This is no small task, but one that is very rewarding. When we come across cultural differences and are unable to recognise and deal with them, our responses are emotional. Happy and satisfied people benefit from it. In total for example, the cost of producing one tonne of sugar vis Kenya ranges from 32000 shillings to 34000 shillings while that of producing the same tonne in Egypt ranging from 24000 shillings to 27000 shillings. When you have a strong company culture, you bring together like-minded individuals with a shared sense of purpose and, most importantly, create a community where they feel like they belong. Sharpen your listening skills. What is the effect of culture on doing business globally? The usual distance between two people should be two feet. And in our role as a stakeholder in the organisation, its important to raise the awareness of cultural issues within our organization beyond the factual cultural information obtained. how much percent of us economy does jeff bezos own? Culture impacts how employees are best managed based on their values and priorities. Horizons can facilitate employment without the need for you to open a local entity. Costs are lower, but it does not mean prices are cheaper. They are waiting for you to offer a greeting, which will be received with a big smile and a warm reply. Fact is leisure and socializing form the foundation that is key to group solidarity that is important to Africa. Positive work cultures also tend to be less competitive, which improves productivity. You should not write on the card, bend it, or leave it behind. Cognitive challenges relate to how we think, process information and essentially how we view the world. They assume that issues like culture dont really matter. Their negotiating style reflects these characteristics. Its important to note that these elements are adaptive, changing as outside forces influences the country. Culture impacts how employees are best managed based on their values and priorities. It is not an overstatement when Edem Kodjo, author of Africa Tomorrow, describes the condition of an African as torn away from his past, propelled into a universe fashioned from outside that suppresses his values, and dumbfounded by a cultural invasion that marginalises him. Farther from the big cities, the infrastructure may become less reliable, forcing people to become highly innovative in navigating the challenges facing them and their businesses. It also impacts the functional Be sensitive to various religions that forbid alcohol. Collectivist cultures - where helping others is more important than profiting on their own - may see their business costs go up since companies prefer to support other companies within their community rather than take advantage of the economies of scale and scope that companies who buy raw materials have access to. WebCulture affects the cost of doing business in any country around the world, culture would affect work and payment of interests and across the board culture plays a vital role in Nejati et al (2011) stated that culture affects almost every aspect of business operations and activities. Still, you cannot produce something out of nothing, and certain costs must be incurred. Some research estimates that up to 90% of a message comes from body language. The cultural nuances that affect organisations obviously go beyond the ability to greet or choose the correct gift. A cross-border deal crosses not only national boundaries, but also cultural barriers. Costs are the expenses that must be made in order for a business to function. Taking account of these factors affects a person's perception of a problem and their behavior in relation to that problem. India is one of the fastest growing countries in the world. To promote this in your employees, let them know that failure is okay, and theres always a certain amount of uncertainty when youre innovating. Personality is defined as a person's sense of self and their place in society. And in England, you would eat your scone after your sandwich but before your cake. How do cultural difference affect companies doing business internationally? The way consumers think and behave is influenced by culture. Culture has a significant impact on how people think, communicate, and act, as well as the types of transactions they engage in and how they negotiate them. This article was written specifically for the NTU-SBF Centre for African Studies. According to research, people from various cultures consume differently mainly due to re consume differently primarily because of their differences in values and norms (Parker-Pope, 1996). By accepting you will be accessing a service provided by a third-party external to https://www.commisceo-global.com/, 34 New House, 67-68 Hatton Garden, London EC1N 8JY, UK. If you can make it easy for your customers to choose your product based on their cultural comfort zone, that is often the best course. Simply because a company's costs are lower does not imply that its prices will be lower. If it is in a particular cultures norms to have unpunished corruption, it costs a great deal for a business to rectify the probable corruptive acts against it. There are also some global business standards when it comes to communication. For instance, in Nigeria, the belief in the role of the Ogun and the God of Lightning and Thunder are paramount in controlling crime and corruption. Look at their faces and see how expressive they are when they speak. Top management in a global company can use a variety of 1) Outline why the culture of a country might influence the costs of doing business in that country. Hence, the social cultural set up in Africa is quite diverse and varied and not static, and has been impacted upon by both internal and external forces. Consumer shopping behaviors may be influenced by cultural differences, which may have an impact on their price search and, as a result, on a firm's pricing strategy. 