Cultural Barriers in International Marketing

Cultural Barriers in International Marketing The research area of this proposal is focused on the broad area of international marketing. More specifically, the focal point of the research will be the sociocultural environment and how this has an impact on a multinational company whose ambition is to enter a new market (Hollensen, 2007). As indicated by Doole and Lowe (2008), the sociocultural factor affects the consumer and buyer behaviour, making the development of international marketing strategies inevitable. In addition, this researchs centre of attention will be the elements of culture which is a popular method of discovering cultures (Albaum Duerr, 2008). Furthermore, the layers of culture will be presented from two different perspectives as well as the relation of culture with consumer behaviour. Finally, an attempt to examine the Japanese culture will be made by reviewing the high- and low-context concept (Hall, 1960 cited in Nguyen et al., 2007: 207), and some additional models introduced by key authors. 3.3 Background Primarily, understanding ones culture before entering his market has a dual aspect. On one hand, the effectiveness of the established marketing strategies and its implementation by locals could be verified (Czinkota Ronkainen, 2007), and on the other hand you familiarise with your own culture (Yamada, 1997: xvi). Furthermore, Japan is one of the most culturally homogenous countries in the world (Engel Murakami, 2001: 21), citizens of which consider their heritage valuable and indispensable (Keillor Hult, 1999). Consequently, this creates trade barriers for the multinational companies (Albaum Duerr, 2008) whose intention is to enter the Japanese market. These barriers can be eliminated by understanding the Japanese values and expectations (Engel Murakami, 2001: 20). Moreover, the ability of overcoming these barriers and cultivate relations with the target market is the fundamental stepping stone for an effective marketing strategy (Ford, 1984 cited in Lohtia et al., 2009). In order to achieve that, companies should be culturally sensitive, in other words they should acknowledge the dissimilarities between domestic and international markets and handle them effectively (Holzmuller Stottinger, 2001; LaBahn Harich, 1997; Rice ODonohue, 2002 cited in Lohtia et al., 2009: 241). However, it is difficult to achieve cultural sensitivity to Japan (Hall, 1987 cited in Lohtia et al., 2009:242), and companies that will achieve it will gain the appreciation of the Japanese consumers (Lohtia et al., 2009). 3.4 Conclusion Initially, Craig and Douglas (2006: 338) confirm that due to globalisation and the rapid change of cultures, a deeper understanding of culture is necessary. Moreover, Steenkamp (2001: 41) verifies that culture is a complex phenomenon and that many dimensions are required to be developed, so that marketers can distinguish effectively one culture from another, and thus establish the appropriate marketing strategy. In the dissertation, the researcher will try to uncover as many dimensions that capture culture as possible, focusing on the Japanese culture, hence identifying the cultural barriers. Japan was chosen as it is a high context country (Hall, 1987 cited in Lohtia et al., 2009), and subsequently the higher the context of a culture, the more effort will be needed from a company to adjust its strategy to that culture (Hollensen, 2007: 221). Literature Review 4.1 Introduction The aim of this literature review is to present definitions of international marketing that are related with Japans sociocultural environment. Additionally, a synthesis of the existing literature was conducted in order to provide a thorough description of the elements and the layers of culture, the available models that examine cultures and their implications for consumer behaviour. Moreover, the data collection was achieved by using the universitys library and ebrary database. The keywords international marketing resulted in 543 and 18.719 hits of secondary data respectively, and lastly 9 books were used. Finally, the e-library was used to obtain academic journals in order to inject scientific ideas in the research. The search engine showed 66798 results of which only 240 were available. Eventually, 10 articles were selected to be used, mainly coming from Emeralds and ScienceDirects databases. 4.2 Definitions and concepts To start with, before attempting to define culture, international marketing should be introduced. There seems to be a consensus regarding the definition of international marketing. More specifically, Doole and Lowe (2008: 6) as well as Ghauri and Cateora (2005: 8) defined it as the procedure that a companys goods and services are targeted in customers of more than one country, which seeks the maximisation of its profit. Additionally, Ghauri and Cateora (2005: 8) raised the difference between international and domestic marketing, where the latter focuses only in one nation. Furthermore, Doole and Lowe (2008: 7), and Hooley et al. (2008: 61) used the SLEPT model to identify the environmental impacts on international marketing. These are: