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For ages, culture has been difficult to define by scholars due to its diversity, Edward Taylor in the 1870s defined culture as "that complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities acquired by man as a member of society" culture naturally is a way of life whereby makes or determines the difference and distinguishes between a member of a society and a non member of the society. Culture can also be defined as the belief of a group of people who have the same way of life, norms and values that other members of another society don't believe in and don't practice.
The transaction of business internationally is quite complex and different due to the fact that the diverse existence of culture of every country in the world differs to each other therefore the inevitable cultural difference across and within countries has a great influence on international business.
The success of any multinational company is determined by the way the culture of that country is practiced and understood, this is known as cross-cultural literacy.
As said by Mc Graw-Hill fifth edition (2005), "In these days of Global communication, rapid transportation and global market, when the era of Global village seems just around the corner, it is easy to forget how different various culture really are". This tells us that no matter how modernized we are as a whole, cultural differences still exist. In the western world, in particular the Americans belief that due to the fact that other countries such as the Asians, Africans and etc practice/imbibe part of their cultural activities such as eating the same food they eat like McDonalds foods e.g. burger and drinking of Coca-Cola and wearing of the same clothes they wear like jeans, listening to pop music and so on, they tend to quickly conclude that those parts of the world has accepted the norms and values of western culture.
The transaction of business in various countries is determined by the way culture is being practiced in that country for instance in China, GUANXI, or relationship backed by reciprocal obligations are central to getting business done. Therefore, by not fulfilling this obligation whatsoever will result to a disadvantage for the company's success in China.
A very good example is the case of McDonalds in china, which lack sufficient Guanxi and they find themselves at a disadvantage. According to a old Roman adage which says thus: "when you are in Rome do as the Romans do". If culture is prevailed more in a country, foreign business will have to face some difficult ethical situation. Going back to the example of the Guanxi in China, while it is paramount to consider and build Guanxi in China, certain things needs to be put into consideration too such as knowing the difference of giving gifts which is considered normal so as to establish relationship and bribing and corruption which is a crime especially in countries like USA.
Another aspect that needs to be considered is that culture may influence the mode of production which might have effect on the cost of production especially countries that are in support of capitalist mode of production.
Another important aspect is the British class division which is a cultural factor in the early 1960s to 80s that raise the cost of doing business thereby making it difficult for firms to achieve cooperation between management and labor compared to Germany, Norway, etc where class conflicts was historically less prevalent.
Thus, one important thing about culture is that it does evolve therefore it is not static although, the rate at which it evolves remains arguable but it is not static.
NORMS AND VALUES
The attitude of a society towards concepts such as individual freedom, justice, truth, loyalty, honesty, obligations socially, love, sex, marriage, role of women, and so on is established by the values of that society. In other words, value is the foundation of culture. Values reflect on our day to day activities such as political, social, religion and so on. Norms are the regulations or rules that guide our day to day activities which can be subdivided into two parts:
Folkways: this is defined as the way people are expected to behave such as dress code for a particular occasion, eating manner with the right utensils, though the violation of folkway does not hold any particular penalty. A good example is the attitude of people towards time, in some part of the country such as USA, they are time conscious and is expected that you arrival early to a business meeting. This might be the contrary in another country and might be regarded as not being polite to be early for a business meeting.
Mores: in contrary to folkways, norm's violation is held more seriously and may lead to criminal offence when violated. Mores tends to be spoken of as what makes the society function properly. For example, drinking of alcohol is prohibited in Saudi Arabia and could result to imprisonment where as in the USA it is allowed.
Determinants of culture (from www.google.com/images)
From www.Google.com/images FIG 1
CULTURAL DIFFERENCE FIG 2
Taken from Mr. L Paul Reynolds slide (STM student porter).
Culture which can be said as the way of life determines the approach and believes of people towards things in terms of word usage, colors, objects, weather/atmospheric condition, behavior, activities, and so on. Difference in culture classifies the distinct nature of each society and country as a whole.
For example, when it rains in the afternoon while the sun still shines in a country in Africa, Nigeria to be precise, it is assumed that a wild animal such as Lion is giving birth at that moment due to the fact that it is an unusual occurrence to experience rain and sun shine at the same time.
Furthermore, what figures signifies in each society/country differs to each other depending on what they accept to believe in. for instance number 10 to some society like the Koreans is a bad luck whereas in some part of Africa it's a number of completion which means expectation of good things.
Color red to the Japanese means witchcraft while to some countries like Denmark denotes positivity.
Another good example is while talking to an elderly person in Africa, it is an insult to look into the eyes of the elderly person whereas in UK it is an insult not to look into the eyes of the person you are interacting with.
According to Weber, Christianity gave birth to capitalism due to the fact that while the Protestants work hard to accumulate their wealth they deprive themselves from the worldly things which might take away their wealth. Therefore they believe in investments instead of spending lavishly.
According to the belief of the Islamic religion, organizations are not allowed to make profits at the detriment of other i.e. exploiting people in order to gather wealth.
Language does not only enhance and allow communication but it likewise shapes the way the world is viewed as a whole by giving more definition of what culture is all about. Countries with diverse languages definitely have diverse culture existence. In Canada there are French and English speaking culture, in Belgium there are Flemish and French speaking culture as well. The difference in spoken language affects the way people react to situations for example Nova when literally translated to Spanish it means star but when spoken it sounds like' no va' which means it doesn't go. As a result of this, General motors' changed its name brand from Nova to Caribe due to its meaning in Spanish.
