How Hugo Boss Clothing Company does deals with Cultural Business Issues

How Hugo Boss Clothing Company does deals with Cultural Business Issues?

 Introduction

Hugo Boss AG is Germany's largest manufacturer of men's and women's clothing and one of the world's leading design houses for men's fashion. The group consists of four major divisions: Hugo Boss AG (company headquarters); Switzerland-based Hugo Boss Industries (the group's second logistics and management center); Hugo Boss Textile Industry (the company's major production plant in Izmir, Turkey); and American subsidiary Hugo Boss USA. The Hugo Boss line of products includes the three main men's business wear brands--Boss, Hugo, and Baldessarini--as well as the more casual Boss Sports and Boss Golf lines. The company also designs and licenses accessories and fragrances and launched its first line of women's business wear in the late 1990s. Hugo Boss fashions are sold in more than 90 countries around the world through over 350 mono-brand franchise shops, as well as through upscale specialty stores and retail chains. About 65 percent of the company's sales derive from Europe; Germany is its biggest market and the United States its second biggest. The Italian textile group Marzotto owns a 50.7 percent share in Hugo Boss.

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HUGO BOSS stands for innovation, creativity, and progress. Its objective is to further consolidate its position as a leading international fashion group and grow with its brands. HUGO BOSS implements stringent design and quality standards to produce superior products that deliver value for money. All the brand collections adhere to a lifestyle philosophy featuring a distinctive brand signature. BOSS. The core brand BOSS stands for clear-cut, contemporary design and high-quality detail. A perfect fit and specially selected fabric qualities form the starting point for the BOSS collections--for men and women, for every occasion. HUGO. Unconventional yet high-quality. Progressive yet tastefully casual--HUGO embraces contradictions. The brand for modern, self-assured men and women with their own individual styles. BALDESSARINI. Character and profile, paired with a passion for the finest fabrics and superb tailoring: the BALDESSARINI luxury collection. For men of consummate sophistication.   Outstanding products, professional logistics systems and an excellent product presentation have made HUGO BOSS the global market leader in the up-market clothing segment. We intend to build on this position and further expand our market potential in the future.

We have convinced customers all around the world of our brand strength. With fashions for the most varied target groups, for the most exacting demands and for every occasion, we have been able to maintain our market leadership throughout 2003.Our brands are the key to our success.

BOSS

Our core brand BOSS, with an extensive woman's collection and three independent men's collections, offers fashion for every occasion to quality-conscious men and women.

BOSS Woman

Versatility is the keynote of our BOSS Woman collection. The cosmopolitan and self-confident BOSS Woman customer can express her very personal style with an outfit of outstanding quality in perfect taste. The collection offers feminine tailoring, excellent fit, high-quality materials, refined details and unobtrusive elegance.

BOSS Black

Assurance is provided by BOSS Black with a collection that consistently offers the right outfit. Up-to-date styling, sophisticated tailoring and superior quality meet the high demands of the successful man, at home in the world’s metropolises. BOSS Black, with a focus on youthful design and high-quality workmanship, links sophisticated elegance with value for money.

BOSS Orange

Trends are set by the sporty BOSS Orange line with its men’s collection for individualists by making a distinct fashion statement in the casual market. Attention to detail and a variety of combination possibilities provide a new interpretation of the usual BOSS quality.

BOSS Green

Function is addressed by the BOSS Green collection for the modern, active man. Technically optimized sportswear and sporty daily wear is combined with functional fabrics in stylish multi-functional clothing of the highest standard for dynamic outdoor and the latest leisure activities.

HUGO

Avantgarde is the word for the trendy HUGO collection for men and women. The cut emphasizes the body, fabrics are innovatively combined and the look is unconventional. This is fashion for individualists who want to make a statement with their outfit.

BALDESSARINI

Exclusivity is embodied in the BALDESSARINI collection, supplemented by top quality home accessories. BALDESSARINI customers share a passion for detail, superior quality and the finest fabrics.

Licenses

Lifestyle accessories, manufactured and sold under license, complete the HUGO BOSS brand collections.

In the world of fragrance, our cooperation with Procter&Gamble, established in 1984, was again successful in 2003. HUGO BOSS is a market leader in the exclusive fragrance segment in all key markets. This position was expanded this past year with the successful launch of “BOSS Intense.” The extension of this licensing agreement represents the foundation for long-term dynamic growth in the fragrances market.

Simultaneously, textile licenses are being integrated into the HUGO BOSS value creation process. Following the previous year’s integration of the bodywear and socks product lines into our internal business processes, the takeover of licenses for knitwear, shoes and leather goods, already initiated, will continue in 2004. These measures serve to further strengthen our core competencies.

