Impact of Culture on International Business
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 9, 2022
Impact of Culture on International Business
Today, the global business is filled with cutthroat competition and most of the companies
are trying to expand their business internationally. While doing business internationally,
different factors like culture, economy, and political system, etc. of the other countries need to
be analyzed. Among them, the cultural factor or culture has a significant influence on
international business. By culture, we mean language, education system, literacy rate, food
habit, lifestyle, social systems, different ways of communication prevailing in the country…etc.
When a company expands its business to a foreign country, language differences may create
some problems.
So necessary action should step should be taken to appoint employees who know the
language of that particular country. Because communication plays an important role in the
success of a business and language is the core element of any kind of communication. The
education system of a country plays a vital role in the culture of a country. So the company
should deeply analyze the education system of the particular country and based on that
business communication should be done. Literacy rate and culture are closely related. The way
of communication of the literate people will be different from the way of communication of the
illiterate people. The food habit of the people in a particular place has a great impact on the
business, especially in the business of accompanying which is dealing with the food items.
Company If the company is dealing with food items, it must study the
Hofstede’s Cultural Dimension will be useful for studying the impact of culture on
international business. According to him, the culture of the people, who are only cautious of
themselves (I-conscious) will be different from the culture of people who care for others too
(We-conscious). And the differential consideration by the society to men and women, the
approach of people in the lower strata of the society towards the social difference, and the
attitude of people to avoid uncertainty depict the culture of the people. (Toncar, Alon & McKee,
(n.d)).
When a company does business internationally, it has to study and analyze the culture of
the other particular country as it directly or indirectly has a role in the growth of the company.
The culture of one country might be different from the culture of another country. For example,
raising one hand before starting a talk in front of a public audience may be a custom in one
country to wish the audience, but the same may be having some other meaning in some other
countries. (Wade, 2004, 38-43).
If a business organization does not take enough care in communicating with people of
different cultures, it may result in a heavy loss of money and reputation. Not only do different
countries have different cultures, but different religions are having different cultures. A type of
gesture may have one meaning in one religion, but it may have other meanings in other
religions. So when a person works in a foreign country or a company does business
internationally maximum care should be taken to reduce cultural mistakes. And also the
companies should try to improve the way of business communication. When a company
expands its business to any foreign country, it should be ready to accept the customs and tastes
of that particular country which will be different from domestic customs and tastes. The
example of the company Domino’s Pizza Inc. is taken here. When the company expanded its
business to foreign countries the company faced it difficult to explain the operational manual
because the custom was different in other countries. “When the company went into Italy, many
Italians found its pizza “too American — the sauce being too bold, the toppings too heavy,” a
company spokesman recalls. Eventually the world’s largest pizza-delivery company packed up
and pulled out of that country.” (Gibson, 2006, R.8).
But the aforesaid company was successful in understanding the culture of different
countries, especially food habits of the people, which is evident from the growth rate of the
company. If a company does not properly understand and make adjustments in its strategy, the
survival of the company will be a question. And also when making a tie-up with any partners or
suppliers in a foreign country, it is better to ensure that the parties have enough knowledge and
idea about the local culture. Franchising is a good option to make an international business
successful because the franchisees can easily understand the culture of the people as it is run
by people from the same country. “Domino’s Pizza International recognizes the need for some
adaptation in order to address the cultural and societal differences encountered in each
individual market. With over 20 years of experience operating outside the United States, our
team is very skilled at adjusting our products and systems for local tastes and preferences.”
(International franchising with Domino’s pizza, (n.d)).
It is the culture of the society that will support an organization that continuously
participates in social development activities. Domino’s Pizza Inc. is a more socially committed
organization and it, directly and indirectly, participates in different charitable activities which
help the company in achieving high growth. To conclude, to be successful in international
business, an organization must understand the culture of the different countries where it has a
business presence.
References
Gibson, R. (2006). Small business (A special report); Foreign flavors: When going abroad,
you should think of franchising as a cookie-cutter business; Unless, of course, you want to
succeed. Wall Street Journal, R. 8. (Provided by the student).