1) culture; 2) language; 3) religion; 4) level of education; 5) customer preferences; and 6) society's attitude toward foreign goods and services are the key socio-cultural factors that have a significant impact on multinational companies' operations. We often forget that cultures are shaped by decades and centuries of experience and that ignoring cultural differences puts us at a disadvantage. The business culture of Latin America differs throughout the region. Again, observe how others dress to give you a better idea of what is the status quo. It encourages people to stay engaged. A Country-Level Example: Africa Versus SE Asia from a Singapore perspective, (Using the CAGE Distance Framework by Pankaj Ghemawat). Even the gesture of ordering and serving fast food over a sit down dinner may be viewed by some cultures as not taking the time to value a relationship. The louder the snap, the better, and it is acceptable to try the snap a second time if you miss it. These miscues can and often do impact the bottom line. 1 0 obj Companies with an innovative culture also encourage their employees to quickly take action on their ideas. Company culture is especially important during periods of uncertainty, like when the company is experiencing significant changes or economic difficulties. For example, decision making may be impaired or people may withdraw from others, creating even more distance between themselves and a solution. Mercado et al (2001) identified eight elements of culture which The cultural nuances that affect organisations obviously go beyond the ability to greet or choose the correct gift. Culture affects our relationships with any of our business associates. It shows up in interactions your employees have with each other and with your customers. Latin Americans are generally very physical and outgoing in their expressions and body language. Furthermore, you might not like some of the dishes offered. The CAGE framework of distance presented here considers four attributes: cultural distance (religious beliefs, race, social norms, and language that are different for the target country and the country of the company considering expansion); administrative or political distance (colony-colonizer links, common currency, and trade arrangements); geographic distance (the physical distance between the two countries, the size of the target country, access to waterways and the ocean, internal topography, and transportation and communications infrastructures); and economic distance (disparities in the two countries wealth or consumer income and variations in the cost and quality of financial and other resources). The important lesson to learn from this is that we should not interpret what we see through our own cultural view and standards. Its also evident in the decisions your employees make. And finally, if your company culture isnt what you want it to be, it may be time to perform a culture audit. Do they prefer a partner (tending toward uncertainty avoidance) so they do not have to worry about local practices or government relations? Because of all the marketing campaigns that have been run to promote the product, i.e. How do you calculate the cost of doing a business? The African, is today the deformed image of others. How and what you eat and drink with your family and friends may be different from what is acceptable while eating and drinking as a business person. Registration and licensing fees, renting facilities, hiring employees, advertising expenses, and other expenses are included in this category. In This Article. The more marked the differences, the greater the distance between the countries (in terms of being attractive). Company culture is often poorly defined. As is the case in the distant memory of colonialization, enslaved Africans were forced to abandon traditional customs, camouflage spiritual rituals, and perish cultural artefacts. However, today, the church and state are now officially separated in most countries, the practice of other religions is freely allowed, and Evangelical churches are growing rapidly. Some cultures place a high value on time, others dont. This may sound quite basic but you need to look at your own culture first. If you have business cards in dual languages, you should pass them out with the appropriate language on top. As a result, brands build strong brand value. Since childhood, people have been influenced by the values, social programming, and experiences they have been exposed to. Local cultures have a profound influence on everything from management techniques to business practices, from negotiation strategies and risk management techniques. 1. It is normal for people new to a foreign culture to experience anxiety and stress. Culture informs our expectations, our behaviours, our motivations and our perceptions of others. High employee turnover is costly, time-consuming and a sign A person's culture influences how he or she behaves, communicates, and thinks. He who wants the rose must respect the thorn.. When youre dealing with people from another culture, you may find that their business practices, communication, and management styles are different from those to which you are accustomed. ", "Where do we find cultural differences in international business? As far as what feels right, normal, and desirable is concerned, culture is a major influence. The Culture Shock experienced by many expatriates who move abroad is a very good example of how cultural differences affect professionals on a personal level. The opening case shows how a simple issue, such as local flavor preferences, can impact a billion-dollar company. It also impacts the functional areas of marketing, sales, and distribution. Watch the volume of your voice. 