The global economy is a relatively modern and yet inevitable phenomenon that has fused the major economies of the world into such a level of interdependence, that when one economy falters, the repercussions affect all of the others. For an international business, this presents opportunities as well as pitfalls. However, unlike economics, a successful business relationship is as much dependent on culture, as it is on finance. It is the relationship that one business forges with another as well as the target market that is plans to sell to, that can rise above global economics and lead to on-going success. But how does a business that is planning to move into an international market understand and prepare for the culture shift that must take place to translate success in the home market into international success?
Culture in business is such a diverse concept that the more we begin to understand it, the more we realise the significance of the part it has to play in international business. Culture is what we learn and absorb from our upbringing and our surroundings. It is the difference between the way a child that has been brought up in poverty in the slums of India views the world, and the way a child raised in an affluent Western society views it. Culture is as much a product of the environment, as it is of attitudes and approaches that have been passed down through the ages. Culture is a unique thread that runs through an individual society. Not only can culture differ between continents and countries, but also between geographical areas within a single country.
Culture and International Business
Beginning to understand cultural diversity and the way it is ingrained into both society and the psychological makeup of the individual, is an important first step when considering moving a business into the international arena. A business model that is successful in a home country may require significant adaptation to make it work in a foreign country. In more extreme cases, some business models simply will not work in particular parts of the world. Acquiring this sort of knowledge at an early stage makes the difference between an astute business that takes a considered approach, and one that is prepared to take a huge gamble.
There are two distinct aspects to international business. The first is the business that is seeking to purchase products and services abroad, and the second is a business that is seeking to expand the market potential of a product or service by selling it abroad. Although culture plays an important part in both scenarios, it could be argued that it is far more important for the business looking to sell a product or service abroad to understand the cultural implications that affect sales potential.
Cultural Considerations and Sales Strategies
Understanding how culture is going to dictate the likely success of a business venture is vital in the first instance. As an example; in many cultures throughout the world, keeping a dog in the house is not acceptable. A company looking to sell dog beds designed to be used indoors is unlikely to have much success. However, if that same company decided to market outdoor dog shelters in those countries, it is likely to have more success. Defining and understanding how culture affects the target market, is a vital foundation block in constructing a successful international business strategy.
Preparing for International Business Success
Good market research is the key to the success of any business strategy. Market research is a way to see into the future and predict the likely outcome of a proposed venture. International business adds a new dimension to the research function in that a business needs to understand the role that culture will play. This presents not only in the form of establishing a market for the product or service, but also in forming relationships with business partners within the supply chain, communicating in a non-native language, contractual agreements, the culture of efficiency within the target country, and even the infrastructure of the country itself.
This article demonstrates the important role that culture plays within the international business arena. Global communications and a worldwide economy have made it much easier for a business to begin to contemplate taking a product or service to an international market. A company that is willing to understand and embrace cultural diversity within a business strategy is a company that is preparing for success in the international marketplace.
David is a freelance writer and regular contributor to the Institute of Diplomacy & Business