Effects of Culture on International Business

INTRODUCTION

The purpose of this essay is to demonstrate the concept of culture in relation to international business. More specifically, is to dig deep and clarify the impact of culture on international businesses. Relating to Copland and Griggs (1985, p. 43) "there is no culture right or wrong, just differences. . . we should make value judgments concerning if cultural behavior is good or bad, better or worse". It really is wrong to assume that people in different civilizations think, feel and act just as. In international business dealings, ignorance of ethnical difference is not simply regrettable, 'it is bad business' (Arwind, 1989, p. 25). Level of sensitivity to cultural difference is essential to successful international business operations. Ignorance of social differences could result in devastating business blunders.

A dialogue on culture should first begin with a classification. In a simple term, culture is "how things are done around here" (Mullins, 2005). Alternatively, (Hofstede 1980) referred to culture as "the program of your brain". In other words, it's the social coding that runs just how we think, take action and perceive ourselves as well as others. However, culture is an extremely broad strategy and incredibly difficult to identify. At the moment there are estimated to be over 200 different meanings of culture. There is no general agreement in regards to to the definition of culture. To some, culture identifies the distinctive life-style of a particular group of people (Herskovitz, 1952, p. 17) or a whole design for living (Kluchholm, 1951, p. 86). Others refer to culture as a pattern of behavior sent to customers of a group from previous decades of the same group (Hall, 1977, pp. 16-17). Culture is not simply 'a product of fitness' (Grosse and Kujawa, 1992, p. 322) purchased, learned or transmitted from one generation to some other. Culture also styles people's values, attitudes, beliefs and behavioral patterns (Terpestra and David, 1985). It is therefore crucial for international business men and women to understand totally not only how people in various ethnicities behave but why they respond in the way they certainly.

GEERT HOFSTEDE AND HIS CULTURAL DIMENSIONS

One of the most influential pieces of research in relation to national civilizations is the task of the Dutch researcher and business expert Geert Hofstede (1980 - 2001). He analysed study data from 116, 000 employees of IBM in more than 40 different countries. He in the beginning recognized four, later five basic proportions to express distinctions between national civilizations:

1. Electric power distance - this is the degree to which inequalities among people have emerged as normal. This dimensions stretches from equivalent relations being seen as normal to vast inequalities being viewed as normal. Types of countries with high vitality distance scores will be the Philippines, Singapore, France and Greece. On the other hand, countries with low electric power distance ratings such as Britain, Sweden and New Zealand favour a more democratic style of management and flatter organisational set ups.

2. Uncertainty avoidance - this refers to the amount to which societies feel threatened by ambiguous situations and the degree to which they try to avoid doubt situations. In countries with high doubt avoidance, such as France, organisations choose strong bureaucracies and career steadiness and generally discourage risk taking activities. Countries such as Britain and Norway which exhibit low uncertainty avoidance will choose more flexible buildings and encourage more diverse view.

3. Individualism/collectivism - in an individualist culture people tend to take care of their own pursuits and those of their immediate family whereas in collectivist culture there's a tighter social construction in which each person value the group to which she or he belongs. For example, in the USA, people are expected to manage themselves and their immediate family only. In collectivist societies such as Japan, however, people are built-into strong, cohesive communities which throughout people's lifetimes continue to protect them in trade for unquestioning devotion. For example, Toyota is Japanese, General Motors American origin companies. Corresponding to Hofestede we can take Toyota in the greater collectivist part of the organisational culture whereas General Motors is more on individualistic part. In Toyota being in a team is more important. However, in General Motors it is more important that individual contribute to the company.

4. Masculinity/femininity - In a very masculine culture the dominant values are reported to be ambition, assertiveness, performance and the acquisition of money and materials items whereas in a feminine culture values such as the standard of living, maintaining personal connections and look after the weakened and the environment are emphasized. For instance, the most masculine countries in Hofstede's framework are Japan and Austria. In contrast, the Scandinavian countries fall season into the feminine category with more emphasis on work-life balance.

5. Time orientation - Relationship (1988) and his acquaintances called this 'Confucian dynamism'. Hofstede relabelled it 'long term versus short term orientation'. In countries exhibiting a long-term orientation, there is a focus on the near future and saving and persistence are respected. Companies in Japan are examples of a permanent oriented world, have traditionally taken an extended term view of investment. In contrast to companies in European economies, it is not necessary to show profits calendar year by year but rather progress toward a longer term goal.