Creation and production

HUGO BOSS creative teams continuously develop new collection themes and products aimed both at reflecting zeitgeist and satisfying a demand for innovation. Extensive global research and product testing are conducted for this purpose. HUGO BOSS creates exclusive designs and colors as well as special finishes in outer fabrics. The model team transforms these ideas into prototypes supported by up-to-date CAD software. HUGO BOSS production sites, like our plant in Izmir, Turkey, then quickly manufacture models, which are shown in the international showrooms as sales samples. Our quality assurance department monitors the entire production process, uniformly applying high standards. It also ensures the ongoing specialist training of staff.

Infrastructure

Seamless provision of our products to retailers is assured by an efficient, globally networked infrastructure. Trading partners receive seasonal collection components in several delivery windows each year, allowing a prompt and flexible response to customer needs. Moreover, in the case of individual re-orders, our partners can obtain delivery of goods in stock within 24 hours in Germany and 48 hours within Europe.

Integrated IT systems support this process at all HUGO BOSS warehousing and sales locations. We will continue to focus on the constant adaptation of our technologies to ongoing market developments and internal corporate requirements in the future.

Distribution policy

Despite the difficult economic situation, HUGO BOSS will continue to intensify the transformation of its brands into international life-style brands with worldwide recognition. Our sales policy is based on two strategies: On the one hand, distribution via so called monobrand shops serves to reinforce the brand experience and create a global image. On the other hand, we rely on our long-term close cooperation with strong trading partners to enable us to convey the fascination of our brands to the final customer. The goal of distributing via up-market fashion retailers is to contribute to joint synergy and focus more sharply on customer convenience.

As a result of this distribution policy, customers from 108 countries currently trust our brands and products. Unique customer and market proximity is achieved by HUGO BOSS subsidiary representation in core markets. In smaller markets, we service our customers directly from our headquarters in Metzingen.

HUGO BOSS Shops

Fashion is an international, visual and, last but not least, a life-style phenomenon. HUGO BOSS shops are designed to give customers the possibility to experience the brands. Contributing to this experience are shop concepts that have a common global theme and are customized for the BOSS (Black, Orange, Green and Woman), HUGO (Man and Woman) and BALDESSARINI brands. These mono-brand shops serve as the showcase for the HUGO BOSS brand world. They ensure optimum merchandise display and promote sales.

The number of shops operated directly by HUGO BOSS will continually be increased in the future. This will enable us to establish in-house retail expertise, which is increasingly important in a competitive environment.

Trade marketing

Various trade marketing activities worldwide bring the HUGO BOSS brands to life at the point of sale and provide support to retailers.

These activities involve decorating retail areas for the individual brands, changing window decoration monthly, and developing promotion and advertising materials for our retail partners. The range of trade marketing services is complemented by retailing events and professional internal training programs for the sales force.

Communication

Corporate and brand communication for HUGO BOSS is managed globally from Group headquarters in Metzingen. International PR agencies and in-house PR offices in HUGO BOSS subsidiaries are coordinated to support our public image in core markets.

Corporate communication concentrates on media reports, press conferences as well as events such as the Annual Shareholders’ Meeting. Corporate communication also assures an internationally consistent presentation and public image for the Group by developing and shaping a HUGO BOSS corporate identity.

Brand communication supports and strengthens the images of the individual brands of BOSS, HUGO and BALDESSARINI. Editorials and photo spreads in leading fashion and life-style magazines are an important component here, as well as interviews with designers and articles about fashion shows. In addition, wardrobing films and celebrities with HUGO BOSS products emotionally charge the brands.

Worldwide print ads are coordinated at Company headquarters with the assistance of professional media agencies. Seasonally changing advertising campaigns permit brand visualization and assure a uniform public image worldwide.

The HUGO BOSS Internet presence is of overarching significance in communication. Comprehensive, up-to-date information, financial disclosures and special sales promotions provide an information source for customers, retailers, the press and shareholders alike.

Sponsorship and events

HUGO BOSS’ cultural involvement in the sphere of contemporary fine arts has become established in the Company as well as in the public domain. We see this as the optimal connection between fashion and art as well as a bridge that strengthens and communicates the aesthetic message of the HUGO BOSS brands.

We benefit from a similar image transfer through sport sponsorship activities. HUGO BOSS is engaged in dynamic sports that impressively convey the values of the BOSS core brand: internationalism, perfection and success.

