Compare How Cultural Differences and Foreign Business Environments Affect Multinational Corporations
M2-Compare how cultural differences and foreign business environments affect multinational corporations
In this report I will be stating the differences of how Tesco function in South Korea compared to how they function in the United Kingdom. Tesco have to adapt to the local culture, traditions and tastes and have to recreate an environment in which shoppers will feel at home.
Tesco’s local adaption strategy in South Korea involves selling products and services based not on the UK experience, but on Korean customer demand. Tesco in South Korea provides live octopus, pet iguanas, fish chopped up alive sushi-style, and dental services as a way of their adaption strategy to appeal to South Korean’s culture. Hofstede’s Uncertainty Avoidance (UA) theory, states deals with the degree to which members of a particular society feel uncomfortable with uncertainty. The theory relates to the fact that the future can never be known. Countries that exhibit strong UA , such as South Korea, maintain strict codes of belief and behaviour. They are intolerant of unorthodox ideas. By adopting the approach Tesco have chosen, they are allowing for a society such as South Korea’s to be more welcoming to the arrival of the company, which in turn invites a greater scope of custom.
Tesco was helped in developing this approach by entering the market through a joint venture with Samsung, a powerful brand name in its own right and one of the leading conglomerates in South Korea. This will help build the recognition for Tesco in South Korea and build a relationship with new customers. As per the Hofstede theory referred to earlier, Samsung represents safety and security within the South Korean market. Therefore, UA is likely to be severely reduced when partnered with such an established brand within the target community.
The localised approach means a lot more fresh food than in the UK to recreate a market atmosphere, as well as fast food outlets, coffee shops and toddler play areas.
In this report I will be stating the differences of how Tesco function in South Korea compared to how they function in the United Kingdom. Tesco have to adapt to the local culture, traditions and tastes and have to recreate an environment in which shoppers will feel at home.
Tesco’s local adaption strategy in South Korea involves selling products and services based not on the UK experience, but on Korean customer demand. Tesco in South Korea provides live octopus, pet iguanas, fish chopped up alive sushi-style, and dental services as a way of their adaption strategy to appeal to South Korean’s culture. Hofstede’s Uncertainty Avoidance (UA) theory, states deals with the degree to which members of a particular society feel uncomfortable with uncertainty. The theory relates to the fact that the future can never be known. Countries that exhibit strong UA , such as South Korea, maintain strict codes of belief and behaviour. They are intolerant of unorthodox ideas. By adopting the approach Tesco have chosen, they are allowing for a society such as South Korea’s to be more welcoming to the arrival of the company, which in turn invites a greater scope of custom.
Tesco was helped in developing this approach by entering the market through a joint venture with Samsung, a powerful brand name in its own right and one of the leading conglomerates in South Korea. This will help build the recognition for Tesco in South Korea and build a relationship with new customers. As per the Hofstede theory referred to earlier, Samsung represents safety and security within the South Korean market. Therefore, UA is likely to be severely reduced when partnered with such an established brand within the target community.
The localised approach means a lot more fresh food than in the UK to recreate a market atmosphere, as well as fast food outlets, coffee shops and toddler play areas.