Retailers find it tougher to generate cash the greater the cultural differences that exist between their home markets and other countries in which they operate.
A study of cultural difference, undertaken by Oxford University's Templeton College and sponsored by KPMG International, revealed that share prices are also affected.
The report assigns a score to differences between a retailer's home market and each country in which it operates to calculate an International Cultural Spread (ICS) rating.
ICS is based on four fields: the preference for individualism over a group approach; the amount of inequality considered normal; preference for 'softer' values such as relationships over 'harder' values such as achievement; and preference for structured over unstructured situations.
Share prices of retailers with low ICS scores, or small cultural variances, outperformed rivals by 30 per cent. However, a high ICS score is not necessarily all bad news. Mothercare has the highest ICS ranking, but only 9 per cent of its sales are international. Franchising helps mitigate its cultural spread, according to the report.[QQ]
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