Cultural Factors in International Business

Introduction

It is certain that firms nowadays deal with the realism of cultural range on both intercontinental business and within their associations. The term international commerce or business jointly expresses all commercial operations occurring between two nations at the minimum. These may encompass both private, as well as government businesses. It is essential to note that private firms undertake such steps for proceeds purposes, but governments commence such businesses for both profit and political motives, among other interests. Culture, on the other hand, refers to a set all that we learn in relative to ideals, traditions, as well as creed.

Other aspects of culture include work of arts, norms, and convictions. It is imperative to understand that there are state, corporate, as well as sub-culture and corporate culture. Culture usually determines international businesses at various levels. Consequently, marketers have highlighted that it is imperative for intercontinental businesses to be sensitive to varied cultural backgrounds. Becker (2000, pp. xi) states that international businesses normally incur loss since they do not apprehend the scope of the wants and behaviors of clients and recruits across regions. However, the heads of such businesses, together with their juniors, should always understand how to adapt to such cultures during their commerce. This is crucial in maintaining excellent relations with the distant country, as well as meeting business objectives.

Language and Communication

International businesses always face huddles arising from cross-cultural languages. It is crucial to note that language affect financial issues since it involves negotiations, among supplementary parameters. A common language is necessary for trade to occur since communication is the groundwork of every exchange. Each party must comprehend what the other is highlighting, and this only possible if a familiar language exists. It is crucial to understand that misunderstanding may arise within parties, which speak the same language.

For instance, US English is different from that of Australia and UK. Inadequate fluency in a language usually leads to misunderstanding during deals, which may later result into tardy or no payment. Mitchell (2000, pp. 1) outlines that the panorama that occurs from communication failure is inexorable. It is a sad moment when one is unable to comprehend constructive statements. Business partners, as well as customers, may consider one incompetent.

Being fluent in a language does not guarantee outstanding communication within businesses. It is crucial to note that one needs to know the implication of words when transacting business. Several words mean different things, and in varied situations. Intercontinental business operators must thus be conversant with such mystifying words to keep up business in foreign countries. Failure to comprehend meanings may make a party withdraw from the deal even if it were the best. Furthermore, misunderstanding arising from such scenarios can still lead to late shipping, as well as irregular payments, among other misfortunes. Inadequate communication leads to poor control of a business (Iyer, 2000, pp. 93).

Another related communication parameter that influences international business is the dissimilarity between elevated and low-context societies. The high-context cultures tend to depart from the real meanings of what they verbally communicate. The hidden meanings of the words and terms often confuse other parties, especially if they hail from low-context cultures. Low-context culture holds a lot of prominence on the vocal language. Czinkota, Ronkainen, and Moffett (2008, pp. 24) state that ‘North American cultures conform to low-context communications’.

Unless one is conscious of this fundamental difference, meaning, and intentions can easily be misunderstood.’ This appears to be encouraging since there is no need for further interpretation. International investors may always find challenges especially when the two cultures are involved. If a low-context culture fails to interpret what a high-context colleague mean, then a deal may not be sealed. This is a major drawback in the international business, thus leading to poor transactions.

Intercultural contact is a major area that influences international business. Communication across cultural and linguistic divides is always a major human resource challenge (Rugman and Brewel, 2003, pp. 745). Corporations always believe that leaning the local language is final to operate in a foreign land. Speaking a language is not equivalent to communicating, but being sensitive to what others are experiencing is fundamental. Foreign marketers always fail to go beyond language, thus unable to understand the social aspect of their partners and customers.

This may create ripples in the business arising from the natives thus developing a negative attitude towards the organization, together with their services. Inadequate intercultural communication may also lead to the usage of offensive words. Furthermore, it usually leads to poor selection of time and situations to market a product. The results of such occurrences usually lead to drawbacks in businesses since the locals lose interest due to the perceptions they have. Failure to win the faith of the partners, as well as customers is a significant shortcoming that faces international businesses.

