Differences In Culture

Trade allows businesses to exploit economies of scales by operating in international markets, and international competition stimulates higher efficiency and reduces monopoly power.

International trade also enhances consumer choice, and international competition between suppliers helps to keep prices down. This again generates better products for consumers and enhances the overall standard of living. But there are factors in international trade that makes it more difficult than domestic business. Differences in culture are one factor, which I am going to explore in this assignment.

Geert Hofstede defined culture as "the collective programming of the mind which distinguishes the members of one human group from another". Everyone is shaped by their own culture, and our thoughts and actions are dependent on our culture whether they know it or not. These thoughts and actions are so integrated in our mind that we don't think about them until we are confronted with another culture and another way of doing things. The world is becoming more and more globalised, but there are still significant differences on how things are done across cultures. In this assignment I am going to explore advantages and disadvantages on how variations in different cultures can affect our ability doing business internationally.

Those who work in international business often discover how different people in other cultures behave. Even though people look very much a like on the outside, like looks and clothes, this may not be the case deep inside. Therefore, if you go into another country and make decisions based on how you operate in your own home country - there might be a considerable chance that you will make some very bad decisions.

There is no doubt that culture is a powerful force affecting the economic processes in the world and cannot be taken lightly as a lot of business deals can be lost as a consequence. That is why in today's global environment, more and more people are required to understand people from countries and cultures different from our own. If a businessman is not aware of the cultural differences between him and his counterparts, he will most likely lose the deal and his counterparts will probably not be doing business with him and his firm anymore. It is therefore important to keep in mind that there are several types of business cultures in different countries.

Relationship focused vs. Deal focused business cultures (Gesteland)

Japan and mostly the rest of Asia as well, is what we call a relationship focused business culture. An RF- culture means that people are most likely to be reluctant doing business with strangers, they appreciate indirect contact and strive to maintain harmony, avoid conflict or confrontations in meetings. This means that if you wish to establish your firm in one of these countries the importance of knowing someone is substantial. It also takes a huge amount of time of face-to-face contact before "getting down to business" as building trust and rapport is a time consuming activity. Foreign businessmen/women doing business in relationship-focused cultures that does not understand the importance of being patient and adapting to the culture will get a hard time making a deal. For a person that is from a deal-focused business culture, who is used doing business with strangers and expect direct and frank communication, it can quite often lead to misunderstandings between the counterparts. Moreover, relationship focused cultures tend also to be more formal and hierarchical than deal-focused cultures. There is a possibility that an American will experience that his informal behaviour towards his Japanese counterparts will be regarded as disrespectful and rude.

Attitudes toward time

Attitudes towards time can differ between cultures as well. There are big differences between a Middle Eastern polychronic person and a Scandinavian monochronic person. Those two cultures use different time systems, which can cause irritation on both sides. Polychronic cultures uses a flexible time system, which means that they are multi-tasking and do not emphasize on schedules and punctuality. The monochronic culture on the other hand, uses a linear time system where only one thing is done at a time. They don't like interruptions and emphasize on being punctual and follow schedules strictly. The effect of a different sense of time is perhaps the most common source of conflict in cross cultural workplace interactions. There are a lot of histories of failed deals because of the different perception of time, such as when a Norwegian businessman waits several hours for his French counterpart to arrive at a scheduled meeting. In fact, what often startles Norwegians or any other monochronic culture working with the French for an example is their lack of concern when schedules are thrown off and tasks postponed. They jump around from one thing to another and are so easily distracted, it looks cavalier and disorganized.

"For a German and a Finn, the truth is the truth. In Japan and Britain it is all right if it doesn't rock the boat. In China there is no absolute truth. In Italy it is negotiable." Richard D. Lewis, When cultures