“We don’t bring the product to the people. We bring the people to the product”.

—Dietrich Mateschitz, Founder, Red Bull GmbH (Gschwandtner, 2004)

Introduction

Red Bull GMBH was discovered in 1984 by an Austrian business man Mateschitz (Red
Bull.com, 2011). It took the company three years to get an official permit from the Austrian
government to start production of Red Bull GMBH in the domestic market in 1987
(Redbull.com, 2011).Today Red Bull GMBH is in 160 plus countries with a market share of 70-
80% and a sales volume of 4.2 billion cans sold in 2010 (Red Bull.com, 2011). The company
has faced many problems from the very beginning which include permission to sell in certain
countries in Europe (Gschwandtner, 2004). The company relies on nontraditional marketing and
has a dedicated force of 5000 student brand managers who help promote and sell the company‘s
image to its target market (Red Bull.com, 2011).

Key Global Strategic Challenges Facing Red bull GmbH

Red Bull GmbH faces many challenges in the functional drink market. These Challenges can be
identified with the help of a SWOT and PESTLE analysis of Red Bull GmbH‘s business
environment:

Red Bull GMBH SWOT Analysis

Red Bull GmbH faces many internal and external challenges which can be identified through its
SWOT analysis (see appendix-1). Following is the SWOT analysis of Red Bull GmbH:

Strengths
Red Bull GmbH enjoys ‗market leadership‘ (Data Monitor, 2004:5) in many countries it operates
with a market share of 70% in most of the countries (Data Monitor, 2004). This market
leadership has transformed into Red Bull GmbH‘s biggest strength in the functional drink
category having almost two third of the production in Europe (Data Monitor, 2004).

Red Bull GmbH‘s marketing efforts have been one of the hallmarks of its success as it targets a
segment of 18-25 (Data Monitor, 2004) .The company relies on its team of 5000 student brand
managers who sell and promote the company‘s products through buzz marketing at various pubs
and places were the target market socializes (RedBull.com, 2011).It is also involved in extreme
sporting events such as jumping off cliffs, Para-jumping, aerobatics, formula one etc
(Gschwandtner, 2004).
Red Bull GmbH has a very strong distribution which includes partnerships with key players such
Cadbury Schweppes in Australia (DataMonitor, 2004).Due to this partnership Red Bull GmbH
witnessed a growth in sales up to 40% during the same year (Data Monitor, 2004).On the
financial aspect the company has recorded a 7.6% increase in 2010 worldwide with a total of 4.2
Billion cans sold (Red Bull.com, 2011).

Weaknesses
Red Bull GmbH has been hit hard when it comes to product innovation (Data Monitor, 2004).
The competition has been achieving milestones by introducing such products as sports drinks
were as Red Bull GMBH remains unchanged with its narrow product line (Data Monitor, 2004).
The company only has four products (Redbull.com, 2011) and with such a small product line it is
vulnerable to market fluctuations especially the category that it operates in is really small
worldwide (Data Monitor, 2004).

Red Bull GmbH‘s marketing expenses are very high as it has to invest in extreme sporting events
(Gschwandtner, 2004) and requires wide-ranging efforts to promote its sales (Data Monitor,
2004).These expenses are very high when compared to its competitors such as Coca Cola
(Dolan, 2005).

Opportunities
Red Bull GmbH can be successful if it goes for a brand extension in an existing product line and
it would be more successful in the non-cola market as it has already earned a name for its self in
the functional drinks category (Data Monitor, 2004).Similarly Red Bull GmbH can diversify its
distribution by going to other modes of retail such as vending machines as it did in Australia
(Data Monitor, 2004).

Red Bull GmbH needs to penetrate into further markets which have huge profit opportunities for
it (Data Monitor, 2004). Asia Pacific markets are huge profitable investments as they accounted
for 50.9% of the total global trade of energy drinks (Data Monitor, 2004).

Threats
Red Bull GMBH faces issues related to public health concerns and has been banned or is under
the scrutiny of the states classification of its product category (Data Monitor, 2004). It is banned
in Denmark and is sold as medicine in Japan and many other countries are expressing their
concerns over its health implications when consumed in high quantity (Data Monitor, 2004).