The communication that needs no verbal utterance is referred to as an unspoken language. Each country has its own developed non verbal communication for instance raising of eye brows means a sign of recognition in some culture, while a wink is a sign of recognition in some other culture. Failure to realize and recognize these cues might result to communication gap. Another example is the difference in cultural nonverbal cues in the USA and Turkish community.
http://www.sharm4u.com/doc/images/CommonHandSignalsforScubaDiving_img_5.jpg From www.googleimages.com
For instance, according to the above picture, making a circle with the thumb and the forefinger is a sign of friendship in the USA while in contrary is a sign of vulgar sexual invitation in Turkey and Greece. Furthermore, the thumb up sign which means "it is alright" in America and other European countries contrarily denoted indecency and lust in Greece.
One other important aspect to put into consideration is personal space while transacting business at the international level. Personal space in this context means a comfortable amount of distance between two people during business discussion. In the USA the adopted and accepted distance between two business partner while transacting business is about five to eight feet apart while in Latin America it is three to five feet apart. This might be considered as invading personal space in northern American and might result in backing away from conversation and in turn might be regarded as aloofness which might have a negative consequence on international business transaction.
According to McGraw-Hill (2005), from an international business perspective, one important aspect of education is its role as a determinant of national competitive advantage. The important role formal education plays in a society is inevitable due to the fact that it's the medium through which individual learn the norms and values, skills, languages and so on of the society. These learnt norms and values contribute to the success and it is one of the determinants of the success of a country.
According to Michael Porter's point of view a very good example is the analysis of Japan's competitive success since 1945 after the war when Japan was left with nothing but just skilled and educated human resources. After all Japan was able to experience success again due to the respect and reverence she has for education which helped gave birth to a large number of literate, educated and highly skilled human resources. One major aspect that contributed to Japan's success is the large number of engineer graduates and the fact that the primary and secondary education system in Japan is based on high standards and more emphasis is laid on mathematics and science.
Laying more emphasis on Porter's point of view, the major reason for Japan's success is nothing but the quality of education provided by the country which is a determinant of national competitive advantage and likewise, quality education is also an important factor guiding the location choices of international business.
Comparing a country such as Pakistan where 70 percent of the populations are illiterates, it is definitely not a good market for poplar international books and promotional materials containing written descriptions of mass marketed products would not have effect because 70 percent of the population can neither read nor write.
CULTURE AND WORKPLACE
Culture would be an important aspect that should be considered in a workplace for an international business operating in a different country due to its effect on values found in a workplace. A management process and practice should be varied and be put into account by an international business with operation in both countries if for instance the culture of Spain and China result in different work-related values.
A very good example is the work of a popular Psychologist Geert Hofstede who used to work for IBM. He was able to gather information about employee's attitude and work value from more than 1000,000 people between the years 1967-1973 across 40 countries comparing dimensions of culture. Amongst his findings are as follows: power distance, individualism versus collectivism and masculinity versus femininity. Though his theories are interesting but should not be based on because it has been criticized by many on a number of points.
CULTURE AND COMPITITIVE ADVANTAGE
In a nut shell, the norms and values of a country contribute to the cost and influence the cost of doing business in that country and likewise, the cost of doing business in a country enhances the strength of firm's competitive advantage in an international market. For instance, the Hindu does not support capitalism as the ethics embedded in the Protestantism and the Confucianism furthermore, the Islamic laws disallowing interest payments mat raise the cost of doing business by constraining a country's banking system.
The example of Japan's cultural influence of competitive advantage on international business cannot be over emphasized due to its ability to lower the cost of doing business such as group affiliation, loyalty, reciprocal obligations, honesty, and education which has contributed to the success of the country's competitive advantage.
In comparison of Japan and American firms, it has been argued that Japan is not in support of entrepreneur whereas the Americans are which has made it possible for the American firms to dominate companies that are in support of entrepreneurial activities such as biotechnology and computer software.
CULTURE AND ETHICAL ISSUES
A good example is the China guanxi which denotes giving of gifts in order to build a relationship with that individual but if a western company gives a gift to a government official, that company would be accused to bribery and supporting corruption. Customs vary from country to country, therefore business in order to succeed should adopt the country's customs in which they trade or intend to trade in.
According to Cateora and Ghauri (2006), "for the inexperienced marketer, the similar but different aspect of culture creates illusions of similarity that usually do not exist". Basically, if the same language is spoken by several nationalities and if they have the same race and heritage, it is not a determinant other nationalities would have the same things in common such as languages or heritage.
Therefore, due to the fact that a product is acceptable to one culture does not mean it is acceptable to other cultures furthermore the type of advertisement approach carried out in one culture successfully might not experience the same success in other culture. So the cultural behavior borrowed from other culture is thereafter translated over time into a distinct own culture. For instance, same language does not mean similar translation of the words or phrases.
Even though the Americans and the British speak the same language, interpretation of the same language spoken might differ due to cultural differences. A good example is the use of elevator used in America, whereas it is called life in England. Another example is use of bathroom is America is referred to as toilet and in England it is referred to as bathing room.
As a matter of fact, the coming together of the European does not ascertain the fact that there would be similarities in culture and it would not change over time. The USA has been together for ages with sub-cultural differences and it has not changed their cultural values notwithstanding the amount of mass communication, and rapid travel.
The believe that if a product sell in one country, then it must sell in another country would be a big mistake marketers would make, therefore, proper assessment must be made in each country for the proposed products and services before any conclusion.
Marketers must adopt the system and strategic means of adjusting market strategies and plans to the needs of the culture in the country they are operating in.