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Allison has a Masters of Arts in Political Science
Cultural norms are the shared values, beliefs, and customs that influence the behaviors and practices of people. Because these norms differ from region-to-region, they can impact how a business operates in the international or global market.
John, a business entrepreneur, is not new to cultural challenges, but he has succeeded in overcoming them with the help of his pal, Cultural Norman (C.N.).
When John first started his international ventures, he struggled to develop successful business strategies, or plans for operating internationally. C.N. helped him to understand that he needed to consider that some cultural norms influence business strategies, such as:
At one point, John had planned to expand into Brazil. However, when he sent his vice president to visit with the local partner, they wouldn't speak to him. C.N. helped John to see in Brazil, personal relationships are an essential part of the business deal. By sending his partner, he was disrespectful and showed a lack of concern for the relationship he had built with the partner. In some cultures, business relationships should be blended with friendship and, in others, personal conversations about family are not usually appropriate. Thus, relationship expectations, or ideals on how personal the business relationships should be, needed to be considered in his strategy for business development.
C.N. also showed John that products and services were culturally dependent. For instance, when John wanted to open a burger shop in India, his inquiries were completely ignored. This was because in India, cows are considered holy and their meat is not consumed. In some countries, the business strategy should avoid pork, such as in areas with large Jewish or Muslim populations, because pig is not consumed by most people in these cultures. Business strategies should consider how cultural norms can influence the products and services they offer.
In some cases, method of entry is determined by local laws, but often it is due to the perception of external businesses and local ethics. Some cultures consider a direct investment an invasion on their land, and the company will need to consider a joint venture or partnership in order to enter. However, in countries where there is a high corruption or high probability that a product will be illegally duplicated because cultural norms don't discourage piracy or plagiarism, a direct investment is the best option. Joint ventures, or shared ownership of the business, are expected when entering some international markets. Depending on local norms, a company may consider franchising, or selling rights to a brand in exchange for royalties or foreign direct investment, where the company directly invests into an international market while maintaining full control of the business.
John also needed to evaluate business performance and how his companies can complete tasks in different cultures.
Some important things to consider include:
When John first started operating in Asian countries, he would bring in managers from the U.S. to oversee the business. He quickly found out that these managers didn't know how to work with the local workforce. Team members never corrected managers if they made a mistake, and they didn't seem eager to do anything outside of their given tasks. C.N. explained that this was because Asian cultures have a high level of respect for leaders, and they are taught that leaders are never wrong. Further, because of the hierarchies, team members generally don't work outside of their given tasks.
John also found that in Asia, projects were completed slowly and decisions were not made quickly. As frustrations would arise, C.N. taught him that Western countries view time as linear. This means that we see time as something that can be spent, and deadlines are extremely important. However, Asian cultures see time as cyclical. This means that it continues to cycle around and because time will continue, it is better to take as much time as necessary to complete a project well, or make an informed decision, than to work quickly.
Gender is also an important factor in international business. While many Western countries are becoming used to having women as leaders, some cultures have not, and women leading men can be a challenge. It can also be culturally unacceptable for married women and men to be alone in the same office together. While this should not change how a U.S. company operates, sensitivity to local culture can help alleviate tensions.
Cultural norms are the shared values, beliefs, and practices of a region. When operating in the global market or internationally expanding a business, it is important to understand how these norms influence the strategy and performance of a business. The business strategy is the plan of how the company will conduct its business. This can be influenced by factors such as:
In addition to the strategy, culture can influence business performance, or how the company operates in the international environment. Some important areas of cultural difference include:
Overall, culture influences how businesses operate in the global market, but having an understanding of the cultural differences and remaining flexible will help businesses perform effectively and create successful strategies.
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Business 120: International Business16 chapters | 105 lessons | 12 flashcard sets
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