Cultural Differences in International Business

7/29/2019 Cultural Differences in International Business

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CULTURAL DIFFERENCES IN INTERNATIONAL BUSINESS.

Cultural differences should be kept in mind, while embarking on an international businessventure. Understanding cultural differences would help an entrepreneur form the

necessary business ties by observing correct business etiquette.

Starting a business outside the geographical boundaries of a country requires assessing anumber of factors. Drawing up a business plan, assessing demand and supply, applying for

loans and grants, getting permits and licenses and deciding on the location of the business

are important issues that preoccupy the entrepreneur. Very often, an entrepreneur focusesonly on the technical aspects and ignores the cultural aspects of a business. A good

business plan is useless, unless people believe in the success of the plan and are willing to

do business with the entrepreneur. This is when cultural differences gain prominence. An

entrepreneur who is unaware of the differences in intercultural communication will find itexceedingly difficult to communicate with potential suppliers and buyers and foster

relations, that are necessary for any business.

Relationship between Cultural Differences and International Business

Role of the Government and Bureaucracy:This is an important factor that is often overlooked by American entrepreneurs, who

expect minimal government intervention in the affairs of the private sector. Generally, in

developing countries the government plays an important role and as a consequence theprivate enterprise has to deal with red tape and bureaucracy. In fact, even in case of a few

industrialized countries, the government and the private enterprise maintain close ties. For

instance, it is a common practice in France, for retired government officials to occupy

positions of responsibility in a private company. In case of South American countries,administrative complexity and bureaucracy are common problems that are encountered by

an entrepreneur.

Business Meetings:The duration of the business meetings is generally long in Asian and South American

countries. Whereas, in the U.S., meetings are short and to the point. Most businessdecisions in Asian and South American countries are taken after a lot of deliberation.

Despite this, strict schedule is rarely drawn and disbursed. In Japan, business ethics

demand punctuality; while being well-prepared and getting the facts right is important in

Germany. One should avoid setting up meetings well in advance, in case of SouthAmerican countries, since there are frequent changes in schedule. Again, French business

firms rely on long-term plans; while South American firms prefer short-term plans.

Communication:

In some countries, written communication is important; while others give preference to

verbal communication. In Argentina and Brazil, verbal communication is very important.In France and Germany, written communication is desired. French lay great emphasis on


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grammatically correct communication; while Germans expect the business communication

to be precise. Humor is often used in office communication in both Australia and the U.S.,

unlike Germany, Japan and China. In the U.S., excessive modesty is neither appreciatednor desired; but in case of Asian countries, modesty is essential. Diplomacy is the key to

good communication in Britain.

Seniority, Meritocracy and Decision-Making: Seniority is given a great deal of importance

in the Asian countries; while meritocracy is important in countries like U.S., Australia and

Germany. In France, a combination of seniority and meritocracy determines thepromotions and importance of the individual in the organization. One should not assume

that the senior-most person has the authority of making business decisions. This is

especially true, in case of South American countries, where the decision-making rules are

not strictly defined. Even in an industrialized country like Britain, many times, authorityand responsibility may be unclear, since the job descriptions are not precise.

Gifts and Personal Favors: Gifts and favors are common, in case of Asian and South

American countries; unlike the U.S., where there are strict rules regarding exchanging

favors within an organization. While Americans feel that gifts and favors affect impartial

decision-making capacity, in Asian countries exchanging favors is a way of life.

Appreciating the cultural differences and making a conscious effort to adapt to the ways ofa country is necessary for any flourishing business. Even seemingly unimportant practices

in some countries, might assume a great deal of significance in others. For instance, in

some countries, taking too much interest in the personal affairs of the subordinates may be

considered rude; whereas, in a few Asian countries, it is expected, and the employeesmight disapprove if the employer maintains a strictly formal relationship. Of course, one

cannot hope to master the minutia of cultural differences, but can hope that a sincere

apology will go a long way in smoothing the bumps along the path to cultural orientation.

Impact of Culture on an International Business

There are many things like culture, economy, politics, etc. that impact the working of

international businesses in today's world. Read on to know about the impact of culture on

an international business.

When the two aspects of human society, culture and business, interact with each other, it

leads to the development of interesting conditions or scenarios. When different cultures

converge at a common point with business as the platform, the clashes are bound to takeplace. But most importantly, such a scenario helps us adapt to challenging situations.

Different communities or countries in the world follow different mannerisms and


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etiquette. The way or view to see a problem might change from country to country, across

the globe.

The international business culture, as a whole, is a congregation of various business

practices, cultural influences and the thought processes followed in different nations. In

this article we will discuss the impact of culture on an international business which can beseen in mannerisms, communication, and many such things.

Body Language

Every nation has a separate culture; a part of which is reflected in the behavior and thebody language of the people. In an international business, understanding the undercurrents

beneath the mannerisms or gestures become necessary. There are chances that behavior

might get misinterpreted by people from different cultures. Thus, it requires a skilled

coordinator to handle challenging situations during meetings.

Communication

The way of communicating could be different in different cultures. The terms used bysome might sound harsh to others. The way in which words are pronounced to impact the

intercultural communication in the corporate houses. In fact, it is one of the major

hindrance in the process of business communication.

TimePeople from Britain and Germany are keen on following the time-bound schedule. Thedifferent 'time-cultures' might be the reason behind clashes, between people from diverse

cultures.

The way in which the boardroom meetings are handled, is also a reason behind differencesin opinions. Corporate houses from western countries stick to the schedule during

meetings. They get down to business in an outright manner. Other cultures may differ in

this aspect of business.

The marketing executives sent for international assignments, are bound to face problems

in dealing with the corporate cultures of that particular country. Understanding a foreignmarket and formulating the company policies to cater to the need of international clients is

a challenging job. Skilled professionals possessing the quality called 'empathy' are able to

deliver the goods in such cases.

With today's businesses entering a 'globalized' world, the interaction between different

cultures is bound to happen. Merely learning different languages, won't be enough. It is

necessary for corporate houses to understand the social conditions of different countries,

to successfully tap the respective markets. Being sensitive to the values and beliefs ofdifferent cultures of the world, is necessary.

International businesses are not only a way of making profits by the exploitation of


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international talent, but also a bridge between different nations of the world. Tomorrow's

world will rely more on a symbiotic relationship between international businesses and

cultures as a whole.


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TO WHOMSOEVER IT MAY CONCERN

This is to certify that Ms.K.Shalini,M.B.A. D/O Shri.T.Kanakajyothi is

working as ASST.PROFESSOR in our college.

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Cultural Differences in International Business