Body language is an additional aspect of contact and failure to construe the meaning may lead to a clash. Every nation has a way of communicating, so understanding the body language is important during relations. It is necessary for international business operators to recognize the connotations underneath the mannerisms or gesticulations. Mead (2005, pp. 33) outlines that there is a need to interpret nonverbal signals and indirect illustrations. It is imperative to emphasize that there are situations where people from other cultures interpret these gestures differently. Such scenarios usually lead to collision in the course of negotiations.

Religion

Religion is one of the major pillars that constitute culture, and it affects several international businesses. Several states merge their worldly and sacred laws. For instance, the US usually offers various products that coincide with their religious and secular celebrations. New businesses that do not understand such holidays usually miss out in such mega sales. This is a major drawback to some international businesses since such periods are limited, but their turnover is enormous. Moments like Black Friday are very important for businesses, but new investors who do not understand it may miss out.

Another impact of religion on the international business is predominant in the nations where sheria law is prevalent (Moran, Harris and Mor, 2007, pp. 593). It is illegitimate to operate in fiscal threats, since the bylaw considers it to be gambling. Furthermore, the law forbids the retailing of alcohol and pock, as well as pornographic associated media. It is imperative to assert that such prohibitions usually limit the well-being of various international businesses sited in states, which practice sheria law.

Values and Attitudes

Cultural values and attitudes also manipulate global businesses. Ghauri and Usunier (2003, pp. 138) outline that values verify what we deem excellent and evil, as well as rational and beautiful; hence it is not simple to convince any populace that their values are erroneous. It is crucial to note that values differ within and across nations, and failure to understand another nation’s value may lead to collision. Willing investors usually experience culture shock when venturing in other countries and these may arise from advertisement and employee recruitment.

Different nations have varied advertisement modes, so what applies in one country may not be appropriate in the other even for international corporations like Coca-Cola. This is pricey for such organizations since they incur high expenses in releasing such adverts. Standards and attitudes are also important when choosing employees, as well as their work schedules. Some societies have nationwide celebrations at different times, and the employees usually fail to attend to their duties during such festive. It is imperative to note that such moves reduce the productivity of businesses if the organization is not aware of such periods. Situations where all employees need leave at the same time usually challenge many international businesses since they result into diminished productivity.

Aesthetic is another key cultural parameter that affects international business. This aspect relates to artistic nature including savor, smell among other dimensions. It is noted that understanding of such aesthetics aid in the management of business (Punnett, 2010, pp. 11). Aesthetic diverges across nations and cultures. Some corporations dealing in the artistic field find it favorable in some countries where people appreciate art. However, this may not be the case if the company does not meet the taste of such people. For instance, investors in South America usually include songs in their advertisements and dealings since the locals love music. Researching and knowing the aesthetic of a society is expensive, and it does not usually give a definite and reliable result.

Education

Education plays a very significant role in international business, and it presents both negative and positive influences. It is important to assert that it varies amid, as well as within the nations. Education level of a nation influences the types of messages and language to use in a business. Furthermore, it verifies which media to use when advertising a product. Marketers trading in nations with low-literacy levels often use audio, as well as visual media to publicize their products. This is inconsistent to what happens in high-literacy nations where written and online ads are prevalent. Mitchell (2000, pp. 8) outlines that education usually determines how a business partner processes information, as well as constructing a presentation. It is crucial to emphasize that education also influences how marketers outfit when addressing various segments of the society.

Social Organizations

This refers to how several nations or communities organize themselves, especially gender roles as well as government systems. Gender roles differ across cultures, and this may influence business. Czinkota, Ronkainen, and Moffett (2008, pp 34) outline that the roles of women in the Middle East shape the behavior of business in a variety of ways. They cannot take up active roles in the international business, so men tend to dominate the field.

Government system also influence international business, for instance India has a caste structure, while western countries have entrenched class administration. Traders usually face mobility tribulations where caste and class structures prevail. Nations usually have trade unions, and this plays a significant role in employee relations, as well as terms of service. There are restrictions in some countries that any incoming firm must employ a given percentage of local work forces. This may affect the business, especially when the locals lack the requisite knowledge to run the corporation.

