Question

Discuss the main traits of culture in emerging malrets in term of Hostedes dimensions. How do differences in terms of Hostedes dimensions affect business in emerging markets?

Answer 1

An emerging market is represented by growing economic activities, favorable government policies, formation of new regional tie-ups and foreign investments taking place in the economy with political stability. It brings modification in the cultural dimensions of that economy that can be identified by the following traits.

1. The uncertainty avoidance index of the culture comes down and people can accept, adapt to the new development and products on offer.

2. The power distance index relatively comes down as an emerging economy gives opportunity to bigger mass of the people and the hierarchal inhibitions comes down. Entry of MNCs promotes flat organizational culture.

3. Individualism is promoted as firms identify the top talent that can deliver the superior performance on its own and get the rewards.

4. There is a promotion of diversity in the economy and a fine balance between the different sex is established in the economy.

5. The indulgence level is increased and people are ready to accept with the new taste, preference and services that were unknown to them.

6. There is a decrease on the score of long term orientation. While maintaining the core values of the culture, people are also able to accept the new values that bring improvement in themselves & their culture.

The change in Hofstede dimensions, causes the firms to bring important changes and customization of the products & services as well as become more conducive & adapt to the culture of the organization. For example, an emerging economy, scoring high on long term orientation, should make the firm, bring respect for the cultural values of the economy. It will increase the level of local acceptability. An economy scoring high on the uncertainty avoidance index, will make the firms to bring local factors, taste & preferences into their products to be successful. So, the cultural factors are very important when a company wants to take expansion decisions in a particular overseas market.