Globalization As the Major Driver of the International Business Expansion in the Multicultural Context

Today, globalization is one of the key processes, which has impact upon world economies, businesses, international relations, interchange of world views and so on. On the one hand, countries continue to sustain their cultural basis and traditions, while, on the other hand, they cooperate with each other, they adjust their economies to new conditions of international business relations in order to remain competitive. The introduction of modern technologies, such as Internet and mobile phones, generated absolutely new ways of interchange of cultural activities and economic interests. Some researchers are sure that the process of globalization had started long before the beginning of the 19th century with trade routes and relations. However, the end of the 19th century and the beginning of the 20th century were definitely marked by the rapid globalization in economical and cultural spheres. The economic integration along with international business integration have become integral parts of globalization, making a lot of countries transform their companies into global businesses, combining cultural and geographical peculiarities and differences. Therefore, globalization contributes to consistent changes in the development of international business with the shift toward multiculturalism and international business expansion.

Culture is one of the most important constituent parts of any society in any country of the world. Culture has a serious impact upon consumer demands and operations of the majority of national and international businesses. All human values and attitudes are formed under the influence of the specific culture. A lot of standards in business and in interpersonal relations are also explained and formed on the ground of cultural traditions. All these factors make global businesses and global economies dependent upon cultural differences. Culture could be split into several constituent parts, among which the crucial elements are values. Values are defined as “as something that we prefer over something else — whether it’s a behavior or a tangible item” (Hummel 2012). Usually, an individual learns cultural values of his community from his early childhood and this explains the fact, why he is always sure that they are the most acceptable and the most rational and logical. These values serve as building blocks for culture.

There are numerous approaches to culture and its interpretation and definition. One of the most general definitions is as follows: “culture is our collective experience as a society, and its impact on our reaction and decision-making relative to every-day facts and circumstances.” (Hummel 2012). Each society has unique “cultural themes”. These themes are the key aspects for defining the way of building business and professional relations. The brightest examples are Chinese cultural themes. People in China do appreciate Confucian values, such as filial piety, endurance and so on. The fact that people in this country value endurance so much has certainly a serious impact upon the way, how they are used to build business relations. “The unwitting Westerner may misinterpret this as unreasonable and storm out of the meeting, instead of participating in the “haggling dance” the Chinese executive is eagerly anticipating as normal and expected. The total disconnect causes a loss of business opportunity, or alternatively, leaves dollars on the table as the exhausted Westerner, unprepared for the duration of the exchange, makes price concessions way too early.” (Bochner 2001).

Nowadays, any company, which has the aim to become successful in business, should be ready to accept the role of culture in international relations and business. Irrespectively of the sphere, the company is working in, cultural peculiarities are closely related to efficiency of its operating and profitability in general. At the same time, the profound knowledge and consideration of all cultural specifications could contribute to the better and quicker development of business and its successful integration into international relations. Moreover, today this is one of the most effective ways of reaching high level of competitiveness in any sphere. There were some of the important factors, which are able to have influence upon business. Not a single business could exist without communication; this is the key aspect of development of business relations, either inside the country or internationally. Body language is closely related to communication, but people from various countries have various ways of expressing their ideas with the help of it. It is necessary to get used for example that Germans usually speak loudly, when they are discussing some important things, people from Japan tend to speak softly.

In fact, cultural differences may be very significant and affect both verbal and non-verbal communication. In this regard, companies should take into consideration cultural differences, while developing their business internationally. As the matter of fact, cultural differences affect the organizational performance because companies have to be able to develop the effective communication and interaction with customers as well as between professionals working within companies.

