Cultural Challenges Of Doing Business Overseas

Introduction

A major challenge of doing business internationally is to adapt effectively to different cultures. Steve Kafka, an American of Czech origin and a franchiser for Chicago Style Pizza has decided to expand his business to Czech Republic. This is a risky decision and Steve anticipates he will face obstacles as he goes about setting up the new pizza outlet at this new location, Prague. Though born in the United States, Steve has family and friends in the Czech Republic, speaks Czech fluently, and has visited the country of his origin several times. But in order to conduct business successfully, Steve needs to understand the culture of the Czech people, the needs and likes of the local consumers and the way they operate their businesses.

Differences and incompatibilities between U.S. and Czech Cultures

As Steve is setting up his pizza outlet in Prague, he needs to understand the cultural diversity, perceptions, stereotypes, and values of the Czech Republic and how they differ from the one in his home country U.S. The Czech decision-making process is lengthy. They have the tendency to use methodical and painstaking care with all business planning, and to consider all business dealings with meticulous specificity. One should be prepared for a lengthy timeline and attention to microscopic detail (CountryWatch). In contrast the American decision-making process, though it touches on all details, is faster. Forcing timelines or hurrying up on actions can be a major business risk. Steve needs to keep this in mind while doing business in Czech and be patient with their processes. For Americans direct eye contact is not necessary for the duration of a conversation, but moments of eye contact are essential to ensure one's sincerity. On the other hand, eye contact while conversing is important to Czechs. They may also look at or even stare at other people in public, but usually with no ill intentions (CultureGrams). To appear confident and emphatic Steve should keep eye contact while doing business transactions with officials in Government and other local entities.

In Czech culture, very few items are eaten with the hands. Also, they eat with the fork in the left hand and the knife in the right hand whereas the Americans use the knife only to cut meat while using the fork in the right hand. Pizza is a popular food in America, often consumed as an entire meal, and is eaten with hands. It can be delivered to the front door, served in a restaurant or carried out on the way home. Most Czechs do not dine out often. Also pizza is considered a popular snack that can be purchased from a vendor on the sidewalk (CultureGrams). Due of these differences, Steve must find a way to attract the Czech people to the fast food restaurant. Also he should consider having the delivery and carry out systems as most Czech people do not dine outside. He should also consider having pizzas in small sizes as pizza is a snack item and will be eaten in less quantity. Another important aspect is that, in Czech cuisine, pork is the favored meat. So to attract customers, he can introduce pizzas with pork toppings and in addition to keeping the trademark Chicago style pizza, he can customize some of the recipes as per the taste of the Czech people. The difference in cuisine and taste can be viewed as an opportunity and the potential if tapped fully can be used to grow business.

The lifestyles, work hours and holiday schedules too are different in the two countries. Respect for these aspects of Czech culture is important to nurture business relationships and ensure that individuals are not offended.

Application of Hofstede's Cultural Dimensions

Culture affects how people think and behave. Dutch researcher Geert Hofstede found there are four dimensions of culture that help explain how and why people from various cultures behave as they do (Hodgetts et al, 2006). Although Steve's origin is Czech, he was born and raised as an American. His values, customs and way of doing business are Americanized. He has visited Czech several times but he may not be completely aware of the business etiquettes and the subtle cultural and social values. Hofstede's cultural dimensions can help Steve in understanding the Czech business environment.

The first dimension is power distance. "It is the extent to which less powerful members of institutions and organizations accept that power is distributed unequally. Countries in which people blindly obey orders of their superiors have higher power distance". Organizations in high power distance countries have centralized and tall organizational structures whereas organizations in low power distance countries have decentralized and flat organizational structures (Hodgetts et al, 2006). Czech Republic has a score of 35 on Hofstede's culture scale which indicates that it is a low power distance country (Geert Hofstede™ Cultural Dimensions). The organizations in Czech will therefore have lesser supervisory control and lower strata of the workforce will usually consist of highly qualified people. The Czech society values education highly. They have well educated and skilled labor force. This will enable Steve to employ dedicated and hardworking individuals and much supervision is not required.

The second dimension is uncertainty avoidance. "It is the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these" (Hodgetts et al, 2006). A high uncertainty avoidance indicates that the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. A low uncertainty avoidance indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change, and takes more and greater risks. Czech Republic has a score of 74 on Hofstede's culture scale which indicates that it is a high uncertainty avoidance country (Geert Hofstede™ Cultural Dimensions). This means that Steve should tread carefully while expanding his pizza business. He should not introduce a great deal of changes all at once as people are resilient to change and are afraid to take risks.

The third dimension is Individualism. "It is the tendency of people to look after themselves and their immediate family only. The other end of the scale is Collectivism which is the tendency of people to belong to groups and to look after each other in exchange for loyalty" (Hodgetts et al, 2006). Individualism values individual achievements,