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Culture Impact on International Business Essay

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Updated: Apr 28th, 2020

International business ventures are slowly gaining momentum, owing to the numerous opportunities presented bythe globalization. Consequently, the above factors have increased competition among domestic players; thus, firms are the seeking opportunities in emerging foreign markets.

However, while domestic environment poses myriad challenges for business operations, international business operation is even more challenging due to numerous economic, social, legal, political and cultural barriers, which are present in these foreign territories.

On the same note, whereas factors above are equally important, the cultural element is extremely vital since overlooking cultural challenges and pitfalls can attract devastating effects to international businesses (Alon, 2004). Against this background, this essay will explore several cultural pitfalls as well as effective strategies that MNCs can adapt to override these challenges.

In spite of the vital significance of cultural elements in international business ventures, some business managers have frequently fallen victim of myriad cultural pitfalls that often act as deal breakers. Wade (2004) underscore that some business managers tend to ignore some minor differences in cultural customs. The latter author also emphasize that some cultural differences such as gestures and body language can attract devastating effects, depending on contextual interpretation.

For instance, whereas the two fingers sign is interpreted as a peace gesture in America, Brazilian interprets it the same way Americans interpret the middle finger gesture. Similarly, crossing one foot over the knee can be insulting in Muslim culture because it exposes the sole of the foot, which is perceived as dirty in this culture (Wade, 2004). The above implies that failure to understand different customs in international markets can turn out to be disastrous.

However, Wade (2004) accentuates that while the noticeable cultural customs listed above are vital for international business operations, managers often overlook some cultural elements that are subtly obscured. Consequently, Wade (2004) explains that culturally ingrained behavior traits often bring conflicts in international business relationships. These behavioral traits, which are shaped by culture, may be less noticeable, but the implications of ignoring them can be devastating for businesses.

Moreover, ignoring those delicate cultural differences might erode the trust that is extremely significant in international business practice. For instance, Americans are accustomed to situations where CEOs makes most business decisions. However, various international cultures may not be accustomed to individualistic decision making; thus most decision are relegated to a panel.

Consequently, failure to understand this cultural difference can be quite frustrating to US business people and more often can act as a great hindrance to international deals advancement. Secondly, Americans are more accustomed to efficiency and timeliness during business deal negotiations. However, this cultural element might not be replicated elsewhere. As a result, business managers might be required to put up with slow processes in some cultural environments where patience is perceived as a vital virtue.

Correspondingly, Gibson (2006) underscores that successful adaptation to foreign tastes, customs and laws is vital for successful franchises operations. In his report, the author highlights some instances, when foreign franchises have failed tremendously because of ignoring subtle cultural differences. On the same note, Subway fast-food chain has been expanding its franchises into foreign markets over the recent years.

Having been in business for a considerable length of time, Subway adopts several approaches to counteract cultural challenges in international markets. For instance, Gibson (2006) underline that Subway decided to override cultural barriers in India markets by seeking the assistance of two Indian natives. However, although India’s bureaucracy posed several challenges initially, they were able to negotiate for approvals eventually.

Secondly, Pride and Ferrell (2006) underscore that prior to entering into new markets Subway conducts research about eating preferences of local people. Moreover, the company modifies their menu to suit the customs of local consumers. According to the latter authors, fast food franchises like Subway and Macdonald are likely to commit grievous cultural mistakes if they ignore cultural differences concerned with certain varieties of food.

For instance, if Subway makes a mistake of serving beef sandwiches in Indian markets, the business is likely to backfire because in India, beef is perceived as a religious stature. This implies that subway have to eliminate beef from their menu in order to promote cultural acceptance in Indian market. On the same note, Subway also omits pork products from its menu in countries such as Israel where port is perceived as religiously unclean (Pride & Ferrell, 2006).

On the same note, in order to increase market share and portray some level of cultural empathy, besides introducing foreign tastes, Subway also includes local sandwich selections in their menu. According to Alon (2004), to succeed in international ventures business must portray some level of cultural empathy either through branding or product modification.

Moreover, the latter author explains that language and cultural factors present branding challenges for international businesses. The above implies that Subway must take note of language and cultural differences while branding their franchises, and while naming items in their menu.

In a nutshell, international business operations are extremely challenging, owing to the myriad challenges mostly arising from cultural and language differences. Any business willing to succeed in global markets ought to dedicate considerable effort towards understanding these differences. As evidenced in the essay, Subway has encountered several cultural pitfalls during international market ventures. Nevertheless, the franchise has succeeded to override these barriers through strategic cultural approaches.

References

Alon, I. (2004) Global franchising and development in emerging and transitioning markets. Journal of Macromarketing, 24(2): 156-162.

Gibson, R. (2006, September 25). Small Business (A Special Report); Foreign Flavors: When going abroad, you should think of franchising as a cookie-cutter business; Unless, of course, you want to succeed. Wall Street Journal, p. 8.

Pride, W. M. & Ferrell, O. C. (2006). Marketing: concepts and strategies. Boston: Cengage Learning.

Wade, J. (2004). The Pitfalls of Cross-Cultural Business. Risk Management, 51 (3): 38- 42.

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IvyPanda. 2020. "Culture Impact on International Business." April 28, 2020. https://ivypanda.com/essays/culture-impact-on-international-business/.

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IvyPanda. (2020) 'Culture Impact on International Business'. 28 April.

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