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How Culture Affects International Business?

Essay by   •  June 16, 2015  •  Essay  •  1,429 Words (6 Pages)  •  573 Views

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The study of culture has led to generalizations that may apply to all cultures. These include elements such as bodily adornments, courtship rituals, etiquette, concept of family, gestures, joking, mealtime, customs, music, personal names, status differentiation, and trade customs. The sensitivity and adaptation to these elements by an international firm depends on the firm's level of involvement in the market. When a company runs a subsidiary in a foreign country, there are some differences in terms of culture that are likely to affect the company’s management tasks.

        First and foremost, social organization will create social structure or hierarchy by organizing its members into small units to meet the needs. Social organization is deemed vital in international business because social classes in social organization rank people in order of status, depending on what is important to the culture. It is also due to the fact that in some cultures, stratification consciousness will automatically shape the relationship with others. Social organization also determines the roles of managers and subordinates and how they relate to one another. In American culture, managers and subordinates are not separated explicitly and implicitly by various boundaries ranging from social class differences to separate office facilities. Global business success requires not only comprehensive fact-finding and preparation but also an ability to understand and appreciate fully the nuances of different cultural traits and patterns

        Secondly, customs and traditions of a specific nation might also affect the company’s management tasks. Customs and traditions are the rules of behaviour that are being enforced ideas of right and wrong. So, the company must be aware of what can and cannot be enforced in a country. Change occurring in manners and customs must be carefully monitored, especially in cases that seem to indicate a narrowing of cultural differences between people. In many cultures, the foreign businessperson must observe certain basic customs. For example, in American business custom, arriving on time for meetings since time and punctuality are so important. In the Northeast and Midwest, people are extremely punctual and view it as a sign of disrespect for someone to be late for a meeting or appointment. In the Southern and Western states, people may be a little more relaxed, but to be safe, always arrive on time, although you may have to wait a little before your meeting begins.

        Next, language is also one of the greatest barriers when it is the cornerstone of culture. Language consists of verbal and non-verbal language. Basically, people who speak the same language often have mutually shared cultures. In verbal language, Language capability serves four distinct roles in global business. Language is important in information gathering and evaluation. Rather than rely completely on the opinions of others the manager is able to see and hear personally what is going on. People are far more comfortable speaking their own language, and this should be treated as an advantage. Becoming part of the market rather than observing it from the outside gathers the best intelligence on a market. Local managers of a multinational corporation should be the firm's primary source of political information to assess potential risk. Language provides access to local society. Meanwhile, in non-verbal language, managers also must analyze and become familiar with the hidden language of foreign cultures. Five key topics time, space, material possessions, friendship patterns, and business agreements offer a starting point from which managers can begin to acquire the understanding necessary to do business in foreign countries. Even English has different interpretation in English-speaking countries and that includes USA.

        As for religion, most cultures people find in religion a reason for being and legitimacy in the belief that they are of a larger context. To define religion requires the inclusion of the supernatural and the existence of a higher power. Religion has an impact on international marketing that is seen in a culture's values and attitudes toward entrepreneurship, consumption, and social organization. The role of women in business is tied to religion, but it rarely happens in America.

        Meanwhile, values are shared beliefs or group norms that have been internalized by individuals. Attitudes are evaluations of alternatives based on these values. Normally, foreign-based corporations have had difficulty in hiring university graduates or mid career personnel because of bias against foreign employers. The more rooted that values and attitudes are in central beliefs such as religion, the more cautiously the global business manager has to movie. Attitudes toward change are basically positive in industrialized countries like America whereas in more tradition bound societies, change is viewed with great suspicion especially when it comes from a foreign entity. These situations call for through research most likely a localized approach and a major commitment at the top level for a considerable time.

So, when it comes to business, cultural diversity can be a significant barrier to understanding and may pose risks for both buyer and seller. Diversity in the workplace is important to running a successful business as it is duly noted that the heterogeneous groups deliver better solutions and critical analysis. So we must structure and run the company in a way that promotes diversity.

        To overcome cultural challenges, there are some suggestions on how to deal with the differences in the workplace. In terms of recognition, we must recognize that people have differences, be it they physical, generational or cultural, and we cannot pretend that these barriers have been broken down. Instead, we should celebrate the differences among the employees, and encourage them to let their individualities show. For example, don't hesitate to ask someone from another culture about their culture's etiquette practices, as their knowledge could prove useful to your business. America is a free country, so there’s no such thing as pigeonholing your employees because employee's worth comes from more than his ethnicity or age.

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