Activities in the world of sports as well as big fashion events in the world’s major cities allow us to demonstrate our fashion expertise and permit our brands to be identified with emotional experiences.

E-Business

The HUGO BOSS Group consistently uses the new media and our trading partners to increase flexibility, make processes more transparent, improve logistical operations and communicate as promptly and seamlessly as possible. It is our objective to satisfy customer needs, which are changing ever more rapidly. In addition to nurturing personal customer contact, HUGO BOSS has been involved in the e-sales arena since 2001 and has continued to conduct business to business activities in the current reporting period with growing success.

For example, product descriptions used for online orders were supplemented with a “virtual stock book.” This stock book is a response to the wishes of many trading partners to provide visualization, using graphics of the products available via the e-sales application.
Part of a multi-channel strategy, the e-business solution at HUGO BOSS is imbedded in an extranet created in-house, which allows our customers convenient access to sales-related information.

The success of international business relationships depends on effective business negotiations. Negotiators need to be well prepared. Understanding how to achieve international business negotiation outcomes and the factors relevant to the process will allow negotiators to be more successful.

In international business negotiations, cultural differences are inevitable between negotiators from different countries. Cultural values can influence international business negotiations in significant and unexpected ways from the first to the last stage of a negotiation. The diversity of values of partners results in different approaches used in the negotiation process and variable expected outcomes. Successful international business negotiation is not guaranteed by following practical negotiation tips. In fact, it would be more useful for negotiators if the most critical success factors of international business negotiations in a particular culture could be identified in advance.

Negotiating with executives from different cultures requires an understanding and adaptability to these differences. Special approaches for particular cultures may be needed. An international business negotiation within the HUGO BOSS, in particular, would require a unique emphasis from other cultures to achieve positive results in negotiations.

To analyze the cultural diversity, Hofstede (1991) proposed five cultural dimensions to assess the values which characterize specific patterns. The first dimension is social inequality or power distance, which is the extent to which the less powerful members of institutions and organizations within a culture and accept that power is distributed unequally. It signifies the dependent relationships of members. In a large power distance culture decisions are made at the top, formality and protocol are preferred. The second dimension relates to the relationship between the individual and the group. It pertains to societies in which the ties between individuals are either loose (individualism) or cohesive (collectivism). Negotiators from collectivist cultures tend to have a collective decision making process and large negotiation teams. The concepts of masculinity and femininity also relate to negotiation style. A masculine culture emphasizes assertiveness and competition. Negotiators from a high masculinity culture are task-oriented. A feminine culture emphasizes nurturing behaviors, a concern for relationship and mutual benefits. Negotiators belonging to feminine cultures tend to be indirect, cooperative, and display harmonious relationships. The next cultural dimension is managing uncertainty. It refers to the extent to which the members of a culture feel threatened by uncertain or unknown situations. Negotiators from a high uncertainty avoidance culture seek more information; require more clarification and explanation of issues. The last dimension relates to the differences between the short-term and long-term orientation. Partners with short-term orientation expect quick results and can be influenced by time pressure. Counterparts with long-time orientation adapt traditions to a modern context and value the necessity to establish a relationship. Hofstede’s dimensions consider national culture as a static but consistent paradigm. At the interpersonal level such as in negotiation, this paradigm is the context for dialogue in which the national culture acts of each partners sets as a filter (Jensen, 2004).

Regarding the recognition of cultural differences, experience doesn’t seem to help much. Misunderstandings based on value differences still play an important role in negotiations even between professional diplomats (Hofstede & Hofstede 2005: 322). Similarly, there are many cultural barriers and risks in partnerships which take place despite the experience of the partners (Hofstede & Hofstede 2005: 347). The Western commitment to universally applied rules means a contract is binding regardless of circumstances but for people from interdependent high-context cultures changing circumstances necessitate adapting to situations (Nisbett, 2003: 66).

Negotiations also reflect other levels of culture such as professional or community (Gullerstrup, 2004, 10). While the national culture might be relatively static in a situation like negotiation, other levels of culture for example the professional values might change quickly in response to the context (Gullerstrup, 2004, 10)

Based on the evidence of the theoretical and practical synthesis of culture based on Hofstede’s cultural values in international business negotiations, this study focuses on determining the cultural value that influence Thai and international negotiation styles, the successful outcomes and the negotiation process used.