1) Outline why the culture of a country might influence the costs of doing business in that country. In reverse, those cultures that are a lot more flexible with their approach to time can see the time-conscious professionals as rigid and materialistic, which ties in with the value given to relationships. In Latin America, El tiempo es como el espacio. In other words, time is space. They will be served first during business luncheons. Understand the aspects of business most impacted by culture. addition to gender differences, the traits an individual possesses are also influenced by them. Page 1. Lets explore these in more detail below. Always exchange pleasantries and inquire about family before beginning to transact any business. WebA company's culture will affect other aspects of worker performance, including attitudes towards work, loyalty to the organization, and a sense of creativity and dependability among individual employees. In family-owned businesses, the patriarch, or on occasion matriarch, tends to retain the key decision-making roles. To some, it sounds like another corporate buzzword. ", "Why do business professionals need cultural awareness? <> If youre not intentional about your company culture from day one, you may not like what you end up with. Marriage and religious customs, as well as other social customs. Despite the social and economic problems of the region, Latin Americans love life and value the small things that provide color, warmth, friendship, and a sense of community. Navin Ravindran is the Vice President- Sales at Aluzinc Asia Pte Ltd, based in Singapore. Conducting business in Africa requires the social cultural awareness and effective cross-cultural communication skills. In order to offer a product to a foreign country, a marketer has to study its culture in depth. In a subsequent article, I will address some additional areas regarding culture to help you in your business pursuits: ____________________________________________________________________________________. It is influenced by culture. why does doing culture in other countries increase cost of doing business? Global business ethics are influenced by culture in various ways. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. While doing business, there should a conscious attention to behaviour, ethics, etiquette visions, working style, beliefs and habits. Global standards recognize a suit and button-down shirt for men with an optional tie. Shorts and jeans are probably not acceptable. It affects our relationships. We need to minimize the possibility of cross-cultural misunderstandings so we can benefit from our differences. People in business are expected to dress conservatively and professionally and be polite at all times. Bringing different expectations, understandings, motivations, etc. Strong company culture starts with positive leadershipif your employees dont trust your leadership, it will be hard to create a strong culture. Why is understanding culture important in business? It is a religion or a religious faith that is a belief. There may be many other reasons. From childhood, each of us acquires values, social programming, and experiences that shape who we become. Business objectives may be the same, but ways of implementation and communication differ greatly. A Dozen Idioms Who Said Animals Cant Talk? which hand should I cut the meat with, or how to I eat such and such, etc.). Lets look at five ways company culture affects business performance. Genuinely thank people for their hospitality. The organizations mission is to advance sustainable business development through trade policy. There are laws/regulations, intellectual property laws, and treaties/agreements. It helps international companies to recognise these elements of culture and understand the attributes of the primary national culture, as well as the subtle subcultures in a country to succeed. Yes, they can see each others priorities incorrectly, i.e. What are some advantages. Product is not available in this quantity. However, lifestyle from traditional folklore, practises of worship & healing, cuisine to song and dance is not only prevalent in todays society, but have a widespread, deep-rooted impact throughout the world; though largely unnoticed. Attitude. Throughout the region, particularly in Brazil, Indians and some black communities have integrated many of their own traditional rituals and practices with Christianity, primarily Catholicism, to produce hybrid forms of the religion. The elements of culture are interrelated and reinforce each other. llP$syxyx(,~OoQ,b+b1K;+WW[aq9I3t WebThe culture of a particular country influences the costs of doing business by affecting the various processes involved in running the business. Just get people to stop reading them., The effects of colonialism past and present are visible all over Africa. For women, dress pants, a skirt or dress are acceptable. These meetings will give them a chance to ask questions and share their concerns/ideas with you. In Africa, social and business culture reflects the past colonial history to a very large extent, with the African identity playing in the background. Better Employee Retention. Culture improves our quality of life and increases overall well-being for both individuals and communities by improving learning and health, increasing tolerance, and providing opportunities to connect with others. For example, English manners in Kenya and Nigeria and Dutch manners in various parts of South Africa. The sum of your unreimbursed expenses and your desired salary is your annual cost. These situations are very different in other countries. Cultural diversity here has to be seen and understood from two sides: the diversity within the African cultural landscape; and. Businesses with competitive, cutthroat environments are typically less productive than collaborative work environments because individuals focus on their own performance at the expense of their team, which ends up hurting the company. Its crucial that you continue to develop your leadership team so they can promote a positive culture as well. Conclusion: Consumers' attitudes and behaviors are influenced by culture. They dont appreciate that in the culture they are working with punctuality is a much more nuanced concept. However, it is always best to be considerate. If the two parties are unaware of this there can be several consequences such as a lack of trust, poor communication, a failed job interview or a confusing meeting. If you would like to learn more about cultural differences and how they affect business, then our eLearning course is perfect! The result is a sort of cognitive dissonance both sides are looking at one another through their own Cultural Lens which means they are interpreting behaviours incorrectly and attributing erroneous meaning to them. Feel free to watch the video sample below or go to the course page to learn more. A Comprehensive Guide to Digital Transformation in Finance, 12 Steps to Clear Safari Browser Cache on Mac, Amazing Services Provided by a Locksmith You Need to Know, Top Tips to Improve Retail Sales Performance of your Business, How to Secure Your Business Finances for the Long Term, VoIP Phone Systems: What It Is And How To Install One For Your Small Business. 