Cross-Country Differences In Cultural, Demographic, And Market Conditions

Regardless of a company's motivation for expanding outside its domestic markets, the strategies it uses to compete in foreign markets have to be situation-driven; cultural, demographic, and market conditions vary significantly among the countries of the world. Cultures and lifestyles are the most obvious country-to-country differences. Market demographics are close behind. Consumers in Spain do not have the same tastes, preferences, and buying habits as consumers in Norway; buyers differ yet again in Greece, in Chile, in New Zealand, and in Taiwan. Less than 10 percent of the populations of Brazil, India, and China have annual purchasing power equivalent to $20,000. Middle-class consumers represent a much smaller portion of the population in these and other emerging countries than in North America, Japan, and much of Europe.1 Sometimes, product designs suitable for one country are inappropriate in another--for example, in the United States electrical devices run on 110-volt electrical systems, but in some European countries the standard is a 240-volt electric system, necessitating the use of different electrical designs and components. In France consumers prefer top-loading washing machines, while in most other European countries consumers prefer front-loading machines. Northern Europeans want large refrigerators because they tend to shop once a week in supermarkets; southern Europeans can get by on small refrigerators because they shop daily. In parts of Asia refrigerators are a status symbol and may be placed in the living room, leading to preferences for stylish designs and colors--in India bright blue and red are popular colors. In other Asian countries, household space is constrained and many refrigerators are only four feet high so the top can be used for something else. In Hong Kong the preference is for compact, European-style appliances, but in Taiwan large American-style appliances are more popular.

The potential for rapid market growth varies significantly from country to country. In emerging markets like India, China, Brazil, and Malaysia, market growth potential is far higher than in the more mature economies of Britain, France, Canada, and Japan. In India there