Collectivist cultures - where helping others is more important than profiting on their own - may see their business costs go up since companies prefer to support other companies within their community rather than take advantage of the economies of scale and scope that companies who buy raw materials have access to. With global media reaching the corners of the earth, entrepreneurship has become increasingly popular as more people seek a way to exponentially increase their chances for success. The result is a sort of cognitive dissonance both sides are looking at one another through their own Cultural Lens which means they are interpreting behaviours incorrectly and attributing erroneous meaning to them. Africa is 30 million square miles. dM'7ItjVT(!JqJ(^yfau"94y/. It covers the same surface as 13 countries including the United States, China and India and the whole of Eastern Europe and in all kinds of riches, especially in raw materials such as platinum, cobalt, uranium, tantalum, gold, diamonds and oil. Businesses with competitive, cutthroat environments are typically less productive than collaborative work environments because individuals focus on their own performance at the expense of their team, which ends up hurting the company. We are going to give you some insights into cultural differences in international business. You need to be sensitive about how other countries relate to people of other races and religions. For example, if you dont look an American businessman in the eye when you speak, it might mean that you are trying to hide something and that you are being dishonest. You dont have to burn books to destroy a culture. I know this all might sound overwhelming to you. The values and morals are abstract and invisible (non-material) such as respect, love, marriage, taboos, laws, kindness and worship and is prevalent in the background, visible to a select few outsiders. It is a religion or a religious faith that is a belief. In most Latin American countries, old-world manners are still the rule, and an air of formality is expected in most business interactions and interpersonal relationships, especially when people are not well acquainted with one another. In some countries, there are laws that state a company cant discriminate against any race or religion. Global standards recognize a suit and button-down shirt for men with an optional tie. By way of exploring these differences, we are briefly going to look at 3 ways in which culture can cause challenges. Also, it is important not to be self-centered and arrogant. Be gracious. Companies whose bottom lines are compromised when their employees take afternoon naps, losing valuable working hours, will suffer for it. How and what you eat and drink with your family and friends may be different from what is acceptable while eating and drinking as a business person. We need to minimize the possibility of cross-cultural misunderstandings so we can benefit from our differences. Top management in a global company can use a variety of approaches to deal with cultural differences. According to Chibueze C. Udeanis Cultural Diversity and Globalisation (2007), in the age of globalisation, its a fact that local contexts in the world are getting dissolved into a worldwide network of interaction under the influence of technology It is therefore all the more necessary to pose the question of cultural diversity and globalisation from an African perspective. According to Richard Bell in his Understanding African Philosophy (2002), the African regional cultures were broken up and destroyed (or at least radically altered) primarily by the European and Islamic incursions going back some 500 years. Concepts like time and ethics are viewed differently from place to place, and the smart business professional will seek to understand the rationale underlying another cultures concepts. The most common greeting is How are you? or Bonjour, Jambo, or in the countrys local language, which is generally said immediately prior to the handshake. 9 Mistakes I Made as an English Language Learner, Attention All English Language Learners - Avoiding The 200 Most Common English Mistakes, 96 More Slang Expressions from Pix to Zs to Become ESL Savvy, 2 Ways To Talk (Casual and Formal) in the English Language, How to Rock a Conversation with Strangers and Boost Your ESL Skills, New Years Resolutions Taking Flight to English Fluency, Get Your Mojo On - Sequel to 100 Everyday Slang Words from Inhale to Pinky, Why READ? It is also an appropriate gesture to look at the card before putting it away. Because of all the marketing campaigns that have been run to promote the product, i.e. It's comparable to real or actual costs, which include all payments and contractual obligations, as well as the book cost of depreciation on both plant and equipment. How Do Cultural Differences Affect International Business? Why NOT? Distance, however, does not refer only to geography; its other dimensions can make foreign markets considerably more or less attractive. They often touch, usually an arm, and even kiss womens cheeks on a first meeting. Personality is defined as a person's sense of self and their place in society. There might be a pat on the back, an arm around the shoulder, or touch on the upper arm. But there are cultural differences regarding eye contact. WebOpen Document. It affects our relationships. In Latin America, El tiempo es como el espacio. In other words, time is space. The level of corporate and individual taxation, government incentives, employer overhead in the form of social costs, local labor laws governing the number of hours that employees work, and the general motivation, reliability, and commitment of the local workforce are all factors to consider. Fact is leisure and socializing form the foundation that is key to group solidarity that is important to Africa. 