Other similar studies of national values that compete with Hofstede's work-related prices platform include: Kluckhohn and Strodtbeck (1961), Hall and Hall (1990), Schwartz (1992), Trompenaars and Hampden-Turner (1998) and Javidan et al (2006). Relating to Geert Hofstede Examination. [2008, online] "For individuals who work in international business, it is sometimes amazing how different people in other civilizations behave. We tend to have human intuition that deep inside all people are the same but actually they aren't". Quite simply, if we get into another country and make decisions established about how we operate in our own house country, the probabilities are we will make some very bad decisions. Understanding Hofstede component helps international business women and men analyse the civilizations in countries in which they will do business. According to Ferraro, G (1998, p. 63) "Hofstede research provides us insights into other cultures so that we can become more effective when interacting with people far away. If known and applied properly, these details should reduce our degree of frustration, panic and concern. But most significant, Hofstede gives us the advantage of understanding which translates to more successful results".

The Hofstede Model of Cultural Proportions can be of great use when it comes to analysing a country's culture. There are however a few things one has to bear in mind. McSweeny (2002), for example, argues that Hofstede research suffers from several important weaknesses, such as the assumption of cultural homogeneity inside a country and the difficulty of generalising for a nationwide culture based on sometimes quite small samples of 1 occupational group in one company.

Personally, I really believe the averages of your country do not relate with individuals of that country. Even though this model has shown to be quite often appropriate when applied to the general inhabitants, one should be aware that not all individuals or even locations with subcultures match the design. It really is to be used as a guide to understanding the difference in culture between countries, not as law set in natural stone. As always, there are exceptions to the rule.

Secondly, how appropriate is the info? The info has been accumulated through questionnaires, that have their own restrictions. Not just that, however in some civilizations the framework of the question asked is really as important as its content. Especially in group-oriented civilizations, individuals might tend to answer questions as if they were addressed to the group he/she belongs to. While on the other hand in the United States, which can be an individualistic culture, the answers will most likely be replied and perceived through the eyes of that individual. And finally, is the data current? How much does the culture of a country change as time passes, either by internal or external influences?

THE IMPACT OF CULTURE THROUGHOUT INTERNATIONAL BUSINESSES

When Disney made a decision to open a Disneyland in European countries, it seems the business failed to do its ethnical homework on from French business negotiating styles to staff versatility and dress practices to consumer spending patterns and eating tastes. The company acquired something that worked in the United States and Japan, two very diverse civilizations and evidently noticed no justification to change it to look at to European sensibility.

According to Roman Dicia a French editor "day one began with a headache. The French people, who have a tendency to wear their cultural hearts on their sleeves howled about Yankee ethnic imperialism when Disney were able to buy 1, 950 hectares of best farmland". The farmers whose households had worked well the land for years and years were bounced. French publication railed at the American invaders in an exceedingly public screen of anger and insult. Before they started out anything, the business had managed to alienate the community, partly because it had underestimated the connection to the land of one portion of French world.

Next, Disney offended French sensibility when it used lawyers somewhat than its professionals to work out constriction and other deals for EuroDiseny. It was simply not a French thing to do. In France, legal professionals are considered a negotiating tool of total last resort. The use of lawyers in early stages in the improvement was a sign of mistrust and backhand rejection of French ways. On the other hand and in terms of businesses, Disney ignorance of Western culture and French working norms caused more problems. The business, which prides itself on the squeaky clean all American look of its employees, instituted a stringent dress code for its employees, barring undesired facial hair, dictating a maximum duration for fingernails and limiting the size of hooped earrings. The staff and its unions rebelled at this perceived invasion on each day French fashion.

In addition, Disney acquired several other important details wrong. For example, lunch break times inside EuroDisney bordered in disaster. While Americans visiting Disneyland prefer to eat at unusual intervals, as they speculate the park confines, Europeans are used to sit back at lunchtimes. As a result the park's restaurants became very active at the lunch break hour as everyone tried out to consume once and were unfilled all of those other day. Customers complained of long lunchtime lines and the pressure to consume quickly. The staff complained of being overworked at lunchtime and underworked during the recovery of their shifts. To top it off, Disney, commensurate with the "family friendly" theme, barred the serving of liquor, perhaps the ultimate insult in a country where in fact the consumption of wine beverages at mealtimes is a birthright.

