The aim of this research is to evaluate the impact of the culture in the international business. The role of the globalization in the economy of the world has amplified international relationships, amplifying the importance of cultural dimension. The literature of this research has highlighted number of variables that have impact over the culture of the population. The availability of these elements is not necessary around the world exploring for the purpose of the new business opportunities. Generally the managers that have been taken the existing norms in their country, anticipating they are similarly valid for different contexts, might get many difficulties of their companies. It is required for the managers of the company to operate the operation in other country to understand the culture context and look for needed adjustments to keep away the issues that might raise and influence the performance of the business.
The role of the international business is not bound up to cross borders rather it is related to the cross cultures as well. It has been found that the culture intensely impacts the thinking and way of communication of people. Along with that it also influences the types of transactions they develop and the way they negotiate them. This kind of activities also influences the business they make and the process they negotiate them. The issues within the business can be created due to the difference in the culture that entirely stymies the negotiating process. The enormous diversity of the cultures of world creates it unfeasible for any speaker, no matter how accomplished and knowledgeable, to appreciate fully all the cultures that may be encountered (Eriksson and Hägg, 2016).
The economy of Unites States of America is mixed economy that is considered as the second largest in the perspective of purchasing power parity. It has been found that the GDP growth rate is around 2.3% in 2016. According to World Bank, GDP per capita income of this country is around 59,531.66 USD. It has been found that USA is a physically huge country that devotes to the actuality that there are number of Americans who think that there are lot of work. This work can keep them busy without moving towards internationally. For business purpose, this country is effective because the company is the business entity that has own rights and exists separately from its employees. Along with that it has been found that the accountability within the company tends to be vertical which can be observed easily (WBC, 2018).
Australia is the part of the Oceania in which the rate of the population is more than 21 million. It has become a famous destination for the visitors, which develops the requirement for huge awareness and understanding of cultures and values of Australia. it has been found that it is the country that has been through an unparallel time of quarter-upon-quarter GDP development, majorly increased through instant development of the Chinese economy. The companies of Australia are tended to be fairly non-hierarchical structure. Equality is the major feature of this country that people do not provide the impression that they observe they are somebody special. Australia per capita GDP rate is 50,303.91 USD and the business in Australia is based on the mining and agriculture due to the key exporter of commodities (WBC, 2018).
The large conventional form of the country is the Federal Democratic Republic of Nepal and this country is known as Nepal all over the world. Federal democratic type is the government type of this country. It is situated in the Southern Asia and this country is more religious where the rate of the Hinduismhas is around 80% of the total population. Kathmandu is the capital of this country where around 1.015 million populations live. Agriculture is the major factor of their people on which around 70% population engaged in it and 1/3rd of total country GDP. It has been found that the GDP rate of this country is 3.6% and $1500 is the per capita income. For the business perspective, it can be said that this country is effective that can provide the expected growth to the companies. The unemployment rate of this country is not good and the involvement of the new company can help the government of the Nepal to increase the employment rate (Schwartz-Shea and Yanow, 2013).
It is required for the international business to focus on the legal, political and economic environment. according to Chua, Roth and Lemoine, (2015), the major aspect for the international business is the socio-cultural, for instance, the concerns related to the legal, economic and legal environment are completed without any issues, the aspects of cultural can influence the potential condition of the company in case of not consider in advertising. It has been found that due to difference in cultures, many international businesses can affect significantly. With respect to large companies, it is necessary for them to have the tendency of hiring same kind of people globally, thus decreasing national differences. Along with that it has been analyzed that due to have strong organizational culture, the values of the employee can be affected that would ahead decrease the influences on national level (Riccucci, 2018). Different kinds of culture of country have significantly impact over the performance of the companies. Along with that it has been found that the cultural difference can become the major barrier in communication.
The aim of this research is to find out the impact of culture of different countries on businesses. The objectives of the research are mentioned below:
The research questions of this research are mentioned below:
The purpose of this research is to evaluate the factors that affect the cultural differences in which USA, Nepal and Australia countries are being chosen. The role of their culture on the business will be mentioned under this research so that the better understanding can be made regarding the concerns which can become the hurdle for the international businesses.