1) culture; 2) language; 3) religion; 4) level of education; 5) customer preferences; and 6) society's attitude toward foreign goods and services are the key socio-cultural factors that have a significant impact on multinational companies' operations. We will write a custom Case Study on Cultural, Political, Economic and Legal Aspects of Doing Business in France specifically for you for only $16.05 $11/page. Far from it; what it shows is the cultural significance of consensus and consultation, which tends to guide the decision-making process in Africas group-oriented cultures. We must note that values, norms and morals are universal assets in understanding and defining culture; which do not change easily. A glaring example of the riches of Africa is the Democratic Republic of Congo, the country of Patrice Lumumba. It is never a good reflection on you if you insist your country, culture, or business is superior to others. It is important to know how to address them. There are some gestures that are similar across cultures like a smile to mean happiness or an expression of anger to mean that you are upset. How does culture impact international business? Just as you would conduct a technical or market analysis, you should also conduct a cultural analysis. It affects everything we do from the way we raise our kids to the way we do business. It also has an impact on the marketing, sales, and distribution departments. Even though in most cultures, people have an understanding to not judge someone by their physical appearance, it would be wise for you to be knowledgeable about local standards. They frequently stand closer to one another when talking than in many other cultures. Always exchange pleasantries and inquire about family before beginning to transact any business. Companies routinely overestimate the attractiveness of foreign markets. <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> Not being able to manage cultural differences is a common reason cited for failed international business assignments. When we are working with people from the same, or similar, culture, its these shared rules that help give us structure and agreement in how to go about doing things, whether thats how we communicate, run meetings or negotiate. We cover everything from understanding culture to cultural differences in business, including a look at differences in approach to time, communication and teamwork. There may be many other reasons. Lets look at five ways company culture affects business performance. In family-owned businesses, the patriarch, or on occasion matriarch, tends to retain the key decision-making roles. Web1) Outline why the culture of a country might influence the costs of doing business in that country. For instance, the ailing of the sugar industry in the country has been blamed on the taxations. Alternatively, this might not be the case throughout the world. The lower a businesss overall cost, the easier it will be for it to operate, pay taxes, and hire employees, if necessary. Opinions expressed are those of the author. The American culture perceives an indirect tone as unprepared or unorganized. You can influence how employees interact with their work and your organization by embracing a culture of engagement. What are three steps to keep in mind if you are evaluating a business opportunity in a culture or country that is new to you? Despite the business world being influenced hugely by the western world of doing things, culture plays a very big role in how business is done on the continent. This may sound quite basic but you need to look at your own culture first. Learning the language and translating or localizing the approach is an important step that can be noted. This article was written specifically for the NTU-SBF Centre for African Studies. The 10 Most Active Stocks Of 2023 - What Are The Biggest Movers This Year? High employee turnover is costly, time-consuming and a sign of poor company culture, so rememberyour company culture guides who you should hire. Companies with a positive culture are more enjoyable workplaces and, more importantly, tend to have better retention rates. Because of all the marketing campaigns that have been run to promote the product, i.e. Be sensitive to various religions that forbid alcohol. They will be served first during business luncheons. A visual depiction of the site's image and its history Start using BusinessTown to stream your courses. And in England, you would eat your scone after your sandwich but before your cake. A Comprehensive Guide to Digital Transformation in Finance, 12 Steps to Clear Safari Browser Cache on Mac, Amazing Services Provided by a Locksmith You Need to Know, Top Tips to Improve Retail Sales Performance of your Business, How to Secure Your Business Finances for the Long Term, VoIP Phone Systems: What It Is And How To Install One For Your Small Business. According to the textual evidence, economic advancement and globalization may be important factors in society change. You probably have heard the expression that when in Rome, do like the Romans do.. Feel free to watch the video sample below or, Cultural Differences in Mergers & Acquisitions, Cultural Differences in International Retail, 3 Real-life Examples of Cultural Misunderstandings in Business, Free Self-Study Guide to Cultural Differences, How Lack of Cultural Awareness Can Cost A Business Big, a foreign expat manager actually managed to cause a riot and get himself beaten up, Why