International Business: Proceed With Caution

Introduction
If you were asked to describe your own culture, what would you say? Describing ones culture is, in fact, not an easy task. It is a bit like asking a fish in water

What is culture?
Culture as a social organization: the way in which human activity is coordinated, organized, the way in which people are expected to behave Culture as an abstract concept: Focusing on peoples characteristic ideas, values, patterns of perceptions, ways of thinking Culture as shared aspects of a society: i.e., aspects that all its members, or a subgroup of its members, share, are familiar with, and pass on to the next generation (e.g., shared and learned patterns of behavior and perception)

Why is learning about culture important?

Business executives who hope to profit from their travel have to learn about the history, culture and customs of the countries to be visited. Business manners and methods, religious customs, dietary practices, humor and acceptable dress vary widely from country to country. Understanding and heeding to cultural variables such as these is critical to success in international business travel and in international business. Lack of familiarity with the business practices, social customs and etiquette of a country can weaken a company's position in the market, prevent it from accomplishing its objectives and ultimately lead to failure.

Importance of culture in international business

Buying behavior: This has to do with the perceptions people of a culture hold regarding imported products, the value of brand equity in a society, the existence and strength of brand loyalty, and the impact of social norms on buying behavior. Consumption characteristics: Issues in consumption include the product versus service consumption in the culture, social class and reference group influences, and urban versus rural sector consumption patterns. An example of this would be food consumption in Brazil. In the urban areas, Brazilians are beginning to eat on the run, favoring snacks and quick meals. In the rural areas, however, the traditional large, sit-down meal is still predominant. Disposal: Resale, recycling, and remanufacturing considerations constitute the disposal level. In addition, some cultures are strongly influenced by social responsibility and environmental implications of product disposal.

Cross-Cultural Literacy:
One of the biggest dangers confronting a company that goes abroad for the first time is the danger of being ill informed. International businesses that are ill-informed about the practices of another culture are likely to fail. To combat the dangers companies should: -Employ local citizens to help them do business in a particular culture. -They must also ensure that home-country executives are smart enough to understand how differences in culture affect the practice of international business.

Culture and competitive Advantage:

The value systems and norms of a country influence the costs of doing business in that country. The costs of doing business in a country influence the ability of firms to establish a competitive advantage in the global marketplace.

Success of Wal-Mart Internationally

Wal-Mart As a global company, Wal-Mart is expanding its branches all over the world. With extraordinary adaptability to different consumer purchase behaviors in foreign countries, it has achieved great success, with $165 billion sales in 1999. In China, people are used to getting everything in one stop and buying larger quantities. To match their buying pattern, Wal-Mart's supercenters in China provide a broad array of merchandise, from fermented bean curd to Gerber baby products to German Bosch tools made in China.

How does a Foreign Culture impact your business?

Operating in a foreign culture impacts your business in two key areas: Demand side impact Management impact

Demand Side Impact

On the demand side, you are now dealing with customers who have different behavioral patterns than those that you are accustomed to. Customers vary on many dimensions; purchase behavior, communication aspects and product preferences are some of them.

Management Side Impact

On the management side, management of your business operations becomes quite different from what it is at home.

Some examples: - In Japan, a manager's smile accompanied by the words, "I don't think so," carries the same meaning as an American manager's "Absolutely not! In Egypt, a training exercise that required the managers to stand on a blanket and turn the blanket around without stepping off had to be cancelled. The reason? One of the managers was a woman, and the men were forbidden to touch her. Because each culture is so specific, it is best to research the individual culture as part of your market research effort. When companies choose to ignore cultural differences, they are operating on the assumption that business is business, and that managers, engineers or bankers are the same throughout the world.

What is required to conduct business successfully in a foreign Culture?

A sensitive, experienced understanding of interaction in different cultures is often a fundamental prerequisite in marketing products or services abroad.

There are two aspects that managers need to address: To gain a more than superficial understanding of people and their behavior. Make sure that their message is getting across to the foreign nationals.