International Business- Culture - Literature review Example

? INTERNATIONAL BUSINESS- CULTURE BY PRESENTED International Business- Culture Culture has been defined in a myriad of ways by different scholars. Edward Taylor in the nineteenth century defined culture as “the complex whole that includes beliefs, knowledge, morals, arts, law, custom and any other capabilities and habits that are acquired by man as a member of a particular society’ (1871,1). In this article the effects of culture international business operations will be investigated, and how the culture affects the cost of doing business in different countries. Cultural differences in most cases increase the operating costs of a business in preparing a manager to accord to the different cultures in their new destinations, especially in cases where the cultures between the home countries and the working country have large variations. For example; GlaxoSmithKline, a pharmaceutical giant has an intensive training program for managers and other employees in international assignments, which is better termed as AI (Wolper, 2004). The AI program has been strategically designed to ensure employees relocating to foreign countries are well aware of the new cultures; AI prepares them for any difficulties that would be encountered. The incentives are offered to encourage them to take the new assignments because; a research by Oudenhoven & De Boer (1995) observed that managers tend to have a stronger preference for doing business in countries with similar cultures to avoid such stresses of dealing with diverse cultures, which has been defined as a problem in current management of multinationals. The company has therefore to undergo an added cost to ensure such managers are motivated in taking their new assignments in such new environments. Language and aesthetics Language barriers in communication refer to the different languages and dialectics used in different countries and by different communities. Language is a cultural diffuser and stabilizer; a common language between people of a nation is a unifying factor, while shared language between nations facilitates international businesses. For example, the fact that English accounts for the largest percentage of spoken languages makes English an international language. Moreover it refers to understanding the meaning of different symbolic behaviors by different people when communicating and how such symbolic meanings refer to which mostly is a challenge faced by managers in International business. Learning to communicate effectively and decoding symbolic communication in many cultures is necessary to enhance effective communication. Communication effectiveness depends on two aspects; high and low context communication (Schneider & Barsoux, 2002). High context communication implies that message will not require any background information, while in a low context communication , more information has to be given in the message for it to be effective (Schneider & Barsoux, 2002). Countries that exhibit more individualism as Hooker elaborates have low context communicant, while countries that exhibit collectivism have high context communication. In low context communication, the people will need signs and other images to remind them, or to communicate of a particular message, while in low context cultures, such is not required as individuals have values that enable them to assimilate such communication as a norm. Behavioral norms are more entrenched in such high context communication such that all are supposed to know and understand their norms to avoid breaking them and getting to the wrong side of the law. As explained earlier, Mexicans are a masculine society that finds more pleasure in saving face especially for a male employee. Direct confrontation with such people is therefore not appreciated; communication has to be in such a way that the individual will feel respected and save their face. Likewise Malays are a people who observe culture and exhibit high context communication. For example, using the left hand to give something or point something in Malay culture is wrong and disrespectful (Salleh, 2011). Symbolic communication impact may be observed in a case where in Spain in 2009, all brown trucks had to be repainted because they resembled hearses in the country, while in Japan, coke had to be renamed Coke Light after the firm learned that the term used before had an embarrassing connotation in Japanese (Magnini, 2006).Therefore, in addition to challenges of spoken language, symbolic language in different cultures as Ghemawat and Reich (2011) explains has a large effect towards effective management of MNEs in foreign cultures. A study by Jakonis (2009) revealed Mexicans have to work for about 20 unscheduled overtime hours in a week, implying they have to stay late a work, even though there is no need or work to be done at such overtime. Overtime is perceived as an unwritten norm in the country, and as expected evidence on the existence of mutual engagement and appreciation that such workers have to the company (Jakonis, 2010). This explains that Mexicans have a high masculinity-femininity index. As Hofstede (1980) explains, a masculinity-femininity index refers to how a culture delegates responsibilities