According to Jin, Yong Park and Kim, (2008), the role of the culture is huge as it considers as the vital components of potential growth. it has been analyzed that there are major two broadly accepted criteria to distinguish cultures on the basis of the differences in feayures like attitudes, values, beliefs and so on. There are two tools such as the Kluckhohn-Strodtbeck and Hofstede frameworks. The role of Kluckhohn-Strodtbeck structure is for investigating cultural differences along six dimensions. On the other hand, Hofstede framework is for investigating the differences in culture along four dimensions, like individualism versus collectivism and equity versus inequality (Luke, 2018). In the context of the culture, it has been found that the importance of the cultural factors in international commerce is vital due to lifestyle, values and language changes from a society to another society. There are two parts in the culture such as local culture which can be considered as the manufacturer and other one is foreign culture which can be considered as the target market. There are some cases like quality, product packaging, services, and time of purchase, advertisement and label that are influenced by culture of people as well as societies regarding to the culture of target culture (Zimbardo and Boyd, 2015).
According to Tung, (2008), the meaning of culture keeps number of meaning but culture supports to civilization. Furthermore, it can be considered as the social phenomenon as it is similar for all people. However, the differences in culture can be frustrated for the businessman. There are many reasons that can be the blunders for international business such as braking promising negotiations, non-acceptance and ignorance. It has been found that there are some basic dimensions of national cultures such as collectivism, ascribed status vs. attained results. It has been found that there are various issues that can be taken into consideration in entering in the international markets. Pricing is one of them in which firm’s level factors, product specific factors, market specific factors and environmental factors (Liñán and Chen, 2009).
There are different cultures are taken into consideration in order to use the price negotiations. USA is the country that charges the same prices to everybody, but in different countries, flexible and negotiation in the price is considered as the common form (WBC, 2018). On contradictory as per Walumbwa, Lawler and Avolio, (2007), the communication keeps huge importance in the international business and the methods of communication are different among cultures. Some highlights simple and direct ways of communication whereas others have tendency to rely on indirect methods. In USA, the way of communication is clear from which one can get to receive a clear form of response to their proposals and questions.
Price is vital component of the service and product, which require price. This elaborates that the firm cannot define the product without opinion regarding its value and price. Pricing of the product affects the demands which can affect the market shares of the company. Cross cultural awareness is necessary for the international business that can enhance the productivity of the business in an efficient manner. It is necessary for the business to have knowledge regarding how to communicate with global business partner on a cross cultural basis (Deresky, 2017).
Figure 1: Pricing issues in international market
Source: (Schwartz-Shea and Yanow, 2013).
Along with that it has been found that there are some effective cultural factors such as packaging, product consumption culture, advertising, forgery, ease of communication, provision for information and environment (Stahl and Tung, 2015). It has been found that he packaging impact the international business. North America, East Asia and Europe have good image towards the packaging products and it is vital for the companies to keep consideration all this stuff while entering in to new market (López?Duarte, Vidal?Suárez and González?Díaz, 2016). Advertisement is the process that can promote the company in to whole world and it is necessary for the company to keep consideration of the values and beliefs of the people while advertising because there are some incidents has taken place in the world that hamper the beliefs of people of other country.
Katan, (2014), provides the importance of the globalization that helps to give the readily available information, labor cost factor standardization, distribution channels and managerial innovation. There are number of organizations of world has expanded their business at global level through organic. Samaha, Beck and Palmatier, (2014), argued that there are some barriers of globalization as well that impact the international business. Cultural difference is one of them in which communication come under major hurdle. Australian businesses are ready to involve in other business with efficient manner (WBC, 2018). On the other hand, it is not easy to enter in the market of United States as the policy of this country is strict and one should be able to fulfill the requirement of this country. It has been found that different kinds of languages create confronting situations for the companies that operate internationally. It is the liability of the management to comprehend the diversities for the purpose of developing the strategies which are similar adaptable in various cultures. It has been found that the business expansions into international level can be done via internal development of by mergers (Morschett, Schramm-Klein, and Zentes, 2015).
The cultural distance in the companies that operate on international level can have negative effects as well which hurt the good image of the company along with the overall business for the long time (Ens et. al., 2015). It has been analyzed that the blunder regarding the culture can outcome in loss of customers as they can get hurt and spread the bad image for the same which would impact t he entire business in negatively. Loss of customers refers the lesser income and revenues and ultimately lesser advantages. People insulted by the blunder in the culture that committed by the international companies.
There are number of approaches in the context of the professional communication which are one of the major innumerable differences in workplace policies from around the world. It has been analyzed that businesses have to face number of issues related to the workplace etiquette because it is not possible that every workplace of each country is same. It shows that the new business should focus on the culture of different countries before expanding the business into new country. With respect to the organizational hierarchy and attitudes in the direction of the management roles, it can be said that these can be varied between cultures (Internation, 2018). The hierarchy system of each country is different from others for instance, the management system of Australia is quite different as it is has non-hierarchical. This kind of attitude managing the system of the organization helps out the company to elaborate the roles and responsibilities across the company. Along with that this also defines that senior managers need to be focused towards work and expect a definite extent of the formality and deference from junior team members.
