IMPACT BUSINESS INTERNATIONAL TO ECONOMIC GROWTH IN
INDONESIA
ARIZONA STATE UNIVERSITY
OMT 440 - INTERNATIONAL BUSINESS
WEEK 1
Abstract
International trade is an economic transaction conducted between countries. Among
the goods commonly traded are consumer goods, such as televisions and clothing; capital
goods, such as machinery, raw materials and food. In almost all countries, international trade
is one of the efforts to increase GDP. Economic growth is a quantitative increase in the ability
of a country's economy to produce both goods and services. In general, the high and low
population of a country, the birth rate and the death rate are very influential on the economy
of a country because productivity, education, and investment in physical capital since the
improvement of longevity creates greater needs. The type of research used is qualitative
research, qualitative research is research that produces several findings that cannot be
obtained using statistical procedures or in a quantitative way. With the existence of
International Business in Indonesia, Economic Growth will increase. The reason is that the
supply and increase for foreign products from the Indonesian people will continue to increase,
for that reason, companies or industries in Indonesia will often experience an increase and
growth such as the development of the textile industry, shrimp, coffee and so on. With the
existence of international business, the prosperity and welfare of the people in Indonesia is
developing well due to the opening of various kinds of jobs, so that there can be a decrease in
the unemployment rate in Indonesia.
INTRODUCTION:
Economic growth can be defined as the inflation-adjusted increase or improvement in
the market value of goods and services produced by an economy in a financial year.
Statisticians traditionally measure growth as the rate of increase in gross domestic product or
GDP in real terms, usually economic growth is used as a measuring tool for a country to
determine whether the country is experiencing high economic growth and is used as an
important component to evaluate the condition of economic growth in a country, economic
growth usually increases the peace of the people living in the country, one indicator that
affects economic growth is international trade activities.
International trade is an economic transaction conducted between countries. Among the
goods commonly traded are consumer goods, such as televisions and clothing; capital goods,
such as machinery, raw materials and food. Almost all For many countries, international trade
is one of the efforts to increase GDP. International trade itself has many benefits for the
country, namely by encouraging industrialization, progress in the field of transportation,
globalization and even encouraging the creation of many multinational companies.
International trade greatly affects economic growth in a country, if a country exports a lot
compared to imports, then economic growth in that country is positive, the benefits of
international trade itself are that it can increase foreign exchange in a country, increase
economic opinion in a country, meet the needs of other countries, and increase employment.
One of the indicators that measure economic growth is Gross Domestic Product (GDP).
GDP is a monetary measure of the market value of all final goods and services produced and
sold in a certain period of time by a country or several countries, generally without
recalculating the intermediate goods and services used to produce them, GDP is usually used
by a country to determine the welfare of the people in that country, because GDP measures
the income earned in the people of a country. If a country exports a lot, then people's income
also increases. The focus of economic attention is always on various ways to increase the
growth of national income in real terms, economists see the growth of real national opinion
can be used as a measure of economic performance in a country. Indonesia itself has a variety
of natural resources that can be exported.
As a medium for exports and imports, Indonesia also has a strategic location so that it
becomes an advantage in conducting international trade. So this research is expected to help
in knowing the impact that occurs on economic growth, with a focus on improving strategies
and focusing on obstacles to the value of exports in international trade.
The government is building a national brand image for Indonesia, within 3 years the
Ministry of Trade has begun to raise awareness of the Indonesian people and the world about
the image of Indonesian products which aims to realize a national brand image.
