Global Marketing Environment: Bridging the Cultural Gap and Characteristics of a Global Leader

This report discusses the cultural differences between China and the United States in doing business and identifies the characteristics of a global leader. It also evaluates the trend of business in developed and developing countries and critiques the importance of cultural understanding in foreign markets.

Running head: GLOBAL MARKETING ENVIRONMENT
Global marketing environment
Name of the student
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Author note

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Introduction
Global business is one of most emerging and popular terms in the current business
scenario. This is due to the reason that in the current era of the globalization, majority of the
business organizations are either operating or opting to have their business in different countries
around the world. This is in order to cope up with the high level of competition in the market and
to increase the sales revenue. However, in doing the global business, there are different factors
should be considered by the businesses in order to have the maximum effectiveness. One of the
major factors is cultural differences. Each of the countries across the world is having different
cultures and it is important for the business organizations to adhere to the cultural factors in their
host country (Popescu, 2013). In addition, leadership effectiveness also plays an important in the
global business due to the fact that characteristics of the global leader are different from a
national level leader. The entire concept of doing business in the case of global market is
completely different to that of business scenario prior to the globalization.
This report will discuss about the major differences in doing business between the host
and home countries by considering the examples of China and the United States. In addition, a
prominent global leader will be identified for discussing the key characteristics and how they
differ from others. The trend of business in the developed and developing countries will also be
discussed along with the critical evaluation of the view of Milton Friedman’s business
responsibility.
Bridging the cultural gap between the United States and China
From the perspective of the vice president of a MNC from the United States, there are
number of problems to be faced in doing business in China. The major difference will be the

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political system of China, which being a communist type is more closed economy compared to
the open economy of the United States. In terms of culture also, there are number of differences
to be considered. Hofstede’s cultural dimensions will be used to identify the cultural differences
between the two countries. One of the major problems will be in case of power distance as the
power distance is huge between the two countries. The ranking of both the countries is denoting
that authoritative style is more being followed in China while the hierarchy level is less followed
in the United States (Jackson & Wang, 2013). Thus, in bridging the gap between the two
countries, the more problem will be to align the home countries employees in following the strict
hierarchy in China. On the other hand, Chinese employees will also not be comfortable enough
in working without having the authority. Thus, it will be difficult for the managers in managing
the employees from both the host and home countries and maintain coordination among them.
Another major cultural difference between China and the United States is the extent of
individualism in the society. It is identified that China is more collectivist society compared to
the individualist society of the United States. Thus, it will be a challenge for the business
organizations from the United States to have their operation in China due to the reason that
society plays an important role in influencing the preference pattern of the customers in China.
Hence, the American firm will have to design their organizational as well as marketing strategies
in respect to the social trends in China. In addition, it will also be important for the American
firm to focus more on the personal relationships with the employees. This is due to the reason
that in the American culture, employees are more self oriented and they are not getting
influenced by the external social forces (Ozer, Zheng & Ren, 2014). On the other hand, in the
Chinese culture, personal relationships are being given major concentration and thus it will be
difficult for the American business organizations to adhere to these changes. In addition,

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bridging the gap will involve implementing the individualistic approach in the Chinese
operation, which will lead to de-motivation of the employees due to the reason that Chinese
employees cannot be motivated by their existing approaches.
It is also identified in the Hofstede’s cultural dimensions that China is having high
scoring in terms of long term orientation and this is denoting that Chinese society is more
vulnerable to rapid changes. This will also be a major challenge for the American business
organization due to the reason that the more frequent will be the changes in the social trends and
patterns, the more will be the difficulties for the business firm in coping up with it. In bridging
the gap, the American firm will have to increase the flexibility in their organizational process,
which will be in against the culture of the host country culture. Thus, they will have to initiate
different approaches in different countries.
Characteristics of a global leader
In the current business scenario, one of the most prominent figures is Elon Musk of
Tesla. In the recent time, he has gained an immense popularity due to his innovative and out of
the box thinking and disrupted the entire automobile industry. One of the major characteristics of
the global business leader is deep self awareness (Coccia, 2017). This refers to the skills of
having the better understanding about own beliefs and knowledge and trying to adhere to the
global standards. In the case of Elon Musk, he is known for his innovative and creative thinking
and knowledge and he is also having the ability to influence the opinions of others. There are
number of instances, where it is seen that public opinions are being gathered in order to develop
products by Tesla such as Tesla semi (Anderson & November, 2013). This is one of the major

