International Business - Culture - Essay Example

International Business- Culture Culture is a very complex concept with many elements defining it. It is an important part of life since it contains learned norms foundation on values, attitudes, and beliefs of a particular community (Hyland 2012). The norms make a fundamental part of the specific community-operating environment. They define the extent to which things like businesses can engage into and the relationships expected of the people involved. However, in every culture there has to be cultural awareness, defined dynamics, common practices, and strategies to implement culture as well as deal with differences (Treiman 1996). The entire mentioned issues affect business-operating environment. Business operating environment can be defined both by its physical, social and competitive factors. These factors can be categorized into political and legal policies, cultural factors, economic forces, and geographical influences (Ajami & Goddard 2006). All the mentioned factors affect business objectives, strategies, and means of operation. It is the mandate of every individual involved to be aware of the factors as well as plan on how to meet them for the success of the business. However, it is not obvious that every individual involved like a manager for instance will be aware of the underlying effects of not observing a countries culture. A manager may be hindered from being aware of the countries culture by either assumptions that all societies uphold the same values or reacting to issues without knowledge (Hyland 2012). It is therefore necessary for every business leader like a manager to be well aware of the culture in which the business is set up, whether locally or internationally. This paper will seek to explain critically how the different elements of culture like social structures and control systems, language and aesthetics, religion, education systems, customs and traditions, arts and literature, and economic system increase cost of operating a business in a given country. Social structures are values that were established long time ago. They define the organization of the society members into small units to meet necessities of the given society (Hyland 2012). The organization is mainly family and classes based. Social classes rank people in order of the important aspects like wealth, job, and education. In some societies, recruitments of people for jobs and promotions are based on competencies (Ajami & Goddard 2006). The contrast is based on sex, age, and family from which an individual come from. Different countries have different defined attitudes towards male and female as part of the social structure. This affects education and level of participation for the inferior gender. The inferior gender in most countries is that of women. Therefore, for a woman thinking of doing business in such environments will have to consider working with a male partner to act as the face of the business. This will increase cost of operation since the individual will have to be paid. Another factor to consider is Age. A country like Japan ascribes wisdom to be proportional to age (Ajami & Goddard 2006). Therefore, in this country, retirement for the old was not applicable which closed out young and energetic people for the opportunities. Another thing is family background of an individual. In some societies, for example Nigeria, a person’s effectiveness and acceptance is accepted or rejected based on the social status of the family from which the individual comes from (Aswathappa 2010). For the individuals coming from high profiled families, acceptance is not an issue as compared to the poor and low statured people. For example, in a country like Nigeria, high profiled individuals are considered more for job opportunities since it is a culture of who knows who in which office. So for an individual who comes from a poor background, it becomes impossible for them to access job opportunities since they do not have networks. These cultural aspects affect international business since qualification for a given task comes after the factors have been considered. A control systems defined by society culture for an organization is another aspect of culture that cannot be ignored. They can be divided into formal and informal control systems (Das 2011). Formal systems define socialization and internalization of norms, ideologies, values and cultural believes while informal control systems involve verbal reactions and discussions that anybody may engage in (Aswathappa 2005). A control system coerces people to follow orders and set systems defined in an organization. The orders are specific on channels of communication, reporting structures and expectations of every individual in a given task. For example, a system whereby there is a set reporting hierarchy in an organization can reflect the culture from which the heads of the organization hail from. A good example is Japanese firms that embrace cultural-oriented control systems rather than output-oriented control systems. The Japanese work more in a communal setting than an individualistic setting. This is translated into their firms where division of duties is overpowered by communal aspect of their culture (Keeley 2001). This disrupts the whole system where anybody in management can do anything and can report to anyone. According to Keeley (2001), such management systems are hard to transfer to international businesses since they aim at establishing long-term employments as they develop generalists’ managers. The results are that a foreign investor in Japan will have to work with such limitations that are largely resource accumulators, an aspect that make operations very expensive for the organization. Language has always been viewed as the cornerstone of any culture. This is because, every culture have a spoken language even if it may not be documented (Czinkota, Ronkanaine & Moffet 2009). It is a common phenomenon that individuals who understand each other language wise often display the same cultural values in their communication and interaction (Nurdin 2009). However, this does not mean that a society is solely made of one dialect speaking groups; many societies are made up of people who speak the same language and a big number of them who speak other languages (Hyland 2012). Either way, there is a need for any person involved in business to consider learning a language that is common in a country of interest. Some international companies like IBM, Microsoft and logica have actually invested in training employees to become linguistics (Aswathappa 2010). The effect of such efforts by an international company is that it is capital intensive to do business in a foreign country since you have to train your staff on how to communicate in the local dialect. According to Aswathappa (2010), Chinese is the most spoken language around the globe but English is the most used language in the corporate world. This makes India to be one of the most competitive countries since majority of its citizens can converse in English. Religion and other belief systems are known to answer some questions on the source and meaning of life. It has a considerable