Globalization and International Management

Globalization and International Management

Geert Hofstede developed Hofstede’s cultural dimensions theory to create a model of cross-cultural communication between nations. Hofstede’s theory divides national cultures into six dimensions: power distance, uncertainty avoidance, indulgence vs restraint, individualism vs collectivism, masculinity vs femininity, and long-term vs short-term orientation (Hofstede, 2009). Hofstede’s cultural dimensions are required for analyzing new markets for Nova Energy Drink, a product within a small business based in Oregon, United States. Nova Energy Drink wishes to enter the Latin American market, particularly the South American market. The company is well-known for its commitment to being environmentally sustainable, or “green,” and for doing good in the community. Entering new markets necessitates understanding the culture, values, behaviour, and expectations among South American ethnic groups, which will shape their perception of brands, particularly foreign ones.

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Nova Energy Drink would like to enter the market in Brazil, South America’s largest country, and Argentina. Brazil’s cultural dimensions vary across each category of the model, according to a website dedicated to evaluating the cultural dimensions of each nation in the world. Distance in terms of power refers to the extent to which less powerful members of a society expect and accept unequal power distribution. Brazil scored 69 in this category, indicating that its people believe in a hierarchy system and that different power distributions are justifiable based on age and social position (“Brazil”). Power is a status symbol for Brazilians, and as a new entrant into the market, Nova Energy Drink would likely do well if it could establish credibility by being well-known and recognized in the United States. This factor, however, has little to do with the company’s entry into the market. It has a low individualism vs collectivism score of 38, indicating that Brazilians are integrated into familial solid and cohesive groups that protect and avow loyalty to one another.

In contrast to how business is done in the United States, business in Brazil would entail developing mutually beneficial and trustworthy relationships before discussing strategy. Nova Energy Drink must understand that Brazilians do business with people, not corporations. Coming on strong with sales pitches and statistics will not make the transition into the Brazilian economy and markets easier, limiting the energy drink’s success. Its masculinity vs femininity score is in the middle of the scale, indicating that Brazilians value assertiveness, success, cooperation, and deference. This means that social harmony and close relationships are as important as profit and success in the workplace. This could make life a lot easier for Nova Energy Drink. Uncertainty avoidance may be the most influential factor, as Brazil scores highly and demonstrates the importance of rules and order in structuring life. A team working in Brazil should understand the importance of structure and standards and the need for employees to be guided. Another intermediate score is long-term vs short-term orientation, which shows that Brazil is not afraid of or suspicious of change but values traditions. Finally, Brazilians are highly indulgent and place a higher value on spending, optimism, and leisure, which can help Nova Energy Drink succeed. The beverage can be positioned as an energy booster throughout the exciting activities in which Brazilians participate.

Argentina’s cultural dimensions scores are on par with Brazil’s, which is unsurprising given its geographic and demographic grouping (“Country Comparison”). Its power distance score is 49, near the bottom of the Latin American countries list. In this country, status and appearance are the most critical factors in determining one’s power level. Argentina, like Brazil, is a masculine society driven by competition and success, a mentality that begins in elementary school. The desire to succeed is strong in Argentina, which can create a highly competitive environment, which can be both a pro and a con for a new entrant into the market like Nova Energy Drink. Argentina is in the middle of the individualism vs collectivism spectrum, and it is the most individualist of all Latin American countries. Massive migration waves and the rise of the middle class are driving this. Like many other countries, Argentina scores very high in Uncertainty Avoidance, indicating a strong need for order and structure to reduce risk and chaos. If rules and standards are not upheld, new ones are imposed, and the punishment for breaking the law frequently leads to corruption and abuse. Argentina ranks high in both long-term and short-term orientation, valuing law and tradition while emphasizing short-term accomplishments over long-term investments in success. Finally, Argentinians prefer to indulge and realize their desires, which can bode well for an energy drink company whose goal is to increase liveliness and physical energy for the time being.

Nova Energy Drink places a high value on social responsibility, which must be maintained when doing business in either or both of the proposed foreign markets. For those at the bottom of the pyramid or the poorest two-thirds of the population, social responsibility should be more concerned with alleviating poverty than sustainability. This approach would not be surprising, given Nova Energy Drink’s history of giving back to the community. The economy and market in Brazil and Argentina are primed for social responsibility, which does precisely that. Firms in Brazil and Argentina are not required or expected to disclose information about their social responsibility efforts (Greisse, 2007), but Nova Energy Drink is one of the few that do. The company has the potential to be transformative in both countries through poverty eradication and strategies such as equal pay distribution among employees and managers, which eliminates further stratification in overall social class. Presenting equitable and well-paying jobs to those in need in these countries means providing opportunities for the economic mobility of the community’s bottom line, which means improving the company’s bottom line.

Doing business in Brazil and Argentina may be more expensive than in the United States. Argentina has a large deficit and the world’s sixth-highest corporate tax rate, making it a much more costly monetary investment for companies attempting to do business there. Furthermore, Brazil has high corporate corruption among executives and entrepreneurs, which can hurt the Nova Energy Drink business in forming partnerships and dealings (Team Latin America, 2019). The currency exchange rates for the Brazilian real and the Argentine peso fluctuate about the US dollar, as the former two depreciate and the latter strengthens. The Latin American business management infrastructure has been preparing for a wave of new political and economic stability and activity, creating ideal conditions for Nova Energy Drink. However, the region is plagued by social insecurity, underemployment and unemployment, and other factors that may hurt the energy drink company.

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References

Brazil. (n.d.). Retrieved March 2, 2020, from https://www.hofstede-insights.com/country/brazil/ Country Comparison. (n.d.). Retrieved from https://www.hofstede-insights.com/country- comparison/Argentina/

Griesse, M. A. (2007). The geographic, political, and economic context for corporate social responsibility in Brazil. Journal of Business Ethics, 73(1), 21-37. Hofstede, G. (2009). Geert Hofstede cultural dimensions.

Team Latin America. (2019, April 5). Ease of Doing Business in Latin America Summary. Retrieved March 2, 2020, from https://www.bizlatinhub.com/ease-doing-business-latin- America-summary/

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Post your initial response to the following:

• After learning about Stephanie, imagine that you had been the school social worker during her suicidal ideation. Which indicators would you have looked for in Stephanie and why?
  

  Globalization and International Management

• How would you have responded to each of those indicators? What kinds of questions would you have asked her and why?