With the slogan "Indonesia Hebat", the Ministry of Trade is making special efforts to
build a positive image of Indonesia. This program is a government recommendation to
encourage the development of national industries and MSMEs. such as batik cloth, shoes or
food will make Indonesia attractive to the international world and reduce imports. Some
exhibitions aimed at building Indonesia's nation branding abroad include:
1. Instore Promotion at Harrods Supermarket - UK, March 27 - May 1, 2010
2. ExhibitionFlanders -AccentadiGent - Belgium (PEPI Program), 11 - 19 September2010
LITERATURE REVIEW:
International Business is a business where business activities cross borders between
countries or internationally. In International Business, it does not only consist of international
trade or manufacturing products abroad, but also developing industries such as tourism,
transportation, banking and other industries. Globalization has led to the development of
international business activities. Types of international business transactions include (i)
Franchising, (ii) Licensing, (iii) Management Contracting, (iv) Marketing in Home Country
by Host Country, (v) Joint Venturing, and (vi) Multinational Corporation (MNC).
International trade is the science of economic transactions that include international trade
(exports and imports) and foreign investment (direct or indirect) carried out in the world by
individuals and companies or organizations to gain certain benefits and benefits. One example
of an international business is Mc Donalds which is franchising where currently Mc Donalds
has more than 200 outlets throughout Indonesia as of 2018. (Yulianti.D.R, 2020) All
international business activities include export and import activities and for example in 2019
all export and import activities have decreased significantly compared to previous years. If
exports decreased by around 6.8%, imports decreased even lower, reaching around 9.5%. The
decline in exports occurred in almost all sectors including oil and gas, with exceptions such as
agricultural products.
Meanwhile, sometimes the cause of the decline in the value of imports is due to a
decrease in imports of consumer goods, which reached around 16.8%. The decline in the
consumer goods component shows that people's purchasing power has decreased.(Saragih,
2022) Economic growth is a quantitative increase in the ability of a country's economy to
produce both goods and services. In general, a country's high population, birth and death rates
have a significant effect on a country's economy because productivity, education, and
investment in physical capital since improvements in longevity create greater demand.
Population growth impacts the growth and performance of a country.
Rapid population growth is synonymous with economic growth and poverty reduction in
a country. The positive effect of population on economic growth also depends on the structure
and number of people in different age ranges in a country, especially in developed and
developing countries. In addition, rapid population growth can lead to lower economic growth
and poverty (Akasumbawa, Adim and Wibowo, 2021) Apart from the population of a
country, a decrease and increase in import exports can also affect economic growth in
Indonesia. The factors that encourage international trade include: (i) product availability, (ii)
price differentials, and (iii) economic growth (iii) product differentiation. A country will
import a product / commodity if the product / commodity in question cannot be produced by
itself or can be produced but in an amount that cannot cover domestic demand (International
Trade And Business: Theory And Empirical Analysis - Jongkers Tampubolon - Google
Books, 2020)International trade along with import and export activities have a major impact
on economic growth. This is also in accordance with the theory of international trade put
forward by Heckscher-Ohlin who believes that net exports or net exports are one of the most
important factors of gross national product (GNP), therefore changing the value of Net
Exports will cause changes in national income. (Yuni, 2021) As for the variables that affect an
export activity, namely from the income of the Indonesian state, where the relationship
between export activities and income is positive with each other. So, if a country's export
activity is high, it is certain that the income in that country is high and vice versa. Therefore,
to encourage the increase in net exports, Indonesia's income needs to be increased and vice
versa. Given the importance of exports for Indonesia in addition to being a source of income
as well as a source of foreign exchange earnings, the government needs to make policies that
support the development of Indonesian exports.(Ngatikoh and Isti'anah, 2020) Law also plays
an important role in all international business activities, in international trade, of course, there
are legal uncertainties that greatly affect investors' investment decisions, often and usually for
two reasons.
