Ch 14: Sales and cross-cultural management
1. Market entry options and salesforce strategy:
Salesforce management process: recruiting-training-supervising and evaluating.
The form of entry determines how large the salesforce needs to be.
Entry method= level of integration in the market
· Forward integration: greater ownership and control of the distribution channel and might consist of the company purchasing a sales subsidiary and establishing product warehouses abroad.
· Forward integration is preferred when *operation large enough to cover infrastructure and other costs and * early and strong presence abroad.
Typical entry approaches:
· Low involvement approach: through EMC (export management company) or ETC (export trade company) that select market, find customers, establish contact and get a commission from the products sold OR use an independent merchant distributor who assumes all the risks with purchasing products from the company and selling them abroad( no control from the company ).
This approach used by companies to test the foreign market.
ETC are larger than EMC and use their size to benefit from economies of scale in shipping and distribution; known in Japan as sogoshosha (general trading companies) .
Licensing is also an example of low involvement (reduce costs, no need to recruit, train, supervise or evaluate)
· Mid-level involvement: controls some parts of distribution process and deals with culture differences that’s why training is necessary to reduce misunderstanding.
· High involvement approach: controls the foreign distribution and requires big sales to cover costs and enough experience to avoid costly errors.
Role of foreign governments: companies must consider foreign regulations that tend to protect local companies from competition. Sometimes, companies must establish infrastructure or support local events or politicians overseas.
2. Cultural considerations:
· Personal selling: salespeople perform their sales within, a country, region or area.
They are encouraged to work over larger areas .example: EU
Personal selling= personal activity = understanding of customers wants and needs and adaptation to local culture to succeed
· Cultural generalizations: some helpful ideas when dealing with some markets
*German: work 30 hours/week and show little interest that their goal is to earn money
*Korean: hierarchical authority
*Australian and New Zealand: different culture: New Zealand more satisfied with their work. Concerning incentives, Australian seek security and New Zealand prefers travel and entertainment.
*Hoftesfede s scale: 5 cultural dimensions chap 4(power/distance, individualism/collectivism, uncertainty/avoidance, masculinity/felinity, long term/short term orientation)
· Corporate organizational culture: acts with conjunction to the country culture and carries employees’ beliefs and values. Differences between companies within the same country are differences between the founders’ cultures and values. It s difficult to change one company’s culture already established( example : can’t make women and men work the same workplace in Saudi Arabia)
· Relationship marketing : *upstream relationship (rely on suppliers involvement)
*downstream relationship (rely on retailers involvement)
Both relations are win-win situations as it leads to both satisfactions through beneficial arrangements.
Bain s (studied differences between customer acquisition and customer retention) equation: 5% increase in customer retention would increase between 25and 100 % of the value of each customer.
Sales people role is critical to maintain relationships with customers.
· Myers-Briggs Type Indicator:
*extrovert (environmental guidance and sociable) # introvert (solitude, privacy and detachment).
*sensing (realistic, practical) #intuitive (more imaginative).
*thinking (logical, fairness) #feeling (subjective).
*judging (quick decision)#perceiving( more opened to new information).
· People from low context (individualistic) tend to be extrovert, intuitive, thinking and judging.
· People from high context (group oriented) are introvert, sensing, feeling and perceiving.
3. Impact of culture on sales management and personal selling process:
· Sales force objectives: could be adding more value to more understand customers or enter new market as a low cost. It influence the rest of sales management. It depends on different cultures and values of different countries.
· Salesforce strategy: addresses structure, size and compensation of the salesforce.
*territorial sf : responsible for a particular area
*product sf : selling only one product or one line of products
*customer sf: responsible for particular clients
Salesforce compensation is different according to countries and depends on social perception of compensations; it has a high impact on employees then final impact on customers.
· Recruitment and selection: issues= strong culture differences if recruit from home country and difficulties to find talented people in host country .skills required depend on the local culture.
Sometimes, it’s easier to establish joint ventures with existing local company to avoid these steps.
