Cultural

Before we discuss on the term cultural insensitivity let us understand the term culture.

The Dutch writer and academic Geert Hofstede referred to culture as “the software of the mind”-the social programming that runs the way we think, act and perceive ourselves and others”.

A more formal definition is that “culture is a set of learned core values, beliefs, standards, knowledge, morals , laws, and behaviors shared by individuals and societies that determines how an individual acts, feels, and views oneself and others”.[ By Charles Mitchell 2000 ]

Cultural Insensitivity: The inability of a person to accept or to become aware of cultural differences. Insensitivity leads miscommunications, increased stress for all parties involved, and an increased risk of unsuccessful business outcomes. [ By JOHN J. O’CONNELL 1997 ]

Problems: current problems facing American firms abroad

After World War II for 30 years American business dominated the foreign markets but now there is change in the situation Japanese, European, and East Asian corporations are making a gradual entry in to markets which was once dominated by U.S. MNEs, causing concerns and making it a matter of importance to look at major problems facing U.S. multinationals.

These problems are:

Emphasis on short-term profitability

Inadequate long-term plans for foreign market development.

Incentives based upon optimization and a quantification orientation instead of customer satisfaction and service.

Ethnocentrism causing a mental dependence upon the “good old American ingenuity” ideology.

Improper, inadequate, or no use of indigenous human resources.

The last three problems are direct cause of cultural insensitivity because there is neither incentive nor motivation to adjust to the local cultures. Currently American firms are reassessing all three problems. [By Mohammad Reza Vaghefi 1991]

For most Americans, an honest way of opening discussion is getting down to business and putting forward an offer. But in some cross-cultural situations, this straight forwardness is disregards and loses the cooperation needed for a strong business relationship. In eastern cultures the American way of pushing a proposal forward is often considered as aggressive and overconfident. In Eastern cultures calling someone by his or her first name, being informal or making a proposal before introductions have been made can be considered as arrogant and insensitive. Billions of dollars lost in business can be result of cultural blindness, simply because we fail to question our cultural assumptions and actions.

Cultural differences are often treated as irrelevant in America. According to Bonvillian and Nowlin , from 20 to 50 percent of American managers sent abroad by their companies return before completing their assignments. When this happens, the cost to the corporations ranges from $55,000 to $150,000 per manager. [By Donald Cyr Purdue 2002]

In Japan, only a few years ago a Disney theme park was successfully opened by Disney, irrespective of the differences between American culture and Japanese culture. The wonders of Disneyland were successfully brought to a foreign country like Japan by Disney. But setting up Euro Disney was different story for Disney. The company failed to do its research on cultural background of Europe such as French business negotiating styles, employee flexibility, dress habits, consumers spending patterns and eating preferences. The company had worked out in United States and Japan both with diverse cultures may be that was the reason the company did not adapt to European culture and this thinking arise problems for Disney.

The first day of the project was like a nightmare for Disney the French people who love their culture from the bottom of their hearts complained about that how Disney managed to buy 4,400 acres of farmland at very cheap market price. The farmers became angry because they and their ancestors had worked on this land for centuries. The French newspapers raise this issue in public and considered it as insult of the French people. Before the single foundation of the building had been dug or a brick laid, their was negative thinking about the company in the mind of the locals because the company did not recognize the attachment of the locals towards the land. Further adding to injury Disney used lawyers to deal with the problems rather than using executives to negotiate, this was against French culture. In France, lawyers are considered as last tool of negotiating.

The company includes sprinkler system in its construction project which was unnecessary from French law point