Czech Republic

Introduction

Culture is an acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior. Because different cultures exist in the world, an understanding of the impact of culture on behavior is critical to the study of management. Doing business with and in foreign countries poses some interesting cross cultural challenges. Czech values education, cleverness, social standing, modesty and humor. Individuals are judged and respected more so on knowledge and ability and in terms of virtue, modesty is very important; therefore, making Czech’s somewhat different from Americans (Czech Republic, 2007).

The Czech Republic was the western part of the Czech and Slovak Federal Republic and was proclaimed in Prague on November 14, 1918, and the Czech nation became one of the two component parts of the newly formed Czechoslovakian state. The Czechs lost their national independence to the Hapsburgs Empire in 1620 at the Battle of White Mountain and for the next 300 years were ruled by the Austrian Monarchy (Czech Republic, 2008).

Despite cultural differences, the Slovaks shared with the Czechs similar aspirations for independence from the Hapsburstate and voluntarily united with the Czechs. For historical reasons, Slovaks were not at the same level of economic and technological development as the Czechs, but the freedom and opportunity found in Czechoslovakis enabled them to make strides toward overcoming these inequalities. However, the gap never was fully bridged and the discrepancy played a continuing role throughout the 75 years of the union (Czech Republic, 2008).

Differences and Incompatibilities between US and Czech Cultures

The cultural differences between the US and Czech Republic are based on unique cultural values and attitudes, business behavior, development across time, their individual traditions, population to include people and culture, geographical positions, and the economic ties with one another.

The Czech Republic has a political, economic and historical base that affects all aspects of international business. Steve Kafka’s pizza franchise is no different. The type of pizza enjoyed by Czechs is often times culturally driven, which may not lead to sustainable demand for the Chicago Style Pizza, for this reason the population may or may not continue to demand the brand being offered by Kafka. Although Kafka is an American of Czech, he has not penetrated the Czech market prior and may have difficulties obtaining; however, Kafka will have the support based on economic relationships.

Kafka can lessen some of risks by using the popularity of pizzas in the market to increase revenue. The pizza market in the Czech Republic is somewhat saturated; however, diversity and his style pizza with his ingredients will play an essential role. During World War II with Italian immigrant families, a deep dish style pizza was developed. Kafka can use this European relationship to filter into the market, since Czechs are enthused with Western European styles foods (Czech Republic, 2008).

Comparative Advantages in the Czech Republic

In every sort of economic activity, comparative advantage identifies which activities a country is most efficient at doing and even though the social and cultures are different, the Czech Republic offers an attractive environment for foreign investments. The Czech Republic is perfect for the Chicago Style Pizza, because of its huge potential for delivery service and its geographic and cultural proximity to other countries that have similar pizza markets that are successful and profitable.

Today the Czech Republic is one of the most prosperous of the post-Communist states of Central and Eastern Europe; therefore Kafka will find a positive business environment in Prague. Prague is located within the Central Europe which is a prime location for new business behavior and creates an ideal environment for foreign trade and improved business investment opportunities. This is a business opportunity that Kafka can take advantage of (Czech Republic, 2007).

Hofstede’s Four Primary Dimensions

Hofstede’s four primary dimensions of culture represent a powerful tool in recognizing and understanding cultural differences and should be used for evaluating the business environment in the Czech Republic.

• Power Distance Index (PDI) is “the extent to which less powerful members of institutions and organizations accept that power is distributed unequally.” In general terms, the society tends towards egalitarianism. That is, people from all societal levels are theoretically seen more as just plain human beings and how they earn their living is of secondary import. For example, in the United States, the power index score is 40 of a possible 100, while in Czech Republic it is closer to 60. The higher the score you see, the higher the distance between normal folk and the upper classes. Kafka will benefit by hiring dedicated and hard working individuals (Geert Hofstede, 2003).

• Uncertainty Avoidance is “the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these.” It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. The Czech Republic has a low tolerance for uncertainty and doubts. Society is centered on a rule oriented framework to reduce uncertainty within society. Steve will need to pay attention not to introduce too many changes all at once and just ensure that his people feel safe and secure within their jobs (Geert Hofstede, 2003).

• Individualism is the tendency of people to look after themselves and their immediate family only, while collectivism is defined as people’s tendency to belong to a group and to look after each other in exchange for loyalty. On the individualist side we find societies in which the ties between individuals are loose and on the collective side we find societies in which people from birth onwards are integrated into strong, cohesive in groups often extended families which continue protecting