Czech Republic Investment Analysis

Czech Republic Investment Analysis

The Czech Republic is a politically stable environment and economically growing country with many incentives for a foreign investor like Steve Kafka. Opening a Pizza franchise in the Czech Republic should be a success considering the Czech people have already shown a taste for American franchises such as McDonalds. Steve will have to mitigate cultural differences and established competition from other existing franchises.

The U.S. and Czech Republic Cultures Compared

Czech culture differs from America in that they tend to be indirect and more formal. The Czech people are more unassuming and avoid confrontation to maintain the social expectation of politeness. In addition, the Czech people are more structured and tend to adhere to rules and regulations which may appear to an American as slow moving. In order for Steve Kafka to be successful in opening his franchise in the Czech Republic, he will have to be formal and patient. Being of Czech decent and having visited the country, Steve has the advantage of being pre-conditioned to the culture and social structure.

Hofstede’s Four Primary Dimensions

In assisting Steve Kafka in understanding the Czech business environment, Geert Hofstede’s four cultural dimensions may be employed as a tool for evaluation. Hofstede’s dimensions include power distance, uncertainly avoidance, individualism/collectivism, and masculinity/femininity. Below is a chart from the Hofstede website that compares the U.S. and Czech cultures. The U.S. and Czech cultures differentiates particularly in the areas of individualism and uncertainty of avoidance. As the power distance and uncertainty of avoidance indexes point out, the Czech people lean toward a structured organization that follows rules meticulously. The Czech people digress from the American culture in the respect of lines of authority. Steve Kafka will have to understand he will have to be both obedient to superiors and directive to subordinates.

Hofstede’s cultural dimensions index exemplifies that Americans and Czechs differ significantly between individualism and collectivism. Americans pride themselves on their individuality while the Czech people are more collective in culture. Particularly since Steve is opening a franchise which will demand local involvement and investment, Steve will have to become part of the community by adjusting to the tastes of the local area.

Comparative Advantage – Labor

The Czech Republic has the advantage of a highly skilled, low cost labor force that makes investment in the country attractive to foreign investment. Steve Kafka can use the advantage of low labor costs not just for lowered operating expenses but more