Assorted governments have varied tariffs, and this may attract or repel investors depending on the business. Investors habitually shy from the government that imposes high taxes on the inward direct distant ventures. This is opposed to nations that have moderate and reasonable tariffs on the inward investments. Madura (2006, pp. 116) emphasizes that the capability of far-off firms to contend in a country is constrained when the government imposes tariffs. Some states do not support the local firms, which want to expand to other foreign countries. However, others offer due support to such willing corporations to invest abroad.

Law and politics also affect worldwide business. The political dogma of a country will decide whether an investor will undertake or not. Zwart and Tulder (2006, pp. 118) state that politics may influence the financial institutions like the national banks. The United Kingdom’s political system is pro market, thus attracting many investors into its territory. This is because initiation of laws derives their basis on precedence and legislation. This is inconsistent with the Islamic countries where political and legal structures derive their basis on sheria practice. This does not favor the market for many investors since their trade is restricted.

Political temperature of a country influence many businesses and this can lead to the continuation or closure of the corporations. Nations with historical, political wrangles and civil wars shun investors. This is common in many African and Asian countries where lack of political stability leads to civil wars. On going businesses close up when the owners, as well as other employees, seek refuge for their lives. Furthermore, instability leads to looting and other associated undertakings. Many global businesspersons consider this a major drawback to a business. Wiling investors cannot venture in such nations since they fear massive losses.

Corruption is another crucial cultural aspect that influences international business. It refers to any illicit or unlawful incentive through the issuance of bribery (Peng, 2008, pp. 70). There are several nations where opinionated corruption is predominant due to their perceived personal gains. It is important to note that such scenarios influence the financial side of the business. Consequently, corruption usually increases the cost of production of a business. Corporations must increase the product or service price to counter the money lost into the corruption deals. Firms originating from corruption free nations usually find it hard to bribe several control points when they trade in corruption prone countries. This make their transactions slow since they are relaxed to bribe their way. This is opposed to investors who understand the corruption levels of a nation they trade.

Technology and Material Culture

This refers to a collection of resources that are necessary for the running of a business (Ajami and Goddard 2006, pp. 216). They include energy, transport network, communication system among other networks. International investors like nations that have the necessary infrastructures. Large ports with heavy cranes to fill and offload cargo facilitate trade since this saves time and other resources. Excellent transport is crucial in trade since it facilitates the movement of resources. Communication company will venture in a nation that is served with optic cables and other related services. This is opposed to other countries, which lack such services.

Time and work culture

It is crucial to assert that time is one of the most imperative resources available for businesses to thrive. Various cultures consider this limited resource differently. Time depend on the work culture of a society since it specifies how people labor at an instance and place (Moran, Harris and Mor., 2007, pp. 30). Business executives from Germany and Britain are strict on time, as opposed to their Asian and African counterparts. This divergence usually leads to wrangles in the boardrooms because one group enters earlier than the other does. This usually leads to misunderstanding when other cultures deal with western businesspersons. This usually affects the time schedules of the westerners since they are strict to the schedules as opposed to other cultures.

Mitigation Measures

Even though, cultural issues influence global businesses, there are myriads of measures that can counter the negative outcomes. Marx (2001, pp. 24) states that ‘The symptoms of culture shock that you are experiencing can obviously affect work; therefore, it is important to be aware of the situation that can arise where a symptom can become a serious problem’. Investors planning to venture in the distant countries should always train in local languages. Furthermore, they should learn the social aspects of such communities, and the inner meanings of the business terms for the smooth operations. A starting company should as well recruit the locals who are fluent in the required languages.

A skillful interpreter is requisite during global business conferences to construe the meanings of gesticulations put across by people from varied cultures. This will enable proper understanding of the body language, hence proper dealings, and negotiations. International business operators can overcome religious challenges by the usage of banks that do not charge any interest rates, as well as omitting statements that add interests. Willing investors should also do thorough research on various business regulations. This will enable them to avoid outlawed businesses in the Islamic territories.

