“How the differences in culture,

affects the international trade business”

by Paulina Moreno

 

 

We are always thinking in ways of make more money, I mean we are always looking for new business, most of the times we do not care if it is outside or inside our country if we get what we want but is it so easy?

People behave differently across the globe, even with face with similar situations, but apart of the distances, what accounts for these differences? The answer is Culture, politics, laws and economics. All these factors can affect a business venture until the point that missing one of them can make the company fail.

International business is different from domestic business because as we said countries are different. And It is very important for business people to understand how to communicate with their counterparts in other countries or best said in other cultures. Specifically cultural factors can help firms based in such countries achieve a competitive advantage in the world economy, for example, some observers have argued that cultural factors have helped to lower the costs of doing business in Japan. In turn, this may have helped some Japanese business achieve a competitive advantage in the world economy.[1]

So What is culture?…Culture is the acquired knowledge that people use to interpret experience and to generate social behavior . Culture is shared by members of a group , organization or society . Through culture we form values and attitudes that shape our individual and group behavior .  Culture is learned through both education and experience, it also passed from one generation to another, so it is enduring.

Even though Culture seems to be a logical situation to consider, huge firms have failed in their attempts to enter in other markets, I mean companies such big as  Disney which found many obstacles to rich the success in France with “Euro Disney”.

So as we can see It is not such an obvious thing or at least not everybody had realized about the Culture importance. Even products that seem “universal” may need to be adapted for international markets. This is the reason that made me interested in to this topic, as well as that the cultural thing is what I must like of what I am studying, marketing. 

 

For doing business in other countries we need across cultural literacy in order to reach our goals successfully. By cross-cultural literacy, means an understanding of how cultural differences, both across and within nations, can affect the way in which business is practiced. In these days of global communications, rapid transportations, and global markets, when the age of the global village seems just around the corner, it is easy to forget just how different various cultures really are. However, deep cultural differences remain. The cross cultural literacy is extremely important. Without it managers may make mistakes that might waste the commercial opportunities.  

 

 

 

“Culture is a set of values, believes, rules, and institutions held by specific group of people.”[2]

 

As I said culture involves lots of aspects like: aesthetics, values, attitudes, manners and customs, social structure, religion, personal communication (unspoken language), languages, and education, every one ness important as the others, but what is culture?

There are many differences between two countries and even between two regions in the same place, for instance, while in one country US the main meal is commonly around 6:00 p.m, in Mexico it is taken around  2:00 or 3:00 p.m , as the same as in US people usually shop in large supermarkets, in Mexico we prefer to buy in local markets ( called “tianguis”) although there are lots of  supermarkets. But which is good and which is bad, the answer is both, we do not know which is the best option, because it depends of your customs. Simply people follow their regions habits.

Ok we have realized about the differences in culture, now what is the big problem with it? Well one of the important aspects in this topic is one named ethnocentricity. What is ethnocentricity means? According to the Britannic encyclopedia It is the belief that one’s own ethnic group of culture is superior to that of others, the thinking that one way of doing things is better or superior to that of others. It causes people to view other cultures in terms of their own culture causing them to over look important human and environmental differences among communities.

 

But how does ethnocentricity affects the international trade? Well this concept may complicate or make easier the relation between nationalities, because sometimes each one tries to impose their way of doing something and vice versa making difficult to establish labors or business relations. 

 

 

Another aspect is the language, it is senior to culture because it is used to transmit information and ideas. Knowledge of the local language can help in permitting a clearer understanding of the situation. With direct knowledge of  a language, a business person does not have to relay on someone else to interpret or explain. Also language provides direct access to local people who are frequently more opened in their communication when dealing with someone who speaks their language. An understanding of the language allows the person to pick up particular points of view, implied meanings, and other information that is not literal.  So language helps to understand the culture better. But  we have lost of languages around the world, so what to do?