Cultural Intelligence is an Essential Skill for the 21st Century, How Intercultural Awareness Training Helps You Succeed at Work, How Cultural Accuracy Checking Can Make or Break Your Global Business Venture. Depreciation is used to calculate the cost of a fixed asset used in production. Some of these regional cultures once had great civilizations and kingdoms, but a minimum of texts survived to record their ideas and achievements. They may be the leader and everyone else may need to follow their command or wishes. Business protocolhow to physically and verbally meet and interact; How culture impacts how people view time and deadlines; How they are likely to ask questions or highlight problems; How people respond to management and authority; How people perceive verbal and physical communications; and, business protocolhow to physically and verbally meet and interact, how culture impacts how people view time and deadlines, how people are likely to ask questions or highlight problems, how people respond to management and authority, how people perceive verbal and physical communications. If they are looking for a new job, their age might be a deterrent to getting hired. If they become bored or disinterested in their current job, its easy to move on and find something better. In addition to a sensible choice in dress, your clothing should be neat and clean. [The] Learn to listen. It is not an overstatement when Edem Kodjo, author of Africa Tomorrow, describes the condition of an African as torn away from his past, propelled into a universe fashioned from outside that suppresses his values, and dumbfounded by a cultural invasion that marginalises him. This kind of alignment is especially important as your business grows. The years I have spent in West Africa setting up business has taught me that as Africans, we have our own way of doing business, and what works for us. Professionals err when thinking that, in todays shrinking world, cultural differences are no longer significant. Along the way, we will answer questions such as. Five Ways Company Culture Affects Business Performance. Dont comment negatively about anything from someone elses culture. The opening case shows how a simple issue, such as local flavor preferences, can impact a billion-dollar company. the diversity of cultures with which Africans are now being more intensively confronted within the process of globalisation. For international business success, it is vital to have a thorough understanding of local business practices. However, be aware that dress pants for women may not be the acceptable dress everywhere. In Iraq a few years ago a foreign expat manager actually managed to cause a riot and get himself beaten up due to not understanding local ways. Marriage and religious customs, as well as other social customs. Culture has an impact on the social side of business along with the economic side. Culture refers to factors such as history, geography, and family dynamics that contribute to assessment and intervention. For example, youll need to understand the following: (AACSB: Reflective Thinking, Analytical Skills). Of course, as your company grows, it wont be possible for you to have one-on-one meetings with everyone. For example, youll need to understand. A way to communicate product features to the customer and influence them to purchase the product. What are the most important factors to consider in evaluating and selecting a country for international business? Studies show that companies with engaged workforces also have higher rates of customer satisfaction. Even though people are focused on the bottom line, people do business with people they like, trust, and understand. Companies whose bottom lines are compromised when their employees take At the same time, the old beliefs and witch craft, supernatural beings and ancestral spirits still practised, promoted very strong and healthy relationships among the communities. Treating your employees well can also improve your companys image, making it a win-win for you and your employees. If you would like to further your reading on cultural differences in international business, then these are all excellent additional resources: Doing business with people from different cultures can also affect the more practical aspects of work. When Culture Goes Wrong: How Culture Has Cost Business Big. Culture comes in many shapes and sizes. It includes areas such as politics, history, faith, mentality, behaviour and lifestyle. The following examples demonstrate how a lack of cultural sensitivity led to failure. 1. Microsoft Offends India Generally speaking, several common themes permeate Latin American business culture. For instance, in Nigeria, the belief in the role of the Ogun and the God of Lightning and Thunder are paramount in controlling crime and corruption. The cost of doing business in a given company is influenced in various ways by a country's culture. Table manners also differ. Its important to note that these elements are adaptive, changing as outside forces influences the country. For example, the simple act of eye contact can cause several practical challenges. <> Reach us by mail:TalktoCanada.com474 Grove St EastBarrie, ONL4M 5W3 CANADA. Now, what happens when you have a professional from a very task-orientated culture visit a client or colleague from a very relationship-focused culture? How companies should market their brands to attract a global audience or how to manage stakeholder relationships with external stakeholders, for example. CEO & Founder of National Business Capital, the leading fintech marketplace offering streamlined small business loans. The more aware you are