Effects of Society & Culture on Global Business

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  • 0:03 Opportunities of…
  • 0:45 Cultural Challenges
  • 1:43 Social Challenges
  • 2:54 Ethical Challenges
  • 4:22 Lesson Summary
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Lesson Transcript
Instructor: Trunnis Goggins
Travel and technology have made our world smaller, which has led to greater opportunities for companies to operate in a global market. This lesson will look at the effects of society & culture on global business.

Opportunities of Global Business

General Motors, Ford Motor Company, Levi Strauss, and Walmart are all major U.S. companies. However, how many of their products are actually manufactured in the United States in their entirety? Another question: is it even economically feasible for these companies to manufacture their products entirely in the U.S.?

There are several political, social, and economic factors that compel organizations to operate multi-nationally. Though there are numerous benefits for organizations to operate on a global scale, these types of operations do come with cultural, social, and ethical challenges. These challenges are all part of the market environment, which is the issues and situations that affect how a business operates.

Cultural Challenges

There are several definitions for the word culture. For the sake of this lesson, we'll use this definition: culture is the characteristics, behaviors and beliefs of a certain group or community of people. With this definition in mind, organizations must consider the cultural implications of introducing a product or service into a new international market.

When operating in a global environment, it is nearly impossible for an organization to take a one size fits all approach. Cultural issues from one region to the other must be considered. Take McDonald's, for example. In the United States, McDonald's is known for the Quarter Pounder with cheese and the Big Mac, both of which are all beef hamburgers. However, in India, where nearly 1.2 billion people find it culturally unacceptable to eat beef, the McDonald's menu consists of lamb, chicken and tofu; beef is not on the menu. These menu changes in India are a way to recognize and respect that nation's cultural norms.

Social Challenges

For the sake of this lesson, social challenges will be measured by social norms. Social norms are accepted and expected behaviors of individuals and groups in a certain society or situation. With this definition in mind, it's pretty easy to determine that organizations operating in multiple societies throughout the world are faced with several social challenges.

For example, there are some companies in the United States that tie their brand to particular social and political messages. In some cases, these messages may be contrary to the position of a particular community or organization or a particular message may be contrary to the position of the government of the United States. However, due to the high level of political freedom and social tolerance enjoyed in the United States, these companies need not fear retaliation from the United States government, but that same protection from governmental and community retaliation may not be enjoyed in other markets in which a particular company chooses to operate.

With this example being considered, it is imperative that organizations are careful to consider and practice acceptable social behaviors in the various regions that they operate. Failure to conform to those social norms could very well lead to a negative impact in the communities and countries in which they are operating.

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