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Cultural sensitivity is a crucial factor in a company's international business success. "A definition of culture may be defined as the standards of beliefs, perception, evaluation and behaviour shared by the members of a social group". For any international company or the company who is intending to go internationally through the way of mergers, acquisition, joint venture or any other way, it is very important to understand or to know the culture differences in that particular county in which company is working actively or intend to work. Intence knowledge of the culture can plays a major and crucial role in a company's international business success.
Now it is essential to indentify importance or the role of culture for the success of an international business. Following are some key points which clarify why it is important to understand culture. It is very easy for the multinational company, if they divide their concentration in to two parts such as:
Consumer Culture, &
Consumer Culture, which basically look in to the cultural factors determining consumer decision making and behaviour. Where consumer culture can be determine or we can say it is depends on many other factors as follows.
Social Culture: It is very important factor in consumer culture, as it is directly related with people's way of thinking and learning through family, peers, occupational or ethnic groups and religious communities. For example, socially oriented country like india and many other, most of the basic values and norms they take for granted e.g. what they think is basically good or evil, what is desirable and what to avoid, are learned in the family during childhood. So social learning forces individual to behave in a particular way.
Subcultures: which takes in to account the groups of people with strongly shared values and cognitions, basic buying behaviour or habit may represent in a society. In the U.S. there are many different ethnic groups, religious denominations and also the regional societies, so for example, Campbell's sells different flavours of tomato soup depending on the region of the country, e.g. tomato soup sold in Montana is not as spicy as compare to Texas.
Religion: This is also the main factor which should take in to account by any international company. As religious factors can force or stop consumers to buy or not to buy particular product or services provided by MNC. A very live and interesting example of McDonald in India, McDonald was highly criticised in Indian market because of using beef abstract in making of some fast food selection, as a part of it now in India, it offers culture-specific selections and got rid of beef to accommodate Hindus who don't eat it.
Language: A difference in natural languages is one of the first barriers which can be felt by any international company. On the other hand it could also become the first norms of communication to understand the culture value and belief of any country.
Education: a level of education in the host country can help an organisation to determine how they going to implement their products or services in to market. e.g. a laptop selling company who want to sell its product in the country where education rate is very low, and the people of that country rarely can use the equipment, it is quite hard or may be not possible to launch that product in to that market. Though high education level also helps an international company to take advantage of local people's skills, knowledge and ability through appointing them to work rather than hiring people from home country.
Political Philosophy: signifies how political factors in the country help customers to go for any new products coming in to the market from outside. And how political philosophy encouraging multinational companies to start their business in to that particular country.
Economic Philosophy: it is also a significant factor allowing or pull off consumers, if for example country's economic philosophy from last couple of years is in inflation, it would be quite challenging task for any multinational company to sustain, as country's economy pulling its customer's buying capacity.
Business Culture, to understand the business culture is as much important as to understand the Consumer Culture. Actually this is the second phase for any international company to start or to sustain in the competitive global market.
As said by Prof. Geert Hofstede.
"Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." (Prof. Geert Hofstede, Emeritus Professor, Maastricht University). Hofstede has identified five business cultures as follow.
Individualism: is the degree to which individuals are incorporated into groups. Individualism is high when, individual's relationships towards social group are less, and vice-versa. So low individualism is preferable for an international company for its smooth running.
Power distance: it is relates to how members of a national culture view distribution of power. Basically it shows, how individual's ability to equalise the distribution of power with different backgrounds related with each other or what is the level of gap between upward social from lower social community, e.g. it is high level of power distance in the country like india and African societies. So again lower power distance is more desirable.
Uncertainty avoidance: it is the extent to which members of a culture feel comfortable or uncomfortable in unexpected or unstructured situations, and unstructured situations could be new, surprising and different from usual, and therefore it is quite unclear or unpredictable to individuals. Cultures in uncertainty avoidance tend to be highly regulated, having complex rules and regulations in terms of proper behaviour, and try to avoid risk taking. And it is in opposite manner, when there is a low uncertainty avoidance culture. In this case to some extend high level of uncertainty avoidance is preferable.
Masculinity: dimension looked at the relationship between gender and work roles. In masculine cultures, sex roles are sharply differentiated and traditional "masculine values," such as achievement and the effective exercise of power, determined cultural ideals. In feminine cultures, sex roles were less sharply distinguished, and little differentiation is made between men and women in the same job.
Long term orientation: is defined as the way members of a culture tend to approach decision making in consumer as well as business activities. These kind of traditional values encourage keeping within well-known and well-accepted boundaries.
It is also know as ethnocentrism behaviour of management. It mainly describe attitudes of this kind of behaviour include seeing ones own standards of value as universal. An international company tends to implement the same culture, style and tradition as like in the home country and that used to defined the culture of whole company. In more easy words management are not ready or not comfortable to adapt the culture of any host country. This kind of management can ruin the whole structure of an organisation, and may create dispute among the member of staff. And it is also not quite sensible action by any international company to act this way.
It signifies the power of host country's culture is dominant within the MNE. In other words polycentric culture enforces the management of international business to modify themselves according to the traditions, styles and customs of a dominant country. So here Hofstede's individualism behaviour of manager can create problematic situation in an organisation and can stop the progress of any international business to move further on. It is like if management is not able to solve the internal problem, how they going to concentrate on external problems or business success. So it is important for any international company to molde them according to the need and must have to adapt traditions, styles and customs of a dominant country.
Geocentric management involves a global view of the organisation's international operations. Rather than orienting themselves toward either the home country or the host country, top managers consider the organization's goals, plans, and performance from a broader, worldwide perspective. The best managers, regardless of their nationality or location, are selected for the assignments that fit their skills and abilities, the various units are connected by a coordinated plan that allows for local needs and actions in the context of overall organizational performance. Although this is the most complex of the three international management approaches, managers who apply geocentric management can make the most effective use of their resources, regardless of origin or location, and achieve the highest possible overall performance.
At the end it can be conclude that, culture sensitivity plays an important role for an international business's success. As discussed above three cultural sensitivity e.g. ethnocentric, polycentric and geocentric, among all three of them geocentric management style is more reliable and can be identifying as a smart action by an international company, and also signifies the mature understanding of any business activity. Yes, it is true that cultural sensitivity is important for an international business, but also other factors like consumer culture and business culture is also needs to give an equivalent importance. As there is no point to expand any business internationally, if company is not sure or not aware of its consumer's culture, style or preferences. And than understanding the business culture helps an organisation to built up their roots in to the entirely new market, which can help any international company to run its business as smooth as home country.