"It was so unlike Disney to get so many details so wrong" says one US structured securities analyst who uses the company. "Maybe it's not such a little world in the end. The company social insensitivities cost it big money and goodwill. I believe it is a reminder to any company or individual conducting business in another country, the devil is often in the ethnical details. They can make or break you. " But for Disney at least, all's well that ends well. After making some significant ethnical adjustment, EuroDisney is no longer the financial drain it was previously on company coffers.

Another great example is McDonald. McDonald's worldwide is well known for the high amount of respect to the local culture. However, years ago when McDonald restaurants joined into India, McDonald experienced some problems with regards to the change of the menus according to the Indian's culture. For instance, for thousands of time, India's Hindu culture revered the cow. Hindu scriptures declare that the cow is gift idea of the God to the people. The cow presents the divine mom that sustains all humans.

McDonalds is the world's largest user of beef. So how can an organization whose fortunes are designed on meat enter a country where in fact the consumption of beef is a grave sin? Use pork instead? However there may be a large inhabitants in India who are Muslim and Muslims do not eat pork. McDonalds taken care of immediately this social food problem by creating an Indian version of its Big Macintosh personal computer "The Maharaja Macintosh personal computer" which is made from mutton. Other enhancements to the menu conform to local sensibilities such as the "McAloo Tikki Burger" which is manufactured out of chicken. Actually, India is the first country on the planet where McDonald's will not offer any meat or pork items. All food stuffs are strictly separated into vegetarian and nonvegetarian lines to conform with choices in a country where many Hindus are vegetarian. A whole lot so that the mayonnaise and the smooth help are also 100% vegetarian in support of vegetable oil is employed as a cooking food medium. It may seem silly for McDonald's to be removing the burger that is became well-known for but in such a multinational company, they had to do what was best for business. Other comparable examples include: the non Kosher KFC's in Israel, what's acceptable rather than appropriate in the Jewish spiritual e book and also Pizza Hut in Saudi Arabia, Halal and non Halal meats.

Also a great circumstance can be IKEA. IKEA got a very successful culture that facilitated its development into various countries. However, this view did not turn out to be successful in america where in they ran into a few problems like different preferences in furniture and cultural change. In addition, more competition and changes in Swedish laws on furniture made expansion into the USA very hard. Longer shipping intervals put into the extension misery and IKEA had to adopt a more adapted culture to improve sales in the USA.

The cultural problems that IKEA experienced in USA were, for good examples; the use of the Swedish flag outside IKEA was very irritating to some Americans. Different likes and the Swedish style of the furniture, this pertains for example to personal preferences of some designs, different size in mattresses that meant the US consumers weren't used in Western european ones plus some found the IKEA beds just too small and this is of colors, etc.

Also these were not much pleased with the "cash and take" service plus they needed better and faster delivery at home and do not enjoy queuing. Don't assume all American can be used to do shopping outside towns or can do, like Chinese language and also, in the us more media advertising were needed. The term of mouth had not been much successful such as Europe.

They also experienced the problem with the several management style. For instance, Swedish managers are expected to be ambassadors and describe the IKEA way to non-Swedish co-workers in abroad operations. It has proved not too difficult in holland however, not so in Germany, France and america. Grol et al. 's (1998) research on problems encountered by IKEA's management of men and women in Germany, France and america, although producing some nationwide stereotypes, implies that in Germany there have been problems of responding to professionals using first name and understanding professionals' authority; doing just as the supervisor asks rather than using one's own initiative. In France there have been problems of informality being regarded as a signal of weakness or indecisiveness, and therefore employees could do what they want. In the United States people felt uncomfortable with the Swedish lack of showing emotion; steering clear of conflict rather than arranging themselves apart by staying away from self promotion. There have been also problems with instructions by managers not being spelt away and the longer term Swedish management way of detailing why things are done: this sometimes appears as indecision. There was a perception that each achievement is not rewarded in view of your Swedish avoidance of discrimination in pay increase. As a result they lost key American managers because of slow-moving progression rather than being sure of these role or future in the organisation.

