Outline why the culture of a country might influence the costs of doing business in that country. Illustrate with examples.
Doing business globally is a common practice these days. As we break the technological barriers and accelerate towards building a global economy we are faced with challenges of cultural diversity among countries.
Today, the business environment has become more dynamic, more competitive and increasingly complex and add a little of cultural diversity to the mix. The challenges of cultural diversity not only influences the way we conduct business international but it also impacts the cost of running business overseas. China being one of the upcoming global business market contenders has opens its business door to the western world. Coming from an age of communism, conducting business practices for international companies have become more challenging, especially the costs of running business. In order to establish a reputation, companies need to heavy invest in learning the way each country does business. Most deals regardless of the cultural influence do tend to occur outside the more conventional office environments; while having dinner together.
Sometimes it pays to know the correct approach and the right people, as they say in the game it's not what you know but rather whom you know. We face challenges to understand cultural diversity and become more dynamic, more competitive in an increasingly complex business environment.
This implies closer attention to be given to understanding the needs of customers around the world, building new relationships and capabilities in diverse markets, evaluating the work force to balance talent and productivity with cost and competitiveness and navigating a regulatory environment with consistent standards of integrity across the globe.
An example to illustrate is how IT jobs are being outsourced to countries such as India. The labor market over there is getting extensively cheaper. Literally that's the benefit that some of the international companies are getting in outsourcing their service to countries such as India and China. Mainly because of the cultural social status that exists people are trying to build their economic viability by working for international business and working for almost peanuts. Not only has this being a plus and encourage more western business to outsource their operation side to reduce their operation cost but also provided greater economic acceleration in nations such as India and China.
There has being recent interest even within Australia to expand its aligns with India for information and operational management and in China for labor management. In return the countries are gaining reputable opportunities to expand there aligns internationally. It's no secret that China has request the talents of Australian sporting officials to assist their preparation towards 2008 Olympics. This has provided Australia with an opportunity to learn the Chinese culture and their method of doing business. Both countries are benefiting from this exchange of skills for opportunities. The benefits of cultural influence have shown that the initial invest may lead to large gain just like the fruits of labor.
Do you think that business practices in an Islamic country are likely to differ from business practices in a Christian country? If so, how?
The cultural differences between a Muslim country and the US will cause business practices to differ dramatically. The public role women can take, appropriate etiquette (including simple things like not passing objects with the left hand), holidays, and wining and dining all differ from patterns in the US. But beyond these, the underlying ideal and understanding of the role of business differs. Since Muslims are stewards of property for God, rather than owners, they are more likely to use their resources carefully and may be less likely to give up or sell something to a person who may not practice the same stewardship. The importance of fairness to all parties in all relations means that over-aggressiveness and self-interest may not be well received, and breaking an agreement, even if technically/legally permissible, may be viewed as inappropriate and the sign of a huge character flaw. Finally, the prohibitions on interest payments in some Muslim countries means that the wording of the terms of an agreement must be careful so that "fair profits" are not construed as being "interest payments.
What are the implications for international business of differences in the dominant religion or ethical system of a country?
Differences in the dominant religion of a country affect relationships, attitudes toward business, and overall economic development. Firstly, differences in religion require inter-cultural sensitivity. This sensitivity requires things like simply knowing the religious holidays, accepting that some unexpected things may happen "because of Allah's will," or understanding how interpersonal relationships may be different between "believers" and "non-believers." (Hence non-believers may be treated differently.) Secondly, religious beliefs can significantly affect a countries attitude toward business, work, and entrepreneurship. In one country successfully beating a competitor may be considered a great achievement while in another it may be thought of as showing a lack of compassion and disruptive to the society and persons involved, both attitudes that may be derived from underlying religious beliefs. Likewise, hard work may be either rewarded positively or viewed as something of secondary importance to spiritual peace and harmony. Thirdly, different dominant religions may affect the overall competitiveness and potential for economic growth of a nation, and hence attractiveness of a country for international business.
Choose two countries that appear to be culturally diverse. Compare the cultures of those countries
I would like to choose two countries such as America and China that appear to be culturally diverse in terms of cost involved, future economic development, and business practices. In the United States, doing business can be very easy as everyone does businesses in comparison to China. However, cultural differences teach different values, norms, beliefs, language, educational institutes, religions, and aesthetics etc. so that for instance what might be polite in the U.S. could be highly insulting in China. Some of the major cultural differences between America and China are as follows:
Cost of doing business in each country:
In the US, it could be easy to set up any businesses due to liberal policies regarding business activities whereas China has strict policies to open up new businesses. Unlike the US, China has more economical factors of production such as men, machine, material and management. China has totalitarian economic system so that it could take years to get permissions for doing business activities. On the contrary, America has free market economic system so that running everything is quite easy but of course labor costs are very high in the US.
The likely future economic development: Although there are no much more differences in the economic growth, according to world bank report, economic growth of China were10.6% in 2010, 9.5% in 2011, 7.8% in 2012, 7.7% in 2013, and 7.4% in 2014 whereas American’s economic growth were 2.5% in 2010, 1.6% in 2011, 2.3 % in 2012, 2.2% in 2013, and 2.4% in 2014 respectively. The difference in economic growth indicates that China is going to be world’s economic growth by 2025, followed by the US, India and Japan respectively.
Business Practices:Chinese businessmen want to value more on building relationship with buyers but American don’t like to do so.In the same way, Chinese want to interact face-to-face whereas American avoids this system. While this can slow down the pace of business, trust is at a premium in the Chinese business culture. Don't be surprised if a business partner asks you about your personal life or even your finances. This is a sign of interest, not indication of rudeness or disrespect. While making business decisions, Chinese believe in-group decision, and finally say by the “boss”, American, on the other hand, believe in individual and made by a single person. Chinese are quite, reserved and often make a clumsy communication but most of American are outspoken, eloquent and make an effective communication.
In short, we can say that there will always be differences in doing businesses in different cultures or nations. Thus, businessmen should be able to address these differences before entering into an international business so that they can be successful and achieve a competitive advantage over its rivals.
Hill, C. W. (2011). International Business: Competing In the Global Marketplace. New York: McGraw- Hill .
(n.d.) Retrieved August 3, 2015 from http://www.1000ventures.com/business_guide/crosscuttings/ccd_ex_china-us.html
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