Social/Cultural, Legal, Economic, Political and finally Technological. This proposal will focus only on the Sociocultural influences. Moreover, 160 definitions for culture have been recorded (Czinkota Ronkainen, 2007), proving the significance of the role that culture plays in marketers strategy (Ghauri Cateora, 2005). Firstly, the etic approach of culture, which focuses on the contrast between two cultures (Luna Gupta, 2001: 46) was identified by Hofstede (1997) as the collective programming of the mind which distinguishes the members of one human group from another (Hollensen, 2007: 216; Luna Gupta, 2001: 46). In contrast, the emic approach of culture was proposed by McCracken (1988: 73) cited in Luna and Gupta (2001: 46). He defined culture as the lens through which all phenomena are seen. It determines how these phenomena are apprehended and assimilated. Second, culture is the blueprint of human activity. It determines the coordinates of social action and productive activity, specifying the behaviours and objects that issue from both. The objective of the emic approach is to achieve a thorough comprehension of the study of culture (Luna Gupta, 2001). 4.3 The elements of culture Primarily, culture was divided into different elements to direct marketers to a deeper examination of the cultural differences between international markets (Ghauri Cateora 2005: 82). More detailed, Ghauri and Cateora (2005: 83) identified six elements of culture: Material culture, Social institutions, Aesthetics, Belief system, Education and Language. Furthermore, Albaum and Duerr (2008: 122), and Doole and Lowe (2008: 74) added Technology with Material culture, as well as Law and Politics, with the former omitting Aesthetics. Hollensen (2007: 225) included Technology to Material culture, added Manners and customs, and omitted Law and Politics. Finally, Czinkota and Ronkainen (2007:57) added Manners and Customs, and omitted Law and Politics. It is worth mentioning that all the elements will be examined thoroughly in the dissertation from the perspective of Japan. 4.4 The layers of culture The layers of culture can be a great opportunity for multinational companies to familiarise themselves with the behaviour (Hollensen, 2007), attitudes and values (Doole and Lowe, 2008) of people with different cultural backgrounds they hire (Hollensen, 2007). On one hand, Hollensen (2007: 219) indicates four layers of culture: national culture, business/ industry culture, company culture and finally individual behaviour, with each layer affecting the next one. On the other hand, a different approach was presented by Doole and Lowe (2008: 73). They portrayed the layers of culture in a national, a regional/ ethnic/ religious/ linguistic, a gender, a generation and finally a social class level. In a nutshell, companies should familiarise themselves with the characteristics of the Japanese employees, as they hardly ever quit their jobs and they are astoundingly bonded with them so as to receive a flourishing career (Engel Murakami, 2001: 29). 4.5 Culture and consumer behaviour Consumer behaviour regarding a product or a message is affected by different components of culture (Doole Lowe, 2008). Jeannet and Hennessey (2004) cited in Doole and Lowe (2008: 80) presented the procedure that consumer behaviour is affected by culture. In contrast, Hofstede (1997) cited in Luna and Gupta (2001, 47) argues that consumer behaviour is influenced by four manifestations which are: values, heroes, symbols, and rituals. Moreover, Craig and Douglas (2006) stated that customs and rituals play a significant role for Japan, in maintaining well-balanced relations among its citizens. However, Usunier (1996) cited in Holden (2004: 567), partly agrees with Hofstedes view, since he believes that consumer behaviour, which consists of consumers values, attitudes and decision making, is affected by cultural dissimilarities. Lastly, Doole and Lowe (2008: 80) identified four ideas that marketers should reflect on when using Western ideas to comprehend the foreign consumer behaviour. 4.6 Cultural analysis 4.6.1 High- and low-context cultures The model of high- and low-context cultures was defined by Edward T. Hall (1960a) as a way of understanding different cultural orientation (Hollensen, 2007: 220). As indicated by Hall (1976) cited in Nguyen et al. (2007: 207), in low-context cultures the message itself is of great importance. On the other hand, in high-context cultures, people tend to elaborate on the message to gain a deeper understanding of it (Hollensen, 2007: 220; Doole Lowe, 2008: 86). As argued by Hollensen (2007), the Japanese have the highest context culture, while the Swiss have the lowest. 4.6.2 Hofstedes model To begin with, Hofstedes dimensions should be taken into consideration when marketers construct their marketing strategy (Hollensen, 2007: 228). Ghauri and Cateora (2005), as well as Hollensen (2007) mention four dimensions of culture; distance, uncertainty avoidance, individualism and masculinity, while Hofstede adds long-term orientation (Hofstede, 2009). The importance of these results is due to cultural dimensions illustrating the traits of a country (Rivera-Vazquez et al., 2009). Consequently, the results for Japan are intended to be used for the dissertation. Lastly, strengths and weaknesses of this model were introduced by Hollensen (2007: 229). 