Cultural Differences in International Business Essay

Introduction

This paper is going to discuss how it is important for international companies to relate and adapt to the cultures of the countries that they seek to set up a business. The paper will also discuss ethnocentrism and ways to avoid it. This paper will also discuss how international companies can avoid conflict by understanding the politics and legal systems of a host country. Elements of other cultures are also important things to know and this paper will discuss why it is important for companies to know them.

Discussion

The world can be said to have very many different cultures but every culture is unique in terms of elements. However, there are elements that when constituted together can be used to define culture. One of the major elements of culture is language. Different languages are a fundamental aspect of culture. Religion and beliefs of people in a certain culture play a vital role in defining a culture. Norms are part of every civilized society. These are very important in a culture and they may include taboos and rituals. Every culture also has a social stratification or collectives. They can also be termed as social constructions which are symbolic. They may be in terms of classes, communities, institutions, and organizations. Statuses and roles are other elements of culture. This involves the roles of different people in a society. It may be based on gender or age. Finally, cultural integration which is a source of harmony in culture is also an important element of defining culture.

How companies can avoid ethnocentrism

Ethnocentricity can be described as the feeling that your culture is the best. It involves biases that foreign culture is inferior to yours. This is a feeling that is prevalent when opening a business in a foreign land. The best way to combat ethnocentrism is through exposure. Companies should always try to expose the employees to different cultures so that they can learn to appreciate them. Companies should do enough research on the hosts and their culture so as to have a smooth running in their business which is free of ethnocentrism. Cross-cultural education is important for employees who are going to work overseas. Businesses that are international need to embrace multiculturalism and avoid being closed-minded.

In order to run a successful business, companies should understand and nurture the skills required to handle the differences in culture which may try to be dominant in such relationships. “Lack of understanding of the important attitudes which are expressed when dealing with different cultures is a recipe for the loss of a lot of money which goes into negotiations, poor sales, and ineffective customer relations” (Moran and Stripp, 2001).

“The company’s willingness to understand, respect and adapt to the other cultures (cultural adaptation) is an important factor for outstanding success in the multi-cultural marketing environment. The Management understanding of both the home firm’s and the partner’s efforts to adapt to each other’s culture are considered essential to the development of successful cross-cultural relationships” (Rudie, 1985).

There are elements of other cultures that companies need to know in order to operate successfully and profitably. These may include religion. A company has to take a religious orientation of the place it is setting base in. For example, a firm that sells alcohol would need to research well before venturing into an Islamic country.

The physical environment has a significant effect on peoples’ culture. For example, people who have lived in arid areas have become nomads and animal keepers like camels.

International companies must know that the politics and the legal systems of a host nation can have a great impact on their businesses. There are countries that do not moot for job creation. Politics also determine if the host nation will adopt capitalism, socialism, free-market and currency controls. The stability of the host nation is also a political impact that international companies have to contend with. The companies also have to abide by the rules set in the host nation. These may occur mostly in businesses that are regulated or professions. Licenses may be required for starting up the business and the time it takes to process them varies in different countries. There can also be restrictions on foreign ownership of land or buildings.” Furthermore, except for the understanding about the stability of the existing government in the country that the firm is setting up a business the state can seize the property that is foreign-owned within its borders. This is termed expropriation where the state quickly compensates the former holders of the property. However, some governments may confiscate property, meaning former owners do not receive proper compensation” (Deresky, 2003).

Conclusion

In my view, it is important for companies to have cultural awareness for them to have successful operations in foreign countries. This will help them adapt to the culture of the people they want to operate with. They will know the political, religious and social existence of their host and thus operate without conflict and also make profits. When you understand someone’s culture you will respect and embrace it.

References

1. Deresky, H. (2003). International Management: Managing Across Borders And Cultures.NewJersey: Prentice-Hall.
2. Duane, D and Cosenza, R (1985). Business Research for Decision Making. Boston: PWS-Kent Publishing Co.
3. Moran, T and Stripp, G (2001). Dynamics of Successful International Business Negotiations. Houston: Gulf Publishing Company.
4. Punnett, B and Ricks, D (2007). International Business. Cambridge: Blackwell Publishers.
5. Rudie, K (1985). Strategies for joint ventures. Lexington: Lexington Gulf Professional Publishing.