The first reason is that little or no investment can be made without a commercial
transaction, which means that an investment is an essential part of international trade. The
second reason is that the trust patterns of multinational corporations almost always precede
international business transactions, particularly international trade. Most multinational
companies tend to develop their business abroad in a structured sequence of activities, starting
with exports in particular, then establishing small representative offices to increase sales,
sourcing, marketing and distribution activities, and finally by establishing direct investment in
the underlying form. (Khotimah, 2018) In addition to legal uncertainty in International
Business, especially in doing business, there are often various marketing techniques carried
out by companies. In International Business, global marketing is certainly implemented,
where the company prioritizes all resources owned from human, physical assets, money
assets, to advertise, sell and distribute products and services not only in the local environment
but globally. The definition of international trade with international marketing is often seen as
the same, even though it is different. The main difference lies in the treatment where
international trade is carried out by the state while international marketing is an activity
carried out by companies that determine business activities that are more active, more
advanced than international trade. (Gumilar, 2018) An important aspect that also determines
strategic decisions globally is the company's ability to think globally, namely its ability to
understand international markets by paying attention to supply and demand around the world,
as well as marketing methods and marketing effective management. The most important
aspect of global thinking is not how to create market opportunities in other countries or how
to exploit resources in other countries, but the most important is the ability to understand the
field of marketing and manage on a global scale and apply best practices, in general.
(Rambe and Aslami, 2022) In addition to having a global strategic mindset, companies must
also think about how local strategies will be used in each branch of the company's outlets
located in various places in the world, a global local strategy is also important for
international companies because each country, city, or region has a different culture and
habits, so an international company should not only think about a mature global strategy but
also think about a suitable strategy in each of the branches they have.
METHODOLOGY:
Type of research
The type of research used is qualitative research, qualitative research is research that produces
several findings that cannot be obtained using statistical procedures or in a quantitative way.
(Dr. Umar Sidiq, M.Ag Dr. Moh. Miftachul Choiri, 2019) The purpose of qualitative research
is to understand the conditions of a context by leading to a detailed and in-depth explanation
of the portrait of conditions in a natural context (natural setting), about what actually
happened according to what is in the study field. (Fadli, 2021)
Analysis method
The science of data analysis methods that are carried out in an organized manner by observing
scientific rules. It can also be understood as a science that studies how data analysis is carried
out scientifically. Data analysis The method used is the narrative method, which is to express
the data with a narrative or story, this method seeks to produce data or research results that
will be easy to understand because of the narrative method, delivered with interesting
language. This method will help to develop a follow-up plan from the data generated by the
research (Silalahi, 2018).
RESULTS AND DISCUSSION:
Research analysis results of the impact of international business for economic growth in
Indonesia
Based on the results of the analysis, there are several positive impacts of International
Business that affect economic growth in Indonesia such as:
Improving Economic Growth:
With the existence of International Business in Indonesia, Economic Growth will increase.
The reason is that the supply and increase for foreign products from the people of Indonesia
will continue to increase, for this reason, companies or industries in Indonesia will often
experience an increase and growth such as the development of the textile industry, shrimp,
coffee and so on.
With the increase in economic growth in Indonesia, people in Indonesia can enjoy the results
of products and services from outside the country in Indonesia.
Source of Foreign Exchange:
International business in Indonesia has added to the country's foreign exchange resources.
Foreign exchange is foreign exchange that is used as a means of transaction from international
trade from one country to another. The currency of another country is only considered as
foreign exchange if the currency is used as a medium of exchange for goods or between
countries. So with the increase in economic growth in Indonesia, the country's foreign
exchange resources have also increased with international trade.
Improving the Prosperity of the Country:
The impact of International Business in Indonesia is also an increase in the prosperity of the
State. The benefit of trade between countries is to increase economic activity and foreign
exchange will also increase due to economic activity. Producers can have an increase in
profits because they transact goods or services outside the country without tariff or non-tariff
barriers while consumers can get goods or services from outside the country.
Increase Employment:
Of course, with the existence of International Business in Indonesia, there is an increase in
employment. With the frequent increase in supply and desire for products or services from
outside the country, the company or industry will get a lot of work that requires a lot of labor
to help the company or industry to overcome the increasing desire for products outside the
country. With the increase in employment, there is also a reduction in the number of
unemployed people in Indonesia.
Strengthening Relationships Between Countries:
Not only does it open up opportunities to sell products outside the country, but with the
existence of International Business it can establish a good relationship between other
countries. With this good relationship, it can benefit the Indonesian trade section and other
parts to improve the Indonesian economy.