4.6.3 Schwartzs model An alternative framework was created by Schwartz (1994) cited in Steenkamp (2001). He mentions three dimensions through which he will provide answers to his societal topics: conservatism versus autonomy, hierarchy versus egalitarianism and labelled mastery or labelled harmony (Steenkamp, 2001: 32). 4.6.4 Alternative models Primarily, Keegan (2004: 14) supports that the focus on marketing changes and that concepts need updating regularly. Based on this idea, Holden (2004: 570) disapproves the reliance on Hofstedes model, while suggesting an approach to culture from a different perspective. Finally, an alternative model for approaching Asian cultures was introduced by Fang (1999), cited in Fletcher and Flang (2006: 438). 4.7 Conclusion Primarily, although there is a large amount of literature concerning international marketing and culture, there seems to be some disagreements between authors, as well as some omissions by others. For instance, Hollensen (2007) supports that it is inevitable to examine cultures without referring to Hofstedes cultural dimensions. On the other hand, Holden (2004) criticises the validity of Hofstedes model. As a result, the researcher will try to compare and contrast the models that have been developed for gaining knowledge of the differences amongst cultures. Methodology 5.1 Introduction The approach that was developed in order to accomplish the objectives was based on desk research. More specifically, the researcher utilised existing written material such as books, e-books, and some scientific journals (Gummesson, 2000: 35). Finally, the World Wide Web (Internet) will be used to obtain the empirical results regarding the cultural dimensions of Japan suggested by the key author Hofstede. The qualitative research method is going to be used. Primarily, the researcher uses secondary analysis which is a qualitative method (Bryman Bell, 2007: 326). Secondly the thesis of other writers will be introduced, instead of the researchers own opinion (Bryman Bell, 2007: 425). Additionally, of great importance should be the fact that the use of mixed methods -both qualitative and quantitative- was avoided because these methods are two different paradigms (Bryman Bell, 2007: 642). Finally, concerning the relationship between theory and research (Bryman Bell, 2007: 11), the inductive theory (Bryman Bell, 2007) was used. Although Fisher (2007: 322) argues that a combination of inductive and deductive method can be employed, only the inductive method was used for this proposal. This can be justified by the fact that the researcher moves from observations, which is the aim of the proposal, to the general which is the theory (Bryman Bell, 2007: 14). 5.2 Desk Research To start with, the only method that was used in order to obtain data for this proposal was desk research. Although Gummesson (2000: 34) argues that knowledge coming from secondary sources is limited, Bryman and Bell (2007: 328) believe that secondary analysis provides the researcher with high quality data. Additionally, it is more cost-effective in a way that secondary data are easier to interpret than primary (Bryman Bell, 2007: 333). Moreover, part of the secondary data collected came from scientific journals. The researcher focused on journals that were related to culture and cultural barriers. The journals that were used came from: The International Marketing Review The Journal of Product Brand Management The European Journal of Marketing The International Business Review The Journal of Knowledge Management Finally, text books were used in an attempt to achieve a deeper understanding of the theory related to international marketing and culture. Some of those used are: International Marketing Strategy by Isobel Doole and Robin Lowe International Marketing by Ghauri and Cateora Global Marketing by Svend Hollensen Passport to Japan by Engel and Murakami 5.3 Alternative Methods Ideally, the researcher could have used alternative methods to complement the validity of material found (Gummesson, 2000: 35). These methods could be: case studies, questionnaires and qualitative interviews (Gummesson, 2000: 35). Primarily, the researcher could have used existing case studies in this proposal to support the data found from existing theory (Bryman Bell, 2007). Unfortunately, word limit prevented him from including material found, as more theoretical findings were included to help readers gain basic knowledge on international marketing and culture. However, it is unquestionably that in the dissertation the researcher will use existing case studies. Finally, the researcher could conduct a case study by approaching a multinational company which maintains its operations in Japan. More specifically, the use of questionnaires or qualitative interviews would have helped the researcher gain an insider perspective (Bryman Bell, 2007: 443) of the marketing strategy that a company deploys in Japan. Unfortunately, the difficulty of approaching a company and accessing its confidential