The impact of culture on international business

Culture, as a fundamental feature of every nation, has a strong influence on shaping the identity of an individual, group or society. Globalisation has led to open opportunities for cooperation with people around the world, so modern society is paying more and more attention to culture, cultural values and patterns, and understanding cultural differences. What is desirable and acceptable in one culture may be an insult and unacceptable in another, therefore a good knowledge of the culture of a certain nation is one of the key prerequisites for a business in the global market

Understanding and appreciating cultural diversity leads to successful business. That is exactly why culture is a major player on the international business scene. For a community to work together as successfully as possible, cultural guidelines and determinants must be shared. Otherwise, if the members of the society behaved as they wished, according to their own discretions, guidelines and values, cooperation would be disabled or reduced to a minimum. When a foreign investor becomes “inconspicuous,” and when he merges with the culture of the community in which he develops the business, then he is considered successful.

You will first encounter the importance of cultural compatibility when negotiating.

Negotiation is an unavoidable process that takes place in the initial stages of developing international business. Negotiation itself is already a very complex process, and if you add cultural dimensions to it, then the negotiator must be extremely skilled to achieve success. The key to successful negotiation lies in recognising cultural barriers, overcoming them and (!) applying them to your own advantage.

Also, when it comes to negotiation, we should never forget that each nation has its own pattern of business behaviour and that it is used to assess and evaluate the environment. If we negotiate with, for example, Americans, then we need to know that, for them, time is the equivalent of money. If, on the other hand, we are preparing to negotiate with the French, then we must not be late at any circumstances. Accuracy and high formality for them are at a special price.

Stereotypes are another item that we must not forget when negotiating. A stereotype in a business environment would mean assuming that certain individuals or groups declare themselves as members of a specific category.

Take Italian and Japanese managers as an example. While Italians are followed by the stereotype of honest, open, predictable, loud managers who are usually late, the Japanese are the bearers of stereotypes of hardworking, diligent, methodical and precise managers who respect others, but also their time. If Italian managers, in this example, are not familiar with the stereotypes that accompany the Japanese, they could conclude that the Japanese are not at all flexible or open to business proposals and compromises. On the other hand, the Japanese could characterise Italians as managers who do not show respect, who are too ambitious, or who damage the reputation of their company.

Cultural matching is conditioned by geographical and spatial characteristics. The closer the two countries are geographically, the more likely it is that their cultures will coincide in many ways, especially if they are countries of the same language area. For example, most Slavic countries share a similar language, religion, values, customs, so it is very likely that the way of running a business will be the same. We will say that they have the same culture. For the geographically more distant nations, it is important to keep in mind: knowing and respecting diversity affects the respect of business partners. The partner’s respect is also influenced by the knowledge of the facts about the country with which he enters into a business relationship. Knowing the facts implies the following knowledge: full name of the state and the capital of the state, name and surname of the president and prime minister, knowledge of religious customs, diet, historical and geographical summary and knowledge of the most important/profitable industry.

Communication barriers can occur, not only in direct communication but also at the symbol level. For example, Operando should not offer its services in India under an existing logo because the owl in India symbolises misfortune, although in America and Europe it is a sign of wisdom.

Differences in the shopping habits of certain nations and cultures can also be a predisposition to success or failure in the international market. For example, car manufacturers have noticed that digital cockpits in cars are more in demand in Europe, while analog ones are more in demand in America.

Also, advertising opportunities in certain countries are limited. The communication structure of a country is often an indicator of the level of literacy of the population, but also the development of the media (written and electronic). It is not uncommon for advertisers to manage in various ways to promote certain products due to the regulation and availability of traditional media. In some African countries, it is common to perform commercials live (on the spot in front of citizens).

The legal barrier is one of the most important and common cultural barriers in international business. Each country has different advertising laws, most often related to media control, promotional content permits, use of children, alcohol and cigarettes in advertisements, control of socially sensitive products, etc. For example, corporate propaganda is banned in Germany, Belgium and Luxembourg. In Great Britain, Ireland, Portugal and Spain they are allowed. Likewise, advertising of alcoholic products is banned in almost all Arab countries.

So, from all this we can conclude that the prerequisite for successful international business is quality and effective management that knows in detail the specific cultural dimensions of different societies and countries. Mutual understanding, respect, promotion of intercultural understanding and acceptance of common solutions that are of interest to all negotiating parties is the key to improving business cooperation and efficient global business.

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