Although the company promises a profitable future yet it is faced by a challenge of a maturing
markets were it faces tough competition from emerging brands (Data Monitor, 2004).The target
market of Red Bull GmbH is maturing and is adopting to different lifestyles which requires less
energy stimulation (Yaqoob, 2008). Consumers are becoming more health conscious and aware
of their health related issues and now prefer to drink bottled water (Data Monitor, 2004).

PESTLE Analysis for Red Bull GmbH

Red Bull GmbH‘s PESTLE (See appendix-2) ranks element of its business environment. The
elements assess 5 relevant marketing environments on a scale of 1-5 were 1 is the highest and 5
is the lowest. The element given the highest ranking is the legal issues. Red Bull GmbH‘s has
been facing legal actions by governments and states which are ranging from approvals to bans
from packaging and labeling of the product to its ingredients (Farris, 2002).

The second element is joint ventures as mode of entry into new markets, since Red Bull GmbH
has its production facilities in Austria and it distributes from the same place (Red Bull.com,
2011), so in order to enter into new markets it might consider Joint Ventures as certain
governments require foreign firms to have local partnerships (Carter and Lee, 2009).

Negative publicity and growing health awareness amongst consumers is assigned same weights
because of the fact that they are interrelated. Red Bull GmbH has faced many issues related to its
negative publicity as at one time it was considered that taurine, one key ingredient was made out
of the Bull‘s testicles (Farris, 2002).It‘s over consumption was also banned in certain countries
due to risks of deaths related to cardiovascular failure especially when mixed and over consumed
with alcohol (Farris, 2002).

Over the years there has been a growing concern amongst consumers regarding their health and
consumers are increasingly switching over to bottled drinks in the non energy category (Data
Monitor, 2004). This can be a big challenge for Red Bull GmbH as it enters into new markets
(ibid). Red Bull GmbH‘s target market was the Generation Y people who were born after 1981
also known as the millennial generation (Yaqoob, 2008). Now as this population ages and their
buying habits change and they become more health conscious it would be a challenge for Red
Bull GmbH to find new target markets comprising of young people (ibid). World‘s youngest
population is at higher ratio in Asia and Africa which in the near future would be promising
investments coupled with economic growth (prg.org, 2010).

Currency fluctuations are always a challenge to organizations but are given a lower rating of 4.
Currency fluctuations have great impact on economy and trade and are measuring tools for trade
amongst countries (Leon, 2011). Supply and demand determine demand of a currency and
relation of business between countries (ibid).However certain countries keep their exchange rate
at low like China which wants the world to benefit from its cheaper labour and cost of
production.(ibid). This can be a promising opportunity for Red bull GmbH to invest in China as
the European economy faces many challenges with the Euro getting weaker against the Dollar in
2010 (ibid). With a total of 2.15 (See Appendix-2) Red Bull GMBH as mentioned above still has
opportunities to invest in other markets especially emerging economies with a younger consumer
base, stable currencies and investment friendly governments.

Cultural Challenges
Company‘s face many challenges when they try to sell their products across different cultures. In
global markets companies come across various cultural challenges which start from unfamiliar
languages, different value systems, beliefs and behaviours of individuals and groups (Cavusgil et
al., 2010). Every country has a unique set of standard of living and consumption patterns (Ibid).
According to Cavusgil at etl (2010:126) ―Culture refers to the learned, shared, and enduring
orientation patterns in a society. People demonstrate their culture through values, Ideas, attitudes
and behaviours and symbols.‖

Hofstede in his research gave the five dimensions of culture (see appendix-10) which are used by
firms as major tools to assess the challenges and future outlook in investing into such countries
and markets. Red Bull GmbH currently sells in markets (See appendix-10) which have
characteristics of High individualism, with stronger masculinity, low power distance, a high level
of uncertainty avoidance and short term orientation.
REDBULL GmbH’s Product Mix

Red Bull GmbH‘s Product line consists of Red Bull energy Drink, Red Bull Sugar Free, Red
Bull Shots and Red Bull Cola (See Appendix-8). Red Bull GMBH however doesn‘t offer all
product lines across most of its markets (Red Bull.com, 2011).

Red Bull GmbH BCG Analysis

The BCG Matrix is a tool which shows relationship between market growth and market share
(Carter and Lee, 2009). The BCG of Red Bull GmbH (See appendix 4) shows Red bull GmbH‘s
current market standing in different regions around the world against its largest competitors. Red
Bull GmbH is a cash cow in North America (earthtimes.org, 2009) and in western and Eastern
Europe, this is due to the fact that the energy drinks market in these regions have matured and
there is intense competition between rivals and there are few competitors who share the market
with Red Bull GmbH (foodproductiondaily.com,2004).