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characteristics of Elon Musk to have the ability of adhering to the global standards and trends
with having the deep self-awareness.
Another major characteristic of a global leader is lifelong curiosity. This refers to the
desire of learning and attaining new ideas and concepts. In the current business scenario, this is
important to order to have the competitiveness of the business among the competition. In the
case of Elon Musk, he is known as one of the most innovative and disruptive global personas in
the recent time. The continuous desire for attaining new goals and ideas is helping his company
Tesla to create disruption in the market and this also resulted in having electric yet practical cars
in the market (Setili, 2015). Thus, it can be concluded that this characteristic of the global leader
is also getting matched with that of the qualities of Elon Musk. Global leaders should have the
ability to think from the global perspectives involving diverse factor considerations. This is
important due to the reason that a leader can be termed as global only when he will be able to
initiate strategic decisions globally. However, in this case of Elon Musk, this characteristic is not
present due to the reason that his business approach is still concentrated in the United States and
Canada. Even though, it is identified that Elon Musk is mulling to expand his business in China,
Australia and some other countries but still now Tesla is having limited presence. In addition, the
product strategy for Elon Musk is also not according to the different customer segments around
the world with having very limited product portfolio. Thus, this characteristic of a global leader
is not applicable for Elon Musk (Weick & Jain, 2014).
Another major characteristic of a global leader is patience. This is also important due to
the reason that in the global business scenario, each of the strategies and decisions to be taken by
the leader should be patiently taken after determining the global business trends. In the case of
Elon Musk, he is more impatient in taking decisions and such announcement of the mass market

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electric car Model S without having the proper infrastructure to meet the market demand. This is
causing huge waiting period for the customers and growing dissatisfaction. Thus, it is important
for Musk to be more patient and in the future global expansion of his business and only then he
will be termed as a global leader. Global leader should have a certain aura and charisma to make
their presence felt. Elon Musk is one of the most communicative and expressive CEOs in the
current time with his extensive presence in the social media platforms. In addition, by
representing Tesla from the front, he has created a distinctive brand image of own he is further
helping in future branding activities (Mariama-Arthur, 2018). Tesla is having limited presence
across the world but the brand image of Elon Musk is well penetrated he is known in each of the
countries around the world. Thus, in terms of global influence, Elon Musk can be termed as a
global leader with having charismatic persona.
Critique and evaluation
With the advent of the 21st century environmental and social issues are triggering into a
rapid pace. One of the major reason was the reluctance and lack of understanding on behalf of
the business organizations are related to the importance of healthy social and environmental
situation. Based on this, the laissez faire ideology was no longer the only aspect on which the
business organizations put their entire focus. A number of different paradigm has also come
around subsequently that connote a more significant part to play for the business organization.
Protecting the environment and society is considered to be the major factors in this
(Czinkota&Enke, 2014). This practices usher a new phase for the organizations to get
accompanied with the importance of protection of environment. In other words, it paves the way
for a new paradigm that is identified as sustainability. The term sustainability does not restricted
itself to point out the role of the business houses to protect the environment rather it serves the

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interests of both sides in terms of both the companies as well as the environment. As a matter of
fact, it can be stated that the purpose of sustainability measures is to cope with the interests of the
organizations with the help to make a better world where people can live healthy and happy.
Globalization has changed the modern scenario where the companies are aiming to
entering untapped markets and cultures. However, in majority of the cases, it is the tendency of
the marketers to wrongly identify and interpret a new culture. The marketers in the western
country have minimum knowledge about countries in the east and vice versa. It has been seen,
major companies like Tesco failed in China miserably and were forced to form a partnership
with the local leaders in the market in order to sustain the losses (Hopkins, 2015). This was due
to the lack of understanding of the foreign market and even the attempt of localizations in China
failed miserably. The company was forced to partner with China resource enterprise keeping a
stake of only 20 percent in the market (Hopkins, 2015).
Similar is the case for Starbucks that failed to capture market in Australia. Starbucks was
unable to compete with the local companies in Australia. Starbucks were too aggressive with
their strategy and the expansion was too rapid that the consumers were unable to cope up and
accustomed with the brand. Australian coffee culture has proved to be challenging for Starbucks
and they were unable to tap into the market in Australia which is booming in nature. The
company started 90 locations very rapidly but in their first 7 years, they were forced to close 61
of their stores due a loss of $105 million (Turner, 2018).
Walmart, being of the giants of the industry in United States have failed miserably in
South Korea and were unable to replicate their original success (Hunt, Watts & Bryant, 2018).

