Since the middle of twentieth century, worlds’ economy has been transformed forcing the enterprises to expand their management and business activities across national borders, adding the international dimension. This change and development became the major reason for openness of national economies and liberalization of trade. Not only that, such expansion of activities across precincts assisted foreign and international companies to emerge on a number of international markets. Today, majority of the organizations operate as multi-national corporations where the understanding of cultural factors is much of a significance. Encouraged understanding of cultural differences followed by the right choice of actions exerts a major influence on success of businesses and maintenance of worthy relations between the partner organizations or employees of different cultural back ground.
In todays’ world, understanding and identification of cultural differences is considered to be one of the most noteworthy and demanded skill of the world’s economy in order gain a competitive advantage on global market. This is because of the reason that culture impacts various aspects of international business, such as communication, negotiations, business relations, management and not only these but it does take into account the psychological differences of understanding, consumer behaviors and marketing communication strategies. The need of time is to characterize and classify cultures, allowing the representatives to be assigned to particular and relevant types of cultures, and to present features. Despite many trade benefits, cultural differences can emerge as barriers in business communications as well which makes it crucial for stake holders to become familiar with traditional variances and be sufficiently prepared to work on culturally diverse markets in order to eliminate the obstruction.
Cultural Differences an Entire Component of the Internationalization Process
With increasing market expansion, globalization and technological advancements, companies are encouraged to internationalize. However, while interviewing the CEOs of a few Swedish firms with value exports and imports of 1138 billion and 1069 billion SEK respectively, it appeared that none of them made culture a deciding factor for expansion of their businesses but had to develop certain skills to adapt to different cultures, values, and norms. Further analysis proved the fact that it still affects the process of internationalization for firms, as the companies must have to fit in and for that adaptation and understanding of other cultures become a key determinant for successful internationalization. Moreover, the development can be facilitated by knowing more about the cultural differences.
Nowadays, companies consider understanding of differences as a significant constituent of the process as it assists them to make better choice of location, mode of entry standardization of practices, transfer of knowledge, performance, and others. Ref –When establishing business activities, firms have to ensure that their marketing plan and management techniques are applicable to the targeted foreign country. However, above all the need of product in foreign market must also be considered and it can over power the need of making cultural differences as deciding factor as well. Thereby, understanding the need, different cultural values and norms comes as an entire component of the internationalization process.
Misunderstanding of Cultural differences, a barrier towards progress
The need of cross-cultural competence increases as the firms adopt to international markets. With the growing challenges new market brings along, business are often supposed to change the approach and structure they are following in the home country. Inter-cultural skills with a global mindset and a new approach can assist companies having a successful international market presence. It is said that, “Culture explain how people make sense to their world” and it is a man-made world where he willingly can spend his whole life (Varner & Beamer, 2011 p.4). Besides, the perception of the world varies from culture to culture. Therefore, to win global market understanding and acceptance of different cultures, the values and norms can serve as the main ingredient in the tread of intensified internationalization process.
It has been observed that misunderstanding cultural values and differences can cause a long term damage to an organization even if that has been occurred unintentionally. TheThe fast food giant McDonald’s spent thousands on a new TV ad to target the Chinese consumer. The ad showed a Chinese man kneeling before a McDonald’s vendor and begging him to accept his expired discount coupon. The ad was pulled due to a lack of cultural sensitivity on McDonald’s behalf. The ad caused uproar over the fact that begging is considered a shameful act in Chinese culture. Likewise, misunderstanding as well as misinterpretation of cultural values have become the reason of failures for many international businesses.
To minimize the mistakes based on misinterpretation of cultural norms, Varner & Beamer have suggested three basic steps that must be fulfilled. Fist being the knowledge and correct understanding of another culture, second the drive to utilize what is learnt and then the implementation of the knowledge is the third step. Firms should behave in a way that makes sense in the culture they are trying to operate business with. Interpretation of unique terminologies and modes of behaviors is essential contributor towards success of business and long lasting networks in various cultures.