of your own culture and the effect it has on you, the more aware you will become of how culture affects others and what you can do about it. Throughout Latin America, the family is still the most important social unit. What are the cultural factors affecting international business? In reality, understanding cultural differences is important whether youre selling to ethnic markets in your own home country or selling to new markets in different countries. You may not have considered some of these aspects before. Each country has different constraints, including the terms of payment and regulations, and you will need to keep an open mind about how to achieve your objectives. These meetings will give them a chance to ask questions and share their concerns/ideas with you. Its therefore important to understand the cultural diversity of Africa. Its crucial that you continue to develop your leadership team so they can promote a positive culture as well. What's Behind The Growth Spurt In Fertilizer Stocks? The organizations mission is to advance sustainable business development through trade policy. Culture has a significant impact on how people think, communicate, and act, as well as the types of transactions they engage in and how they negotiate them. Farther from the big cities, the infrastructure may become less reliable, forcing people to become highly innovative in navigating the challenges facing them and their businesses. Costs are lower, but it does not mean prices are cheaper. how to estimate business travel cost for various locations? endobj According to research, people from various cultures consume differently mainly due to re consume differently primarily because of their differences in values and norms (Parker-Pope, 1996). Strong company culture starts with positive leadershipif your employees dont trust your leadership, it will be hard to create a strong culture. They are more likely to be flexible and creative in their approach and have less rigid constraints than their counterparts from more established companies. 00:00 00:00. In This Article. The slave trade, introduction of new diseases, forced colonization, foreign language and religious impositions, and new administration threw most of the continent into social, religious, political, and cultural confusion. What happens when you have a culture that sees eye contact as a sign of confidence and engagement interact with one that sees eye contact as rude? So again be sensitive to this. eO4BvQ[R. We often forget that cultures are shaped by decades and centuries of experience and that ignoring cultural differences puts us at a disadvantage. In Africa we have specific values associated with some group of people, but these may solely be the material or visible culture, such as food, clothing, housing, drumming and dancing, and art. Which country do you think is the most complex? There may be religious taboos. Our cultures very much shape how we go about our business. Today, more than ever, it is difficult to distinguish between formal and leisure clothes. What are the major cultural factors that affect international business? Look at their faces and see how expressive they are when they speak. Watch what you say. These include, without limitation, labor (including salaries of executives and officers), rent, interest on borrowed capital, depreciation, cost of inventory. In order to offer a product to a foreign country, a marketer has to study its culture in depth. Culture informs our expectations, our behaviours, our motivations and our perceptions of others. Eye-contact is important during business meetings in Canada. Culture refers to the accepted norms and values and rational behaviour of groups. Culture impacts how employees are best managed based on their values and priorities. Be aware that probably no one likes individuals who are loud, aggressive, and offensive. There are many areas that may affect how you relate to others. And finally, if your company culture isnt what you want it to be, it may be time to perform a culture audit. However, in Africa most of the times its difficult to see the dividing line that determines where socialising ends and where business begins. Conversely, entrepreneurs are often well equipped to negotiate global contracts or ventures. It is influenced by culture. Learning the language and translating or localizing the approach is an important step, but so is understanding the customs and etiquette of that market. The contributions and cultural influences stemming from Africans have been greatly undermined in schools worldwide. Company culture is especially important during periods of uncertainty, like when the company is experiencing significant changes or economic difficulties. This is due to, among other things, the fact that the intrinsic African identity is dominantly an ethnicised cultural diversity. 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Or localizing the approach is an important step that can be noted than in many cultures... Afternoon naps, losing valuable working hours, will suffer for it is leisure and socializing form the foundation is. Comment negatively about anything from someone elses culture and clean: TalktoCanada.com474 St... Ways company culture isnt what you want it to be self-centered and arrogant case. Must note that values, norms and values and rational behaviour of groups, however, does not refer to. Anything from someone elses culture a way to communicate product features to the way we do business people! Assets in understanding and defining culture ; which do not change easily turnover is,. Addition to a foreign country, culture, so rememberyour company culture isnt you.