between males and females in society. Mexican by preferring to have more working males than women are therefore a masculine culture, and as Jakonis (2010) further elaborates, there is high degree of group feeling among Mexicans, which according to Hofstede refers to a collectivism society were bonds between pope re much stronger. The Mexicans believe they are valued for the time they are giving to the employer, and not according to the effectiveness and productivity of their work or output. Social structures and Control Social structures are the arrangements of human relations that place each individual in their appropriate places in the society, and what derives its definition by the individual’s roles or functions (Bada 2003). For example, the western world has portrayed trends of being a patriarch society. This is society where males are offered more privileges than females, and are considered to be the ones to play leading roles compared to females. On the other hand, the capitalist society in the western world is an individualistic culture where each one has to consider their benefits, unlike in the Asian region where they observe a collectivism approach in issues. Social structures in International business may lead to a business incurring costs. Peterson (2009) explains that Mexicans have a negative attitude towards a female employee, as women in the Mexican culture are supposed to perform domestic duties, and may not be welcoming to such female employees. This amounts to having high gender egalitarianism (House et al, 2002). Therefore, if a manager is female, workers may have a negative attitude towards such a manager, which would affect the operations of the company and decrease its productivity. Mexicans have also low uncertainty avoidance and prefer to follow directions rather than be the ones to draw such policies in the work place (Jakonis, 2010). Uncertainty avoidance according to Hofstede refers to how members of a society approach the possibilities of having future risks. On the other hand, power distance in Malaysia averages at 104 compared to the East Asian countries having an average of 60 (Oluwabusuyi, 2011). Hofstede (1980) explains the power index as the difference in inequalities in which different countries will treat their people, or the degree of inequalities in a country. This means in a country having a low power distance, subordinates have less reliance on their superiors and there is a tendency to carry out consultations. This implies that in Malaysia, there exists a power and wealth inequality. On the other hand, Malaysia is ranked relatively low on individualism, which implies similar to other Asian countries that put more emphasis on living collectively and not individuals, Malaysia has more emphasis on collectivism, where one has to consider the welfare of others and not their own welfare (Oluwabusuyi, 2011). Therefore, in the workplace the Malays will tend to work in groups, helping one another, making team working in organizations more ideal. The Malays have mostly been affected by the Chinese worldview in communism ideologies (Pacini and Epstein, 1999), regarding working together for a common goal. Moreover, Hofstede (1980) explained masculinity as the degrees to which a society reinforces, or undoes not reinforce the male model achievement in the work place, male control, and power. High masculinity will indicate a county with high gender differentiation. The Malays have a low masculinity index as females are treated similar to males, indicating both will stand to benefit the same in the working place unlike in the Mexican society that is more masculine. Malaysia just like Mexico has low uncertainty avoidance in that they focus more on what they know and leave the ambiguous to others who have a better understanding according to Hofstede’s (1980) definition. Therefore, a manager who has to work in Malaysia similar to working in Mexico will have more responsibilities of ensuring the people take risks in innovations. Education Systems Ahmed and Julian (2009) on a study in doing businesses in Malaysia revealed some trends that may make it difficult for a business to operate, especially for small and medium scale businesses. Malaysia according to this study is explained to have a serious shortage of skilled labor in some industries, which include foundry technologies, molders, and tools and die designers, textile industries among others. However, the country has elaborate skills in technological industries, especially in electronics. The problem is in Malaysia according to Ahmed and Julian (2009) is that the shortage of the skilled workers has created an unequal business environment, where multinationals and other large companies offer extremely high salaries to the few available skilled workers, making the small and medium size companies unable to compete effectively as they may not afford paying such high salaries. This has made more businesses in these industries either to exit the market, or unable to produce goods for foreign markets due to the lack of required skilled labor. On the other hand, Mexico has one of the highest skill levels globally; although the country has been supplying the cheap labor to the United States the skill levels of most Mexican is