Culture effects how businesses and how people do business in several ways. Culture has an impact on the social side of business along with the economic side. On the social side culture effects business in ways such as communication and beliefs. With communication you can have words or sayings that mean one thing in English and another in Chinese. When the communication breaks apart between two parties that means those businesses just could’ve lost a deal. With beliefs you must take in account the country you are doing business in. You must understand the countries superstitions so that you don’t upset your hosts or workers if you’re a manger. Sacred holidays also work into the beliefs of different countries. As a manger you must know what days you need to work employees and what days not to so you can keep the business going.
With tools such as Hofstede’s framework we can see how just how different countries are when it comes to how they produce goods and how they view leadership. China for example has a low individualism score which means they work in a collectivist culture which values groups and not a lot of responsibility on one person. Knowing that means if you were to try and do business over there you would be dealing with a group of people rather than one person as you would see in the U.S. Another category that the U.S. and China are on opposite ends of is power distance. The power distance scale says that if a country has a high score there is a lot of inequality between the supervisors and the employees and vice versa if the country has a low score. China scores a 80 in that category which means that the supervisors get the reward for what the employees are doing instead of the praise going to everybody. The U.S. scores a 40 in power distance which says when the company does good everybody gets a raise because we believe in equality.
Another tool that can measure how countries view culture in the workplace is the Kluckhohn-Strodtbeck framework which was developed by two researchers named Kluckhohn and Strodtbeck and they get their results from asking six different questions. Sticking with China, one of the questions they ask is about the environment and with China they dominate the environment even though they have a history of being one with nature. There present nature is one that shows very high pollution and new construction everywhere with no signs of slowing down. Another question is whether a culture is public or private. With China they are public which means they more willing to share personal things as keeping things private is looked down upon to them. The U.S. would be the same as china in that we dominate nature as well, because we also have high pollution and destroying more forests to build more buildings. The U.S. is different from China in privacy because Americans value their privacy a lot. Companies keep their trade secrets locked away; even everyday people put privacy at the top of their lists.
The Cultural iceberg is model that helps understand culture in the shape of an iceberg with the tip of it being all the things you see when you look at another culture such as their food, fashion, art, language, holidays and their music are some examples. That’s the ten percent of the culture you see the other ninety percent is everything under the ocean such as their communication rules, manners, leadership, concept of time, their attitude toward different genders and age groups, how they approach religion and problem solving. An example of Japans iceberg model would be that you see how Japan operates in tight spaces. Their food is also more on the seafood side. They tend to walk more than use cars. Those are some things that you can see by just looking at them. Below the water line Japanese culture is very formal they keep their distance when speaking and bow instead of shaking hands. Those things are important to know when traveling there to business because once you try to shake their hand the deal is pretty much off because you have offended them. Another aspect of their culture that is below is that are very few female CEOs in Japan. When a woman marries, she is expected to quit her job and become a stay at home mother.
Other cultural issues that take place when doing business in other countries would be attitude, competencies and literacy. Attitudes are either positive or negative feelings toward something or someone. Someone from America might have a bad attitude towards Japan’s strict train policies as they don’t allow you to eat or use your cell phone while riding the train. Another aspect regarding attitude is that they are learned from an early age by parents or figures in charge. Attitudes could greatly affect business globally because some people just won’t go away from how they feel about a certain culture. Cultural competency is bringing together the knowledge, awareness, and sensitivity of a different culture together and adding effectiveness to it. This means an American company can go overseas and absorb a different cultures behaviors, attitudes and work ethics to produce an even more effective outcome. Cultural literacy is by product of doing international business. By spending time in that culture, you gain information that you can’t just see on the outside you start to pick up on the little things. By understanding those little things, you are able to more effectively talk to people from other countries, you understand how they like products sold to them, and you can better manage your employees.
Religion is another big part of international business in that it can dictate how a region views work, time and goods. If a U.S. company wanted to do business in Morocco, the person that company sent would have to be familiar or practiced Islam because that is the religion that dominates Morocco. Sticking with Islam they believe in the essence of time because they must have daily prayers and especially on Friday afternoons. Sending someone who didn’t have knowledge of this could lead to bad business if didn’t allow employees time for their prayer or didn’t let them leave on time on Fridays. Islam also doesn’t allow consumption of alcohol and pork so a company would have to drop those products from their lineup if they wanted to start in Islamic country but that same company could look into adding coffee line to serve there instead because coffee is served at all ceremonial events so there is a big market for it.
There are many ways to see how culture effects international business whether it be social or economic. The two frameworks discussed are tools that help businesses see how certain countries feel about certain beliefs which makes it easier to engage in international trade. Understanding how attitudes can have positive impact or a negative impact towards your business is key to keeping the flow of production high. Having good cultural competency can lead to expanding your business elsewhere and running that business effectively because you are able to absorb another countries beliefs and adapt to them. By gaining cultural literacy a person can effectively navigate a business negation or market a product to a certain group. Religion plays its part in international business by understanding what the religion is of the area you are doing business in and how their certain customs affect how you handle employees and products in that region.
- Wild, J. J., & Wild, K. L. (2013). International business. Harlow, England: Pearson.
- Exploring China. (n.d.). Retrieved from https://sites.psu.edu/chinaportfolio/classification-categories/
- The Cultural Iceberg. (n.d.). Retrieved from https://www.languageandculture.com/cultural-iceberg
- Section 7. Building Culturally Competent Organizations. (n.d.). Retrieved from https://ctb.ku.edu/en/table-of-contents/culture/cultural-competence/culturally-competent-organizations/main
- Aliasis. (2018, November 25). Cultural Differences Between the USA and Japan. Retrieved from https://owlcation.com/social-sciences/Cultural-Differences-Between-the-US-and-Japan
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