Role of Culture in International Business

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, some mannerisms are either frowned upon or encouraged on the international scene. For instance, with regard to our hypothetical company, Company X, attitudes towards gestures, punctuality as well as humor could be different in all the countries it operates. It therefore pays for Company X to acquaint itself with differences in culture so as to avoid misunderstandings in dealings with all categories of stakeholders. In the final analysis, therefore, the odds of success are greatly enhanced for a company that understands and respects the culture of a region, country, or jurisdiction it operates in.

Culture also has some marketing implications as far as international business is concerned (Pride and Ferrell, 2011). In the past, many businesses have made fatal marketing errors as a result of their indifference to a target country's prevailing culture. This is more so the case when it comes to poor understanding of buyer behaviors. It is important to note that in most cases, the behavior of buyers is largely influenced by the said buyers' cultural attitudes as well as influences. In that regard therefore, our hypothetical company, Company X, must be aware of not only the cultural attitudes but also the influence culture has on the target market. This in my view is particularly important when it comes to making decisions on not only the promotion but also the distribution and packaging as well as design of the various electronic products it offers to the concerned markets.

Next, culture also does play a prominent role in the establishment of positive relations and rapport -- be it with customers, suppliers, or even employees. The development of trust amongst the stakeholder groups mentioned above (most particularly in foreign markets) is largely dependent on proper understanding of the pertinent cross-cultural issues at play. For instance, with regard to Company X, negotiations between it and some key clients in the various jurisdictions in which it operates could vary as a result of cultural issues relating to religious beliefs, conduct of business or even societal status. It should also be noted that understanding the applicable culture or set of cultures could also aid in the enhancement of creativity and hence innovation. In most cases, creativity thrives in those instances where there is diversity of ideas. If utilized well, cultural diversity could have a positive impact on open mindedness, curiosity, and passion (Kania, 2010).

Based on the definition to culture I have given elsewhere in this text, it is clear that people's thinking patterns as well as behavior can and are indeed influenced by culture. As Kania (2010) points out, people of different cultures see things differently. In his own words, "Poles, Germans, Americans or the French have different perception of such values as teamwork, a different attitude to regulation and procedures and they perceive dimension of time differently" (p.17). For this reason, despite all their benefits, cultural differences could negatively affect the smooth running of business operations in an organization.

Language barrier is one of the most prominent issues a multinational could face in its quest to exploit foreign markets. It is important to note that to achieve its goals; a multi-cultural organization with operations in various parts of the world needs to enhance efficiency by ensuring that its various subsidiaries are in constant communication. The relevance of competence in cross-cultural communication cannot therefore be overstated in this case. Managers of the various subsidiaries of Company X must therefore have enhanced understanding and knowledge of communicational diversity so as not to obstruct organizational management and development. Yet another key issue that Company X could face with regard to culture as it seeks to exploit business opportunities in other jurisdictions is the right approach to adopt when it comes to the adoption of affiliations. On this front, Company X may find that unlike is the case in Thailand, France lacks a collectivist culture that essentially puts the needs of a group before those of the individual. In that regard, should Company X fail to understand Thailand's collectivist culture well, it could end up making several strategic blinders. For instance, unlike is the case in France and Germany, the implementation of individual incentives in Thailand and Brazil as a way of motivating employees could end up being an ill informed strategy or move. The development of an organizational culture that is more or less unified could also be a challenge for Company X. This is particularly the case given that the various subsidiaries of the companies represent different cultural perspectives.