Attracting Foreign Investors:
International business means broad and global trade, so of course it will attract the attention of
some foreign investors to add business capital to industries or companies in Indonesia. The
addition of this capital will help the Indonesian state in Indonesia's economic growth, open up
new jobs that can also help reduce unemployment and have a big impact on the Indonesian
economy.
Production Quality Improves:
International business encourages the improvement of the quality of products or goods that
have been produced by a company or industry. Improving the quality of these products will
help Indonesia to be more competitive in international trade and increase the export of goods
if the product is highly marketable in international trade.
Technology Transfer:
International business also provides Indonesia with technology transfer. Technology transfer
is in the form of specialized technology from developed countries to developing countries.
Technology obtained from developed countries will help increase Indonesia's economic
growth such as advanced technology or personal technology will be exported to countries that
need it and these countries can feel the development of technology from international trade.
There are also some negative impacts of international trade on economic growth in Indonesia,
such as :
Due to the influx of foreign products from outside the country, local products made in the
country have experienced a decline in sales, which can provide obstacles to Indonesia's
economic growth.
The declining value of the rupiah currency:
The influx of foreign currency into Indonesia through international trade has decreased the
value of the rupiah currency or devaluation. Devaluation is a policy carried out by the
government to reduce the value of the domestic currency against the value of foreign
currencies.
Unfair competition:
Local and international market competition is frequent and with this competition, the
relationship between competitors is not good and will have a negative impact on Indonesia's
economic growth.
Small industries become less competitive:
The entry of industries from outside the country, small industries often experience exclusion
or lose competition to industries outside the country that have greater advantages than small
industries.
The emergence of economic colonization from other countries:
This impact is a negative impact that can damage economic growth in Indonesia because with
the entry of foreign industries, there is also economic colonization from foreign countries.
With this impact, the Indonesian economy must remain vigilant so as not to be colonized in
terms of the economy.(The Impact of International Trade on a Country's Economy, 2022)
CONCLUSIONS:
The conclusion obtained from writing this research article entitled "The Impact of
International Business on Economic Growth in Indonesia" is that international business is a
series of trade activities carried out by a country on an international scale with other countries
which aim to mutually increase the amount of foreign exchange in their respective countries.
With the existence of international business, the prosperity and welfare of the people in
Indonesia is growing well due to the opening of various kinds of jobs, so that there can be a
decrease in the unemployment rate in Indonesia. The exporting and importing of products to
outside and inside the country that occurs due to the existence of international business,
strengthens the trade relations between Indonesia and other countries. International business
in Indonesia also attracts foreign investors to invest in various industries in Indonesia, which
helps drive economic growth in Indonesia.
Apart from the positive impacts of international business in Indonesia, there are also some
negative impacts that affect the movement of the economy in Indonesia. With the influx of
foreign currency into Indonesia due to international trade, the value of the Indonesian
currency (Rupiah) is devalued or what can be called a decrease in the value of the currency.
Unfair competition can also arise in Indonesia due to the involvement of foreign countries in
the development of their companies in Indonesia, which increases the possibility of native
Indonesian companies losing the competition to sell local products.
INFLUENCE IMPLEMENTATION BUSINESS INTERNATIONAL ON THE
CULTURAL ENVIRONMENT
Abstract:
Through data analysis, background information helps to drive international business while
keeping the culture in mind. In this article, the author takes a closer look at the importance of
cultural factors in international business, how culture can influence international business
strategy and marketing, and case studies on the challenges and obstacles faced. The research
method used is data collection and processing from various sources such as online journals
and websites related to the topic of discussion. In summary, cultural influences are critical to
the success or failure of international business. Although losses are not uncommon in
business, the influence of culture on international business strategy affects various aspects
such as communication, negotiation, decision-making, values, business practices, consumer
preferences, and government regulations and policies. For successful international expansion,
companies must conduct thorough market and cultural research, adapt products and services,
collaborate with local partners, comply with local laws and regulations, and improve cross-
cultural communication and negotiation skills. In addition, companies must be committed to
ethical and socially responsible business practices and be willing to learn and adapt to change.
