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The importance of culture in international business

Posted on May 2, 2013 at 3:26 pm

The influence of the different cultures in the global business world is essential for building successful International Relations. This issue is based on the new global business perspectives and what is important to consider in developing an International Business plan. Companies have the challenge of presenting and expanding into new horizons, and it is really important to fully understand those new markets that the company is planning to expand in.

Nowadays, a company’s business dealings are increasingly more international, and the need for effective cross-cultural communication has become essential: knowing a foreign culture is a long-term process of assimilation, comprehension and integration and is undoubtedly the key to successful business expansion globally.

Taking time to know the culture of the country in which you are going to be doing business with is really important as it shows a sign of respect and it will be strongly appreciated; in fact, not doing so will cause uncomfortable situations between companies (that could result in the failure of the business.) So it is important to say that those who effectively respond to the culture and lifestyle of the country where they plan to expand have more possibilities of developing successful businesses than those who don’t.

One graphic example that supports this statement is explained in the book Management Across Cultures: Challenges and Strategies. The author uses a grasshopper to explain how it is seen in different cultures: In United States it is considered a plague and a useless insect, in China it is considered as a pet, and in Thailand it´s a great snack to be used in sandwiches. He finishes this example by stating that if a grasshopper is capable of creating so many points of view, imagine all the other aspects among diverse cultures.

So, if you are going to start any business or negotiation with a different culture, be sure to investigate and learn how one does business in that country, and, even more important, what one should never do. What for your culture might be something of good taste, might be considered an offense by other cultures.

Here are some more examples of business protocol in different countries:

In South America it is common to do business face to face.

In Russia, decisions have to be approved by several committees, which can make business agreements take much longer.

In Japan, they have learnt the art of silence in negotiations and many times Americans are not used to it and desperately think that something has gone wrong and feel pressure to close the negotiation when it is not needed.

Each culture has a different social structure; some are more defined and closed than others, thus being more difficult to establish business.

Another important aspect to be considered when expanding to a different country is the language, the local expressions and the way they express themselves, Literal translations are not always effective and can lead to misunderstandings, for example, when promoting or naming the products that the company wants to launch in a different market.

This is why companies that want to expand need a specific localization, which is the modification of a business, product, content, that can satisfy both the language and cultural differences of the targeted market.

Here are some examples of how some companies have failed when localizing their business in different countries:

The multinational energetic company Powergen chose a completely inappropriate naming for their delegation in Italy: www.powergenitalia.com. They received a huge number of visits to their website, but most of them were from people who thought that the web commercialized products to solve sexual impotence- a market very different market from their target.

Here are two other examples of companies that tried to enter the Spanish market, but their names did not make their attempts very successful.