rapidly increasing (Zuniga & Moniga, 2008). Education developments in Mexico have led to improved education levels, with its educated individuals growing five times faster than its overall population growth. This implies Mexico has a large pool of professionals without employment and seeking to be employed away especially in U.S (Zuniga & Moniga, 2008). A company venturing in Mexico will therefore have a large pool of professionals to employ in virtually all industries, compared to a company in Malaysia. There will therefore be reduced costs of operating and increased productivity in Mexico than in Malaysia based on skilled labor. It will therefore cost much less to employ skilled labor in Mexico compared to Malaysia. As Hofstede (1980) elaborates, Mexicans may therefore be said to have a long term perception on education compared to Malaysians, as the former have banked more on education to improve skills and their future. Religion and Belief Systems The power of belief system is illustrated by a case in Germany where all driver’s uniforms in the country were changed as no one had been required or made an attempt to wear a brown shirt since 1945 (Magnini, 2006). Moreover, in 1994 Heineken engaged in promotions campaigns in the 1994 world cup. This required all flags of countries to be printed under bottle cups. Among these flags was the Saudi Arabian flag which had a Holy verse that resulted in angry reactions by all Muslims worldwide that a holy verse was associated with alcoholic beverage; leading the company to recall all the bottles and discontinue the promotion(Dalgic & Heibrom, 1996). Insensitivity to religion and beliefs can therefore be disastrous. There was a strong belief that the shirt was only reserved for Hitler and his litigants. Religion is a cultural stabilizer. Religion has large effects on most business activities, and largely shapes values and behaviors of people. Mexico for example is a predominantly catholic nation, a religion which has succeeded in instilling values in people. For example, Mexicans are known to persevere and withstand working long hours at very low wages, and yet maintain a positive outlook despite the hardships they face; Mexicans have deep values of having for life, and enjoy their celebrations in unexceptional way, with the family fabric being the central focus that carries much importance (Rogers and Fornwald, 1997). Moreover, they find all people worth of respect due to these religious, values regardless of their talents (Rogers and Fornwald, 1997). Such values will benefit an MNE to develop strong and positive organizational culture with much ease. Moreover, despite Mexicans being a masculine society where hardships and competition are the main ideals (Hofstede, 1980), even female executives are received with these values, and they encounter few problems as the Mexican Machismo requires males executives to be polite and gentlemanly (Rogers and Fornwald, 1997). On the other hand, Most Malaysians are Muslims (60%), while the rest of its composition of non o Muslims. Hofstede (1980) argues that a nation is a useful definition of a society as similarity in people sums up as a cause and effect of national boundaries, with similarities linking groups from different countries. On the hand, Clark et al (1997) argues that national cultural norms that affect economic behaviors of individuals are viewed as typical life a particular nation. Therefore, by Malaysia being 60% Muslims and inclining towards Islamic ideologies, the country has embraced Islamic laws and practices in all their endeavors including business operations (Anonymous, 2011). For example, when operating in Islamic countries, a business has to make provisions for prayers five times a day, tea breaks, long lunch hours, and socialization due to strong collectivism that most Islamic people enjoy. Therefore, a business operating in Mexico may have more benefits in terms of utilizing man hours and the values instilled by the predominant religion in Mexico, compared to a company operating in Malaysia that has to give provisions for Islamic religious practices. Offering such provisions will however benefit the company in attaining better rapport with its employees and society, which will make employees to have increased loyalty to such a company. In international business, culture is a critical factor to consider when planning operations in any foreign market. Business is all about interacting with people, and managing the people with their religious beliefs, cultural orientation, and other practices. A business cannot go against such cultures. Though many MNEs have well elaborated organizational cultures, there has to be room to accommodate such particular cultures in different markets. Such different cultures will directly affect a business and its operations. In most cases, there are costs as well as benefits a business has to injure as a result of social structures and culture in general. Learning and respecting these cultures is the baseline for a business to succeed in its operations in a foreign culture. References List Ahmed Z. U., & Julian C. C., 2009. Doing Business in Malaysia, Adelaide: School of Commerce University of Adelaide Bada, M., 2003. 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