The Culture Challenges of Doing Business Overseas

University of Phoenix

MBA 501

David Francom

September 17, 2007

Introduction

A major challenge of doing business internationally is to adapt effectively to different culture. Such adaptation requires an understanding of cultural diversity, perceptions, stereotypes, and values (Hodgett &Luthans, 2006). Doing business overseas has its challenges as well as it rewards. This paper will analyze some of the challenges and rewards in doing business overseas. I will also discuss some of the major differences and incompatibilities between the United States and Czech cultures as was as comparative advantages and trade barriers that one should be aware of when conducting business overseas.

Some of the major differences and incompatibilities between the United States and Czech cultures are; norms, values, beliefs and behavior. These differences will create a business risk for Steve because even though he is of the Czech origin, has friends and family living there, visits several times and speaks the language fluently he does not the full knowledge of how businesses are conducted in Czech. Though he is a franchisor for Chicago Style Pizza, he cannot operate internationally as he does locally because of the differences in value, as it will affect his management functions.

For example, in the American culture if an employee’s primary obligation is to the organization, then if the employee is not performing well he or she can be removed. However, if in the Czech culture employee’s primary obligation is to their family and friends, then of course, it will be almost impossible to remove employees if they are not performing well. This will affect functions such as planning, scheduling, goals and career (Hodgetts & Luthans, 2006). These risks can be mitigated if Steve studies and implies the background, eating habits, needs and wants and gestures of the Czech culture.

Comparative advantages exits when a country has a margin of superiority in production of a good or service where the margin cost of production are lower. Some comparative advantages that exit in the Czech Republic are lower cost, knowledge contact and communication and innovations. Innovations are achieved only through long-term comparative advantage. Steve can take advantage of these advantages by paying cheaper for labor; share his knowledge with his staffs and by implantation of the four types of innovation, which are product innovation, process innovation, organizational innovation and marketing innovation and market innovation effectively.

The affect the four dimensions, power distance, uncertainty avoidance, masculine/femininity and individual and collectivism have on organizational show in all cultures and cross culture. Hofstede’s four primary dimensions will help Steve evaluate the Czech business environment if it is implied effectively. For example, Czech culture is characterized by the relatively strong sense of masculinity. A with power distance when dealing with other cultures you have to adapt your company values to that of the culture in which you live and the people that you employ and the public that you deals with. For the business to be successful, Steve will have to be willing to be able to adapt or participate willingly and follow through on those culture benefits of