· Training: in the host country to meet the customers’ needs > it could be day sales+ coaching seminars. Adapting training to the local purchasing behavior. Companies must offer higher compensations than competitors do to its employees to not lose them after the training.
· Supervision:
*motivation and compensation: use of financial motivation in most countries. Increase of salaries or commissions or increase in the hierarchical position (seniority) or foreign travel missions.
*Management style: approach to supervise employees that varies from country to another.
That could invoke negative responses from individualistic countries (ex: USA) and positive responses from low individualistic countries such as India.
· Ethical perception: when salespeople need to work within the law to maintain a clean image and avoid frustrating situations.
Some countries have different perceptions on Ethical issues:
*usa : employees more comfortable with clear ethical policies
*Japan/Korea: society provides guidelines
*Mexico: follow management policies regardless to their own standards
· Evaluation : requiring salespeople to justify their efforts by giving information on their efforts, strategies, success, failure… to correct problems and achieve goals .
Evaluation promotes long-term profits. Progress through feedback.
*quantitative evaluation: comparison of sales
*qualitative evaluation: test of knowledge of salesperson.
In some countries, its waste of time and may offend privacy of salespeople.
4. Cross-cultural negotiation strategies: setting up strategic alliances and requires skills and expertise. It’s challenging because of the cultural differences.
· Stages of negotiation process:
*non task sounding: activities to establish rapport between parties
*Task related information exchange
*persuasion: give and take deal
*concessions and agreement: lead to a result.
· 8 Possible negotiation strategies:
*employ an agent or advisor: when cultural familiarity is low
*involve a mediator: third party to benefit both sides
*induce the counterpart to follow one’s own negotiation script: persuasion especially when cultural familiarity is high.
*adapt the counterparts negotiation script: moderate levels of familiarity, adjust some common negotiation rules.
*coordinate adjustment of both parties: to have a common negotiation approach.
*embrace the counterpart script: great familiarity, the negotiator volunteers to adapt the counterpart approach.
*improvise an approach: when parties are very comfortable with each other culture
*effect symphony: high cultural familiarity; creation of a new script with coordination of both cultures.
· Considerations to pick the right strategy:
*reflect on your cultures negotiation practices: meaning of satisfactory agreement
*learn the negotiation script in the counterpart’s culture: who decides what? Expectations: win-win or win-lose result.
*consider relationship and context: circumstances of the interaction?
*prediction or influence of the counterpart approach
*chose a strategy: compatible with cultures involved.
5. Expatriates: are home country personnel sent overseas to manage local operations in foreign countries.
· Advantages of expatriates :
*better communication: more understanding of home office, goals, political and priorities, more familiarity with sales techniques, more cultural understanding
*development of talent: being able to train future expatriates through their significant overseas experience.
· Difficulties of sending expatriates abroad:
*cross cultural training: to use more effectively human resources that leads to a higher financial return, better performance and more satisfaction.
When expatriates are far, they couldn’t catch the newest technology so the training is needed. Training could be through a coach who accompany the expatriate during the first year to see potential risks before they arise
The more different the culture, the more specific the training needs to be.
*motivation: through attractive policies and incentives+ continuous communication.
*compensation: through premiums, housing allowances, cost of living allowances, tax equalization, bonuses, vacation…
When a compensation is high, expatriate might lose motivation when back to his home country and previous salary .
*family discord: typical candidate is a married man with school age children.
Issues= provide work to his spouse and children adaptation (language, education…)
Sometimes challenging and leads to stress, marriage break up, dissatisfaction and decrease of performance.
Solution= provide a good counselor to guide all the family.
*security risk: terrorism and kidnapping discourage expatriates and increase anxiety.
· Repatriation: return of expatriates.
*difficulties of finding jobs
*decrease of standard of living
*lack of appreciation of knowledge gained overseas
*lack of direction
Effective ways to avoid pitfalls:
*provide chances to use international experience
*position choices
*recognition
*family support
· Generalizations:
*communication id necessary when abroad
*expatriates are important in complex environments (political and other issues) and in countries with high cultural differences
*in competitive environment, local nationals could provide more support than expatriates do.