INTRODUCTION:
In international business, it is important to understand how different societies do
business. Culture has a great influence on the compass of international business, as it can
make consumers in different countries have different demands. This conception includes not
only language and traditions, but also values, morals, beliefs and practices relating to the way
people from different artistic backgrounds interact and conduct business. The influence of
culture on transnational business is becoming less and less important in the current period of
globalization, where companies operate in colorful countries and regions with different
societies, cultural understanding is becoming less and less important. Success in international
business is not only determined by factors such as finance and marketing strategies, but also
by the ability to adjust to the native culture. Thus, the company is also obliged and must
ensure that its actions or strategies are acceptable according to the initial request, otherwise
the company will experience difficulties. (Global Consumer Culture Index).
One of the most influential factors in transnational business is the artistic factor. It is
important for international business people to understand the impact of culture and anticipate
the challenges or obstacles that arise due to artistic differences in the marketing field. These
artistic factors can affect the characteristics of products made by companies and can also
affect consumer attitudes towards making purchases. Understanding culture in international
business can also help establish better relationships with business partners around the world,
avoid construction errors, and reduce the threat of artistic conflicts. Thus, artistic aspects must
be considered by companies that will carry out their business conditioning encyclopedically,
so that artistic aspects can be used as a foundation for companies in conducting their
marketing conditioning. One of the challenges faced by global companies is the increasingly
complex consumer attitudes colored by artistic morals.
Culture:
Culture according to (Erin Meyer, 2014), refers to a set of beliefs, principles and
procedures that influence how people interact, communicate and work together.
International Business:
International business is a process of marketing products or services by expanding
business in the global market, which takes into account factors such as customs, culture,
norms, and regulations that apply in destination countries. The main objective of international
marketing is to add value to customers in the global market and make a profit from the
business generated. International business refers to marketing practices carried out by
companies outside the national territory, taking into account cultural, linguistic, and
regulatory differences in the destination country. They have updated this view through their
book entitled "International Business: The New Realities" (Michael R. Czinkota and Ilkha A.
Ronkainen, 2020). Meanwhile, according to (John Daniels-Lee Radebaugh-and Daniel
Sullivan, 2018) international business includes all types of companies that operate abroad and
involve trade in goods and services, investment, and inter-company operational cooperation.
It can be concluded that international business is a business activity that crosses national
borders and includes various forms of business transactions.
Overall, international marketing is becoming a necessity for companies that want to
expand their business in the global market. By understanding cultural differences and
designing the right marketing strategies, companies can achieve success in cross-border trade
and provide added value to customers in the global market.
Attitude or outlook:
Managerial attitudes or ways of thinking continue to develop in line with the times and
changing business trends. There are various managerial views or attitudes according to (Retna
Kumalasari, 2022) which can be seen, namely:
1 Ethnocentric orientation, where local values and culture are considered a priority and should
be applied to others. This view is common and often exploits the belief that a particular race,
religion or ethnic group is superior to others.
2 Polycentric orientation, being one of the attitudes in which a manager evaluates the values and
culture in the country where they do business.
3 A geocentric orientation is a more global view, where managers can understand the business
or market as a whole without having to stick to existing geographical boundaries.
Global Marketing:
Global marketing is a marketing strategy that targets the global market. This strategy
is carried out by utilizing information and communication technology to reach customers
around the world. According to (Philip Kotler and Kevin Lane Keller, 2021), global
marketing involves utilizing all available resources, such as human resources, capital, and
corporate goals, to face global market challenges and achieve the same potential in the global
market. This shows that global marketing has an important and inevitable role because it is
the result of the times and the needs of the global business community. Thus, companies that
want to enter the global market must have international marketing management as capital to
achieve success in cross-border trade.