data prevented the researcher from implementing it. However, it is worth mentioning that the researcher has not had the chance to meet his supervisor. Consequently, the research methods could possibly change with the intention of writing a high-quality masters dissertation. Ethical issues There are no ethical issues concerning this proposal since only desk research was conducted. To be more specific, there was no distortion of data and every secondary source has been acknowledged by in-text references and a reference list, adhering to the rules of Aston Business School on plagiarism. Last but not least, copyrights of published books, articles and journals were respected. Task List Tasks Problems Solutions Search and obtain existing literature on theory and concepts of culture in books and e-books Limited searching skills, due to restricted previous experience Received advice from professors as well as from library staff on effective research techniques Search and obtain existing literature from scientific journals Not all journal articles are available in full text in the Aston e-library and many of those available were not completely relevant to the topic of the proposal Methodical and detailed research for alternative articles Select the most relevant articles Time consuming Skim and scan the articles found Obtain text books from the Aston library that are related to differences across different cultures Not all books are available in the Aston library Obtained e-books from ebrary of Aston University Obtain results from empirical studies regarding the culture of Japan Not all data is available in text books Access World Wide Web (Internet) to obtain the information needed Write the assignment Limited previous experience Guidance on the structure of the assignment via lecture notes and slides Conduct an effective literature review Limited previous experience Guidance provided through lecture notes and slides Combine information provided from different books, producing a uniform text Large amount of information from secondary data sources available Skim and scan all secondary data sources to combine all information provided and highlight any omissions observed in the literature Use case studies of different multinational companies that examine similar problems Word limit Not covered by the proposal but will be covered in the dissertation Proof-read and edit the assignment before submission Possible mistakes or omissions Thorough reading and correction of mistakes

Religion in Chatharine Sedwicks Hope Leslie, Stephen Jay Goulds Dinos

Religion in Chatharine Sedwick's Hope Leslie, Stephen Jay Gould's Dinosaur in a Haystack and Norman Mclean's A River Runs Through It In Hope Leslie, by Catharine Sedwick; Dinosaur in a Haystack, by Stephen Jay Gould, and A River Runs Through it, by Norman Maclean; the authors use religion in order to give the reader an insight on the stories and ideas they present, as well as gaining respect in the reader’s minds. All people can relate to religion, in one way or the other. Therefore, people have a sense of what the author is trying to express as well as giving the author a universal sense of respect. Although these literary pieces are based on totally different settings, 17th century puritan lifestyle, scientific evolution, and rural Presbyterian family life, religion is the common theme that relates these works. In Hope Leslie, Sedwick’s 17th century puritan characters are so well presented you overwhelmingly have a sense of respect for not only the characters, but also to Sedwick. Even the character’s names, like Hope and Faith makes the reader think of them as good puritan people. Sedwick describes in great detail the nature of the puritan lifestyle to give you the perception of the strict, yet honorable puritan life. Sedwick clearly writes her novel so even if you have no background on puritan religion, you feel a sense of what is was like. Religion was the key element in this novel. It showed basis for most of the actions the characters. In 17th century puritan communities, religion is the law of the town. For example, when Sedwick is talking about the Sabbath day she states, "Not a human sound is heard without the dwellings, and but for the lowing of the herds, the crowing of the cocks, and the gossiping of the bi... ...onal beliefs of these religions are. For example, he shows Pauls rebelliousness very early in the novel when he doesn’t eat his oats like the traditional Presbyterian would. It shows that even though Paul respects religion, he doesn’t let it make decisions for himself. After reading this novel, I had an overwhelmingly large respect for Maclean. His religious viewpoints were expressed clearly and without any discrepancies and his morals are regarded as almost untouchable. In conclusion, religion is a belief that everyone can relate to and have a sense of respect for. In these three extremely different literary works, all is tied to religion in some way. Even if you are not a religious person, you still have respect for the religion. These authors have totally different religious backgrounds, but as the reader, you have an equal amount of respect for each of them.