Therefore, globalization that drives the international business expansion of companies operating in different countries of the world also gives rise to the multiculturalism, which affects both customers and professionals working within the company. Companies expanding their business internationally have to sell their products and services to customers in new markets. However, customers in new markets have a different cultural background compared to the traditional customer group, which companies working with. For example, if a company is based in the US and decides to enter Japanese market, then the company has to adapt to the new cultural environment because the behavior of Japanese customers will be absolutely different from the behavior of American ones. For example, if the US-based company runs a chain of restaurants and opens its business in Japan than the company will not succeed, unless it takes into consideration specific gastronomic tastes of Japanese customers. Also an American company will have to take into consideration the new, Japanese system of values, instead of the traditional American one. Such changes occur whenever a company decides to go internationally and expand its business. In such a way, there may emerge substantial barriers grounded on cultural differences, which companies have to overcome. In this regard, globalization eliminates fiscal barriers and opens the way for the free movement of capital, goods, and human resources, but globalization cannot eradicate cultural differences, which companies have to adapt to, if they want to conduct their business internationally and reach the global customer group.

Understanding of customers’ needs is not possible without knowing cultural aspects, at the same time, it provides the chance to adapt better to them. Any marketing campaign is vitally important for organization of sales and efficient operating of any company. However, in order to build this marketing campaign it is necessary to study the customer demand, paying specific attention to cultural differences of the concrete target audience. Cultural differences may be so significant that companies may need to develop a totally different marketing strategy for their successful performance and effective work with new customers.

However, it is not only customers, who have a different cultural background, but also employees of companies, which operate internationally, have a different cultural background. In fact, the international business expansion driven by the process of globalization inevitably raises the problem of the recruitment of local professionals, who have a different cultural background. For example, a company entering a new market, recruits new employees from the local labor force. The company may transfer some managers to the new country, where it opens its business, but these managers will encounter the problem of adapting to the new cultural environment. To put it more precisely, the cultural difference of their subordinates may raise the problem of the ineffectiveness of their management style. Managers may simply fail to implement their traditional management style successfully just because it will not work in the particular business environment. For example, managers from western companies, where democratic management style is mainstream, may confront substantial difficulties, if they are transferred to an oriental country, where they have to work in the environment, where employees are accustomed to the authoritarian managerial style. In fact, any new culture requires the adaptation from the part of managers as well as employees. Hence, organizations expanding their business internationally have to complete the integration of their new outlets effectively in cultural terms. Their professionals have to learn to interact with new professionals, who have a different cultural background.

In addition, it is worth mentioning language barriers as an important cultural factor that may affect the international business expansion. If a company decides to go internationally, it has to use the vehicle language, which all professionals can use fluently. Otherwise, communication gaps are inevitable. Today, English is the most widely-spread vehicle language, although companies may use any vehicle language as long as this language is comprehensible for all employees working within the company. The vehicle language is important because professionals have to communicate with each other. They have to understand each other properly and fast. Otherwise, any miscomprehension will lead to errors and misunderstanding within the company. Thus, companies may overcome language barriers but, as a rule, employees need some training and language courses to learn to use a vehicle language effectively.

It has been already mentioned that the role of modern technologies could not be underestimated with regard to globalization of business and cultural mixing. Actually these technologies managed to “shrink” the world and make people from various corners of the world much closer to each other, giving them limitless possibilities to share their cultural beliefs and traditions, their worlds and values, their lifestyles and living conditions. As a result, all international relations, all economic relations are effected by globalization and spread of information technologies. “This reality has created a new ideological context that calls for international social responsibility and accountability that goes beyond individualism, beyond borders, highlighting the importance of global thinking. We need to extend the mode of concern for individual actions from local boundaries to a global level.” (Schuster,  Copeland 1999). Those companies, which took the decision to make their business international, have to study cultural differences of various regions, be ready to react to cultural peculiarities of their existing and potential customers. These procedures could be united under the term “cultural understanding”.

