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The Cultural Challenges Of Doing Business Overseas

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The Cultural Challenges of Doing Business Overseas

MBA/501

Dr. Ellen Szarleta-Instructor

August 27, 2006

The Cultural Challenges of Doing Business Overseas

Introduction

For an American company to be successful overseas with business ventures they have to take risks in making business decisions which can be challenging. Steve Kafka, an American of Czech origin and a franchisor for Chicago Style Pizza, has decided to expand his business into the Czech Republic. He knows it is a risky decision; when he became a franchisor, he had to overcome great deal of difficulties. Steve anticipates he will face some of these difficulties again at the new location in Prague, Czech Republic. Although he was born in the United States, he has family and friends in the Czech Republic, speaks Czech fluently, and has visited the country of his origin several times. For this business venture to be successful Steve has to evaluate and take in considerations of the cultural differences between the United States and Czech Republic before moving ahead.

Differences and Incompatibilities between U.S. and Czech Cultures

There are many differences and incompatibilities between the U.S and Czech Republic cultures and if Steve wants to expand his business here in the Czech Republic he is going to have to weigh the differences and take them into consideration in his business decision-making process. According to the information presented by CultureGrams, there are some obvious difference between the American and Czech cultures in regards to food and diet. In Czech, dining out dining out is a rare occurrence. In the United States the pizza which is a favorite and popular dish is considered a whole meal itself that can be consumed at the restaurant, carried, or delivered to the home for consumption whereas the Czechs eat pizza only as a snack on the streets where it sold as by street vendors. Czechs tend to eat with the fork in the left hand and the knife in the right where in the U.S. the American uses the fork in the same hand that write with.

With these differences to contend with, Steve has to develop a strategy that will allow his business to succeed here in the Czech Republic. CultureGrams also mentioned that Czech enjoy to consume beer through out the day whereas in the U.S beer is often consumed with pizza and taking this under consideration Steve can think of a marketing strategy for selling beer and pizza in new foreign market. Steve may have and idea for dealing with the pizza but he has to understand the Czech business culture so that can create relationships to help with his business venture. Direct Eye contact is very important during a conversation especially during business meetings, whereas in U.S it is somewhat important. In the Czech Republic, workdays begin between 7 and 8 a.m. and end between 3 and 4 p.m. and in the U.S. the working hours are not set because businesses operate on 24 hour basis. These difference have to be taken understand consideration so that no one is offended during the business relationship.

Evaluation of Czech Business Culture Applying Hofstede's Four Primary Dimensions

Culture affects the beliefs and the actions of people from different countries in different ways. In International Management (Hodgetts and Luthans, 2006), the author notes that culture has several characteristics and is defined as "acquired knowledge that people use to interpret experience and generate social behavior". An individual has to understand and respect the different cultures with whom they have relations with. Steve may be a Czech origin but he was born and raised as an American with the values and customs that are instilled within all Americans. Steve has to take this understanding, remain open-minded, and pay attention to the actions because culture affects how people act and think. Power distance exposes an employees' desire to fall within the good graces of his or her superiors. The individual in this subpart understands and accepts that he or she is at the lower end of the hierarchy. They are willing to receive and follow orders and find pride in doing so. This person is not looking for any type of personal praise for doing his or her job, as long as the superiors are pleased and satisfied, and that the result is beneficial to the company. The concept of power distance can be subdivided further. Low-power-distance exists in organizations with flatter structures in which the employees on the lower-levels are just as qualified as the employees in the supervisory and/ or management positions. CultureGrams indicated that the Czech culture is one of low-power distance because the citizens are cultured, dependable, and accept all orders imposed on them. The Czech society has a high regard for their professionals and tradesmen. Knowing this aspect Steve would be able to employ good people to work and run his business. The extent to which people want to stay away from the unknown is known as uncertainty avoidance which explains how individuals generate beliefs because they feel pressured by confusing situations. People do not like the unknown situations which create fear which in turn foster insecurity. The Czech culture is example of an uncertainty avoidance culture where citizens are loyal to their positions. Organizations with employees that are from high-uncertainty-avoidance cultures tend to be loyal to their positions and this confirms that Steve's business would be successful because of his loyal employees. His employees will perform 100% because they feel security in their positions. The line between individualism and collectivism is large. According to Hofstede, individualism is the tendency to look after oneself and his or her family only, while collectivisms are defined as one's tendency to belong to a group and for the members to look after each other in exchange for allegiance. On the personal level the Czech society is highly individualist according to CultureGrams. The materialistic

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