Changes From The Paleolithic To The Neolithic Age Essay -- essays rese

  Ã‚  Ã‚  Ã‚  Ã‚  There were changes that occurred from the Paleolithic Period to the Neolithic. Small changes were made in this time, from the culture, to bigger changes like economics, and agriculture. How did man deal with these changes and what kind of impact did it have on society?   Ã‚  Ã‚  Ã‚  Ã‚  The Paleolithic Period is the earliest time period man has been alive, and the longest of the Stone Age's. It dates from 2,000,000 B.C to 10,000 BC The people of the Paleolithic Period lived simple lives, which consisted primarily of survival. Man's life was simply to hunt, eat, and survive, while the woman’s job was to gather and watch over the children.   Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  The people of the Paleolithic Age were mostly nomads. To survive they had to travel everywhere, and follow the migration of animals; as the animals were there primary food source. Whenever they decided to stay, they lived mostly in caves, tree trunks, and those types of shelter. They had to eat, and to do that they had to kill the animals. They did this by using tools as weapons. The tools were mainly stone, bone, and ivory. They could make the weapons into hatchets, knives, and spearheads. The use of tools is one important development that took place in this time period.   Ã‚  Ã‚  Ã‚  Ã‚  The Old Stone Age (Paleolithic Age) is also the step forward in technology and religion. The people of this time discovered how to contro...

Indias Space Programme Essay

The country is now capable of launching its own spacecraft. In fact, it offers this service to many other countries. Now India has made landmark progress with the launch of Chandrayan for its moon mission. India started its space programme with the launch of first space satellite ‘Aryabhatta’ on April 19, 1975. This space satellite was named after the great Indian astronomer and mathematician of the 5th century, Aryabhatta. It was launched from a soviet cosmodrome with the help of a Soviet rocket. It marked India’s giant leap and made her the eleventh country to join the space club. The second satellite ‘Bhaskara’ was launched on June 7, 1979. It was also launched from a Soviet cosmodrome. It was named after two eminent personalities—Bhaskara I and Bhaskara II. It was followed by ‘Rohini’. It was the first Indian satellite put into the space by SLV-III, an Indian rocket. It was launched from Sriharikota in Andhra Pradesh on July 9, 1980. It was developed by the scientists of ISRO. It was the success of the mission of SLV-III which brought recognition to the space programme of India. India’s fourth satellite Rohini II was launched by the launch vehicle SLV-III from Sriharikota on May 31, 1981. It was designed to provide useful data for 300 days. It was weighted 38 kg. It was known as India’s first development rocket flight. Unfortunately, it burnt in space on June 8, 1981, without completing its mission. Bhaskara II, India’s fifth satellite in space, was launched on November 20, 1981 from Soviet cosmodrome Volgograd. It was the earth observation satellite. It was a milestone in the space journey of India as it brought to India the honour of being a space nation. Apple, an experimental geostationary communication satellite, was launched on June 19, 1981. It was launched with French coordination. With this, India entered the domestic satellite communication era. India launched INSAT-1A on April 10, 1982. India joined the select group of techn ically advanced countries. But this mission failed on September 6, 1982. In April 1983, India successfully launched Rohini satellite (RS-D-2). It marked the opening of new horizons for India. India’s ninth satellite INSAT-1B became fully operational in October 1983. It was the world’s first geo-stationary satellite combining services like telecommunication, mass communication and meteorological. It was launched in August 1983 from US Space Shuttle Challenger. India’s space programme is primarily driven by the vision of great scientist Dr. Vikram Sarabhai. He is considered as the Father of  Indian Space Programme. The main objective of India’s space programme has been to promote the development of application of Space Science and technology for socio-economic benefits of the country. The launching of Chandrayan I in 2008 marked a milestone in the history of space technology of India. Chandrayan will orbit around the earth for two years. During the period, it will send data to scientists. The scientists with the help of the data will study various aspects of moon, and will prepare a map of the moon. The map will further help in the study of moon. Then onward India made successive progress in the field of space research. It launched INSAT series satellite which made India’s position stronger in the comity of nation. India has now become self-reliant in terms of launching vehicles and telecommunications. Now India offers telecommunication services to other countries. The launching of satellites like IRS’s, ASLV’s, PSLV’s have placed India in the exclusive club of four nations—USA, Russia, France and Israel. Captain Rakesh Sharma was the first astronaut of India. Now the country enjoys a respectful position in the countries of the world.