Cultural understanding is “study of cultural constraints encountered by businesses include local attitudes, taste preferences, language, religion, management style, gender discrimination, skills, personalities, education, etc.” (Schuster,  Copeland 1999). Denise Pirrotti Hummel, J.D. is the CEO of Universal Consensus, suggested treating business in the context of local cultures. He revealed his views using the example of McDonald’s. This is a company, working in around 100 countries and has around 70 million customers on a daily basis. “Their headquarters and senior management are U.S.-based but they entrust their local operations to local managers of the countries they operate in. Operations in more than 50 percent of their outlets are franchised.” (Hummel 2012).

The most important thing is that the menus are made in accordance with cultural peculiarities and taste preferences of the customers in each country. This is a good example to prove that globalization, accompanied by cultural understanding, has a considerable impact on building successful business and could provide additional possibilities for companies to be competitive not only in local markets, but also in global economies. The international business expansion demands a lot of experience and efforts. In addition, numerous specialists from various cultures are needed. Viktoria Kimmel and Paola Lopez in their writing Effects of Cultural Differences in International Business and Price Negotiations state that the number of companies, which tend to work internationally is constantly growing. This means that the competition for such companies is also getting tougher and they have to face much more challenges than before. One of the main obstacles, which become crucial for the international companies, is certainly cultural diversity. Culture is able to have direct and indirect impact upon business in several ways. There are language problems, pricing collisions, especially they are acute, when the cooperation is only in the initial stage. The management of the company should be able to cope with all these problems quickly and with satisfaction for both sides, because there could hardly be the second chance to correct mistakes and restart the cooperation. Thus, culture has a serious impact upon the whole process of business interaction and cooperation.

In order to make the process of integration into international market smooth, companies should consider some general advices. Before entering any foreign country, managers are to take care of informing of all staff workers about this country, about their traditions and cultural peculiarities. Such steps are needed in order to avoid spoiling of the first impression, which at any rate would have some impact even in the future. (Kimmel, Lopez 2008). People living in different countries do not simply speak different languages, but they have different traditions and ways of doing business. Therefore, it is much easier to consider all these differences beforehand and be ready to react properly. The country, where a multinational company starts to operate, could also face a lot of bad surprises, because local customers might be not ready for cultural traditions of the country, where this company originates from. They would likely be not ready to completely reconsider their attitudes and this would influence their desire to purchase goods from this company, if its policy is not flexible enough.

Overall, the trend of business to globalization is evident today in the whole world; more and more organizations develop their international relations and search for customers in the whole world. This process is enabled and supported by the rapid development of new technologies. At the same time, there are a lot of challenges, which these companies are to meet, in order to build successful international cooperation; one of the greatest challenges is the cultural diversity. In this regard, cultural barriers are among the major challenges for the international business expansion, which companies may confront under the impact of globalization. To put it more precisely, globalization contributes to the emergence of free trade. Moreover, globalization contributes to the elimination of fiscal barriers that encourages the free movement of capital, human resources and goods. However, globalization cannot eliminate cultural barriers, which companies have to overcome on their own. In this regard, they have to take into consideration cultural differences in their company-customer interaction and in their human resource management.

 

Works cited:

Hummel D.P. Cultural Differences in Business, 2012

Hummel D.P. The companies that will see growth in the coming decades are mastering how to do business across cultures. 2012

Kimmel, V.,  Lopez, P. Effects of Cultural Differences in International Business and Price Negotiations . International Marketing Strategy, 2008

Bochner, S. Psychology of Culture Shock. Routledge, 2001

Griffith, D.A.,  Myers, M.B.,  Harvey, M. G.An Investigation of National Culture’s Influence on Relationship and Knowledge Resources in Interorganizational Relationships Between Japan and the United States. Journal of International Marketing: September 2006, Vol. 14, No. 3

Schuster, C. P., Copeland, M. J. Executive Insights: – Global Business Exchanges — Similarities and Differences Around the World Journal of international marketing. Chicago, Ill.  Vol. 7.1999, 2, p. 63-80

The terms offer and acceptance. (2016, May 17). Retrieved from

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"The terms offer and acceptance." freeessays.club, 17 May 2016

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"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

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