The Importance of Understanding Cultural Differences in International Business

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Introduction

It is important for business managers whose firms conduct business on a global scale to understand that cross cultural-competence is important if their firms are to be successful in their business pursuits. What seems to work for a company in the home country may not work well in another country because cultural practices and customs determine how business is conducted and also shape consumer behavior and perceptions. Business decisions made without proper knowledge of the underlying cultural issues can be costly in terms of poor business performance and lost opportunities. In a world that is globalizing fast future success in international business by multinational companies will depend on how they respond to cultural diversity across the regions of their operations.

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Hill’s Article

Hill claims that doing business in Saudi Arabia can be a challenge for many western companies despite the existence of numerous opportunities that can enable enterprises to flourish. He claims that western companies would find it difficult to run operations the traditional way due to the conservative nature of Saudi society. Businesses have to be run in a manner that is respectful full of the mainstream culture of the Saudi society which is mainly based on Islam and Bedouin traditions. For example, businesses must remain closed during prayer times. He claims that Saudis attach a high premium on social status and that business decisions can be influenced through the opinions of family or friends, so western business managers need to anticipate that business negotiations may proceed at a slow and relaxed pace. Similarly, Saudi business executives prefer to enter into business dealings with people they regard as mature. The main argument in Hills’s article is that for western companies to be successful in Saudi Arabia, they must harmonize their business operations in accordance with the customs and business norms of Saudi society. Hill cites McDonald’s as an example of a western company that conducts business in a culturally sensitive way (Hill, 2007, p. 124).

Disney’s Article

This article basically illustrates the importance of understanding cultural differences in international business. The author claims that Disney’s failures in Europe are due to the company’s failure to recognize that consumer needs, preferences, behaviors, and lifestyles in the European market were different from those in the American and Japanese markets. Another claim is that the management overlooked and failed to plan strategically when the first instance of resistance towards implementation of the project first occurred. The article argues that since Disney did little to change its management strategy to accommodate the cultural differences of the European people, the company was unable to realign its business strategy in a way that could have enabled the company to appeal to the needs, preferences, and lifestyles of consumers in the European market. The other argument is that the management at Disney relied on their successful experiences in the American and Japanese markets as a decision-making framework for their operations in Europe which was new territory and this strategy did not work for Disney (Barnett & Cavanaugh, 1995, 159-160).

Conclusion

It is clear from the above illustrations that companies can make costly mistakes due to a lack of understanding of how behaviors and needs vary across regions. Globalization has resulted in a change in how international business was traditionally carried out. To beat the competition, global enterprises will need to train managers and essential employees from foreign subsidiaries on the importance of thinking in different ways when they work in diverse cultural environments. This will help the firms to effectively deal with cross-cultural challenges in their business activities.

Reference List

Barnet, R.J. & Cavabagh, J. 1995.Global dreams: imperial corporations and the new world order. New york.Simon & Schuster.

Hill, C.W.L. 2007.Internatiopnal Busisness: competing in the Global Market place.7th Ed. New York: McGraw-Hill Irwin.

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Premium Papers. 2022. "The Importance of Understanding Cultural Differences in International Business." April 21, 2022. https://premium-papers.com/the-importance-of-understanding-cultural-differences-in-international-business/.

1. Premium Papers. "The Importance of Understanding Cultural Differences in International Business." April 21, 2022. https://premium-papers.com/the-importance-of-understanding-cultural-differences-in-international-business/.


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