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The company did not take into account the preferences of the local people of buying small
packages and similar problems caused failure of the company in Germany.
This shows that companies from developed countries are unable to evaluate and take into
consideration, the important of the culture in the target market. There are multiple instances
where famous brands have not been able to compete and sustain in Asian countries. This is due
to the lack of ability of the marketers of to identify key factors and buying behaviour of the
consumers. It should be noted that this should be the nature of the modern marketers to consider
cultural differences while making an entry into foreign markets.
Business trust in developing countries
The major focus of the business have changed in the recent terms and countries like
China and India are growing at rapid rate. Globalization has changed the marketing scenario
where the untapped markets seemed more lucrative for majority of the investors. The market in
developed countries have become highly saturated and there is minimal growth in the market as
they have reached their maturity stages. Therefore, it has been difficult for companies to
maintain competitive advantage in markets like United Kingdom where there are large number
of global company’s competition for increasing the market share. The retail industry in the
United Kingdom has become highly saturated where companies are forced to use innovation and
creativity to change strategies to increase their short term sales volumes.
On the contrary, markets like India and China are booming and growing at rapid rate. The
growth of the economy is very high which is reflected from the foreign direct investment in the
country.The foreign direct investment is the countries is the highest and having the largest
population in all over the world, the marketers have the opportunity to cater to a larger

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population. The growth of the economy in countries like China and India have increased the
disposable income of the communities where the people are aiming for luxuries so companies
using effective strategies will be able to sustain in the these markets (Holmes, 2018). The
infrastructural development, availability of cheap labor and availability of the resources,
workforce skills, business value chain development and productivity are the reasons that foreign
investors have trust in the businesses in China. The transaction cost in China is lower when
compared to the already grown economies. The availability of cheap labor having sufficient
skills, labor cost and necessary aptitudes are there, which makes the country more attractive.
The political and economic stability of China is also another factor and the regulatory
environment of the government is as such that it facilitates foreign investors. Stability means that
there will be opportunity and predictability in the market which will provide bright opportunities
in the future growth of the businesses. Economic instability results in hyperinflation
whichmakesthe market obsolete (Holmes, 2018). The growth prospects and the size of the
country is one of the most endearing features that makes it more trustworthy for business as
economy is still developing in this country and it will grow even further due to the unparalleled
demographics of the country. The size of the market and the availability of FDI is one of the
major reasons that the market is considered to be lucrative.
Similarly, in case of India, the situations are similar to China where the growth of the
country is even higher. The amount of FDI investment has increased considerably due to the
demographics and the growing nature of the economy. The cheap labor is one of the most
important factor for the investors and the population of the country is younger and 47% of the
population are below the age group of 25 which means that the country will remain young for
quite some time and it ensures availability of cheap labor form the market (Awasthi, 2017). This

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is one of the factors in which India has taken over China where the labor has started to increase
in the past few years. The size of the population and the availability of the youths employed in
the foreign market is one of the major factors responsible for making it more attractive for the
foreign investors. It is expected to grow by7% in the next year. The foreign direct investment in
the country increased by 17% which estimates to about $25 billion during the first quarter of the
financial year (Awasthi, 2017). The majority of the countries such as United States, United
kingdom and Germany are already developed countries and economies where there is labor
shortage and the costs are much higher when compared to the markets like India and China that
are among the top five economies in the world but still are developing nations with ample
opportunity of growing into this market (The Economic Times, 2018).
The psychology of the consumers in the emerging economies is more distinct than in the
developed countries. This means that companies will face difficult situations if they are unable to
understand the cultural aspects and buying behaviors of the consumers in developing countries.
The growth of the market is expected to be optimistic and the foreign marketers are aiming to
increase the amount of investment (The Economic Times, 2018). These are the following reasons
due to which there has been increase in the trust of among developing countries ad decrease in
trust in the developed countries. The developed economies have stabilized and there is limited
scope of growth in market like this while on the contrary, the availability of talents and skills at
low cost is expected to remain in the developing countries for a longer time which has caused the
investors to be more trustworthy and hopeful of the current situation. Globalization had a key
role to play in this as it has reduced the barriers of entry into different markets and free trade has
facilitated in availability of markets that have remained untapped for quite a long time.
Moreover, the growth of the economy and the current data points make it more optimistic for the

