Cultural Challenges In Doing Business Overseas

The Cultural Challenges of Doing Business Overseas

Many young American entrepreneurs are seeking to do businesses internationally. Some entrepreneurs want to expand their businesses and the others want to challenge their skills. When young American entrepreneurs launched their businesses overseas, they assumed that money would help them to overcome any obstacle because the value of U.S. Dollars is higher than most of the countries' currencies. Due to this faulty assumption, many American businesses owners have closed their oversea businesses within three years. Steve Kafka is one of the American business owners who want to expand his business into the Czech Republic. Although Steve Kafka's origin was from Czech, knowingly only the Czech language would not help Steve Kafka's business to succeed in the Czech Republic. The tips below might help Steve Kafka to overcome the cross-cultural challenges.

Major differences and incompatibilities between the U.S. and Czech cultures

A major challenge for Steve Kafka to do business internationally is to adapt effectively to difference cultures. The cultural differences that Steve Kafka has to conquer not only to the customers but also the employees. A quote shows a requirement for the cultural adaptation, "adaptation requires an understanding of cultural diversity, perceptions, stereotypes, and values" (Hodgetts, Luthans, & Doh, 2005). Steve Kafka could understand the cultural diversity by learning or acquiring knowledge on how people use to interpret experience and generate social behavior. Each culture has different technology transfer, managerial attitudes, managerial ideology, and business-government relations. Even a cultural common handshake could affect Steve's business. Culturalgrams (2007) identified the cultural differences of both countries, "U.S. culture uses a firm handshake but German culture uses the brusk and firm handshake and repeats on arrival and departure". The basic beliefs and behaviors of the workers and business partner are the major cultural impact on Steve Kafka's management. Base on the Culturalgrams World Edition (2007), Czechs are persistent in stating opinions or wishes whereas Americans tend to be honest and straight forward. Czechs are very obedience and cooperative. They also value traditions. However, Americans value invention, entrepreneurship, and creation. They are the risk takers. Culturgrams (2007) also indicated that not maintaining eye contact while conversing is disrespected to Czechs. They may also look at or even stare at other people in public, but usually with no ill intentions. Yet, Direct eye contact is not necessary for the duration of a conversation for Americans. To Czech's perception, speaking loudly on public transportation or in quiet places is impolite; conversely, it is normal to Americans because they generally stand about 2 feet (.6 meters) away from each other during conversation.

These differences might seem unimportant to many people, but they will create major risks to Steve's business. The conflicts will arise when Steve and his staffs or business partners have difference opinions or values in managing the business. Czechs might feel contempt if Steve did not shake their hands or eye contact in the ways Czech people do. Steve might feel threat when Czech people stand closer to him than 2 feet away but Czech people need to stand closer to the people whom they talk. Many Americans stereotype that Czechs were aggressive because their countries used to be ruled by Hitler or communists, (O'Brien, 2005). This faulty belief would lead Steve to approach his business partners and employees in a wrong way. Steve could do a research online, from the books, or from his Czech friends to mitigate these risks.

Comparative advantages exist in the Czech Republic

Czech locates in the center of Europe so that will be an advantage for Steve's business. The cost to construct a business in the Czech Republic is low, and Steve can fine a well-qualified employee easily. The Czech government coordinated its laws and regulations with those of the European Union. According to the U.S. Department of State (2007), Czech still has a low inflation rate though its economic growth increased significantly since 2004. Legally, domestic and foreign investors treat equally. Both are paying under the same tax code. U.S. citizens, whom stayed longer than 90 days, may acquire real estate under similar conditions for Czech citizens. Czech laws guarantees protection of all forms of property rights to U.S. citizens, both intellectual and physical. The wide availability of educated, low-cost labors, economic growth, low inflation, and same tax codes are the advantages for Steve to establish his business in the Czech Republic.

Hofstede's four primary dimensions

Hofstede's four primary dimensions might help Steve in evaluating the Czech business environment. For example, Hofstede (2005) mentions that the Czech Republic