International investors should reflect the principles of a corporation’s locale. Becker (2000, pp. 8) states that ‘Corporate managers must understand both home and host countries’ formal and informal value, rules and structures and attitudes of the people and real cultural criterion for solving social issues.’ Leaning and understanding a people’s values and traditions enables the corporations to reorganize their programs, thus avoiding loses associated with such occasions. This can also help them source for back up staff to deliver when a large number of employees take leave.

International investors willing to venture in other countries should always learn the education levels of the intended audience. This will enable them to pass the right information using the best media. This usually prevents misunderstandings among the target audience. It is also imperative for the international businesses to study the government regulations about both inward and outward direct foreign investments. This enables such firms to be acquainted with such regulations thus avoiding loses and other charges associated with the government tariffs.

International corporations can always be innovative to counter technological problems in a given locale. Steers and Nardon (2006, pp. 223) outline that countries that have low technology can as well borrow to meet the local demand. They further state that such actions made Korean industry thrive. This will always help in evading problems that arise from such inadequate technological services. International businesspersons should always scrutinize the corruption perceptions index, which estimates the corruption levels of a country. The data are always available from the transparency international. The knowledge acquired from such data will enable such investors organize how they can overcome corruption challenges.

Conclusion

More than a few cultures exist across the globe, with each portraying varied traditions. Global business operators often come in collision with these cultural issues, and at varied levels. Some cultural aspects cause businesses to experience harsh moments, while some work in favor of these organizations. Several firms and corporations are able to thud down the hurdles that culture presents in the sphere of global business. Even though, an investor is familiar with the prevailing culture of a nation of interest, a simple misapprehension may squash conciliation. Furthermore, some cultures are extremely entrenched in their way of undertaking operations, and a sole signal can cause a major difference between a flourishing long-term association and humiliating one’s host.

All the listed cultural issues have both constructive and negative impacts on global business. However, demerits prevail over the advantages that they present. Investors and their employees educate themselves on the culture and traditions of the potential business partners, upon request. Such education usually proves worthwhile during international dealings. There is no secret in succeeding in a foreign country, which others find challenging. It is merely research and a thorough dedication in learning the culture one wants to contact. Furthermore, there are consultants who assist foreign firms intending to venture in other countries, which help them address culture shock.

List of References

Ajami, R. and Goddard, J. 2006. International business: theory and practice, 2nd ed. New York: M.E. Sharpe.

Becker, K., 2000. Culture and international business. Binghamton: International Business Press.

Czinkota, M., Ronkainen, A., and Moffett, M., 2008. Fundamentals of International Business, 2nd ed. Gillingham: Wessex Publishing.

Ghauri, P. and Usunier, J., 2003. International business negotiations. Oxford: Emerald Group Publishing.

Iyer, G., 2000. Teaching international business: ethics and corporate social responsibility. Oxon: Routledge.

Madura, J., 2006. Introduction to business, 4th ed. Ohio: Cengage Learning.

Marx, E., 2001. Breaking through culture shock: what you need to succeed in international business. London: Nicholas Brealey Publishing.

Mitchell, C., 2000. A short course in international business culture. California: World Trade Press.

Moran, R. Harris, P. and Mor, S., 2007. Managing cultural differences: global leadership strategies for the 21st century, 7th ed. oxford: Butterworth-Heinemann.

Peng, M., 2008. Global Business. Ohio: Cengage Learning.

Punnett, B., 2010.Experiencing International Business and Management: Exercises, Projects, and cases, 2nd ed. New York: M.E. Sharpe.

Rugman, A. and Brewel, T., 2003. The Oxford handbook of international business. Oxford: Oxford University Press.

Steers, R. and Nardon, L., 2006. Managing in the global economy. New York: M.E. Sharpe.

Tulder, R. and Zwart, A., 2006. International business-society management: linking corporate responsibility and globalization. Oxon: Routledge.