How Culture Affects Business Ventures
As the global marketplace becomes increasingly accessible, more and more companies are expanding across borders. Both small and large businesses are trying to tap into new markets. However, not all are successful, which is frequently the result of cultural barriers. But the massive advantages that come with cultural diversity means that it makes sense to create multinational businesses and cross-cultural teams.
There are of course some drawbacks and potential stumbling blocks that come with cultural differences, including employee engagement and product popularity. This article explores the key areas you have to focus on, if you’re considering selling your product or service in a different country.
Areas of Impact
Cultural differences will affect:
- The speed of business processes;
- Business etiquette — how to physically and verbally meet and interact;
- Managing employees and projects;
- The propensity for risk-taking;
- Decision making as well as negotiating;
- Distribution, sales and marketing.
For a broad perspective of cultural differences, you can use Hofstede’s Model, which is composed of 6 dimensions: Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long-term Orientation and Indulgence.
Here is an example of a graph showing Spain, United Kingdom and the United States and how they score on the different dimensions.
Don’t let your message be lost in translation! When venturing into a new market, your communication strategy will have to be more organised than ever. You have to think about the words you will use, the connotations they may possess in other cultures, along with the traditions of other countries. Furthermore, you’ll have to choose the right approach and tone to convey these messages. For example, Russian customers might prefer straightforward content, while in India you may have to be more indirect and nuanced in your communication style. Understanding subtle non-verbal communication, which is unique to each culture, is key to getting your international venture right.
Do your research in advance and find out the appropriate greetings, goodbyes or even table etiquette for the culture you’ll be getting involved with. Pay attention to detail - and if in doubt, ask! The worst that could happen is being perceived as ignorant, which is better than being rude or arrogant
You will have to expect differences with regards to work etiquette. People from different backgrounds will have different attitudes towards: communication, evaluation, leading, deciding, trusting, disagreeing, scheduling and persuading. For example in China, a country which scores high on Hofstede’s power distance dimension, an authoritative leadership style is predominant whereas in Norway a more laissez-faire attitude is more common. National culture trumping on organizational culture is a common problem that international ventures bring. Which is why cultural awareness is becoming a must when moving into a foreign market. Therefore, try to adapt where possible and plan ahead to prevent any negative surprises.
You may have to adapt your management style to fit into the cultural norms. However, it is also important to keep your company's values. If your vision is to produce an eco-friendly product, this has to be reflected in your business culture, even if the place you currently find yourself in doesn't place as much value in this area as your previous one. Remember that you are also held accountable in your country of origin and you want to avoid scrutiny from your loyal customers.
You can expect a difference in how employees interact with management too, such as whether they feel comfortable speaking up and expressing their opinion. For example, in Poland, you’ll often find more traditional values in terms of hierarchy, which means senior management positions command respect and expect a certain level of formality.
Defining roles in international teams, where there are different attitudes and expectations of the organisational hierarchy, can present challenges. Be mindful of not treating your employees or customers in the same way, but do treat them with the same quality of engagement.
At this point, you may be wondering if looking at your workers or customers through a cultural lens doesn’t lead to stereotyping and perhaps making wrong judgments about individuals. A quote from Erin Meyer might shine some light on this worry:
“If you go into every interaction assuming that culture doesn’t matter, your default mechanism will be to view others through your own cultural lens and to judge or misjudge them accordingly.”
To understand an individual, a good starting point is to understand their culture.
Time and Deadlines
Attitudes towards time and time management vary drastically depending on cultural norms. For example, in South America, the concept of time is more fluid and often situations take precedence over schedules. This might cause clashes with employees from more time-conscious countries like Germany or Scandinavia. It would be beneficial to see the unhurried approach as an opportunity to develop good relations, rather than get constantly frustrated by it. Be aware of the differences you can encounter depending on the region of the country your business venture is too. You are likely to see more “time equals money” attitude in large cities than anywhere else, a difference you should take into account.
Don’t let a deal fall apart due to cultural misunderstanding: be open to new cultural experiences and let go of biased assumptions when doing business across borders. If you adapt to the culture your affiliate is from it is more likely that you will close the deal because of the positive impression you make. Find the perfect target audience for your product/ service depending on the culture you are venturing into. You will have to be specific, for instance, in Japan and Austria, men usually are in control of decision making, but women make the majority of purchasing decisions in Sweden. Just because you might be targeting women in your country of origin it might not necessarily be the case in your new market. Find out about your target audience’s buying patterns and behaviours, to make your sales strategy as effective as possible.
Politics and National Pride
Some areas of the world are more open to globalisation and international companies than others. This could affect not only your customer base but also your employee engagement and retention. You will have to be mindful of the general attitudes and national sentiments when choosing the location of your international business venture. Furthermore, you might even have to change your name or adapt your logo to be more suitable. For example, if your brand colour is predominantly black or has the number 4 in it, you might be considered unlucky in China and your brand won’t have a positive image. The political and nationalistic sentiments are also going to play a major role if you are expecting government backing. To avoid tensions, it is best not to discuss any political matter that does not directly pertain to the business at hand.
Your understanding of culture will affect your ability to enter a local market, develop and maintain business relationships and competitive advantage. The better your understanding, the easier it will be to navigate many complex interactions. Ignoring the ways culture impacts an individual puts your business venture at a disadvantage. Therefore just as you would conduct a technical or market analysis, you should also conduct a cultural analysis.