Particularly in the business aspect, sometimes people decide to choose a lingua franca[3] to communicate and most of the times it is the English, but why the English  is another topic.[4]

We also have the unspoken language which means to communicate by hands gestures, facial expressions, physical greetings, eye contact and the manipulation of personal space, and it is very important  at the moment of make business because as we know one main point to close treats between people is be an easy going people, and maybe while ones belief that we are saying “thanks”  the other receives it  like bad manner.[5]

The same thing happens with religion, it is the reason of many business breakers.  Religion may be define as a system of shared beliefs and rituals that are concerned with the real of the sacred [6]. The relationship between religion an society is subtle, complex, and profound. While there are thousand of different religions in the world today, six dominate: Christianity, Islam, Hinduism, Buddhim, Confucianism, Judaism. The importance of this one is that most of the human values often derive from religious beliefs, so,  different religions take different views of work, savings, and material goods. Understanding why they do will helps us to understand why companies from certain cultures are more competitive that companies from other cultures. It also helps us to understand why some countries develop more slowly that others do. Knowing how religion affects business practices is  specially important in countries with religious governments.

 

How can religious principals could affect the penetration of certain product or company? For instance in some religions the alcohol is forbidden, so it is not necessary to point that selling Tequila in those countries will cause a sure failure.

Another example  would be certain religious groups that do not eat meat because of its beliefs so Mc Donals would never enter in to that markets, but it would be an advantage to companies which develops vegetarian products.

 

When making business we also have to think in education  which influences many aspects of culture. Educated people read more and have a much better understanding of what is happening in the world. Additionally higher rates of literacy usually result in greater economic productivity and technological advance. Education also helps to provide infrastructure neither  for developing managerial talent.

One of the most common gauges of education is formal schooling or formal education that is the medium  through which individuals learn many of the languages, conceptual, and mathematical skills that are indispensable in  a modern society.

 

Education also includes  values and attitudes, both are learned from role models, including parents, teachers, and religious leaders, and they differ from one country to another because they are formed within cultural context.

Values are Ideas, beliefs and customs to which people are emotionally attached, another definition says that values are basic convictions that people have regarding what is right and wrong, good and bad, important and unimportant[7] . So values have to do with concepts  use in business such as  honesty, freedom, responsibility, between others.  Values are important to business because they affects a people’s work ethic and desire for material possessions. For example while in certain cultures the hard work and material success is important in others is more important a modest life style and leisure. Because values are so important for every group the influence of values from others cultures can be hardly resisted. For instance Muslims believe that drugs alcohol and certain kind of music and fashion are against his religious beliefs and values .

 

 

But what about attitudes?  Attitudes are positive or negative evaluations, feelings, and tendencies  that individuals hold toward objects or concepts, the attitudes that emanate from values influence directly international business. There are different kind of attitudes that influence in the international trade business  like:

Attitudes toward time: There are different perceptions about the handling of time, between certain countries for instance in Latin America people have a flexible way to handle schedules and time, while in England people usually adhere to the established schedules and compromises. Or attitudes toward Work: Where as some cultures display a strong work ethic, others stress a more balanced  pace in work and leisure. For instance people in southern France like to say “We work to live, while people in US live to work

 

Also when doing business in another culture, it is important to understand  peoples manners and customs. A minimum understanding of both themes is needed to avoid making mistakes or offending people. In depth knowledge, improves the ability to negotiate in other cultures, market products (to make  them effective) , and manage international operations.

Manners are the appropriate ways of behaving, speaking and dressing in a particular society, for example, in Arab cultures  one does not extend a hand to greed an older person unless the elder first offers the greeting, if a younger person goes first this would be considered a bad manner, another examples: in Latin countries It is acceptable to show up late for a party, while in England and France punctuality is highly appreciated. In many western countries, it is acceptable to talk about business when playing golf while on the contrary in Japan business are never discuss during the match.  

Customs are common or established  practices which dictate how things are to be done in specific situations[8] , for example sharing food gifts during the Islamic holy month of Ramadan is a custom, as is the Japanese tradition of throwing special parties for young women and men who turn age 20. We now define two types of customs and how instances of each vary around the world.  Customs also dictate the way that companies advertise and market their product. For example in US orange juice is advertised as a breakfast drink, but in France it is sold as a refreshment because the French do not drink orange juice with breakfast.

