The importance of cultural factors in international business

May 7, 2018 Cultural

In the process of globalization, the world is getting smaller. The connections and interactions between countries or international companies are easier by cultural integration. For example, Google’s company was a small company in California before 2000. They then expanded their company in other countries such as Germany, Japan and they has boosted many different language versions of the site. Google has been considered as the largest search engine in the world from June 2000 and they was available in 100 different languages in 2004.

Nowadays, the word “google” seems to become a memorable word in human mind. However, every coin has two sides. According to BBC News, Google also had some problems with Microsoft over the Window phone Youtube App. Google explained the reason that leads to conflicts is different ideal and technology development between Microsoft and other communication companies. They claimed that Microsoft had not upgraded the new version to connect to Google’s product. Hans Magnus Enzensberger described “Culture is a little like dropping an Alka- Seltzer into a glass – you don’t see it, but somehow it does something”.

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It is correct in case of Google’s company, cultural factor plays an essential role to be success. It has brought a tremendous opportunity but itself is also a challenge. Cultural factors can be described as invisible barriers in business cooperation. This essay will analyze how considerable culture is in international business. Culture is considered as a complex concept that is very difficult to define and understand. There are variety of different cultural definitions in each aspect of research.

In international business’s research, culture is indicated by Geert Hofstede, “Culture is a collective phenomenon that is shared with people who live or lived within the same social environment, which is where it was learned. It is the collective programming of the mind which distinguishes the members of one group or category of people from another”. Culture is a program of collecting, connecting and sharing human mind in the same environment, but there must be an alternative to people in each group. Cultural factor has a significant effect on both living life and business success.

Nissan is a typical example for interaction and cooperation between the UK and Japan. It is believed that, Western and Eastern countries have a lot of difference in cultural styles. For an Eastern company, to be successful in a Western country is a burdensome task and they have to face with plenty of cultural challenges. However, Nissan, a Japanese company, expanded their market to the UK and they has got a lot of achievement. They firstly have established close relationships with local in order to approach UK culture effortlessly.

Nowadays, they become a biggest car manufactory in the UK. Nissan is investing $200 million (? 126 million) to build its new Invitation model in Sunderland (BBC News) and their project is also supporting by a ? 9. 3 million loan from the UK Government. Language is pointed out as the reflection of culture. It is the key in interaction between human. It has directly influence on international business. Language is used to gather and evaluate information or provides an access to connect to other partners. It is also important in company communications.

It is said that up to 7,000 different languages are spoken around the world. According to The Lance (The student news site of Linganore High School) “the world’s most widely spoken language by number of native speaker are Mandarin Chinese, Spanish, English, Arabic, Hindi, Bengali, Portuguese, Russian, Japanese and German”. Sources: lhslance. org Although Chinese is the most popularly spoken language in the world, a majority of countries chooses English as the second language because it is becoming more and more fundamental and effective in international business communication.

In particularly, English can help business cooperate with their potential customers who are not in the same language neatly. For example, 565 million users exploited Internet information by English. Whist, it is just 510 million by Chinese, twice less than the number of spoken Chinese people. Sources: lhslance. org and webmarketingtoday. com Language is divided into two form: verbal and non-verbal language. In verbal communication, the spoken words are used to express their thoughts or ideas clearly and concisely.

A successful management has to understand their customer demands, they can predict accurately what clients want to know and then plan what they would say appropriately. Nevertheless, in different countries, the spoken words have different meaning. For instance, Pepsi had a slogan “Come Alive with Pepsi”, and it then was translated into Germany as “Come out of the grave with Pepsi”. Apart from verbal communication, the managements are required to be well-recognized their customer’s non-verbal communication such as time, space, material possession, facial expressions, gestures, and eye contact.

For example, bowing is evaluated as an important moral standard in Japan, but it is meaningless in US. Another gesture that has totally opposite meaning is nodding the head. In most of countries in the world, it presents for agreement or “yes”. However, in Bulgaria and parts of Greece and the Middle East, it means “no”. Therefore, “to effectively communicate, we must realize that we are all different in the way we perceive the world” (Tony Robbins) because misunderstanding in language communication can lead to a negative impression about company’s brand image.

Another cultural element that pervades and impact significantly on international business is religion. There are many various religions that exist around the world. Although they share a numerous in common, they still keep their specific individuality. In the research of Monir Tayeb, it is described that Hindus raise their hand, their palm held together and their fingers pointing upward in greeting or in parting from one another. El Al, the Israeli national airline, does not fly on Friday because that is the holy day in Judaism.

Source: age-of-the-sage. org It is believed that religious differences such as Buddhism, Catholicism, Christianity, Hinduism and Protestantism greatly reflect in human behavior and decision-making. For example, because of cultural differences, McDonald’s balance carefully standardization with respect local traditional like both beef and pork are not serviced in India to avoid offending its Hindu and Muslim population (economist. com). In conclusion, cultural evolution has plenty of serious impacts on business environment.

Understanding clearly the substantial roles of cultural effects is a key to cooperate successfully in international business. Culture manifests itself in two principal elements: language and religion. They contribute to build determination in managerial styles and management decisions. For example, after signing an agreement that concerns a comprehensive global alliance in 1999, France’s Renault was very successful in European car market, while Nissan had a significant presence in Asian and North American car market.

Although they cooperated, they were still two independent cultural organization. They then recognized that their problems are corporate culture to be success in expanding their market globally. Firstly, they chose English as a principal language to communicate with each other and their customers around the world. They next had training for their staff, both male and female, because the companies claimed that women is more educated and they are becoming an important labor in international business.

In the cultural integration stage, national cultures should evolve and change gradually. However, cultural changes are different between countries because of income and education level. Improving levels of cultural awareness is a difficult and indistinct mission. The companies could not have merged the two cultures without destroying value. Therefore, practicing cross-cultural business and eliminating overage and inappropriate cultural factors selectively to minimize cultural dimensions are a big challenge that most of multinational corporations have to attack nowadays.

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