Role of Culture in International Business
In an attempt to further enhance their bottom-line while at the same time taking advantage of the benefits and conveniences of globalization, businesses are increasingly extending their operations abroad. Although there are many benefits that such businesses stand to reap, the said global expansion presents its own unique challenges. Indeed, multinational companies operating in global markets face a raft of challenges. These challenges include but they are not limited to business structure adaptation, staffing issues, regulatory and legal hurdles, economic volatility, financial reporting, etc. Multinational companies also have to contend with cultural issues as they conduct their businesses internationally. This is more so the case in terms of the management of their human resources. This text concerns itself with the role of culture in international business. The company of choice for purposes of this discussion is a global electronics company with offices in four jurisdictions, i.e. Thailand, Brazil, Germany, and France. This hypothetical company will herein be referred to as Company X.
Culture according to Hofstede (as cited in Wagner, 2009) "is the collective programming of the human mind that distinguishes the members of one human group from those of another" (p.2). This is the definition of culture that will be adopted in this text. As per this definition, culture serves as the foundation of the behaviors of people in the society. In that regard therefore, people of different societies tend to have different cultures. This could be a plus or a challenge for international businesses.
From the onset, it should be noted that the proper understanding of and respect for the relevant cultures enhances the success of companies in the markets in which they choose or elect to operate. To begin with, culture does have an impact on business relationships (Wagner, 2009). It should be noted that although culture extends beyond etiquette,...
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