Red Bull GmbH is a star in Middle East, Africa, Australia and New Zealand (See Appendix 4). It
has a market share of 22.7 percent in Middle East and Africa and a market share of 13.6 percent
in Australia and New Zealand (See appendix 5).Stars are profitable since they are market leaders
but require huge investment for maintaining market leadership in a growing market (Jobbers,
2010).

Red Bull GmbH is a question mark in Latin America and Asia excluding New Zealand and
Australia (See Appendix 4). Red Bull GmbH‘s Market Share in Asia is 2.8% and 11.7% in Latin
America (See Appendix 5). Asia Promises to be a profitable investment in the near future
because of the largest youth population in the world (Euromonitor International, 2007).
Population wise India has the highest number of 20-24 age bracket people accounting to 98
million followed by China with 82 million and Indonesia 21 million (ibid). Moreover economic
growth and raise in income in these countries has increased the potential for Red Bull GmbH to
invest in such economies (ibid). South American countries especially Brazil is considered to be
one of the emerging economies of the world with Red Bull GmbH having a 26% growth rate in
South American Countries (earthtimes.org, 2009).
Red Bull GmbH’S ANSOFF Matrix Analysis
An Ansoff Matrix is a strategic analysis tool which explains future potential for a company in
managing its products in relation to its markets (Carter and Lee, 2009). According to Red Bull
GmbH‘s ANSOFF Matrix analysis (See appendix-6), it should go for a diversification strategy.
This is based on previous analysis in this report identified through the SWOT, PESTLE and
BCG Matrix Analysis tools.

The company needs to go for diversification strategy because it faces challenges of a narrow
product line which is an obstacle for further development in maturing markets (Data Monitor,
2004). Red Bull GmbH‘s current target market that is generation Y is maturing in most of the
countries due to which Red bull GmbH has to explore new markets which have a huge youth
population (Yaqoob, 2008).The income levels in developing economies and emerging markets
are improving due to which people living in such countries are witnessing improved standards of
living and increased purchasing power (Euromonitor international, 2007).

People in the developed markets are already adopting healthy lifestyles and due their being more
conscious of their health Red Bull GmbH faces an eminent threat of drop in sales unless it
diversifies its product line and penetrates into new markets (Data Monitor, 2004). With above
mentioned factors of aging population, narrow product line and emergence of new economic
power centers Red Bull GmbH should go for a diversification strategy.

Current Product Mix Strategy of Red Bull GMBH (Standardization Vs Adaptation)

Red Bull GmbH has a standardized (See Appendix-7) product mix this is due to the fact that Red
bull GmbH produces and distributes its products from a centralized production facility in Austria
(Red Bull.com, 2011). However Red Bull GMBH had to adapt (See Appendix-7) its product mix
according to different countries in accordance with their legal requirements (Farris, 2002). Red
Bull GmbH was allowed to sell in France after twelve years of ban when it changed the contents
of its drink removing the controversial ingredient taurine from it (Palmer, 2008). In most of the
countries around the world Red Bull GmbH had to print health warning labels of not consuming
the drink with alcohol (Farris, 2002). In Canada Red Bull GmbH was allowed to sell its products
after the health authorities approved warning labels that quantity should not exceed 16.6 oz per
day (Farris, 2002).
Why Should Red Bull GmbH go for Product Adaptation
Red Bull GmbH should go for product adaptation strategy because it has in past faced many
issues ranging from narrow product line to health and legal complications to controversial
ingredients (See Appendix-1 and 2). Some of the advantages of adaptation (See appendix-7)
which would benefit Red Bull GMBH in overcoming these issues which include approvals from
governments, matching needs of the segments individually and ethical concerns etcetera.

Red Bull GmbH should go for adaptation strategy because (see appendix-6) it is going to go into
product diversification and this is being done to cater to the needs of new markets and with new
product lines. As mentioned earlier in this section it can cater to the needs of such emerging
markets as Asia, Middle East and Africa etcetera through product diversification and thus would
need adaptation strategies for its product mix. Moreover since Red Bull GmbH has to face
various cultural challenges as mentioned in the previous section so it has to adapt itself to such
cultures and markets which would mean it would have to diversify its products and markets
accordingly.

