Impact of Culture on International Business

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Impact of Culture on International Business

Today, the global business is filled with cut-throat competition and most of the companies are trying to expand their business internationally. While doing business internationally, different factors like culture, economy, and political system, etc. of the other countries need to be analyzed. Among them, the cultural factor or culture has a significant influence on international business. By culture, we mean language, education system, literacy rate, food habit, lifestyle, social systems, different ways of communication prevailing in the country&etc. When a company expands its business to a foreign country, language differences may create some problems. So necessary action should step should be taken to appoint employees who know the language of that particular country. Because communication plays an important role in the success of a business and language is the core element of any kind of communication. The education system of a country plays a vital role in the culture of a country. So the company should deeply analyze the education system of the particular country and based on that business communication should be done. Literacy rate and culture are closely related. The way of communication of the literate people will be different from the way of communication of the illiterate people. The food habit of the people in a particular place has a great impact on the business, especially in the business of accompanying which is dealing with the food items.

If the company is dealing with food items, it must study the Hofstedes Cultural Dimension will be useful for studying the impact of culture on international business. According to him, the culture of the people, who are only cautious of themselves (I-conscious) will be different from the culture of people who care for others too (We-conscious). And also the differential consideration by the society to men and women, the approach of people in the lower strata of the society towards the social difference, and the attitude of people to avoid uncertainty depict the culture of the people. (Toncar, Alon & McKee, (n.d)).

When a company does business internationally it has to study and analyze the culture of the other particular country as it directly or indirectly has a role in the growth of the company. The culture of one country might be different from the culture of another country. For example, raising one hand before starting a talk in front of a public audience may be a custom in one country to wish the audience, but the same may be having some other meaning in some other countries. (Wade, 2004, 38-43).

If a business organization does not take enough care in communicating with people of different cultures, it may result in a heavy loss of money and reputation. Not only do different countries have different cultures, but different religions are having different cultures. A type of gesture may have one meaning in one religion, but it may have other meanings in other religions. So when a person works in a foreign country or a company does business internationally maximum care should be taken to reduce cultural mistakes. And also the companies should try to improve the way of business communication. When a company expands its business to any foreign country, it should be ready to accept the customs and tastes of that particular country which will be different from domestic customs and tastes. The example of the company Dominos Pizza Inc. is taken here. When the company expanded its business to foreign countries the company faced it difficult to explain the operational manual because the custom was different in other countries. When the company went into Italy, many Italians found its pizza too American the sauce being too bold, the toppings too heavy, a company spokesman recalls. Eventually the worlds largest pizza-delivery company packed up and pulled out of that country. (Gibson, 2006, R.8). But the aforesaid company was successful in understanding the culture of different countries, especially food habits of the people, which is evident from the growth rate of the company. If a company does not properly understand and make adjustments in its strategy, the survival of the company will be a question. And also when making a tie-up with any partners or suppliers in a foreign country, it is better to ensure that the parties have enough knowledge and idea about the local culture. Franchising is a good option to make an international business successful because the franchisees can easily understand the culture of the people as it is run by people from the same country. Dominos Pizza International recognizes the need for some adaptation in order to address the cultural and societal differences encountered in each individual market. With over 20 years of experience operating outside the United States, our team is very skilled at adjusting our products and systems for local tastes and preferences. (International franchising with Dominos pizza, (n.d)).

It is the culture of the society that will support an organization that continuously participates in social development activities. Dominos Pizza Inc. is a more socially committed organization and it, directly and indirectly, participates in different charitable activities which help the company in achieving high growth. To conclude, to be successful in international business, an organization must understand the culture of the different countries where it has a business presence.

References

Gibson, R. (2006). Small business (A special report); Foreign flavors: When going abroad, you should think of franchising as a cookie-cutter business; Unless, of course, you want to succeed. Wall Street Journal, R. 8. (Provided by the student).

International franchising with Dominos pizza. (n.d). Dominos Around the World. Web.

Toncar, Mark., Alon, Ilan., & McKee, David. (n.d). Cultural determinations of international franchising: An empirical examination of Hofstedes cultural dimension. Web.

Wade, Jared. (2004). Risk management: The pitfalls of cross-cultural business. 51, 38-43. (Provided by the student).

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