James Joyce’s Araby as a coming-of-age story Essay

Araby, by James Joyce is a story about a young boy experiencing his first feelings of attraction to the opposite sex, and the way he deals with it. The story’s young protagonist is unable to explain or justify his own actions because he has never dealt with these sort of feelings before, and feels as though someone or something totally out of the ordinary has taken him over. The boy can do nothing but act on his own impulses, and is blind to the reasoning behind him. Araby is such a powerful study on childhood because of the way Joyce so vividly recounts the frustration a child feels when they are unsuccessful at trying to be an adult too fast. The story begins with images of blindness, a symbol of the boy’s youth and ignorance. Joyce describes the street the boy lives on, North Richmond street, as being â€Å"blind.† It is from these blind shadows of the boys ignorance that the object of his affection, his friend Mangan’s sister, emerges. Joyce describes her figure as being â€Å"defined by the light of the half-open door† (Joyce, 27) a symbol of the boy becoming enlightened by these new, adult feelings. As she enters the story, the images change from darkness to light and his feelings change from immature childhood concerns to those of an adolescent. Eventually, the boy’s language becomes more poetic and adult, and his thoughts turn completely to her. â€Å"Her image accompanied me even in places the most hostile to romance,† he admits â€Å"her name sprang to my lips at moments in strange prayers and praises which I myself did not understand.† The boy idealizes Mangan’s sister, obsessing over her, and is overcome with joy when she speaks to him. She tells him about a bazaar being held called Araby, and asks him if he is going. â€Å"I forgot whether I said yes or no† says  the love-struck boy to the reader, he is overcome with a mixture of fear and excitement as she chats calmly with him, explaining she can’t go because she will be away on a retreat when the bazaar is being held. She does not have to say anything else, the boy has found his opportunity to gain her affections, he tells her he will go to the bazaar on her behalf and buy her a present. He can hardly contain his excitement at this chance he’s been given to prove to do something nice for her, and to do something mature and adult like traveling to a bazaar and picking out a present alone. The boy takes this new responsibility, this new adventure to mean that he’s entered a new phase of life. Time suddenly seems to slow down in the story as the boy waits for Saturday to arrive. â€Å"I could not call my wandering thoughts together† he complains â€Å"I had hardly any practice with the serious work of life which, now that it stood between me and my desire seemed to me child’s play, ugly monotonous child’s play.† (Joyce, 29) Everything getting in the way of his journey begins to torture the poor boy, he sits in agony as the clock ticks, as he waits to be allowed to leave, he can barely contain his frustration. This sort of anticipation shows to the reader that the boy is not as mature as he feels himself to be, if he were an adult making a journey for a girl he liked, the entire process would not seem so exigent. When his uncle finally arrives home he is distracted and has forgotten about the boy’s desire to go to the bazaar. He starts talking about an Arab poem he knows and keeps the boy even longer, finally giving him the money and allowing him to go. The boy’s arrival at the bazaar, like his quick transition to adulthood, is a false awakening. By the time he arrives at the bazaar he can not purchase anything, the vendors are tired and closing up shop, and have little desire to see what this young boy can buy from them. He is being treated as a child and is aware of it. His quest for adulthood and independence seems somewhat futile, this trip didn’t assert anything. He feels the disappointment of seeing Mangan’s sister empty-handed pour over him. As the boy leaves the bazaar the light goes out, once again returning to the symbols of light and darkness in the beginning. The boy is returning to  ignorance and childhood. â€Å"Gazing up into the darkness I saw myself as a creature derided by vanity; and my eyes burned with anguish and anger† reflects the boy, finally realizing that the whole quest was frivolous, the girl was a fantasy. So, in this end paragraph, although the darkness is a return to childhood, he has gained some self-realization. His ability to recognize his youth and his ignorance is a growth.