Negotiators from different culture need to focus on the purpose of negotiation. According to Khatiwoda and Manandhar, (2016), the purpose of negotiation is different in the view of the negotiators from different cultures. The deal makers of some cultures have the goal of the business negotiation which should be signed contract between the parties. On the other hand, other culture tends to focus that the goal of the negotiation is not related to the contract but there should be an effective leadership between the two sides. The purpose of negotiations is quite different from each other as Asian negotiators, whose negotiating aim is often the development of the relationship, which gives a lot of time to negotiation preliminaries (Zimbardo and Boyd, 2015). On the other hand, Americans tend to get to know one another thoroughly, are considered as the important foundation for an effective business bonding. It shows less importance when the aim of the company is merely a contract (Internation, 2018).
Research Philosophy is an effective approach and vital part of whole research as it facilitates in getting comprehending regarding the research issues. There are three kinds of research philosophy such as positivism, interpretivism and realism in which this research is used the interpretivism philosophy because this approach enabled to get the opinions and point of view of participants (Schwartz-Shea and Yanow, 2013). This selection of philosophy facilitated researcher to reach till conclusion regarding managing diversity in international business (Kalhor, Shahi and Horri, 2014). Positivism and realism research philosophy have not used in this research because there is no requirement of highly developed methodology like hypothesis building and proving.
The role of the research approach is huge in the research. Inductive and deductive are two kinds of research that facilitates researchers to evaluate the utilization of the specific data collection method for project. Inductive research approach is used for this research because the compatibility of this research approach with interpretivism philosophy is good. Along with that inductive research approach assists researcher to attain the subjective knowledge related to the research issue. The strength and dependability of the research outcomes are increased by selecting this research approach (Wilson, 2014).
This research paper has entailed the exploratory as well as the descriptive research design in order to get reliable outcome for the proposed research topic. The use of exploratory research design help researcher to gather data in-depth by using exploratory research design. Descriptive research design is supported in comprehending the characteristics of the research. It is the design that facilitate in collecting the view points of participants for the purpose of gathering the information and meeting the objectives in order to answer the research questions.
With the help of the effective research strategy, researcher would be able to gather the information in an efficient manner and evaluate the data to develop definite conclusion. For this research study, three journal articles have been taken which topics is Effect of Culture on International Trade: Case Study of Saffron Export, The Influence of Culture in International Business and The Influence of National Culture on American Business People – Managerial Implications for Central Europe. With the help of above mentioned article, researcher has entailed the theoretical understanding and knowledge regarding the topic. The researcher gets facilitated to gather the information regarding the culture diversity and their impact over the international business. It also facilitated in embryonic validity of research (Klenke, 2015).
Primary and secondary are two methods that help to gather the information regarding the proposed research topic (McNabb, 2015). For this research, secondary data collection method has been taken in to consideration by which selected journal articles have been chosen for the purpose of making better understanding regarding the proposed requirements (Marshall and Rossman, 2014).
It is required for the researcher to keep focus on the analyzing the data in an efficient manner. There are three kinds of methods of data analysis such as thematic, statistical and conversational analysis. For this research study, thematic analysis has been chosen because this method has the ability to examine and pinpoint the qualitative data.
Ethics keep the huge importance in the research as it is vital for the research to do no harm people who are involved in the research. Researcher has considered all ethical points before implementing this research (Nestor and Schutt, 2014). The help of three journal articles have been taken into consideration but it has been assured by the researcher that there should not be issue of plagiarism while researching from those journal articles.
Figure: Hofstede’s dimension of USA, Nepal and Australia
Source: (Hofstede Insight, e.d.)
According to Greet Hofstede the importance of culture in international business is enormous as the value of culture decides the formulation of the business. In the context of the power distance dimension of Hofstede, it has been found that the score of Australia is 36 in this dimension which is low in which the communication between manger and employee is informal and participative. The score of Nepal is slightly high with 65 that show the hierarchical society. The power distance score of USA is 40 which highlight the society’s inequality. There is high extent of geographical mobility in the US. It has been found that the Americans are considered as the best joiners in the world. They do not have idea to communicate with other in deep way (Stahl and Tung, 2015).