An outgrowth of global teaming is that it helps CIOs become globally oriented, an important asset in fostering global trade and gaining an edge in worldwide markets. "The CIO [of a multinational company] needs to have empathy for the local culture. Because when we understand each other, we make global trade that much more feasible,"

At companies that operate globally, CIOs are often charged with the task of aligning technology across not only business units but also countries and cultures. Global teams frequently play a key role in such efforts; their members' multinational sensitivity, cultural diversity and shared vision can help motivate local buy-in to the project at hand. That's when they work well, which is not always the case. In addition to time and distance problems, cultural issues can make it difficult for global teams to work together.

What follows are 10 strategies -- called from discussions with consultants, analysts and global executives -- for making your global team a success.

1. Incorporate diversity. Recruit team members from across geographic lines, business functions and corporate experience. Diversity is a powerful tool when you're trying to gain buy-in to the project across the enterprise. It also brings insight into local conditions that may affect a project's success.

2. Build trust. Take time to cement relationships among members. Plan regular get-togethers, especially meals away from corporate premises. Such activities help transform "us" and "them" into "we."

3. Create team identity. A team Web page on the corporate intranet or special programs to gain the group corporate recognition will heighten participants' sense of importance in the company.

4. Build consensus. Make sure that members at all levels share the corporate vision; otherwise, you'll keep coming back to that issue every time there's a disagreement. Don't underestimate the value of confrontation. If used correctly, it keeps issues from festering and sabotaging success.

5. Teach sensitivity. Formal instruction goes a long way in eliminating ignorance that could set a project back. When everyone is in sync about the proper protocols for processes that differ from one location to another, the project runs more smoothly.

6. Establish ground rules. To avoid misunderstandings and frustration, global teams need to follow common ground rules for communication, dealing with conflict, running meetings and other project activities. If necessary, bring in a facilitator to help identify significant differences among members and suggest the most effective rules for the group.

7. Be fair. Be consistent in compensating team members. They will talk. Boost morale by offering incentives when they meet project milestones.

8. Communicate progress. You can never communicate too much. Make sure you share critical data among team members in a timely fashion. Keep management or other interested parties aware of successes and setbacks. Toot your own horn when things go well. Solicit new ideas when you're stymied. Flag problems that need resolution.

9. Designate responsibility. Especially when time and distance separate participants, it's easy for tasks to fall through the cracks. You can avoid a lot of finger pointing if you document exactly who is responsible for what.

10. Go face to face. No matter how well you keep in touch, time and distance often cause minor problems to escalate. It's important to get global team members together in one location on a regular basis. That promotes more productive brainstorming and helps participants iron out difficulties, realign priorities and, most important, reinforce a sense of community and common purpose.

Globalization is an inevitable process in the 21st Century, and so is the cross-culturalization. On the one hand, the world is becoming more homogeneous, and distinctions between national markets are not only fading but, for some products, will disappear altogether. This means that marketing is now a world-encompassing discipline. However, on the other hand, the differences among nations, regions, and ethnic groups in terms of cultural factors are far from distinguishing but become more obvious. Cross-cultural issues not only affect international marketing but also will affect the domestic marketing as well. Therefore, understanding of culture is of major importance, even to those who deal with only domestic plants and domestic customers. To those who do deal with foreign customers, suppliers, and bankers, understanding culture becomes not only important but also mandatory. The changed world makes marketing a cross-cultural process that requires marketers must be well informed with cultural difference nationally, locally, and ethnically to be the winner in the 21st Century markets.

The 'Great Divide' Between Business Cultures: Relationship

Whether marketing, sourcing or negotiating a joint venture, the fundamental differences between relationship-focused (RF) and deal-focused (DF) markets impact our business success throughout the global marketplace.

Relationship-focused cultures make up the vast majority of the world's markets. The Arab world, Africa, Latin America and most countries of the Asia/Pacific region are strongly relationship-focused cultures. That is, they are markets where business people get things done through intricate networks of personal contacts.

RF people prefer to deal with family, friends and persons or groups well known to them - people who can be trusted. They are uncomfortable doing business with strangers, especially strangers who also happen to be foreigners.

Because of this key cultural value, relationship-oriented firms typically want to know their prospective business partners very well before talking business with them.
In contrast, the deal-focused approach is common in only a small part of the world. Strongly DF cultures are found mainly in northern Europe, North America, Australia and New Zealand, where people are relatively open to doing business with strangers.
A third group of cultures falls somewhere in between. Most southern and eastern Europeans tend to take a moderately deal-focused approach, as do increasing numbers of Hong Kongers and Singaporeans.

This 'Great Divide' between the world's cultures affects the way we conduct business from the beginning to the end of any commercial relationship

The susceptibility of nonverbal language gestures to misinterpretation underlines a major challenge for people trying to do business across cultures: Behavior which is polite and quite proper in our culture may be rude and highly offensive in another.To help international business travelers avoid damaging blunders our next chapter focuses on global business protocol.