Cross-Cultural Marketing:
Cross cultural marketing is a process of planning, implementing, and controlling
marketing programs with the aim of utilizing cultural differences, norms, values, and
consumer behavior that exist in various countries in order to achieve profits, according to
(Philip Kotler - Kevin Lane Keller - Swee Hoon Ang - Siew Meng Leong, 2017).
Cultural Elements:
Cultural elements are the distinctive features of a culture, including customs,
traditions, beliefs, values, language, symbols, art, and social structure. These elements are
specific to each culture and shape the way people perceive and interact with their
environment. In cross-cultural marketing, it is important to understand cultural elements
because it helps companies design marketing plans that are culturally appropriate and
acceptable to the audience intended audience. If cultural elements are ignored, marketing
communications may be ineffective and could even be perceived as offensive or harmful.
Cultural elements are crucial in international business because they can affect the way
consumers perceive and act towards a company's products or brands. By understanding
cultural elements, companies will easily design appropriate and effective strategies with
cultural differences in each country. (Michael Czinkota and Ilkka Ronkainen, 2018)
Cultural Factor:
These factors influence the behaviors, beliefs, values, customs, and perceptions of
individuals and communities within a particular culture. These factors include language,
religion, education, social norms, attitudes, aesthetics, and historical traditions, among others.
These cultural factors vary among regions and countries, but can have a major influence on
consumer behavior and decision-making, making them important considerations for
businesses operating in different cultural contexts. Understanding these factors can help
companies develop targeted marketing strategies and avoid cultural mistakes that can damage
brand reputation. According to (Marieke De Mooji, 2018), there are several cultural factors
that have a significant influence on consumer behavior, such as norms, values, attitudes, and
the use of social media. By understanding, and respecting the local culture, there will be no
mistakes in culture.
RESEARCH METHODS:
The research method used is qualitative method. Qualitative research does not use
statistical data but through data collection which is then analyzed and interpreted (Anggito &
Setiawan, 2018). Qualitative methods refer to research that focuses on an in-depth
understanding of a phenomenon by conducting descriptive or interpretive analysis of the
resulting data. This method is used to understand the complexity of a phenomenon, such as
human behavior or culture.
Qualitative descriptive method is a research method used to obtain data in the form of
words, images, or symbols that are not numbers. This method aims to describe a phenomenon
or event by collecting data by seeing, hearing, and feeling directly or through documentation
related to the phenomenon. This method is often used in social research and for researchers
who want to explore the subjective experiences of individuals or groups. Qualitative
descriptive methods produce data that is more in-depth and rich in detail compared to
quantitative research methods that produce data in the form of numbers and statistics. Some of
the techniques used in qualitative descriptive methods include observation, interviews, case
studies, text analysis, and interpretation.
RESULTS AND DISCUSSION:
The Impact of Culture on International Business Strategy:
Culture on international business strategy is significant because culture influences
various aspects of the decision-making process, consumer behavior, and the way business is
conducted. To address the impact of culture on international business strategy, companies
should develop cultural sensitivity, conduct thorough market research, and collaborate with
local partners who have a good understanding of the local culture. The following are the
impacts of culture on international business strategy:
1 Communication:
Culture affects the way people communicate, including language, speech styles and
communication etiquette. In international business, a good understanding of how to
communicate with business associates from different cultural backgrounds is essential to
maintain good relationships and avoid misunderstandings. For example, high and low
contexts in communication as well as different nonverbal expressions need to be considered.
For example, McDonald's, as an international fast food company, had to adapt to the cultural
differences in communication in India. They had to understand that language, symbols and the
way messages are expressed are very important. For example, they use commercials featuring
local actors and actresses in their ads, and incorporate Hindi and regional languages in their
marketing campaigns.
2 Negotiation and decision-making:
Culture also affects the way people negotiate and make decisions in business. Some
cultures prioritize personal relationships and building trust, while others may focus more on
legal and logical aspects. Also, the decision-making process may be more collective or
individualistic, depending on the culture. For example, when Renault-Nissan formed a joint
venture with Chinese automaker Dongfeng, they had to understand different ways of
negotiation and decision-making. In China, the decision-making process tends to be more
collective and consensus-based, which affects the dynamics of negotiations. Renault-Nissan
had to be patient and respect the local culture to reach an agreement that was beneficial to
both parties.
