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International business and its cultural impact

In this essay I am going critically to evaluate the impact of culture on the International Business. Culture is a term which could be defined in lots of ways. All the people have different behaviour and perceptions so when being asked what is culture on their behalf, the response will will have different aspects. Regardless of the we all believe that we have impulsive knowledge on what culture suggest determining it is more technical. According to Kroeber and Kluckhohn's research culture may be described in more than 160 ways. Best culture explanations which were found during the research are that culture is ( See Appendix 1)

Different areas of culture help differing people to find the best field for the kids. But there are a case when culture impacts the whole population not only individuals. Relating to Francis Fukuyama "the most crucial region of modern life where culture exercises a direct influence on domestic well-being and international order is the overall economy. Although economical activity is inextricably linked with social and political life, there's a mistaken propensity () to regard the market as a facet of life using its own laws, independent from the rest of world. "

The complete culture's impact on international business might be within every international company as culture affects HRM, International marketing, supply chain, procedures management, corporate and business strategies and especially way to do business.

On the other palm culture's influence may be found mainly in principles, beliefs and habit. We are able to simply view three ethnic differences across worth, beliefs and action (see Appendix 2)

The main summary about culture we can make is that when comparing different cultures we can explain 4 key assumptions.

Cultures aren't homogenous. Within every culture there are subcultures. Including the caste system in India, working course culture. Also host to residence. For instance Basque people, French Canadian. Cultural history and its own interpretation are incredibly specific, so we cant suppose that two people from one country will behave in similar way or even to have common values.

Separation of ethnic issues from financial and politics is sophisticated as all three factors interact to affect views and values.

Defining the degree of differences between cultures is not logical because reputation of differences is a subjective issue.

As the amount of international trade and travel rises cultures become increasingly associated and the cultural diffusion may modify the significance of national cultures.

As we found that culture affects beliefs, principles and habit, it's likely that the culture influences also the management style. The variations of what authorizes the management are not different in dark-colored and white terms, because there are a cross-cultural understanding of the goal of conducting business and the type of management task. However there are variations of emphasis, top priority and understanding which may create a variety of styles and practice. Actually the differences can be found by separating countries in a cluster. Relating to Hofstede's Cultural Proportions there are four types of these which are being used to be able to compare countrywide cultures.

Individualism versus collectivism.

Individual rights and freedoms are key ideals in individualistic ethnicities. Special emphasis is located on personal job and remuneration. Collectivistic cultures are built on a foundation of prices: harmony between people in the group, the top priority of group needs and hobbies. Hofstede concludes that all abundant countries are individualistic and poor - collectivist. In societies individualistic human relationships can be planned and either get together to terminate them if they replace them with a good offer from elsewhere. In collectivist cultures are characterized by romantic relationships of moral and psychological nature.

Power Distance

Each person in the organization defines different levels of possessed by him and other members of the group's organizational status, prestige and level in the organizational hierarchy. Various are the rights deriving from the hierarchical level. Subordinates perform the decisions of superiors in different ways. Use categories: gender, inequality, privilege, social position, status, electric power, etc. podchineiie Studies of Hofstede put Asian and South American countries together with Belgium, France, Italy and Spain in the group of countries with a high index of severeness of hierarchical position. Scandinavian countries and the U. S. have low values of the parametyr, Bulgaria is one of the countries that are characterized by the greatest difference between managers and subordinates.

Uncertainty avoidance

There are societies where the doubt of future concerns people, and vice versa. For those societies are characterized respectively high or low with regards to the experts in handling problems as small or large function of individual awareness to deal with them. Societies that not take the risk and concern with tomorrow, develop pluralism of opinions and are prepared to deal with individual problems. In other societies, people are preventing for the future, they are anxious and ambitious. They feel threatened by the planet around them because they avoid the chance. Hence the characteristics of the crop in their respected organizations: subordinates seek clear instructions and managers, preferring more rules and regulations. Bulgaria is one of the countries in which people feel reasonably stressed, are usually more conservative values and value protection.

Masculinity v femininity

G. Hofstede defines masculinity as the degree to which prominent values in modern culture are considered ambitious, seeking the goals you should. The orientation is towards money and ownership of property. Cultures with a womanly nature, appreciate the relationship between people, caring for others, overall quality of life.

Dimension masculinity femininity "is important to look for the methods of reasoning in the job, the choice of methods to solving nl most complex tasks of issue resolution. In Table. 5. 5. shown the results for organizations of prevailing "masculinity" or "femininity" in the nationwide culture (adapt. 3, 5, 12, 15 and 18). Depending on national ethnicities are produced organizational value systems and patterns. Large transnational companies are constantly confronted with the condition of national civilizations, assessed the compatibility of ethnicities, predict the introduction of their interaction and assign them (incorporate).

So for every businessperson that is going to deal for a first time with a particular country can easily to look at the clusters (see Appendix 3, fig 1) and to get an idea whit what kind of culture he's facing and how to deal.

These clusters show that there surely is a level of cultural interest between groups of nations so it's much easier to make an over-all understanding of management practice. But there are risk s of making groupings of countries. The aspect of how people act in certain situations must be found out by own experience and discussions with people who have already worked with this country. Although having an understanding of your nation's characteristics at a good level is very useful in international business because in several parts of the world which different management styles and because each of the key business factors are damaged by the culture and ethnic differences.

When a company is creating its international strategy, it will consider where and what is going to sell, also to evaluate if the product will be accepted, because the future of the product's success depends on the cultural understanding of the folks who are heading to buy it. For example for a firm selling pork meats will be impossible to market in Islamic countries as a result of religion constraints. Also personnel should be used in a variety of adequacy in the foreign locations. So individual resource management need to be hypersensitive to any cultural need that might to specific countries. Similarly if the company wants to determine overseas plants, the culture and cultural difference can easily affect just how of development and content and format of any financial records produced to report the firm's performance. It's important to look how culture influences the procedures management, international marketing, human reference management and financing functions.