impact in an individual’s life irrespective of the country of origin (Aswathappa 2005). They define values to be upheld and most often, they are the main sources of conflict in a community (Hyland 2012). In terms of business, religion plays a very great role. They define the extents to which a business can go. For example, in an Islam dominated country, any business involved in receipts of interests is highly prohibited. This is because, the religion consider it usury to do that. A case in point is a ruling that was made by Pakistan’s Federal Shariat Court that interest collecting was illegal. This makes any entrepreneur planning to venture into banking and financial systems to consider other forms of making money like market systems and profit sharing systems no matter the cost involved. Every society has a defined way of gaining and growing knowledge on different issues in life. Education systems create useful insights to a business. According to Misra & Yadav (2009), a country whose formal level of education is higher has a higher opportunity for business since the level of reception of new ideas, new products, new services, and practices (Aacsb International 2011). The opposite happens for countries with a relatively lower level of education or the ones that embrace religious education. The leadership controls everything in such a society and it is risky to carry out business in those areas. An example is a country like Somalia; the elders control every aspect of the society while following closely what the Islam religion ascribe to. Any business venture that goes against the stipulated education is shut down and further operations are highly prohibited. Another thing that education controls is availability of work force and the kind of production that can take place in such a country. An international business entrepreneur will always consider source of work force when venturing into a new country. For example, it is easy to establish a business in India since skilled work force is guaranteed for any business. This will reduce the cost of bringing in man power a case that happens in a country with less skilled man power like Pakistan in areas of high level accounting (Misra & Yadav 2009). Customs and traditions are defined rules that govern the knowledge of wrong and right. They can either be presumed or written laws that reflect values and attitudes of the given community. They define how to maintain law and order and how power should be implemented in the society. Either way, they are all meant to be observed since they influence how people balance between personal lives and work that is important for business (Menipaz at el. 2011). For example in a country like US, material wealth, and 24 hours, working is esteemed. This is the opposite of what is happening in countries like Greece and France. In this two countries leisure is more valued than hard work. In some countries, smoking and alcohol drinking are normal things. However, this is not the case in Muslim dominated countries. Drinking and smoking are highly prohibited since they are against the religion’s law. They attract severe punishments in case one is court using the substances. The mentioned aspects of customs and traditions may have cost implications on an international entrepreneur who is either ignorant or unaware of them. Their consideration may affect advertising campaign on consumer goods that are related to the prohibited values and cultural attitudes. Aesthetic and literature are results of imagination. They are used by different societies differently but one common use is passing cultural basic beliefs through imagination. A businessperson intending to have an international business should consider learning the art of business for the specific country of interest. For example, a country like France embrace diplomatic art of negotiation invented in the 14th centuries (Katsiolodes 2012). Failure to learn the art by any entrepreneur will cause a business not to succeed hence leading to looses that could have been avoided beforehand (Ruel 2012). Economic system defines how a given society spends the limited resources to satisfy needs. They define what to produce, how to produce, by whom and for whom (Hyland 2012). The economic systems are divided into market economy, command economy, traditional economy, and mixed economy. All the mentioned economic systems have a specific control in the nation or society involved. Only a long-term commitment will make sense when international business is considered (Pervez 2003). For an entrepreneur who is not planning to have a long term, business relationship with the country, the venture my end up being more expensive. However, there are times when cost of operation facilitated by change of business environment is justified. This depends on whether it is based on operation requirements, available local expertise, expatriate failure, and adaptation cost. A county whose operation requires an organization to consider an extra expense like hiring and training local workforce will raise cost of operations for the international organization (UGM n.d). Such costs will be justified since accepting to incur them will facilitate smooth operation of the organization. Another cost that is justified is to be incurred is when adaptation is involved. A company may be required to train its team on the culture and some important elements of the culture like language. Language being one of the main pillars of a culture will call for an early preparation.The preparation made will facilitate smooth running of the business in the foreign country. Adaptation cost is one of the major costs to be incurred in any foreign culture. An entrepreneur needs to consider modification and alterations of the company’s operations processes that are prone to be affected by the culture. For example, those planning to be involved in a wide range of activities in a foreign country should consider being most adaptive since they will interact more with a bigger part of culture (Castro, Barrera, & Martinez 2004). The company needs to create an aspect of ownership with the country of investment, which may cost the company some money. The consumers will need to be made comfortable through the company creating an environment where the consumer understands the products and are willing to purchase (Nurdin 2009). In conclusion, an entrepreneur need to understand that different countries have different social structures and control systems, language and aesthetics, religion, education systems, customs and traditions, arts and literature, and economic system that affect business operations. The experience in one culture is likely to change in another depending on the type of business since cultural elements affect business environment differently. For example, Islamic dominated culture prohibits financial institutions from making profits through collection of interests. Such elements will make the cost of doing a financial business in such a culture more expensive. Therefore, it is important for every entrepreneur to consider the cost implications of every elements of a given culture to the business. 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