3 Belief values:
Cultural values and beliefs influence business priorities and behaviors. For example,
some cultures may place more importance on sustainability and corporate social
responsibility, while others may focus more on economic growth and wealth creation.
Respecting and understanding these values can help companies navigate international markets
more effectively. For example, Walmart faced difficulties when expanding into the German
market because they failed to understand local values and beliefs. They tried to implement an
American business model that prioritizes friendly and enthusiastic customer service.
However, German consumers value efficiency and privacy over friendly interactions. As a
result, Walmart had to close its operations in Germany in 2006.
4 Business practices:
Culture also influences business practices, such as work ethics, organizational
structure, and leadership style. Some cultures may be more hierarchical, while others are more
egalitarian. In international business, companies need to adjust their business practices to
match local cultural expectations. For example, IKEA had to adapt to different business
practices when entering the Russian market. They faced bribery and corruption charges that
were common in the country. IKEA decided to deal with the situation by promoting the
company's values and refusing to engage in corrupt practices. As a result, they were able to
build a good reputation in the Russian market.
5 Consumer Preferences:
Consumer tastes and needs can vary significantly between cultures. Companies must
understand consumer preferences and purchasing habits in international markets to customize
their products and marketing strategies. For example, companies may need to offer different
product variants or use different distribution channels. For example, the Coca-Cola company
had to change their marketing strategy to accommodate the unique preferences of Japanese
consumers. In Japan, consumers tend to prefer lighter-flavored and healthier drinks. Coca-
Cola responded by launching new products specifically designed for the Japanese market,
such as Coca-Cola Clear and Coca-Cola Plus, which contain fiber.
6 Government regulations and policies:
Government policies and regulations are often influenced by local culture.
International companies must understand and comply with local regulations, such as
environmental standards, labor laws, and trade regulations. Failure to comply with these
regulations can lead to sanctions, fines, or even business closure. For example, Uber, an
American ride-hailing company, faced various challenges when entering the Indian market.
One of the biggest challenges was the strict government regulations and policies regarding
transportation. India has rules that require ride-hailing companies like Uber to be licensed as
taxi companies. In addition, some states in India require Uber to provide a fleet of vehicles
that meet certain emission and safety standards. To overcome these challenges, Uber employs
local adaptation strategies, such as collaborating with local governments, investing in
environmentally friendly technology, and understanding local culture in order to comply with
government regulations and policies.
7 Human resource management:
Culture affects many aspects of HR management, including recruitment and selection,
training and development, motivation and incentives, management and leadership styles, and
communication and employee relations. For example, McDonald's, one of the largest fast
food restaurant companies in the world, had to deal with cultural differences in HR
management when it entered the Japanese market. In Japan, the work culture has
characteristics such as high dedication, loyalty to the company, and valuing strong
interpersonal relationships in the workplace. To adapt its HR management strategy,
McDonald's Japan adopted the following a more humanistic approach and create a work
environment that values relationships between employees.
Cultural factors that influence marketing strategies in international markets:
Marketing in international markets requires a deep understanding of the cultural
factors present in target countries. These cultural factors can influence marketing strategies in
a variety of ways, including how products or services are presented, marketing
communications, and how companies interact with customers. The following is a detailed
explanation of the cultural factors that influence marketing strategies in international markets:
1 Living material:
Living materials include the natural resources, technology, and infrastructure present
in a country. These factors affect marketing strategies in terms of distribution, pricing, and
product offerings. For example, products that rely on advanced infrastructure may not suit
markets in developing countries, and companies may need to adjust their marketing strategies
accordingly.
2 Language:
Language is the primary means of communication between companies and consumers.
The inability to communicate effectively with customers can be a major obstacle in
marketing. Companies need to adjust their communication strategies, including advertising,
promotional materials, and customer service, to ensure the message is well received by local
consumers.
