What cultural and social characteristic could affect businesses that trade with certain foreign countries?
|
Instructor: Allison Tanner Show
bio
Allison has a Masters of Arts in Political Science. She has worked in the customer service and food industry since 2013. Doing business globally requires knowledge of how to handle the cultural norms of the regions or employees from the regions where the company does business. Explore how cultural norms can impact the business strategy of a global business. Updated: 03/22/2022 Cultural norms are the shared values, beliefs, and customs that influence the behaviors and practices of people. Because these norms differ from region-to-region, they can impact how a business operates in the international or global market. John, a business entrepreneur, is not new to cultural challenges, but he has succeeded in overcoming them with the help of his pal, Cultural Norman (C.N.). When John first started his international ventures, he struggled to develop successful business strategies, or plans for operating
internationally. C.N. helped him to understand that he needed to consider that some cultural norms influence business strategies, such as: At one point, John had planned to expand into Brazil. However, when he sent his vice president to visit with the local partner, they wouldn't speak to him. C.N. helped John to see in Brazil,
personal relationships are an essential part of the business deal. By sending his partner, he was disrespectful and showed a lack of concern for the relationship he had built with the partner. In some cultures, business relationships should be blended with friendship and, in others, personal conversations about family are not usually appropriate. Thus, relationship expectations, or ideals on how personal the business relationships should be, needed to be considered in his strategy for
business development. C.N. also showed John that products and services were culturally dependent. For instance, when John wanted to open a burger shop in India, his inquiries were completely ignored. This was because in India, cows are considered holy and their meat is not consumed. In some countries, the business strategy should avoid pork, such as in areas with large Jewish or Muslim populations, because pig is not consumed by most people in these cultures. Business strategies should
consider how cultural norms can influence the products and services they offer. In some cases, method of entry is determined by local laws, but often it is due to the perception of external businesses and local ethics. Some cultures consider a direct investment an invasion on their land, and the company will need to consider a joint venture or partnership in order to enter. However, in countries where there is a high corruption or high probability that a product will be illegally
duplicated because cultural norms don't discourage piracy or plagiarism, a direct investment is the best option. Joint ventures, or shared ownership of the business, are expected when entering some international markets. Depending on local norms, a company may consider franchising, or selling rights to a brand in exchange for royalties or foreign direct investment, where the company directly invests into an international market while maintaining full control of the business.
John also needed to evaluate business performance and how his companies can complete tasks in different cultures. Some important things to consider include:
When John first started operating in Taiwan, he would bring in managers from the U.S. to oversee the business. He quickly found out that these managers didn't know how to work with the local workforce. Team members never corrected managers if they made a mistake, and they didn't seem eager to do anything outside of their given tasks. C.N. explained that this was because some Asian cultures such as that in Taiwan have a high level of respect for leaders, and they are taught that challenging superiors is inappropriate. Further, because of the hierarchies, team members generally don't work outside of their given tasks. Create an account to start this course today Used by over 30 million students worldwide Create an account Explore our library of over 84,000 lessonsCulture is a challenging concept. It involves how a group of people behaves, what those people value and appreciate, and what they believe is right and fair. Perhaps its best definition is "learned behavior: a way of life for one group of people living in a single, related, and independent community." In their book, Introduction to Global Business: Understanding the International Environment and Global Business Functions, the authors identify four characteristics of culture which are important for global companies to recognize:
Culture embodies so many different components: manners and customs, values and attitudes, power, face saving, names and titles, religion, gift giving, risk taking – and, of course, language.  Values are basic beliefs or philosophies that are pervasive in a society. The United States tends to place a high value upon foreign items, associating them with sophistication – French wines, for example, or Swedish automobiles. In Japan and Korea, by contrast, there tends to be a subtle resistance to things foreign. This is reflected in an aversion to purchasing foreign products and a resistance to accepting employment with foreign firms operating in these countries. Religion is a powerful cultural aspect which can impact everything from weekends and working hours, through holidays and food consumption. How important is language? It's a vital component of advertising, which we've covered before in a series of gaffes in which mistakes have cost marketers in international markets. As we noted in "The Challenges of International Marketing Research," one way to eliminate these problems is to employ backward translation. A message is translated from English into the target language, then someone skilled in that foreign language translates it back to English. It can then be compared to the original. Language is not only important in marketing. It is crucial to managers when evaluating employees and communicating on an intra-company basis with overseas divisions. Knowing language opens doors, avoids embarrassment, and makes every trip abroad more pleasurable. The authors give the example of "Chuck," sent by the president of the Parker Pen Company to visit the firm's trading company in Buenos Aires, Argentina. This was Chuck's first time outside the United States. Arriving after a 14-hour flight from Chicago, he was asked by the trading company to take a taxi to the office as they were tied up with important customers. At the taxi pick-up area, he was dismayed to find that all of the licensed taxi drivers were on strike. Not knowing how to speak Spanish, he had trouble conveying to the "regular" drivers where he needed to go. After an hour of work, Chuck was invited to accompany his trading colleagues to lunch. He was given a menu in Spanish. Not wanting his hosts to perceive him as oblivious, he ordered the only item he could understand, "bistec," under the assumption that it might be beef steak. He was right. The waiter proudly presented Chuck with a two-pound steak. Argentina is justifiably proud of its world famous, Pampas beef cattle. Back at HQ, Chuck and his colleagues worked for another four hours. At six o'clock, he was invited to accompany a group of customers to dinner. Although it was a different restaurant, he had the same problem. The entire menu was in Spanish. There was one item that Chuck could read: "bistec." He ate his second 32 ounces of prized Argentinian steak. Around eleven o'clock, Chuck returned to his hotel where he was greeted in the lobby by Parker Pen's president. "Chuck, I just arrived. The food on the flight was terrible." Chuck duly ate his third two-pound steak with his boss. Further reading
How does different culture affect business?The influence of cultural factors on business is extensive. Culture impacts how employees are best managed based on their values and priorities. It also impacts the functional areas of marketing, sales, and distribution. It can affect a company's analysis and decision on how best to enter a new market.
What social and cultural issues should a manager consider before doing business in a foreign country?7 cultural factors you need to consider when choosing your next export market. Material culture. ... . Cultural preferences. ... . Languages. ... . Education. ... . Religion. ... . Ethics and values. ... . Social organization. ... . Product or service potential.. How do social and cultural differences create barriers to international trade?How do social and cultural differences create barriers on international trade? -differences in language, body language, perception of personal space, and perception of time. -differences in local customs, national holidays, and religious holidays.
How differences in social culture influence the values of a business?You must understand that cultural differences affect global business in three primary areas – organizational hierarchy, etiquette, and communication. Understanding them and recognizing their effects on your business will prevent you from creating misunderstandings with foreign clients and colleagues.
|