 

But that’s not all, we also have to care about  what we call aesthetics, it is  what a culture considers to be in “good taste” in the arts (including music, painting, dance, drama, and architecture), the imagery evoked by certain expressions, and the symbolism of certain colors.

Aesthetics are important when a firm considers doing business in another culture, because big  mistakes  can resulted from selecting inappropriate colors for advertising, product packaging, and even work uniforms, for instance, the color green is a favorable color in Islam and adorns the national flags of most Islamic nations; these results in product packaging that is often green to take advantage of these emotional attachment. On the other hand, across much of Asia, green is associated with sickness. In Europe, Mexico and the US black is the color of death and mourning; In Japan and most of Asia is white.

 

All that you have read is very interesting but , how  and why people from various cultures behave as they do?

The must famous study of how culture relates to values in the workplace was undertaken by Geet Hofstede, who collected data on employee attitudes and values for over 100 000 individuals. This data enable him to compare dimensions of culture across 40n countries. Hofstede isolated four dimensions that he claimed summarized  different cultures. Hofstede´s four dimensions are:  power distance, uncertainty avoidance, individualism and masculinity.

Power distance is the degree to which less powerful members of organization and institutes accept the fact that power is not distributes equally. Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations and had created institutions and beliefs for minimizing or avoiding these uncertainty. Individualism is the tendency of people to look after themselves and their immediate family only. Masculinity is the degree to which the dominant values of a society are “success, money, and thing”, in contrast with femininity which is the degree to which the dominant values of a society are “caring for others and the quality of life”

Hofstede´s results are interesting for what they tell us in a general way about differences between cultures. Many of Hofstede´s findings are consistent with some standard western stereotypes about cultural differences. For example, finding Americans are more individualistic and egalitarian than the Japanese (they have a lower power distance), who in turn are more individualistic and egalitarian than Mexicans, might strike many people as having a reasonable amount of face validity. Similarly many might agree that Latin countries, such as Italy, Columbia and Mexico, place a higher emphasis on masculine value (they are machismo cultures) than the Nordic countries of Denmark, Finland, Norway, and Sweden. [9]

[10]

 

Nowadays the entire world is involved in this phenomenon called GLOBALIZATION;  this term signifies that,  the whole globe is gradually integrating in the main aspects such as economic, laws, culture, politics, language, etc. So we are arriving to the state that Alvin Toffler named “Global Village” where the dimensions  planet are altered by all the technological advancements in many aspects as communications, the new political divisions, the free trade agreements, etc, and now the world seem to be smaller making that every event that happens in any part of the earth  will quickly affects the rest of the world.

This globalization is changing or transforming the cultural patterns and thus way there are surging new attitudes and customs

Trading is not the exception, we are trying to unify the way of doing and manage negotiations, and everyday a raising number of firms are trying to place their goods and services in foreign countries to expand their activities, in order to, increase the benefits and their competitive level. But can we really do it?

Due to this fact , day by day, makes necessary to have  a more detailed knowledge of  all the cultures around the world, understanding the way of life  of these other countries and learning how, where and when to penetrate in to these global markets, considering the way that you have to act to make deals with those countries, reducing the risk of failure and making more possible to success, because we already know these local preferences of buying, being treat and working.

 

So definitely knowing the cultural aspects of other countries is an advantages, although this, a question comes to my mind, how possible will be to unify the world to one way of making business?, Mexico is always trying to follow the US patrons of living ( it includes working) and as Mexico many other countries want to be like the big ones (Japan, US, Germany, etc)  and as we can see it is not so necessary; we can  better try to understand other cultures and try to define our self, in other to crate, why not? As a starting point of some other nations.

When getting in to another country we do not have to impose a way of doing something we have to adapt to the environment  to make it works for them and for us.

 

 

 

 

 

 

 

 

 

 

 

 

I took some of my examples from:

 

- International Business, A Strategic Managment Approach

Alan M Rugman, Richard M. Hodgetts

- International Business, An integrated Approach

John Wild, Kenneth Wild, Jerry Han.

- International Business, Competing in the global Marketplace

Charles W. L. Hill