The Role of Culture in International Business - Essay Sample

Introduction

Culture refers to the traditions, customs, norms, religious beliefs, ideas, values and other aspects of social behavior that is acceptable to people of a particular society. Culture is an important component in transacting of business as it has an impact on business functions. Various people from different parts of the world and from different cultures interact at an international level exchanging goods. Their diversity in culture dictates how they interact in business. Failure to understand the culture of people you are doing business with might negatively affect your business performance. In my presentation, therefore, we discuss the important role played by culture in doing the international business.

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The greatest aspect of culture that play a big role international business is communication ("How does culture affect international business? | Language Insight", 2019). Effective communication is a key component in carrying out a successful business transaction. Doing business at the international stage implies that there might exist a language barrier between two trading parties. It is therefore, critical to select a common language that the two trading parties understand for them to complete their business transactions. For example, an American farmer who supplies corn to an Italian miller must consider common language that will be understood by the two of them in the transaction. In most cases, English speaking is prevalent and dominates as business language. In dealing with the cross-cultural difference, businesspeople ought to be sensitive in selecting the language to use and how to communicate with people from a different culture.

Different cultures in the world have different perceptions about time. Some societies treat time with a lot of sensitivity. For instance, Germans are known to be punctual in time, Americans are fast to strike business deals while Japanese take time in negotiating before settling for a business deal ("THE TOP TEN WAYS THAT CULTURE CAN AFFECT INTERNATIONAL NEGOTIATIONS ", 2019). Again, business people from various countries might dedicate more time a certain goal while negotiating for a deal. Therefore, Americans want to reduce the formalities associated with negotiating for a deal while the Japanese get devoted to establishing cordial relationship with their business partners.

Another aspect of culture that has an impact in business is the etiquette at workplace. Different countries depict their unique way of interaction at workplace. Some could embrace formality while others could embrace informality in how they relate in the workplace. For instance, people from Asian countries like being addressed in formal way, that is, by their titles Mr/Mrs. People of countries in the North America like the USA and Canada like being addressed by their surnames.

Moreover, religion, an aspect of culture, also has an impact in international business. Different countries in the world have different religions and therefore has an effect on doing business in the international arena. For instance, most of the British population are protestants while most of the Saudi Arabian people are Muslims. There are minimal chances for a Christian from Britain who deals with pork meat to export the meat to Saudi Arabia because of the restrictions in the Muslim religion. They attach pork meat to evil and thus such a business is negatively affected by the religion. For an entrepreneur, therefore, such considerations must be put into account before venturing into such a market.

Nonetheless, different nations in the world have different attitudes towards business and business activities. There are countries that encourage social equality in doing business. Most of the countries lying in the Scandinavian region of Europe emphasizes on equality in business. Such countries include; Sweden, Switzerland and Ukraine. On the other hand, some countries like Japan emphasizes on respect for those occupying the high offices. That is why in Japan, most organizations are structured hierarchically because the focus is on organizational hierarchy. Thus, it might be a challenge to multinational companies to define roles for their employees. Again, there are some cultures in the world that have working hours limitations. For example, some cultures see long working hours in an organization as a commitment while others as a sign of lack of efficiency and lack of priority to family time.

In some countries there exist some cultural barriers for a certain section of the population to engage in issues to do with business. For instance, in societies that portrays high power distance index, ("Impact of Culture on International Business", 2019) women are not allowed to lead an organization. They accept and believe that the power is distributed in unequal way. In societies with low power distance index, both the seniors in an organization relate as if they were equals. (Yeganeh, 2011)

Culturally, every country in the world have their customs and unique mannerisms and gestures. Some mannerisms in one country might not be the same to those in other countries. For example, in the USA and most European countries, handshakes are common especially after striking a business deal or after a business meeting. In the Arab countries, handshakes have a different perception. In India, for example, women do not shake hands with men as it is against the dictates of their culture.

Moreover, education, an element of culture also plays a great role in international business. Countries with well educated people tend to make business deals based on substantiated information and thorough research. On the other hand, countries that have invested less in education of her people follow their traditions in making decisions concerning business.

Political philosophy, is another aspect of culture that affects international business. Every country in the world has a political philosophy that they subscribe to it. For instance, a country that is led with dictatorship means that her citizens have little democratic space to make any decisions. It is the leadership of the country that makes absolutely all the decisions including those of business. Countries with democratic forms of government implies that the citizens of such countries have democratic space to contribute in any decision making they want to be part of it. For instance, in a democratic state like the USA, citizens' participation in governance is respected. Therefore, entrepreneurs must consider the political philosophies of the countries they wish to invest their capital in before venturing into their markets.

Last but not least, for every business, finances ensure that the objectives of the firms are achieved. However, access to the finances are influenced by culture. For instance, companies seeking to expand overseas might get affected financially on how they will source for finances because different countries have different economic states and different levels of financial development. In the USA for example, the country relies on selling of equity shares to raise their finances. Countries like Germany and Japan depend on bank loans. While venturing into new countries, companies might decide to source for their finances in the host state or from their home country. Hence, financial sourcing is influenced by culture of different countries in doing business internationally.

Conclusion

In conclusion, we can say that culture and business are two things that cannot be divorced. Nearly every aspect of international business has an element of culture effect. Therefore, as companies venture into foreign markets in a globalized world, the companies must endeavor to invest a lot in learning the cultures of the people where their businesses operate. Though learning of new challenges presents a number of challenges in the initial stages, it is important for the success of the business in new lands.

Works Cited

How does culture affect international business? | Language Insight. (2019). Retrieved from https://www.languageinsight.com/blog/2018/how-does-culture-affect-international-business/

THE TOP TEN WAYS THAT CULTURE CAN AFFECT INTERNATIONAL NEGOTIATIONS . (2019). Retrieved from https://iveybusinessjournal.com/publication/the-top-ten-ways-that-culture-can-affect-international-negotiations/

Essays, UK. (November 2018). Impact of Culture on International Business. Retrieved from https://www.ukessays.com/essays/business/international-business-and-its-cultural-impact-business-essay.php?vref=1

Yeganeh, H. (2011). A generic conceptualization of the cultural distance index. Journal Of Strategy And Management, 4(4), 325-346. doi: 10.1108/17554251111180990