Impact of culture on International Marketing

It's clear that the cultural differences around the world offers not only problems but also opportunities for the international marketing. When being over a business trip it's interesting to handle products and facts that could be thought to be "strange". For example adverts of well-known brands completely different than those ones at home, or even opening hours for outlets. All those simple facts are of any great importance for marketing professionals and cause potential threats for the coffee lover when creating a strategy.

When a business, which is going to expand abroad, is growing its strategy there are four alternatives for it:

- selling the product without changes on international market segments.

- modifying products for different countries or areas.

- developing services for foreign markets.

- incorporating all differences in a single product and bringing out a global product

Having categorized cultural groupings and cultural characteristics, managers are able to seek new international markets to increase their firms, to market more goods, and raise revenue. Even culture might be recommended as an instrument for marketing segmentation because if the culture in the prospective country is similar to the culture in the existing markets, it's a precondition that providing the product in the prospective country might achieve success.

Products sold on international markets are inspired by the neighborhood behavior, tastes, attitudes and traditions in each market. The Coca Cola Company's try to sell Diet

Coke product on the Japanese market was not successful because the Japanese do not

consider themselves chubby and Japanese women do not need to say they are

dieters turning to products whose label specifies that. The company was obligated to

change the product name in Coke Light, and the campaign emphasized keeping in

shape by eating the product, rather than losing weight.

Goods intended for consumers are much more likely to put up with changes because they need to be adopted to meet the customers expectation in the prospective market and also to meet the economic conditions than it. There are lots of examples of international firms that adjust their products to meet up with the specific objectives of the international markets. For example, McDonald's was pressured to remove their menus including pork and beef meat and to create menus specifically for the Indian market. The business in addition has developed rice-based

menus in China, began selling beer in Germany, wine beverages in France, and in Japan

the persona Ronald McDonald was called Donald McDonald to be easier to

pronounce by japan.

Another cultural issue that is effecting the international business is the purchase price because it needs to match exactly the level of monetary development in the prospective country. McDonalds can be an exact exemplory case of that. When McDonalds opened up in India, the company wasn't forced only to remove the meat and pork menus but also to lessen the prices of all goods that have been sold in the restaurants. But nonetheless despite the fall season in prices recent statistics show that McDonalds in India increased their revenue by 8, 9% ( ˜˜˜ ¶˜˜»)

Human Source Management

In every company the HRM Supervisor is in control to look after recruiting and training personnel, working methods and time. For each company dealing around the world, it's very more likely to have staff of merged nationalities that could lead to ethnic confounding.

When recruiting staff, some ethnicities will apply more conducted approach. Including the approach depends on accurate qualification for the work and also test in order to asses the actual capability of the individuals. Other ethnicities will act differently by applying more easygoing procedure. For example this method is dependant on education, personal suggestion or employer networks.

A main strategy that is also relevant to the HRM is Hofstede's idea of 'vitality distance".

It's relevant because it's related to man's behaviour to hierarchy as well as the manner in which this may be translated into different ranges of pay degrees of the highest and the lowest in the business. For instance in France which Hofstede described in the energy Distance group, there are a great gap between lowest and highest paid staff while in contrast the greater collectivist and low ability distance countries the distance is much smaller.


In order a corporation to pursue its goals and targets it must be guaranteed with sufficient cash. Also need to be watched if funds are being used efficiently and effectively, if financial performance is reported to then management and shareholders. They are the key functions of the finance within every business. But elements mainly affected by culture are sources of fund and reporting practice.

Sources that might be used for companies growing range between different countries, as resources represent not only on the political overall economy of the countries but also on their state of monetary and financial development. For example in countries as japan and Germany common form of sourcing business is by having loan from a bank while in the USA and UK businesses rely more on raising money by retailing equity shares on the currency markets. In order to expand overseas, companies might want to find the money from the sponsor or home country or even from third country. For example, when McDonalds made a decision to open up their first restaurant in Moscow in 1990 during the Soviet Union. The company has used a jv with the Moscow City Council. Despite all the funds originated from the franchisor from Canada and the united states headquarters, the deal was to pay to the town Council in order to be permitted to operate in Moscow. So the agreement shown the Soviet/Russian politics system where business and point out are closely connected. So it's good to state that the financial plans were partially inspired by culture.

Similarly there isn't an unified approach for confirming financial results by annual reports. For example countries as Germany, Italy and France use "continental" procedure and is closely influenced by duty regulations. The report's information is designed to allow the taxes authorities and administration to compute and screen the liability. While Australia, USA and UK use Anglo-Saxon way. It's assumed that the shareholders are the key users and the info provided in the record allows them to asses the business's performance and their investment's performance.

These differences are of an great importance for international companies because when they get into the international market and build their branches they will be challenged to agree to the local conditions and rules. Also the financial information from all the branches should be merged in addition to create consolidated accounts. Common practice for international companies is to generate unified reporting system predicated on home country's guidelines and terms. So then your international branches use this system in order to get ready their financial accounts. After records are finished then your local personnel in the international branches "reworks" the information in order to meet up with the local legislation.

Appendix 1

" shared patterns of patterns (Mead) ; "Collective mental coding" (Hofstede); A set of base assumptions - shared solution to general problems handed down from one generation to another ( Schein) ; The essential primary of culture includes traditional ideas and especially their fastened values (Krober and Kluckhohn)

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