Importance of Foreign Language Skills for European SMEs - Term Paper Example

? Language and Intercultural Skills in European SMEs By Presented to Language and Intercultural Skills in SMEs in Europe Introduction The business world is increasingly becoming competitive due to the global phenomenon called globalization. In effect, only business organizations, be they multinational corporations or SMEs, which learn to adopt to the contemporary phenomenon maintain their profitability and obtain the competitive edge important for business. In fact, we have always heard the phrase “Geography is dead” in terms of business bandied around the world. In effect, this underlines the global approach that business is taking. In this case, globalisation does not only affect the multinational corporations, but also affects SMEs. Thus, remaining competitive and adapting to the modern business environment is the most essential approach towards the global business phenomenon. Adapting to the new business models requires SMEs to acquire new skills essential for remaining competitive. In this regard, SMEs should not continue with the usual methods of transacting business. One important object for these businesses is to ensure that they learned foreign languages enhance their competitiveness in the business world. It is important to point out that, customers will always appreciate conducting business while speaking their language. In effect, managers will always find it competitive to learn foreign languages as an essential skill to conduct their businesses. On the other hand, it is crucial for managers to learn intercultural skills since “Geography is dead” on a business perspective. However, in order for SMEs' managers to learn foreign languages and intercultural skills, it is important for businesses, governments, and university to collaborate in order to prepare young managers to adapt to the competitive global market effectively. Therefore, the first part of this expose discusses the importance of learning foreign languages in SMEs, in Europe. The second part is a discussion of the importance of intercultural skills for these SMEs. Finally, the final part of the expose is a discussion of the collaborative efforts businesses, governments, and the university can implement to prepare the budding managers to a competitive global business environment. Importance of Foreign Language Skills for European SMEs English is ideally the formal language for conducting business in Europe. However, there are other important languages that an individual should learn in order for them to transact business in an orderly manner. Some of these languages include Spanish, French, and German, among other languages. In this regard, failure to learn foreign languages limits SMEs in terms of market reach and expansion. According to the European Union (2003, p. 39), SMEs are small and medium-sized enterprises, which meet a set definition criteria of staff headcount, annual balance sheet and turnover. On the other hand, skills in foreign languages ensure that the time taken for negotiations is shorter and since managers in SMEs are able to build relationships while communicating in the local language of the countries of their operations. Besides, foreign language skills are crucial in eliminating poor judgement since managers are able to interpret data by understanding the foreign language. According to Maurais and Morris (2003, p.1), “Global communications challenges are becoming increasingly prominent in a rapidly changing world characterised by rising interdependence.” In this regard, this implies that no single business unit can survive on its own without depending on another business. In this case, a business needs suppliers and producers of the goods and services that formed their business operations. Importantly, businesses and customers have a symbiotic relationship enabled by communication. Communication entails passing information and obtaining feedback between two parties, which is possible by understanding the language used during communication. Therefore, the failure to understand and communicate in a common language brings breakdown in communication, which may result to failure in a business. According to a recent study by ELAN (2006 cited in Hagen, 2011a, p. 2), “A significant amount of business was being lost in Europe as a result of a lack of language skills.” In this regard, foreign language skills are critical in retaining business contracts in a cross section of countries in Europe. To emphasize the importance of learning foreign language skills among managers in the SMEs sector of the economy, the ELAN (2006 cited in Hagen, 2011a, p. 2) noted, “Across the sample of 1964 businesses, 11% of respondents (195 SMEs) had lost a contract as a result of a lack of language skills.” While the sample was representative, the statistics paint a scenario that underlines the failure by SMEs to identify the importance of a foreign language in their businesses and hence the loss of business. In retrospect, SMEs that ensured that their management and employees learned foreign languages skills did not have the problems that their counterparts suffered for failing to learn these foreign language skills. According to Wei and Cook (2009, p. 29), “Interpretation is an essential ingredient, not just with respect to logical consistency, but also because economic theories are at a risk of being distorted when communicated to the general public.” In this regard, SMEs require the knowledge of foreign languages in order to carry out the economic and market analysis when venturing into these foreign markets. Take a case of a British SME seeking to venture into France, where French is the national language. In this case, such an SME will need to study economic and market analysis data of markets in France, which will be in French language. In effect, an SME whose managers do not understand the French language will require the services of interpreters whereby some of these interpreters may not have any formal training in economics and business studies. In effect, there may be a loss of valuable information during the interpretation, which makes the management of the British SME eventually make wrong decisions that may result to failure in business since there was the loss of data and information during the process of translation. On the other hand, the management of a British SME with efficient language skills in French will be able to analyse, interpret data presented in the French language, and effectively make the right decisions based on their interpretation. As such, such an SME will prosper in the French market since the management had the essential skills required to analyse and interpret data. As indicated earlier, English might be the primary language for conducting business in most European countries. Thus, SMEs will comfortably find it easy to conduct business in English speaking countries in Europe. However, other languages such as German; used when exporting to fifteen European nations; Russian, used in Poland, Bulgaria, and the Baltic states; and French, used in eight countries, are equally important (Hagan, 2011b, p.11). On the other hand, not everyone in Europe is comfortable to communicate in English despite the language being the widely spoken language in the world. The former German Chancellor, Willy Brandt supports this by quipping “If I am selling to you, then I will speak your language, aber