8Eksr ]U:~-fp#6OOZDt=+l@i2d&z"{LgJ*aV"I:DE'.M>L\hE*ZfOLM=hU& Management is another good example of where we see differing cultural expectations cause challenges in the workplace. However, be aware that dress pants for women may not be the acceptable dress everywhere. Those kinds of employees dont typically want to leave. What factors should a business consider when choosing a location? Examples of Cultural Differences in International Business. Even though in most cultures, people have an understanding to not judge someone by their physical appearance, it would be wise for you to be knowledgeable about local standards. A suggestion would be that when you are visiting, working or living in a country that you spend some time observing people. Despite the business world being influenced hugely by the western world of doing things, culture plays a very big role in how business is done on the continent. A talented individual might have all the qualifications youre looking for, but if theyre a poor cultural fit, they can do more harm than good. In Africa we have specific values associated with some group of people, but these may solely be the material or visible culture, such as food, clothing, housing, drumming and dancing, and art. Culture adds social and economic value to society in addition to its intrinsic value. Engaged employees are more efficient because theyre more invested in the job theyre doing. By way of exploring these differences, we are briefly going to look at 3 ways in which culture can cause challenges. Whether a company should enter a new market depends on how it analyzes and decides to do so. Get the ebook and improve your English - join our newseletter. This trend has also been increasing in popularity in recent years, according to researchers. As seen in SE Asia, socialising is key and builds personal trust, which is a prerequisite to doing business. The data consistently shows that positive work cultures are also more productive. For instance, the ailing of the sugar industry in the country has been blamed on the taxations. Companies with a strong culture understand their purpose and what theyre working toward. The beliefs also promoted good kinship and cordial interpersonal relations and respect for elderly, kindness and habit of sharing, compliance with social norms, taboos and totems, and control of deviant behaviours in the society. For international business success, it is vital to have a thorough understanding of local business practices. In addition to a sensible choice in dress, your clothing should be neat and clean. What are the factors that determine the costs of doing business in a country? By focusing on national wealth, consumer income, and peoples propensity to consume, CPA emphasizes potential sales, ignoring the costs and risks of doing business in a new market. 10 Very Cool Facts About South Korean Culture, "How do cultural differences affect business? In business and in social interactions, Latin America is overwhelmingly Catholic, which has had a deep impact on culture, values, architecture, and art. Direct, lets get to business conversation is considered rude. 3 0 obj It refers to the possibility that a company's operations may be affected by cultural differences such as language, customs, norms, or customer preferences in a certain country. This is why cultural awareness is so important. Our cultures very much shape how we go about our business. Why is culture important in global business? In some cultures, women may be judged differently if they have more to drink. But if you step back a little and think, you will see that each area is impacted by your own culture. How companies should market their brands to attract a global audience or how to manage stakeholder relationships with external stakeholders, for example. This often includes quite a bit of socializing. Navin heads the global business expansion for the organisation and provides operational leadership within Aluzinc Asia. If you are working for a small or entrepreneurial company, what are some of the challenges you may face when trying to do business in a new country? U.S. Government To Hit Debt Ceiling On Thursday - What Happens Next. For example, youll need to understand the following: (AACSB: Reflective Thinking, Analytical Skills). endobj Cultural assumptions/ethics/political correctness, Business organization/management style and leadership/business relationships, Entertaining and socializing/ gift giving. They are more likely to be flexible and creative in their approach and have less rigid constraints than their counterparts from more established companies. Say thank you as if you mean it even though something might not be in your taste. Even though people are focused on the bottom line, people do business with people they like, trust, and understand. Culture determines all of these key issues. The opening case shows how a simple issue, such as local flavor preferences, can impact a billion-dollar company. The influence of cultural factors on business is extensive. Professionals err when thinking that, in todays shrinking world, cultural differences are no longer significant. Or are they willing to set up a wholly owned unit to recoup the best financial prospects? This will allow you to be more sensitive to other cultures. Write to me and share any comments you have on this article using the comments below. 4 0 obj What happens when you have a culture that sees eye contact as a sign of confidence and engagement interact with one that sees eye contact as rude? Companies whose bottom lines are compromised when their employees take afternoon naps, losing valuable working hours, will suffer for it.