How may advertising act as a barrier to entry? Essay

Like almost every science, the school of Industrial economics is made up of theory and empirical studies. In Industrial economics, empirical studies are industry studies conducted by a number of researchers. Joe Bain, from the Harvard school of industrial economics, first mentions barriers to entry in an industry study he conducted in the early 1950s. Bain links entry barriers to the capacity to raise price above unit (marginal) cost in the long run without inducing potential entrants to enter the industry. Demsetz of the Chicago school links the idea of entry barriers to government based restrictions on entry, which are not relevant for this essay. Bain outlines a total of three types of barriers to entry: Absolute cost advantages, Economies of scale and Product differentiation. Bain links advertising and the creation of copyrighted brand names to product differentiation. In his 1956 industry study, he found that advertising acts as a barrier to entry more in some industries than in others. For example, he found that in the Automobile and Cigarette producing industries, advertising, effectively constituting as a barrier to entry in his belief, is used to a higher extent than in the caned fruit and vegetable industry. For a definition of advertising we refer to Colley (1961). He defines advertising as â€Å"mass paid communication, the ultimate purpose of which is to impart information, develop attitudes and induce action beneficial to the advertiser†. Advertising is usually used by firms to inform and/or persuade customers to buy their products. Firms also use advertising to remind ex-consumers that their product is still on the market or to hamper the entry of new firms into the market. It is important to establish whether advertising is predatory or cooperative advertising. Predatory advertising attracts away customers from competition, whereas cooperative advertising increases demand for all firms in the market. A profit maximising firm will typically advertise as long as the expected marginal revenue from advertising equals the expected marginal cost of advertising. Advertisement levels vary between markets mainly due to differences in market structure. For a profit-maximizing monopolist, the optimal level of advertising is dependant on the ratio between advertising and price elasticities according to Dorfmann and Steiner (1954). The greater the consumers’ responsiveness to advertising and the lower their responsiveness to changes in the product price, the higher will be the optimal level of advertising relative to sales. In an oligopoly market structure, Cable (1972), argues that advertising plays a more important role than price competition. Cable argues that rival firms quickly realize changes in price, which leads them to also lower their prices as a consequence. With regards to advertisement, it is unlikely that changes in their levels are quickly realized by the competition and effects on profits are unlikely to be closely related. This is the explanation why, according to Cable, in an oligopoly market environment high advertising intensity prevails. Advertising as persuasion – view This view is advocated by the Harvard school scholars, like J. Bain (1968). The assumption is that advertisement changes peoples perception of the product. According to Bain, advertisement increases market power and prices, as well as distorting consumers’ preferences. Bain argues that by changing the consumers perception in favour of the advertised product, demand for it becomes less price sensitive, more inelastic to changes in its price. Without any immediate changes in the competitor’s advertisement levels, consumers will be less likely to change their choices, even if the competitor lowers prices. If a rival company wishes to enter the market, it has to either offer substantial price cuts or advertise more than the incumbent. Bain classifies â€Å"persuasion† advertising as a barrier to entry, since either lower prices or heavy advertisement spending will heavily reduce the entrant’s potential profits. John Sutton brought an extension to Bain’s â€Å"Advertising as persuasion†-view in 1992. Sutton sees advertising as an endogenous strategic â€Å"sunk cost† expenditure, which firms alter like they alter price and quantity. In his model, Sutton assumes that companies use advertisement to influence different levels of perceived quality just like Bain does. This leads to consumers perceived quality becoming a function of firms’ advertisement. F(u) = f + a (u), where F(u) is the total level of fixed costs and u is the perceived quality, with a (u) being an increasing function. Sutton finds in his three staged game, that even as advertising levels increase, the number of firms in the industry remains unchanged, even if the market is growing. (Church and Ware, 2000) Advertising as information-view This view is advocated by the Chicago school scholars, like Stigler (1961). He sees advertising primarily as a means of firms providing information to consumers, who lack knowledge about the products on the market. Stigler reckons that advertisement changes consumers perception about a product so that they can make the decision as to which product is best to them. Different to Bain’s theory, this information will actually make the demand for products more price elastic. Consumers have more information about the product and will make more rational decisions. This leads to companies competing and a lower profit maximising price for the incumbents. New firms can make customers aware of the features and prices of their products though informative advertising. Whichever firm, whether incumbent or entrant, offering the best value for quality in the eyes of the consumer, will expand in the long-term, benefiting from economies of scale, leading to higher levels of concentration. In the long term, therefore, effective informative advertising may also be classified as a barrier to entry. Empirical evidence Catherine Matraves studied the â€Å"Market structure, R&D and Advertising in the Pharmaceutical Industry† in 1999. She found that as markets across the world in this industry become more liberalized and open, e. g. total market size increases, advertising spending of surviving firms also increased. Matraves uses Grabowski and Vernon’s industry studies of the pharmaceutical