wenn du mir etwas verkaufst, dann mu?t du Deutsch sprechen (…but if you want to sell me something, then you must speak German)” (2011 cited in Hagan, 2011b, p.11). In effect, this underlines the importance of SMEs to learn language skills necessary for foreign markets ventures. Importance of Intercultural Skills for European SMEs Intercultural skills are important in the economic and business world, more so when an SME is dealing with international and foreign markets. In this case, an SME's management should be able to understand the cultural differences in different European countries to ensure that they maximised profits by identifying with the culture of the country. To emphasize the importance of intercultural skills, Johnson, Lenartowicz and Apud (2006, p. 526) noted that businesses failed overseas because of the “inability of managers to understand the local culture of a subsidiary and interact effectively with their counterparts overseas, rather than a lack of ability in the technical aspects of their job.” Since all SMEs would like to expand in overseas markets across Europe, the management guiding the ventures should understand the local culture of subsidiaries to interact effectively with customers and their counterparts responsible for the daily operations. Traditionally, firms operate domestically, which in essence means that they tailored their goods and service for the domestic market by aligning their products with the culture of their country of origin. However, globalisation means that a business should venture into overseas markets in order for the business to make more profits and expand in growth. Nevertheless, most firms ventured into foreign markets using the same policy for goods meant for their unique domestic market. According to Adler and Gundersen (2008, p. 10), “When firms exported products, they often did so without altering them for foreign consumption.” However, this is changing in the global market and firms are increasingly adapting their products to the culture of the overseas markets in order for them to have a competitive edge in the market. Heller (2003, p. 490) calls this process hybridity, “Which is a mark of being able to navigate across the different realms of the corporate market.” Conversely, the aim of SMEs is to expand their domestic markets first, and then seek to expand into foreign markets. However, the goods and services SMEs produced for their domestic markets have to be different due to the differences in cultures. In effect, intercultural skills in an SME become crucial to venture into overseas markets, which have different cultures. Efforts to Prepare Young Managers to a Competitive Global Market From the abovementioned, it is evident that we cannot over emphasise the importance of foreign language and intercultural skills in European SMEs. In effect, it is important for all stakeholders to collaborate and equip budding managers with the necessary skills meant to guide SMEs to profitability in the ever-increasing competitive business world. The European Commission (2007, p. 7) supports this idea and point out the need to take “A pro-active attitude to global competition and markets is increasingly becoming not a choice but a matter of necessity.” This puts emphasis on the role the state governments, the universities and businesses should play towards equipping young managers with experience and skills required in the competitive global market. According to Hagen (2011a, p.59), national governments should ensure “every citizen should learn two languages in addition to his or her mother tongue.” In this regard, the government should make it a policy that each citizen learned the foreign languages while in school. Thus, education institutions, including universities, and national governments will make this possible by collaborating to enable young managers learn two foreign languages critical for global business. Secondly, collaboration between universities and leaders in the business world to develop better education programs in the university is important. One such program is International Business (IB), which is a significant program for future managers. Jones and Khanna (2006, p. 454) noted, “The first generations of IB scholars appear more engaged in historical data.” In effect, collaborating with business leaders will ensure that IB programs in universities were fundamentally a result of proposals from individuals who had first hand experience in the field. In effect, young managers will learn how to manage SMEs in future. In addition, Hagen (2007, p. 62) asks the business world and universities to “consider offering a foreign student placement service if not already doing so” to give young managers a hands-on experience for future practice. Conclusion We cannot overemphasize the importance of intercultural skills and skills in foreign languages, in the current global business environment characterised by competition. In this case, SME managers need to conduct business and ensure that contracts were successful since there was effective communication with their clients. In effect, understanding the language of their clients was the most fundamental thing for SME managers. On the other hand, intercultural knowledge is crucial to ensure that an SME's practices in a foreign market were acceptable since different practises may result to failed business ventures. On the other hand, governments, universities, and businesses should adequately equip future managers to enhance their success in the global competitive business world. These measures include, ensuring that each citizen learned at least two more foreign languages other than their native and use successful businesspeople to formulate IB programs in the universities along other equally important measures. References Adler, N.J. and Gundersen, A., 2008. International Dimensions of Organizational Behavior, 5th ed. Mason: Thomson Higher Education. European Commission, 2007. Final Report of the Expert Group on Supporting the internationalisation of SMEs [pdf]. Available at: [Accessed 17 Apr. 2012]. European Union, 2003. Commission. Official Journal of the European Union, [online] 124, 36-41. Available at: [Accessed 17 Apr. 2012]. Hagen, S., 2011a. Report on Language Management Strategies and Best Practice in European SMEs: The PIMLICO Project. [online]. European Commission. Available at: [Accessed 17 Apr. 2012]. Hagen, S., 2011b. The Language Guide for European Business Successful communication in your international trade. [online]. European Commission. Available at: [Accessed 17 Apr. 2012]. Heller, M., 2003. Globalization, the new economy, and the commodification of language and identity. Journal of Sociolinguistics, 7(4), 473-492. Johnson, J.P., Lenartowicz, T. and Apud, S., 2006. Cross-Cultural Competence in International Business: Toward a Definition and a Model. Journal of International Business Studies [e-journal], 37(4), 525-543. Available through JSTOR [Accessed 17 Apr. 2012]. Jones, G. and Khanna T. 2006. Bringing History (Back) into International Business. Journal of International Business Studies [e-journal], 37(4). Available through JSTOR [Accessed 17 Apr. 2012]. Maurais, J. and Morris, M. A., 2003. Languages in a Globalizing World, Cambridge: Cambridge University Press. Wei, L. and Cook, V., 2009. Contemporary Applied Linguistics, Language for the Real World, New York and London: Continuum International Publishing Group. Read More