It has been analyzed that there are a number of concerns which should be considered by the businessmen before starting up the business. In the context of Australia, it has been found with the help of the Hofstede dimension that the society of Australia respects the freedom and dignity of the individual. With respect to USA, it has been analyzed that Americans abstain from greetings that include close physical contact. At the time of dealing with American, it is necessary for the business to avoid misunderstanding and confusion. It has been found in the context of Asia that conversation in Nepal can feel somewhat same to Americans. Communication style of Americans is indirect and they do business with Asians counterparts which will require learning to read between the lines. The people of US see the freedom of speech and access to information as a right. Nepal has heavy censorship of media and internet on the other hand; Americans are not taken seriously the site of the social media networks.
With respect to Individualism, it has been found that Australia has highest score of 90 in individuality that describes in the world of the business, employees wanted to be display initiate and self-reliant. Nepal has low score in this dimension as the society of this country is considered as the collectivistic. It has been found that the loyalty in the collectivist culture is important. On the other hand the individualistic score of USA is 91.
Masculine is the dimension that refers the society will be effective by the competition, success and achievement. The score of Australia in this dimension is 61 which show the Masculine society. It is the country that has belief in their success and attainments in life. The organization of this country provides the promotion and hiring decision in the workplace. People are more concerned towards handling the issues at their own level. The score of masculinity of Nepal is 40 which considered as the feminine society which focus on the equality. People work in this country to live or survive. The resolution of the conflicts is being done in the organization by compromising and negotiations. The organizations of Nepal provides the friendly nature and flexibility in working is preferred by the organization in order to provide the satisfaction to the employees. Masculinity score of US is 62 and this refer the typical behavioural pattern of America. This can be elaborated by taking consideration of the combination of the masculinity drive. It is the country that has same culture in this respect.
In the context of the uncertainty avoidance, it has been analyzed that Australia has 51 score, US has 46 score and Nepal has 40. There is another dimension of Hofstede of Long term orientation in which the score of Australia is 21 which shows the normative culture. The score of this dimension of US is 26 and Nepal has no scores in this dimension. The score of Indulgence of Australia is 71, the score of US is 68 and the score of Nepal is not scored under this dimension.
It has been found from the above analysis that the organizations of Australia are based on the hierarchy which is established for the purpose of making effective process. It has been found along with superiors of the company of Australia are accessible and the managers of the company are relied on the individual employees. By supporting the statement of the literature review of “Australian businesses are ready to involve in other business with efficient manner”, it has been found that the individualism score of Australia is high and the long term orientation score shows people have strong concern regarding their job.
With respect to US, it has been found that this country has great acceptance of new ideas and innovative products and a desire to try something new which is related to the technology, food and the different practices of business. Along with that it has been found from the above analysis that the Americans are tended to be more broadminded for different kinds of ideas. Simultaneously, Americans do not need a plenty of rules and they are lesser emotionally expressive in comparison of higher scoring cultures. In the context of Nepal, it has been found that the organizations of Nepal provides the friendly nature and flexibility in working is preferred by the organization in order to provide the satisfaction to the employees.
The above mentioned findings show that the business culture keeps huge importance in any kind of business and the impact of culture can influence the whole business. There is a different strategy of different country as it is mentioned that US people are not talkative as Asian which shows the culture difference in the business. It is needed by the businessmen to consider the business culture in an appropriate manner so that the success of the business gets not affected due to lack of understanding of different culture.
Conclusion & Implications
It has been concluded from the above discussion that managing cultural diversity is vital for the organization to expand the business globally. The research has been discussed on the impact of culture of different business of different countries for which Australia, USA and Nepal have been taken into consideration. It has been analyzed that due to have strong organizational culture, the values of the employee can be affected that would ahead decrease the influences on national level. The research has implied the various information regarding the cultural differences and its impact over the performance of the business that deal in different countries. Hofstede’s dimension has been taken into consideration for analyzing the entire study of the research. At last, the findings after analysis have been made regarding the topic of this topic.
With respect to the potential concern, it can be suggested that managers of host country should be familiar with diverse culture values and they must have comprehensive understanding how to give preference one cultural norm over another for the purpose of reducing the cultural gap. The managerial implications in the context of the cultural differences are given below:
Throughout the procedure of complete this research study, it has been found that the researcher can face various issues which can have the adverse impact on the research study and impact the research outcomes. Along with that there are some other factors which keep equal importance for the research that are money, relevant data and time that can bound the study of the research in order to develop the reliable results. For this research process, there is less time to develop research which can put the negative influence over the study in relation to collect the data from the various kinds of resources such as the research issues. Money is another constraint of the research limitation that put the negative impact over the information because due to lack of money the researcher was unable to get access of data from which the researcher could collect huge information related to the topic. The researcher has taken three articles of journal which bounded the researcher to go beyond the research issue to provide an extent level of knowledge.
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