthmus and reloaded, all to save the weeks-long voyage by sail between the Aegean and Ionian Seas. ©JohnGraham
- 37. The Changing Climate Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 37 • Climate change opens up a new trade route that may compete with the Panama Canal, cutting costly days off the travel time between Western Europe and Asia. • Here a German commercial vessel follows a Russian icebreaker through the proverbial Northwest Passage. • Map 2 shows the changing world climate and how it opens up new avenues for foreign trade. ©EducationImages/UIG/GettyImages
- 38. Communication Links Telegraph Telephone Television Computer Mobile Phones Satellite Internet Communication has evolved. Each revolution in technology has had a profound effect on human conditions, economic growth, and the manner in which commerce functions. Map 5 illustrates the importance of fiber optic cable and satellites in providing global communications. 38 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- 39. Summary A prospective international marketer should be reasonably familiar with the world, its climate, and topographic differences. Geographic hurdles must be recognized as having a direct effect on marketing and the related activities of communications and distribution. Many of the peculiarities of a country (i.e., peculiar to the foreigner) would be better understood and anticipated if its history and geography were studied more closely. The study of history and geography is needed to provide the marketer with an understanding of why a country has developed as it has, rather than as a guide for adapting marketing plans. History and geography are two of the environments of foreign marketing that should be thoroughly understood and that must be included in foreign marketing plans to a degree commensurate with their influence on marketing effort. 39 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Editor's Notes
- #5: History has a lot to do with modern-day relationships between countries. The historical development of trade in China along the Silk Road certainly had an impact on trade between China and the rest of the world. The Cold War with the former U.S.S.R. still impacts relationships with the U.S. even long after the break up of the former Soviet Union.
- #8: Why do Mexicans have a love–hate relationship with the United States? Why were Mexicans required to have majority ownership in most foreign investments until recently? Why did dictator General Porfırio Dıaz lament, “Poor Mexico, so far from God, so near the United States”? Why? Because Mexicans see the United States as a threat to their political, economic, and cultural sovereignty. Most citizens of the United States are mystified by such feelings. After all, the United States has always been Mexico’s good neighbor. Most would agree with President John F. Kennedy’s proclamation during a visit to Mexico that “Geography has made us neighbors, tradition has made us friends.” North Americans may be surprised to learn that most Mexicans “felt it more accurate to say ‘Geography has made us closer, tradition has made us far apart.’”
- #9: How each country depicts its history is from its own perspective and is subjective. History is recorded from the country’s historical point of view. For example, in the above map Exhibit 3.1 illustrates when and by what means the present United States was acquired.
- #10: The Monroe Doctrine was followed by the Roosevelt Corollary, which stated that not only would the U.S. prohibit European intervention in Latin America, but the U.S. would monitor Latin America to see that the countries in the region met their international obligations. This corollary was used to justify American intervention in Latin America including in the Dominican Republic and the acquisition of the Panama Canal from Colombia.
- #12: Justification for U.S. Intervention in Latin America starting in 1945 based on the Roosevelt Corollary is illustrated in Exhibit 3.2. According to U.S. history, these Latin American adventures were a justifiable part of our foreign policy; to Latin Americans, they were unwelcome intrusions in Latin American affairs.
- #13: Geography is one of the uncontrollable elements that international marketers have to deal with. Geography has three major components: climate and topography, economic growth and development, and natural resources.
- #16: As countries prosper, natural barriers are overcome. Tunnels and canals are dug, air conditioning systems are constructed, and bridges and dams are built in an effort to control or to adapt to climate, topography, and the recurring extremes of nature. Humankind has been reasonably successful in overcoming or minimizing the effects of geographical barriers and natural disasters, but as they do so, they must contend with problems of their own making. The construction of dams is a good example of how an attempt to harness nature for good has a bad side. Developing countries consider dams a cost-effective solution to a host of problems. Dams create electricity, help control floods, provide water for irrigation during dry periods, and can be a rich source of fish.
- #18: Many governments are drafting new regulations and enforcing existing ones. Electronic products contain numerous toxic substances that create a major disposal problem in landfills where inadequate disposal allows toxins to seep into groundwater. The European Union, as well as many countries, has laws stipulating the amount and types of potentially toxic substances it will require a company to take back to recycle. A strong motivator is the realization that pollution is on the verge of getting completely out of control.
- #22: Europe consumes more energy than North America (as shown in Exhibit 3.4). Also notice that oil is emphasized in North America, coal in Asia, and natural gas in Europe. Although the United States continues to consume the second greatest quantities of energy of any country (about 22 percent of the world total), China is first. Finally, there is some good news on this topic. China is beginning to curtail its use of coal in favor of renewables, with demand there predicted to peak before 2020. Also, the United States and China recently agreed on targets to cut carbon emissions, spurring the global efforts for cutting greenhouse gases.
- #33: Countries like Kenya, with a high proportion of young people, face high education and healthcare costs, whereas countries like the United Kingdom, with top-heavy population pyramids, face high pension and healthcare costs for the elderly with fewer wage earners to bear the burden. Europe, Japan, and the United States epitomize the problems caused by an increasing percentage of elderly people who must be supported by a declining number of skilled workers.
- #39: Each new communications technology has spawned new business models; some existing businesses have reinvented their practices to adapt to the new technology, while other businesses have failed to respond and thus ceased to exist. The Internet and mobile phone revolutions will be no different; they too affect human conditions, economic growth, and the manner in which commerce operates. As we discuss in subsequent chapters, the combination of the Internet and the dramatic increase in mobile phone subscribers worldwide has already begun to shape how international business is managed. However, as the combinations of new technologies permeate the fabric of the world’s cultures, the biggest changes are yet to come.