Czech Republic

The Czech Republic is a developed, democratic country about the size of South Carolina located in the center of Europe. In 1993 Czechoslovakia split into two sovereign states, from which the Czech Republic emerged, and in March of 1999 the Czech Republic joined the European Union (EU) (CultureGrams: Czech Republic, 2007). The Czech Republic is also a member of the North Atlantic Treaty Organization (NATO).

Steve Kafka, an American of Czech origin and franchisor for Chicago Style Pizza, has decided to expand his business into the Czech Republic. Steve is fluent in the Czech language, has friends and family in the Czech, has visited several times and has overcome a great deal of difficulties as a franchisor. Steve anticipates difficulties as he establishes his business in the Czech and this paper analyzes the possible challenges he will encounter due to cultural differences.

Political and Governmental Culture

Although the Czech Republic is experiencing increased standards of living, both Russian and German influences are still prevalent. Familiar with U.S. cultural environment, Steve should be aware, despite modernization efforts, the Czech Republic is still confronted by a moderate amount of bureaucracy. The legal system is complex with plenty of red tape (Doing business in the Czech Republic, n.d.).

Comparative Advantages in the Czech

Some of the better-known products produced in the Czech Republic include: machinery and transport equipment, manufactured goods, glass, lead crystal, porcelain, jewelry and beer (Traditional Czech products, n.d.). Steve could take advantage of the proven popularity of beer in the Czech by offering it in his store. This could serve as an incentive for both domestic and foreign (tourists) customers to frequent his restaurant.

Hofstede's Dimensions

Hofstede's four primary dimensions can certainly help Steve evaluate the Czech business environment. A comparison of the estimated scores for both countries reveals several cultural differences that will influence a US-minded person conducting business in the Czech Republic. Czech people highly value personal relationships but in terms of business they have a collectivism approach. Greater equality between societal levels creates a stable cultural environment and low tolerance for ambiguity creates rule-oriented society with tight regulations in the business environment.

The Power Distance Index (PDI) for the United States and the Czech Republic is similar, with the US's being slightly higher. This similarity indicates that the values for equality or inequality are the same, but the fact that the US is higher indicates that Steve should expect to be treated with slightly less deference than he may be accustomed. Likewise, people will likely want to get to know him with little protocol in an informal manner. In his direct business environment Steve should consider an inclusive management style, involving others in the decision-making process.

The Individualism (IDV) score focuses on the degree to which a culture values the importance of individualism as opposed to the group. This score is much higher in the US as opposed to the Czech Republic. This is an indication that compared to Americans Czech's will generally have a strong sense of responsibility for their families, especially when a choice must be made between business and personal issues. In addition, decision-making may be time consuming because many people throughout the hierarchy will need to be consulted. Praise will be directed toward a team rather than an individual and promotions will be rewarded on seniority and experience rather than performance and achievement.

The Masculinity (MAS) score focuses on the degree to which a culture adheres to the traditional role of male versus female. Once again, the score for the US is significantly higher than for the Czech. This is an indication that the Czech culture values personal time and families. Common practice is for Czech people to base business decisions on personal trust rather than projected profit margin. Partiality is considered positive and favoritism to close relationships is openly preferred. Small talk and personal questions are the norm at social/business functions; individual's lives and interests are just as important as business matters.

Uncertainty avoidance (VAI) looks at the level of tolerance for ambiguity within a culture. This is another measure that varies greatly between the US and Czech cultures, except the Czech scores higher than the US in this instance. Some of the traits that can be expected include resistance to change and the development of an understanding of new concepts