When entering a new market, businesses must analyze the macro-economic factors that will affect strategic planning and success. This is true whether the business is venturing across town, across the country, or across the world. A popular tool to help business leaders analyze the external factors that will shape their market entry is the PEST Analysis (or PESTLE Analysis).
PEST or PESTLE pushes business leaders to analyze how external factors beyond their control will impact business operations and consumer behavior within a target market:
Political: Upcoming elections, lobbying and pressure groups, war/terrorism/conflicts, trade agreements, bureaucracy, corruption, etc.
Economic: Stability of the current economy, key exchange rates, unemployment rates, access to credit, etc.
Sociological: Population growth rate and age profile, employment patterns, job market trends, social attitudes, cultural norms and taboos, religious beliefs, etc.
Technological: Anticipated new/disruptive technologies, competitors’ access to new technologies, government and educational research focus, technology infrastructure support, etc.
Legal: Anticipated legislative changes, applicable tax law, property rights, labor regulations, consumer protection, health and safety regulations, etc.
Environmental: Environmental regulations, Green initiatives, carbon footprint, sustainability, etc.
Language and Culture Within PEST
Both language and culture play major roles in evaluating the sociological factors that might positively or negatively affect a business as it ventures into new markets.
Analyzing sociological factors includes researching language. Companies must determine the native language(s) spoken by government leaders, business leaders, and consumers in a target market. After that, they must also analyze the prevalent, non-native languages they are likely to encounter within their workforce and/or consumer base. This information will inform several key decisions:
- Should the company designate a lingua franca? A lingua franca is a common language chosen by a company for all internal communications across the entire organization. Companies typically require employees to have a certain level of fluency in the chosen lingua franca.
- Should the company focus on hiring bilingual/multilingual employees for key positions that must communicate with local business and/or government officials and/or manage a local workforce, rely on language interpreting solutions, or a combination of both?
- Into which languages must or should business content be translated, such as legal contracts, employee/human resources documentation, employee training materials, and health and safety documentation?
- Into which languages consumer-facing content must or should be translated, such as marketing materials, product packaging, product instructions/safety materials (whether printed, online, or video-based), the company’s website, and social media.
Culture likewise has a major impact on business success. Some cultural influences are pretty obvious. For example, one would not expect a chain of BBQ pork restaurants to do well in predominantly Muslim communities. Other influences can be subtle, but still have great impact.
Beyond organic knowledge gained from living within a culture, there are some tools available to help businesses research culture. For example, Hofstede’s Cultural Dimensions help businesses delve deeply into culture and prepare for success.
Hofstede’s Cultural Dimensions rate national cultures based on six dimensions, scoring each on a scale of 0 to 100:
- Power Distance Index
- Individualism Versus Collectivism
- Masculinity Versus Femininity
- Uncertainty Avoidance Index
- Pragmatic Versus Normative
- Indulgence Versus Restraint
Power Distance Index
The Power Distance Index (PDI) measures the “distance” between those in power and those not in power. Societies score a high PDI when they tend to accept unequal, hierarchical distribution of power. Individuals understand “their place” in a high PDI system. Conversely, societies with low PDI scores disperse power more widely.
In high PDI cultures, one finds more centralized organizations with complex hierarchies. There are typically large gaps in compensation, authority, and respect. Leaders expect respect. Consequently, leaders see pushback as an attempt to circumvent their power. Workers are unlikely to initiate any action, expecting instead to be guided and directed by managers.
Cultures with flatter organizations where supervisors and employees are seen as near equals have low PDI scores. In these cultures, delegation is more common, and workers are valued for their input and innovation.
Individualism Versus Collectivism
A high Individualism Versus Collectivism (IDV) score means a culture values individualism. People value their time, privacy, and freedom and expect individual rewards for hard work. Employees tend to avoid mixing work and social life.
A lower IDV score leans toward collectivism. Groups work toward maintaining harmony and tend to be very loyal to each other. Feelings and emotions may be suppressed to avoid conflict. Saying “no” or providing negative feedback in public is frowned upon.
Masculinity Versus Femininity
Masculinity Versus Femininity (MVF) looks at the distribution of roles between men and women. In “masculine” societies (high MVF), the roles of men and women overlap less. Men tend to be more dominant. Workers expect long hours. They are motivated by precise goals.
In more “feminine” societies (low MVF), there is less distinction between “male” and “female” roles. Feminine societies emphasize quality of life and tend to be more relationship oriented. Strong egos are frowned upon. Success comes from negotiation and collaboration across all levels.
Uncertainty Avoidance Index
The Uncertainty Avoidance Index (UAI) measures how people cope with stress and anxiety. High UAI scores go to cultures that avoid anxiety at all costs, attempting to make life as predictable and controllable as possible. Individuals are expressive, freely displaying anger or emotion, but in the end, lean toward the safest, most conservative options. Societal conventions – unspoken “rules” or cultural expectations – are prevalent.
Low UAI cultures are a bit more relaxed. Teams are inclusive and open to change and innovation. There is less sense of urgency, and decision making may be more open-ended.
Pragmatic Versus Normative
Pragmatic Versus Normative (PVM) is sometimes called “Long-Term Orientation.” It addresses a society’s need to explain the inexplicable. It is strongly tied to religion and nationalism.
A high PVM culture tends to be pragmatic. It is long-term oriented, modest, and often thrifty. Individuals in high PVM cultures ask “What?” and “How?” more frequently than “Why?”
Low PVM culture, on the other hand, asks “Why?” Above all, people in more normative cultures have strong convictions, especially with respect to religion and nationalism. Additionally, workers feel they need to “sell themselves” to be taken seriously and often use flattery.
Indulgence Versus Restraint
Indulgence Versus Restraint (IVR) measures the degree to which the society allows indulgence – enjoying life and having fun – versus restraint. High indulgence societies are more optimistic. They focus on personal happiness, not taking life too seriously. Moreover, work-life balance is important, and feedback, coaching and mentoring are expected.
More restrained societies tend toward pessimism. Behavior is more controlled and rigid. Restrained societies prize formality and professionalism in the workplace.
Translation and Localization
Translation and localization professionals rely on factors like those espoused by Hofstede, along with their personal experiences as natives within a particular culture, to support businesses as they enter a new market. These professionals transform content into the appropriate languages and localize it to match the styles and preferences of the local culture.
Vocalink Global supports businesses in life sciences, manufacturing, and information technology as they venture into new markets with translation, localization, and interpreting solutions. Want to learn more? Connect with us today!