IKEA had to accept a new culture and at the same time keep its. Otherwise it'll either not do well on the US market or it will not be IKEA any longer. IKEA has satisfied social problems, especially in the US, due to a lack of information about these ethnic differences. Indeed IKEA didn't conduct any market research before coming into new market and did not use local knowledge. However, the extension in another country of IKEA has eventually been possible even if they met some challenges on the way. This is attributing to the fact that IKEA notion is very effective but also because the company have made special efforts to modify its products and services to various cultural conditions. "We don't spend much money or time on studies. We use our eye and go out and appearance, and say it will probably do quite nicely here. Then we might adapt, but quite often we adhere to our viewpoints, " says Mr. Anders Moberg, IKEA's leader. Therefore IKEA evolved the rules of the retailing industry. This was considered quite dangerous because IKEA's extended its stores internationally without having data and information about the new country but it's been successful, in Europe, where the idea of IKEA works well, without necessary version. But, in the United-States, IKEA had to struggle in the early years and made several changes to its retailing method to adapt to US requirements.

On the other palm, a different circumstance can be Wal-Mart. When Wal-Mart first expands in Mexico they ran into many social problems. For instance, they found that the Mexicans prefer to buy fresh produce at the neighborhood stores. In addition they found out that many Mexicans don't have automobiles which cannot buy in large volumes as in the United States. However, Wal-Mart didn't give up and developed strategies to meet up with the local conditions. For instance, they chosen local managers who recognized Mexican culture, building smaller stores that folks could walk to and offering more fresh produce and low prices. Their strategy does pay off, Mexicans started to change their shopping habits and Wal-Mart became one of the most significant suppliers in Mexico.

Wal-Mart also learned that they can increase into China as they discovered that the Chinese language were deal hunters and available to the low price strategy and the wide range of products offered by Wal-Mart. However, to succeed in China, Wal-Mart also found it acquired to adapt its merchandising and procedures strategy so that it can engage with the Chinese language culture. For instance, Wal-Mart has learned that Chinese consumers insist that food must be freshly gathered or even killed before them. Some Chinese language consumers were offended when Wal-Mart was trying to sell them dead seafood. So Wal-Mart started out to display the meats uncovered, installed seafood tanks into which shoppers could plunge fishing nets to pull out their dinner and began retailing live turtles for turtle soup.

The Wal-Mart scenario demonstrates that culture can have a large effect on the business enterprise strategy. For example, in the case of McDonalds; meat ready after halal is printed out on the label before exporting meats to Saudi Arabia or even as we seen above, McDonalds created the "The Maharaja Mac pc" which is made from mutton for the Hindus. Also, Coca Cola had labeled on containers provided to the gulf to contain "non-alcohol" or in the case of Nokia when presented Hindi SMS for Indians users of cell phones etc

CONCLUSION

"Culture is important for many aspects of business life particularly when a business must interface with people, either as customers, employees, suppliers or stakeholders" (Aswathappa, K 2008, p. 78). Deal and Kennedy (1982) claim that culture is the sole most important factor accounting for success or inability running a business. Goffee and Jones (1998) dispute that no business strategy or programme can or will do well without the correct culture in place. Mullins (1999) claim that culture helps to clarify why different groupings of people perceive things in their own way and perform things differently from other groupings. He also suggests that there is little or nothing accidental about ethnic strengths, there is a romantic relationship between culture and the business enterprise performance.

When it comes to analysing a county's culture, Hofstade component of cultural measurements can be considered a very helpful tool as there is absolutely no current discussion on culture in a business framework is complete regardless of Hofstede. Alternatively, Disney, McDonalds, IKEA and Wal-Mart are research to aid the debate that in which the impact of culture in international business is vital.

Personally, I never declare that culture is the only thing we should pay attention to. In many sensible cases it is the economic or political factors provide better explanations but sometimes they don't really and then we have to go back to check out answers throughout background and culture. I also believe that too often people point out the differences as opposed to the similarities in cultures and view these variations as intimidating and negative somewhat than as opportunities for creative alternatives. It is a simple trap to fall into. What we need to remember is the fact anyone can manage successfully with mix cultural relationships with the correct mindset. All we need to have is to change our mental computer disk and reprogram ourselves.

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