Red Bull GmbH’s Existing Modes of Entry into International Markets

According to the Market Entry strategy (See Appendix-8) Red Bull GmbH follows the Stages
model of Internationalization. The Uppsala Model in the stages model identifies basically two
trends in the internationalization of a firm (Carter and Lee, 2009). Firms firstly develop markets
according to an ―establishment chain‖ Carter and Lee (2009:215). This is further elaborated in
the sense that firms start with zero exporting activity that is development of domestic market,
then it can take up a sales subsidiary and finally an overseas production facility (Carter and Lee,
2009).

Red Bull GmbH does not completely follow this theory; it has started with domestic market
development in 1987 in Austria (Red Bull.com, 2011) which was not enough and so it started
moving abroad into other countries since 1992 (fundinguniverse.com, n.d.). It gradually followed
into other Markets like Western Europe, North America, Australia, Middle East and Africa (See
Appendix-5). However it has kept production centralized and has not established a production
facility in any other country to date (Red Bull.com, 2011).
Red Bull GmbH at the corporate level in its international business model (See appendix-8)
follows the multi-level marketing approach. According to Carter and Lee (2009:226) ―Multi-
level marketing (MLM) refers to a marketing strategy where products are sold through a
distributor structure that has many levels. The Idea behind MLM is to grow a business through
word of mouth. People are encouraged to introduce others to the business. In return, they get a
commission on sales made.‖ Red Bull GmbH follows this approach as it distributes its products
through distributors who sometimes are wholly owned subsidiaries and also through its 5000
dedicated student brand managers (Red Bull.com, 2011) who market its products to such places
which are visited by its target market and in doing so they get commission on sales and first hand
work experience (Gschwandtner, 2004).

In the market entry modes (See Appendix-8) Red Bull GmbH follows the direct and indirect
export and Strategic Alliances approaches. It has Strategic Alliances with Cadbury Schweppes
Australia to distribute its products not only through traditional channels but also through vending
machines (just-drinks.com, 2003). On the other hand Red Bull GmbH imports its products
through its network of wholly owned or independent subsidiaries present in different countries
from its home base in Austria (Farris, 2002).

Red Bull GmbH’s Future Modes of Entry into International Markets

Red bull GmbH in its process of internationalization should follow the Bargaining power
approach as a choice of entry into future markets (See Appendix-8). This is due to the fact that it
is difficult to do business without government support in such countries where governments have
high bargaining power and as mentioned in the PESTLE (See Appendix-2), Red Bull GmbH has
been facing legal complications when it comes to approval of its products in countries
worldwide. An example of this was France which has already been discussed above in this report
.Moreover it should follow the agency approach as it moves into future markets like China were
joint ventures and strategic alliances are key factors to success of business (Carter and Lee,
2009).

At the corporate level Red Bull GmbH should keep Multi-level marketing business model as it
has contributed to its success in the past through Student Brand Managers and Strategic
distribution alliances (Red Bull.com, 2011). It could also go for ―the Transformational Business
Model‖ Lee and Carter (2009:229) as it adapts and diversifies its products and markets in the
future as proposed in the previous section of this report.

In the market entry modes Red Bull GmbH should go for Joint Ventures and strategic alliances
as it plans to enter new geographical regions (See Appendix-8). One of the advantages of Joint
ventures is that they allow firms to avoid from making expensive risky investments on their own
and at the same time help avoid competition from stronger firms (Bell et al, 2008).

Analysis of Red Bull GmbH’s Current Promotional Mix

Red Bull GmbH spent $ 600 million on marketing which is 30% of its revenue in 2004 which is
quite higher than the world‘s number one beverage brand Coca Cola which spent 9% (Dolan,
2005). Red Bull uses the ―Buzz Marketing Strategy‖ (Gschwandtner, 2004) by sponsoring
exclusive and extreme sporting events around the globe from Formula 1 to Aero Shows, from
Skiing to Climbing you name them and Red Bull GmbH does it all (ibid).