Cross-Cultural business Issues today

The cross-cultural issues will provide more challenges and opportunities to the marketers in the 21st Century although they might not be totally new in the marketing area. Many unsolved problems or issues need to be solved and discussed by the scholars and marketing professionals in theories and in practice. In the theoretic area these themes and issues need to be probed: 1) culture impacts on marketing (international versus domestic); 2) cross-cultural dimensions of marketing research; 3) cross-cultural aspects of marketing mix (products, price, promotion, and distribution; 4) cross-cultural marketing education and professional training; 5) cross-cultural practice in electronic marketing.

The topics or themes listed above can be viewed as guidelines for further theoretic studies although they will not be treated as exclusive for the marketing scholars. More themes and topics will be discovered as the theoretic discussions going on. In terms of marketing practice, the following points should be guidelines for marketers to minimize the possible cross-cultural marketing mistakes:- 1) develop cultural empathy (recognize, understand, and respect another's culture and difference); 2) be culturally neutral and realize that different is not necessarily better or worse; 3) never assume transferability of a concept from one culture to another; 4) get cultural informants involved into the decision-makings.

Cross-cultural marketing is defined as the strategic process of marketing among consumers whose culture differs from that of the marketer's own culture at least in one of the fundamental cultural aspects, such as language, religion, social norms and values, education, and the living style. Cross-cultural marketing demands marketers to be aware of and sensitive to the cultural differences; to respect the right to culture by the consumers in various cultures and marketplaces, marketers should understand that they deserved the right to their cultures. If the marketers want to be the winners in the cross-cultural marketing, they must create the marketing mix that meets the consumer's values on a right to their culture.

From the anthropological perspective, all market behaviors are culture-bound. Both consumer behavior and business practices are performed largely by the culture within which they take place. Therefore, in order to match the marketing mix with consumer preferences, purchasing behavior, and product-use patterns in a potential market, marketers must have a thorough understanding of the cultural environment of that market, i.e., marketing cross-culturally. However, this is by no means to suggest that in the 21st century all marketers should focus on cultural differences only to adjust marketing programs to make them accepted by the consumers in various markets. In contrast, it is suggested that successful marketers should also seek out cultural similarities, in order to identify opportunities to implement a modified standardized marketing mix. To be able to skillfully manipulate these similarities and differences in the worldwide marketplaces is one of the most important marketing strategies for businesses in the 21st Century.

As discussed above, marketing cross-culturally requires that marketers determine the cultural viability of markets. To determine the cultural viability of market means that the marketers should positively identify cultural factors that can be used to facilitate the marketing program in the targeted markets. These factors may or may not exist in the targeted markets; a successful marketer is able to make use of those already existent factors while create other non-existent factors. The classic anthropological theory suggests that while all human behaviors, including market behaviors, take place within a cultural context, human beings are able to influence and even change, through their behaviors, the cultural context within which their behaviors take place.

Accordingly, not only does culture influence marketing; but marketing also influences culture. Marketers can act as agents of changes within a culture. The interactions between marketing and culture can be examined from three perspectives. First, culture defines acceptable purchasing and product-use behavior for both consumers and business. Let us take business gift as an example; in cultures where a business gift is expected but not presented, it is an insult of to the host. In countries where gifts generate an obligation, such as in Japan, it may be beneficial to engage in the practice. Yet, in other cultures, offering a business gift could be misinterpreted as inappropriate, thus offending the recipients. Secondly, each element of culture influences each component of the marketing mix. Promotion, for instance, is strongly influenced by the language. Product acceptance is affected by culturally based attitudes towards change. And distribution is influenced by social institutions, such as kinship ties. Thirdly, marketing also influences culture, especially by contributing to cultural borrowing and change. In the long run, as more markets become global and standardization of marketing mix increases, the rate of cultural changes will also increase.

Nonetheless, cultures may change slowly, and specific products many meet with protracted resistance. Therefore, the primary task for marketers is to locate the similarities in various markets and strategically make them available for entering into the new markets cross-culturally. Marketing cross-culturally is a process during which marketers need to continuously adjust their behaviors and marketing programs to fit into the targeted markets. However, when entering foreign markets, marketers frequently fall into the trap of the self-reference criterion; the unconscious application of one's own cultural experiences and values to a market in another culture. Even more dangerous than self-reference criterion is ethnocentrism, the belief that one's own culture is superior to any other. It is important for the marketers know that there is no room for ethnocentrism in the 21st Century marketing practice.

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