The Cultural Challenges of Doing Business Overseas

Steve Kafka, an American of Czech origin and a franchisor for Chicago Style Pizza, has decided to expand his business into the Czech Republic. He knows it is a risky decision; when he became a franchisor, he had to overcome a lot of difficulties. Steve anticipates he will face some of these difficulties again at the new location in Prague, Czech Republic. Although he was born in the United States, he has family and friends in the Czech Republic, speaks Czech fluently, and has visited the country of his origin several times. He knows the people and the culture. In this paper, I will analyze the cross-cultural differences between the United States and Czech Republic, determine comparative advantages in this country, and recommend ways to minimize the risks of establishing a franchise overseas.

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, 2005). Doing business overseas has its challenges as well as it rewards.

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.

Although Steve is of Czech origin and speaks the language, he should still take into consideration language barriers as well as different attitudes and expectations from local partners. His friends living in Czech can help him, but Steve cannot expect them to be around for all his business transactions. For example, to show respect to others in the Czech Republic, one addresses both men and women by their professional titles and last names. People do not use first names until they are well acquainted. This culture is very different from the U.S. and Steve needs to be aware of it in order for him to avoid offending local business partners and customers.

The affect the four dimensions by Hofstede, 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 Czech. Steve’s management structure has to follow that of the Czech culture while understanding that uncertainty avoidance knowing that certain cultures like to have rules, are willing to work hard and has work regulated, while other culture rule are different. The likely results of this evaluation will be that Steve will adapt the Czech culture of doing business and also educate his employees on his culture of doing business.

Czech has an individualistic culture. This is quite contrary to the assumptions and conventional wisdom about former communist bloc. Czech people ideally achieve things alone and they assume a great deal of personal responsibility. Another characteristic of individualistic culture is competitiveness. Individuals and business compete to bring out the best. Though competition is a challenge, a dedicated and skilled workforce in a highly individualistic culture will help Steve in his entrepreneurial