Red Bull GmbH build up its pre-marketing hype in France by sponsoring Austrian air acrobat
Felix Baumgartner who flew across the English Channel to France at a speed of 220 mph and
flew for less than seven minutes but this event was given a free media coverage for months
(Gschwandtner, 2004). This is not the end, other than sponsoring extreme sporting Red Bull
GMBH uses humour as an appeal to advertise its products through humorous cartoons. It also
activates its brand by targeting such places as Clubs, Pubs and Concerts etcetera through its
teams of SBM (Student Brand Managers) (Redbull.com, 2011). Red Bull GmbH‘s promotional
mix represents its culture which it markets across the globe which is individualistic, fun loving
and energetic (Red Bull.com, 2011).

Analysis of Red Bull GmbH’s Distribution

Red Bull GmbH has a network of sales subsidiaries in 160 countries around the globe
(Redbull.com, 2011). These Sales Subsidiaries import Red Bull GmbH products from Austria
and Switzerland through trains, trucks and ships as logistical mechanisms for shipment (Red
Bull.com, 2011).

Red Bull GmbH‘s follows the intensive distribution and exclusive distribution strategies (Jobber,
2010). Example of this is the distribution of Red Bull GmbH on trade at all major retail outlets
and super stores (Farris, 2002).The example of exclusive distribution at the whole sale level is of
Cadbury Schweppes which is the biggest distributor in Australia which uses vending machines,
food courts and colleges as places for distribution (Just-drinks.com, 2003). It also utilizes its
team of 5000 student brand managers around the globe to sell its products off-trade at selected
Bars, Clubs and events etcetera (Redbull.com, 2011).

Conclusion

To conclude Red Bull GmbH is a Global brand which has sales channelized across all
geographical regions and has many opportunities for further development which are balanced by
its strengths like its Market Leader ship, Unconventional Marketing and Financial strength. It has
got a strong culture which is individualistic, masculine and sporty and truly represents the
segment that it markets too.

However, as the market becomes more and more saturated due intensive competition, it would be
required to diversify its products and markets. Furthermore, it would be required to adapt its
product lines according to new cultures and geographical regions that it plans to enter in. As it
would be entering into future markets it would be facing challenges of market entry with
governments and state actors having high bargaining powers.

This would mean adapting according to market. It would also be requiring agency approach as
some countries and their markets are well managed through agencies. Joint ventures would also
be helpful in reducing costs of production and distributions especially in emerging economies
which promise cheap labour and lower cost of production. However, Red Bull GmbH would still
be required to keep an eye on production and distribution operations in such countries and
markets to ensure same quality and product delivery which it gives from its home base Austria.

There would always be legal complications haunting its business operations however its strength
would remain in its marketing communication efforts. The use of off trade methods for
marketing would facilitate its sales and help in stable brand activations. Its distribution strategy
provides it sustainable competitive advantage, but this can also cause problems if distribution
partners do not show loyalty and exclusivity and long term commitments to business. In the end
with all these above mentioned factors Red Bull GmbH can still maintain its market leadership
and uniqueness as compared to other brands in the market.
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Appendix

SWOT Analysis Red bull (Appendix-1)

PEST Analysis Red Bull (Appendix -2)
Red Bull Energy Labelling and Packaging (Appendix-3)

Red Bull Can Labelling (Hansel, n.d.)

BCG Matrix (Appendix-4)

Adopted from Carter and Lee Figure 9.2 the BCG Matrix (Carter and Lee 2009)
Red Bull Market Share Value (Appendix-5)

Source: Euro monitor (2007) @ Euro monitor International 2007

 Red Bull GMBH’s ANSOFF Matrix (Appendix-6)

Existing Products New Products

Product
Existing Market
Markets Development
Penetration

Market

New Development Diversification

Markets

“
ANSOFF MATRIX” (Tutor2u.net, n.d.)
Standardization Vs Adaptation (Appendix-7)

Figure 9.2 “Standardization Vs Adaptation in international Marketing” (Lee and

Carter, 2009)
Market Entry Strategy (Appendix-8)

Process of Internationalization
Theoretical Bargaining
Stages Model Networks Born Global
Approach Power

International Business Model

Multi-Level
Subscription Network Effect
Corporate Marketing
Level Razor and Blade Monopoly Auction
Disintermediation Click and Mortar Loyalty Business

Market Entry Modes

Direct and
Country or Indirect Joint Venture Franchise
Market Level Exporting
Acquisition and
Strategic Alliance FDI
Merger

Figure 7.2 “Market Entry Strategy” (Carter and Lee, 2009)

Red Bull GMBH’s Product Line (Appendix-9)

Red Bull Energy Drink

The basic product of Red Bull GMBH is Red Bull energy drink (Redbull.com, 2011). It has been
Red Bull‘s first product in its product line which was introduced more than two decades ago
(Redbull.com, 2011).The drink was for people who wanted to have a clear and focused mind,
physical active life and also giving them fun and excitement (Redbull.com,2011). Its main
ingredients include Caffeine, Taurine, Glucuronolactone,

B- Group Vitamins, Sucrose, Glucose and Alpine Spring Water. It is available in three sizes of 8,
12 and 16 oz (Redbull.com, 2011).For product Label and Packaging (see appendix-3).

