The Cultural Challenges of Doing Business Overseas - Essay Example

The Cultural Challenges of Doing Business Overseas School Affiliation Overseas Business and Culture Doing business overseas is a decision made by business people after learning or thinking that there would be an increase in profitability. Many times, a business from one culture may leave one country and start a business elsewhere. Though it is not necessarily a worldwide problem, cultures sometimes vary and this normally poses a challenge to a businessperson. Whenever one wants to start a business in a foreign country, the cultural differences may play a key role in the success of a business.

This paper uses the case study of Steve Kafka who is an American born in Czech and who wants to continue selling Pizza in Czech. The essence of using this case is to analyze the cultural challenges faced by business people when starting businesses overseas. Firstly, the Czech and USA share various similarities but have some cultural incompatibilities, which may prove somewhat hectic for this businessperson. For instance, the Czech people are not known to be people who thrive at indulgence unlike the Americans.

According to Hofstede (n.d), this quality tends to lead into pessimism, which means Kafka may encounter a problem with employees unless there are Americans. In contrast, Americans are viewed by many people as optimists. It could lead to some clash between these two cultures. Notwithstanding this claim, the important thing here is that Kafka was originally born Czech meaning the culture is pretty well known. Secondly, Americans are well known for having an attitude of outspoken unlike their Czech counterparts who have a more reserved approach.

While this may seem as a non-issue, it is actually an imperative in business because it is being started in Czech. In addition, the Czechs tend to have an official way of engaging people by shaking their hands and raising hands before speaking (Cravens, 2006). Conversely, Americans do not find it a necessity to shake hands or even raise it when seeking attention. As a result, this could have some impact in Czechs who are most likely to view the Americans as arrogant and disrespectful. If this happens, Kafka may find selling Chicago style pizza hard.

Therefore, it is imperative that the businessperson take some time and train all the employees about the cultural approach of the Czech people. In mitigation of these risks, Kafka only needs to remember the kind of a society Czech Republic is made of. Then, it is important to have a mixture of people from both the USA and Czech in order to ensure balance. According to Cravens (2006) in order to overcome some of the challenges posed by cultural diversity, a businessperson ought to understand the culture of the land.

That is to say, Kafka – as much as Czech is the country of his origin- need to understand if there have been any changes in the way Czech people behave. In terms of comparative advantage, Czech provides Kafka with various areas to capitalize on and make the pizza business a success. Firstly, the Czech is itself a developed country with high standards of living as well as economically strong. Secondly, Czech has some of the most exports of fruits and other farm produce. Additionally, farming- dairy, poultry and crop farming- in this country is practiced which gives Kafka yet another advantage for the Pizza business.

Kafka could utilize such advantages in making Pizza acceptable by the Czechs people. Looking at Geert Hofstede’s cultural dimensions, Kafka is likely to understand the environment that Czech offers. Firstly, in terms of individualism, Czech is pretty much the same as USA whereby there is no interdependence. This dimension shows how much a person cares for the other people in the society. Czech’s individualism is relatively lower than that of United States but not enough to suggest that the country acts as a group (Hofstede, n.d.).

This dimension will help Kafka in understanding the kind of customers who will buy pizza. Power distance in Czech is widely accepted unlike the US where people can easily access their seniors. This therefore means that Kafka needs to understand the Czechs have a perception towards employers. This is an important to understand as it may affect the relationship between Kafka, employees and even the customers. Normally, people whose society embraces power distance tends to avoid much interaction with the senior people (Hofstede, n.d.).

As a result, it becomes quite hard to understand the needs of an employee and teamwork hardly thrives. Masculinity is the order of the day in Czech and this is a major boost to Kafka because the salespersons hired in Czech could end up competing on making sales hence increasing profitability. According to Hofstede (n.d.), a high score in the Masculinity dimension implies that the society is more driven by competition than quality. The same could be said of United States which tends to mind first about own family before extending help to the others in the society.

From this setting, Kafka has an opportunity to thrive in the Pizza business because the society in itself views life as a competition. Uncertainty avoidance determines a society’s view on the future and how prepared one ought to be. Whereas some countries resent even the thought of planning, Czech displays an active role of uncertainty avoidance. Similarly, the United States is also conscious on the unknown future and plans are normally put in place to mitigate against unknown happenings. Therefore, the outcome Kafka is likely to see is that Czech and USA share these dimensions; as a result, training the employees on the best way to prepare will not be hard.

Concerning the barriers likely to be encountered by the trader, one ought to first understand that Czech is an EU member and some products have no tax imposed on them. According to “Trade Regulations” (2009), these include unfinished products and other materials save for ones related to veterinary. In addition, alcoholic products require clearance letter. In Kafka’s case, this will be dependent on which option will be used because any importation of goods into Czech normally has a 10% VAT.

However, if the trader chooses to use the locally available materials to make the Pizzas, there may a reduction in the barriers. In order to assess the various prices for Pizza, Steve ought to look for other competitors in the city and enquire on the prices. By firstly, understanding how the other competitors sell their Pizzas, Steve will be able to set own price. According to Teece (2013), pricing of items in a new business is imperative as it greatly determines how the local people will receive the company products.

Normally, people’s perceptions are shaped by a company’s price with a section of them viewing a company as one meant for the rich if the prices seem extortionate. In conclusion, doing business overseas could encounter numerous challenges many of who are cultural-related. However, when one firstly understands the background of a culture it becomes easier to overcome these obstacles. In the first place, one ought to closely analyze the people’s behavior as it could greatly affect the business.

For instance, the Czechs people have been proved very official unlike their American counterparts. This means that if Steve overlooks this cultural difference, there is a likelihood of a misunderstanding. The business of Pizza could do well in Czech is Steve firstly remembers that Czech people are not as indulgent as the USA ones which implies there is a probability of them avoiding the alcoholic joints and visit the Pizza shop. Additionally, the individualistic level is high meaning there is a great concern for self and immediate family.

In terms Steve’s business, this means the people would buy the pizzas for themselves and the family members. References Cravens, C. (2006). Culture and Customs of the Czech Republic and Slovakia. Westport, Conn: Greenwood Press. THE HOFSTEDE CENTRE. (n.d.). Retrieved November 18, 2014, from http://geert- hofstede.com/czech-republic.html Trade Regulations. (2009). Exports & Imports: Czech Republic. Retrieved November 18, 2014, from http://www.export.gov/czechrepublic/doingbusinessinczechrepublic/eg Teece, D. (2013). Business Models, Business Strategy And Innovation.

Long Range Planning, 43(2), 172-174