industry in her paper, which reject Bain’s â€Å"Advertisement as persuasion-view†, but support the Stigler view â€Å"Advertisement as information†. Grabowski and Vernon found that high advertisement-sales ratios did not act as an effective barrier to entry. Geroski and Murfin (1991) observed a different relationship between advertisement and entry. The two researchers found that in the UK car industry falling concentration and increasing imports lead to an increase in advertisement intensity. They conclude their findings in saying that advertising facilitates entry to the extent that an entrant can account for a large share of total industry advertising. However, they note that it is very costly to acquire this large share of advertising. Fiona M. Scott Morton, also studied the Pharmaceutical Industry, but only looking at the U. S. (1998). Fiona looked at the entry decisions generic pharmaceutical manufacturers face when they look at markets which have been opened by patent expiration to competition. She confirms the findings of Grabowski and Vernon (1992) stating that advertising is exogenous to entry decisions. She finds some evidence that brands may affect generic entry very slightly by advertising before patent expiration, but both effects are â€Å"nearly insignificant†. Fiona concludes her paper stating that â€Å"brand advertising is not a barrier to entry by generic firms into the US pharmaceutical market†. Conclusion We have seen two models in this essay, Bain’s â€Å"Advertising as persuasion-view† and Stigler’s â€Å"Advertising as information-view†. The models outlined show how the different views shared on the purposes and effects of advertisement yield different outcomes on concentration and market entry. Persuasive advertising causing high brand loyalty forces potential new entrants to either outspend the incumbent for advertisement expenditure or to offer high price cuts. These constitute in substantial barriers to entry. Stigler’s â€Å"Advertising as information-view† sees advertisement as a barrier to entry mainly in the long term, as companies selling products at the best price for the best quality to well-informed consumers, expand and benefit from economies of scale. However, empirical research shows that in the majority of industries, advertising does not constitute in a barrier to entry. Bibliography: Joe Bain: â€Å"Relation of Profit Rate to Industry Concentration: American manufacturing, 1936-40†³, 1951, Quarterly Journal of Economics; Barriers to New Competition†, 1956, Harvard University Press; Industrial Organization, 1968 Grabowski, H. G. and J. M. Vernon, â€Å"Brand loyalty, Entry, and Price Competition in Pharmaceuticals after the 1984 Drug Act†, Journal of Law and Economics, vol35, Pages 331-345 Catherine Matraves: â€Å"Market structure, R&D, and Advertising in the Pharmaceutical Industry, The Journal of Industrial Economics, Pages 175-177

Detection of Oil Spillage in the Sea Research Paper

Detection of Oil Spillage in the Sea - Research Paper Example The images were taken during the Prestige oil spill that happened in Spanish coast. Geographical Information System (GIS) database was used in the integration of the images to study the spatial distribution, slick progression and the results compared to field observations. From the results acquired, a relationship is developed between the use of radar imagery and other available options like wind data and in situ interpretations. Integration of these techniques produces efficient ways of monitoring and forecast oil spills in the oceans. Key words Advanced Synthetic Aperture Radar (ASAR), oil spillage, Geographical Information System (GIS), and oil slick. Introduction Oil spillage in the sea or oceans serves as a main source of water pollution and environmental degradation. Most leakages result from ships ferrying oil to various destinations across the world. Storms in the sea cause ship wreckages that lead to oil spillage. Monitoring of such incidences before extensive damage is made is essential. The case study for this project is an oil tanker, Prestige that was damaged in a storm in the coast of Spain. Though it had a capacity of 77000 tons of heavy fuel, after the damage, there was an immediate loss of 5000 tons. Over 190kms of the coast was contaminated with the oil within a period of three days. After a few days, the ship broke and sunk in the Atlantic Ocean. During the incident,3000tons were lost as spillage as other 6000tons as it sunk. Oil spread 270km along the south/south west of the cape of Finisterra. Satellite images have been provided by the European Space Agency daily since the accident occurred. The Envisat space craft and European Remote Sensing (ERS) revealed the leakage, raising an alarm in salvaging process of the sea (Palanzuela, Gonzalez, & Cuadrado 2006). The data retrieved from radar was of great use in oil spillage detection because it covers a wide area. Radar also assists in taking images at all times. This makes it useful in detecti ng and clean up operations of oil spills. The mode of technology used in the project was Advanced Synthetic Aperture Radar (ASAR). The images retrieved from the radar were very critical in detecting oil spills from the Prestige tanker. The images were integrated by the Geographical Information System (GIS) database that revealed further information about the spillage. The area covered by oil spill, its quantity and spatial distribution in the area within the oil spillage period was traced. Observations made in the field and the condition of wind during the incident could be retrieved. Oil Slick Detection The area affected lies in the north-west coast of Spain on Atlantic Ocean. The coast line covers the Cape of Finisterre to the mouth of Mino River. The marine biodiversity in the area is rich, with a blend of vertical water and column layers. The rich cold water provides nutrients that support pelagic and demersal fisheries. A rich mussel raft culture is also maintained. The fishing industry, mussel culture creates employment to the natives. Beaches, resorts and ecological important areas offer good grounds for national parks. The spillage that occurred became a threat to these areas. ASAR scenes retrieved through wide-swath mode by ScanSAR technique showed that the area affected was greater than 400kms. Several organizations took part in field survey. The data