Red Bull Sugar Free

This is the sugar free version of the original energy drink with 3 calories per 100 ml
(Redbull.com, 2011).It has the same packaging as the original variant mentioned above.

Red Bull Shots

Red Bull Shots is a 60 ml packaged drink with 27 calories enough to give the same energy that
the original Red Bull Energy drinks gives (Red Bull.com, 2011). It is also available in sugar free
variant for health conscious segment (Red bull, 2011). It is designed for occasions were body
and mind wants to remain active such as parties, travelling or sports etc (Red Bull, 2011).

Red Bull Cola

The last product in the product line of the company is Red Bull Cola. Red Bull Cola is available
in 8.4 oz and 12 oz packaging (Redbull.com, 2011).It has been the most controversial product of
Red Bull GMBH to date as it has been banned partially in Germany and Taiwan over traces of
cocaine found in it (Friedman-Rudovosky, 2009).However the company defends its position in
the market by explaining all its ingredients are natural and listed on the cans (Red Bull.com,
2011).
Hofstede Cultural Dimension Index Analysis (Appendix – 10)

Country PDI II MI UA LTO

Africa East 64 27 41 52 32
PDI= Power Distance Index
Africa West 77 20 46 54 9
II= Individualism Index
Arab countries 80 38 53 68 23
Argentina 49 46 56 86 20 MI= Masculinity Index

Australia 36 90 61 51 21 UA= Uncertainty Avoidance Index

Austria 11 55 79 70 60 LTO= Long Term Orientation

Bangladesh 80 20 55 60 47
Belgium 65 75 54 94 82
Brazil 69 38 49 76 44
Bulgaria 70 30 40 85 69
Canada 39 80 52 48 36
Chile 63 23 28 86 31
China 80 20 66 30 87
Colombia 67 13 64 80 13
Croatia 73 33 40 80 58
Czech Rep 57 58 57 74 70
Denmark 18 74 16 23 35
El Salvador 66 19 40 94 20
Estonia 40 60 30 60 82
Finland 33 63 26 59 38
France 68 71 43 86 63
Germany 35 67 66 65 83
Great Britain 35 89 66 35 51
Greece 60 35 57 112 45
Hong Kong 68 25 57 29 61
Hungary 46 80 88 82 58
India 77 48 56 40 51
Indonesia 78 14 46 48 62
Iran 58 41 43 59 14
Ireland 28 70 68 35 24
Italy 50 76 70 75 61
Japan 54 46 95 92 88
Korea South 60 18 39 85 100
Latvia 44 70 9 63 69
Lithuania 42 60 19 65 82
Luxembourg 40 60 50 70 64
Malaysia 104 26 50 36 41
Malta 56 59 47 96 47
Mexico 81 30 69 82 24
Morocco 70 46 53 68 14
Netherlands 38 80 14 53 67
New Zealand 22 79 58 49 33
Norway 31 69 8 50 35
Pakistan 55 14 50 70 50
Peru 64 16 42 87 25
Philippines 94 32 64 44 27
Poland 68 60 64 93 38
Portugal 63 27 31 104 28
Romania 90 30 42 90 52
Russia 93 39 36 95 81
Serbia 86 25 43 92 52
Singapore 74 20 48 8 72
Slovak Rep 104 52 110 51 77
Slovenia 71 27 19 88 49
Spain 57 51 42 86 48
Sweden 31 71 5 29 53
Switzerland 34 68 70 58 74
Taiwan 58 17 45 69 93
Thailand 64 20 34 64 32
Trinidad and 47 16 58 55 13
Tobago
Turkey 66 37 45 85 46
U.S.A. 40 91 62 46 26
Uruguay 61 36 38 100 26
Venezuela 81 12 73 76 16
Vietnam 70 20 40 30 57

