International business encompasses all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across national boundaries. International business occurs in many different formats:
Understanding the Importance of Culture in Global Business The companies that will see growth in the coming decades are mastering how to do business across cultures. The list of fast-growing emerging markets goes on and on. The domestic companies that are likely to see incremental growth in the coming decades are those that are not only doing business internationally, but that are developing the strategic skill set to master doing business across cultures.
What is possible is developing the mindset of a globalist — or, in other words, mastering cross-cultural core competency. If I tell you that when you engage in a sales call in the United States, the acceptable spatial proximity between you and your prospect is 2.
If I demonstrate to you, instead, how uncomfortable you feel when I say hello and proceed to shake your hand while standing 6 inches from your face, I have accomplished the equivalent of teaching you to fish.
You now know that every culture has a specific, acceptable space proximity.
By sheer observation, you have added this to your cross-cultural tool belt. The next time you get off the plane anywhere in the world, you will look around and observe how far apart people are standing, log that information somewhere in your busy brain, and proceed to your next meeting armed with information that will avoid instant discomfort and a potential disconnect that may jeopardize business with your international counterpart.
Now imagine if you could augment this simplistic metaphor incrementally, to every aspect in which culture impacts business. A Framework for Understanding Culture has many definitions.
My own definition is that culture is our collective experience as a society, and its impact on our reaction and decision-making relative to every-day facts and circumstances.
Why is cross-cultural competence critical to your professional future and the viability of your company? According to a May Accenture study, optimizing this process through training can increase productivity by 30 percent. It is possible, however, to incorporate a cross-cultural framework that improves cross-cultural understanding and interactions.
Let us examine some examples of American executives interacting with Chinese executives to illustrate how a few of these comprehension lenses impact business.
Chinese cultural themes are rooted in folk belief and Confucian values, including filial piety, thrift, endurance, and trustworthiness.
These values are deeply engrained in the Chinese psyche. The Confucian value of endurance has a profound impact on the business process.
The total disconnect causes a loss of business opportunity, or alternatively, leaves dollars on the table as the exhausted Westerner, unprepared for the duration of the exchange, makes price concessions way too early. Communication An understanding of the subtle challenges in the use of English with non-native speakers, as well as the nuances of non-verbal communication, is critical to achieving business objectives when operating across cultures.
In East Asian cultures, communication is very subtle and indirect. Thus, the direct style of Western communication can easily create serious offense, despite the best of intentions. Failure to understand simple but subtle issues in communication may also cause both you and your counterpart to lose face.
Creating a loss of face for your Chinese counterpart is devastating to the business relationship and often unrecoverable — leading once again to loss of opportunity.
Group Dynamics This comprehension lens involves the understanding of how individuals from certain cultures interact in groups.
An understanding of group dynamics in the target culture significantly impacts the sales process. In individualistic cultures, such as the United States, customers make most of their buying decisions individually, whereas in collectivistic cultures, decisions are significantly influenced by the group family, extended family, network of friends and colleagues, and the community at large.
While the decision-maker may appear to be at the negotiation table because that individual is the chairman of the company, the shots may be being called by individuals not present father, grandfather or uncle, for example. In China, a highly collectivist culture, the marketing collateral and sales process needs to be targeted toward the group, and not toward the individual.
After only two years in operation, they ran out of cash and had to borrow million dollars to keep operating. Process Engineering There is a significant difference between a company that is multinational, and a company that is truly global. The difference is that a multinational company simply operates in multiple nations; a global company has embarked upon the journey of systematically updating its policies, procedures, and systems across multiple cultures.
Some of the most significant challenges are often IT-related. Even given the incredible advances in modern-day technology, global companies still suffer from program and platform inconsistencies.
Where technological practicality or the realities of budget do not permit complete integration, that disconnect must be evaluated and corrected. Typical examples include requests from finance in HQ in the United States requesting financial reports from satellite offices around the world.
The HQ platform might have the capability to generate the report with the specific information and format requested in a blink of an eye or at least the click of a mousebut a satellite office in Senegal might require a programmer or a wiz with an excel spreadsheet over the course of a week to effectuate the same result.
Knowing means that reasonable expectations for the deliverable can be set.Understanding the Importance of Culture in Global Business The companies that will see growth in the coming decades are mastering how to do business across cultures.
Important ways in which technology is facilitating International Business are as follows: Technology is beneficial to international business.
It may be stated that lowering of trade barriers has made globalization of markets and production a theoretical possibility, technology has made it a practical reality. Resource management plays a crucial role in business success. When it comes to medium or large organisation, it is very hard for the top management to manage all the resources manually.
Important ways in which technology is facilitating International Business are as follows: Technology is beneficial to international business. It may be stated that lowering of trade barriers has made globalization of markets and production a theoretical possibility, technology has made it a practical reality.
Resource management plays a crucial role in business success. When it comes to medium or large organisation, it is very hard for the top management to manage all the resources manually.
International Business refers to the trade of goods, services, technology, capital and/or knowledge at a global level.
In many cases,it plays a crucial role it is truly impossible to gain an understanding of a culture's buying habits without first taking the time to understand the culture.