3 Social interaction:
Social interactions include the norms, customs and ways of communicating in a
society. These factors influence how companies build relationships with customers, business
partners and suppliers. For example, in some cultures, business is conducted through personal
networks and close relationships, so companies need to adapt their marketing strategies to
build strong relationships with local stakeholders.
4 Aesthetics:
Aesthetics encompasses the values of beauty and taste that exist within a culture.
Aesthetic differences between cultures can affect product design, packaging, and promotional
materials. Companies need to understand local aesthetic preferences and adapt them into their
marketing strategies to attract consumer attention and create a positive impression.
5 Religion:
Religion has a significant influence on consumer values, beliefs, and behaviors.
Companies should consider religious sensitivities in their marketing strategies, such as
avoiding advertisements that may be considered offensive or honoring certain product
restrictions. For example, companies that sell Food products must ensure their products
comply with halal or kosher requirements if they want to sell in markets with a majority
Muslim or Jewish population.
6 Education:
The level of education affects the way companies convey information about their
products or services. In countries with high literacy rates, companies can use more complex
marketing materials and in-depth information about their products. However, in countries
with lower education levels, companies should simplify their messages and use attractive
visuals to convey information. In addition, companies need to consider how best to reach
consumers who have limited access to education and technology, such as using traditional
media or more localized marketing campaigns.
7 Value System:
A culture's value system includes beliefs, norms, and moral principles that shape
individual and societal behavior. Value systems influence consumer preferences, perceptions
of products or services, and purchasing decisions. In formulating marketing strategies,
companies should take into account local value systems and customize approaches
accordingly. For example, in a country with a value system that prioritizes togetherness and
family, companies may need to emphasize product benefits related to family welfare.
Challenges and obstacles in international business implementation:
1 Differences in laws and regulations:
The first challenge and obstacle in international business implementation is the
difference in laws and regulations between different countries. Each country has different
legal and regulatory systems when it comes to business, taxation, labor, consumer protection,
and others. This can cause difficulties in meeting the requirements and rules that vary between
countries. An example of this challenge is the free trade regulations between the United States
and the European Union, which have differences in food and drug regulations, making it
difficult for companies to export their products to both regions.
2 Ethical and social responsibility issues:
The next challenge and obstacle is the different ethical and social responsibility issues
in different countries. Companies must be mindful of different cultural, religious and ethical
values when doing business overseas. An example is the issue of human rights and forced
labor in China, which has been in the media spotlight and tarnished the reputation of
companies working with companies in China.
3 Political and economic risks:
Further challenges and obstacles are political and economic risks that arise in certain
countries. Changes in government policies, wars, or economic crises can threaten overseas
investments and business operations. An example of this challenge is the economic crisis in
Greece in 2008, which caused many companies to exit the Greek market.
4 Influence of technology and innovation:
The last challenge and obstacle is the influence of technology and innovation that can
affect international business. Technological developments and innovations can trigger
changes in certain industries, and companies must adapt to stay relevant in a fast-changing
market. An example of this challenge is the advancement in more environmentally-friendly
production technologies, which forces companies to change their production processes to
remain compliant with increasingly stringent environmental regulations.
CONCLUSION:
Based on the results and discussion, it can be concluded that the impact of culture on
international business strategy is significant, affecting various aspects such as communication,
negotiation, decision-making, values-beliefs, business practices, consumer preferences,
government regulations and policies, and human resource management. These cultural
differences require companies to adapt marketing and business strategies effectively in
international markets. Cultural factors such as religion, education, value systems, and
language influence marketing strategies, including product selection, promotion, and ways of
communicating with consumers. In implementing international business, companies must face
various challenges and obstacles such as differences in laws and regulations between
countries, ethical and social responsibility issues, political and economic risks, and the
influence of technology and innovation. To overcome these challenges, companies must have
a deep understanding of local cultures and regulations, and effectively adjust their strategies
and operations to achieve success in the international market.