Table Adopted from “Dimension Data Matrix” (Hofstede et al, 2010)

Asia

Bangladesh
China

Power Distance Hong Kong

Index India
120
100 Indonesia
80 Iran
60 Japan
Long Term Individualism
40
Orientation Index Korea South
20
0 Malaysia
Pakistan
Philippines
Russia
Uncertainity
Masculanity Index Singapore
Avoidance Index
Taiwan
Thailand
Turkey
Vietnam
Africa and Middle East

Power Distance
Index
80
70
60
50
40
Long Term 30 Individualism Index Africa East
Orientation 20
10 Africa West
0
Arab countries
Morocco

Uncertainity
Masculanity Index
Avoidance Index
Europe

Austria
Belgium
Bulgaria
Croatia
Power Distance Czech Rep
Index
Denmark
120
100 El Salvador
80 Estonia
60 Finland
Long Term
40 Individualism Index France
Orientation
20
Germany
0
Great Britain
Greece
Hungary
Ireland
Uncertainity
Masculanity Index Italy
Avoidance Index
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Norway
North America

Power Distance
Index
100
90
80
70
60
50
Long Term 40
30 Individualism Index
Orientation
20
10 Canada
0
U.S.A.

Uncertainity
Masculanity Index
Avoidance Index
South America

Power Distance
Index Argentina
100
90 Brazil
80
70 Chile
60
50 Colombia
Long Term 40 Individualism
Orientation 30 Index Czech Rep
20
10
0 El Salvador
Mexico
Peru
Trinidad and Tobago
Uncertainity Masculanity
Avoidance Index Index Uruguay
Venezuela
Australia and Newzealand

Power Distance
Index
100
80
60
Long Term 40 Individualism
Orientation 20 Index
Australia
0
New Zealand

Uncertainity
Masculanity Index
Avoidance Index
Explanation of Hofstede Dimensions of Culture
The Hofstede Cultural Dimensions is an ―applicable framework for classifying cultural patterns‖
Carter and Lee (2009:122). He identified five dimensions to compare cultures of different
countries these are known as power distance, uncertainty avoidance, individualism and Long
term Orientation (Carter and Lee, 2009). These are explained as follows:

Power Distance (PD)

Power distance represents the way societies treat humans on unfairness (Carter and Lee, 2009).
―Collectivist Countries‖ Carter and Lee (2009:123) have high power distance as compared with
―individualistic societies‖ (ibid). Almost all developing countries have a higher rating on
collectivism and power distance (Carter and Lee, 2009).It is also the culture of organizations
were few individuals make decisions about their functioning (ibid) were as it is the vice versa in
low Power distance countries.

Uncertainty Avoidance (UA)

This relates to future uncertainties and how do societies try to overcome while dealing with them
(Lee and Carter, 2009). Countries with High Uncertainty Avoidance are risk takers and not hard
working (Carter and Lee, 2009). A high Uncertainty Avoidance transforms into an identity for a
society and its norms which result in avoidance of risk taking (ibid).Thus companies have to put
in their efforts into marketing and creating a positive perception of a brand or product Carter and
Lee (2009:124).

Individualism (IDV)
Individualism means what value a society gives to individual efforts and achievements in
relation to people living around that particular individual (Carter and Lee, 2009). Countries that
show high individualism score show that the rights and freedom of individuals are respected
(ibid). Such people are good in building relationships with people but these relationships are
often characterized as being weak (Hofstede et al, 2010). Low individualism score means more
collectivism and strong families (ibid).
Masculinity (MAS)
It basically explains the roles of male and female members in a society where there is stereo
typical difference (Carter and Lee, 2009). It explains whether societies re-enforce this role of
male as being a dominant member as against females or not (Hofstede et al, 2010). High
Masculinity means high gender differentiation and low masculinity means the opposite (ibid).

Long Term Orientation (LTO)

This is the fifth dimension in the model (Carter and Lee, 2004). This dimension was added to
explain the difference of thinking between the eastern and western societies (ibid). The influence
of the teachings of Confucius on the eastern value system was used as a classification for this
orientation (ibid). A long term orientation would mean having determination, carefulness, to give
prominence to relations in an orderly manner and finally having a sense of embarrassment
(Hofstede et al, 2010). Short term orientation means stability in personality, saving grace,
respecting traditions and exchanging gifts (ibid).