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foreign investors to be more positive about the growth of the markets in India and China than in
developed economies. The countries like United States, Germany and United Kingdom still
remain top markets to entry but it comes off with high risk and high cost of entry in the market.
Critical analysis of Milton Friedman’s theory
According to the corporate sustainability theory given by Milton Friedman, business
organization is only responsible for maximizing the profit in ethical manner. Thus, the concept
social responsibility for the business organizations is not being considered by him. However, in
the current business scenario, social responsibility also plays an important role for the business
organizations in gaining their competitive advantages (Orlitzky, 2015). According to Servaes and
Tamayo (2013), meeting the social responsibility is not mandatory for the business organizations
but it can help in gaining added advantages for them. This is due to the reason that social
responsible activities of the business are having positive impact on the firm value by enhancing
the goodwill among the customers. Thus, the more will be the positive word of mouth in the
market, the more will be the market potentiality for the business. On the other hand, it is stated
by Flammer (2013) that social responsibility should be treated as a major objective for the
business. This is due to the reason that business organizations are maximizing their profits by
utilizing the resources from the environment and nature along with the surrounding society.
Thus, it is the responsibility of them to pay the value for it by means of corporate social
responsibilities. In addition, it is also being stated by the authors that business organizations
should have the major two objectives with one being the profit maximization and another one is
social responsibility.

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Even though these authors have stated about the importance of the social responsibilities,
Ioannou and Serafeim (2015) stated that initiation of the corporate social responsibilities will
involve added cost for the organizations. This is due to the reason that social responsibilities will
involve funding without having any immediate outcome. Thus, as per the authors, it will be not a
profitable venture for the business organizations to initiate social responsibilities. In addition, it
is also being stated by the authors that initiation of the social responsible activities will lead to
the negative impact on the financial performance, which will in turn reduce the profitability for
the shareholders. Thus, as per the authors if the economic viability for the business organizations
gets reduced then it the initiation of the social activities should not be considered as business
objectives.
Cho, Lee and Pfeiffer (2013) stated that it is the responsibility of the government and
social establishments to look after the social welfare but business organizations should not
indulge in added responsibilities. This is due to the reason that business corporate is not
experienced for the social works and they are only oriented towards their economic goal. Thus, it
will be more effective if the business organizations are not getting involved in the social welfare
activities rather they are focused on their internal matters. It is also being stated by the authors
that there are number of instances where it is seen that business organizations are getting
indulged in different unethical activities in relation to the social responsibilities. Thus, the core
objective is not getting fulfilled even after the involvement of the business organizations.
Therefore, it can be said that Milton’s theory cannot be agreed due to the reason that even
though it is causing added cost for the business but it is also having positive outcome in the long
term. In addition, business organizations may not initiate social welfare activities as the
government, but they should also have some sort of responsibilities for the resources they are

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using. Hence, business organizations should also have the objective of socially responsible along
with the core objective of profit maximization.
Conclusion
This paper concludes that initiation of the concept of the global business have changed
the entire scenario of doing business. In this paper, the major cultural problems to be faced by an
American firm in doing business in China are being discussed and identified. There are number
of problems being identified. Characteristics of Elon Musk are discussed in this paper in respect
to the ideal features of an ideal global leader. A few negative and positive points are being
identified. In addition, the critical analysis of cultural responsiveness is also being done based on
different journals. It is also identified that corporate sustainability theory being given by Milton
Friedman is not applicable in the current business scenario. There are number of reasons being
discussed in this paper for disagreeing with this theory.

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