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Quesadra D. Goodrum

International Business Practices

Colorado Technical University

Individual Project Phase 2

Instructor: Juan Roman

10/13/2014

Culture can be referred to as values, ideas, beliefs and knowledge which are shared by a social group or that which govern an individual (Wren, 2012). It consists of expressions, artistic works and other traditions, which are shared and reinforced by members of a group and passed down from one generation to another generation. Cultural practices vary from one community to another since different communities have different cultural practices. As a result of this fact organizations find it difficult to adopt in a new culture. Cultural factors such as lifestyles and customs forms the character of a society and often influence the decisions made by customers. Culture in business differs in terms of political and the legal changes. Businesses planning to go global should familiarize themselves with how unique political and legal dynamics can affect their operations in different countries; this can only be achieved if a business has cultural sensitivity. This will help the entity to not only recognize and accept the diversity between different groups, but it will also help it to act objectively.

Factors Multinational Companies Need to Understand

My team and I are at an advanced stage of taking our business global. We have selected out three regions that we considered ideal to set up our operations. These selected regions are in the Middle East, in Latin America and in Asia. We decided to select only one country from these three regions, the main reason being because we are only just beginning our operations, maybe if the businesses succeed we can expand our scope to other countries. In Latin America we choose to invest our resources in Chile. One consideration that influenced our decision was a report by the World Bank entitled “Doing Business” which highlighted that economist and investors rated Chile as the best Latin American country to do business in. Chile has open laws regarding enterprising and company start-up, which can be done in a single day. The country also has few bottlenecks on imports and exports. As for the Middle East we decided to settle with Saudi Arabia. The country is widely recognized for promoting and encouraging innovation among entrepreneurs. The country is also very similar to Chile on the basis that starting up a business enterprise is relatively straight forward. In Asia we favor practicing in Singapore due to a selection of factors such as safety and a conducive business environment.

From a business perspective there are various components of these varying cultures that I need to take into account and understand. The first is language and communication, which I consider as one of the biggest barriers which we will have to overcome. In order to effectively conduct a business communication is a must and is of importance. Any small errors can lead to disastrous implications. Obviously a quick fix to this would be to learn a new language but since we are setting up ground in three different countries this might prove difficult. The other solution would be to recruit locals to my businesses who would help ease the communication process, as opposed to just using expatriates. The locals will act as interpreters. Another factor that I need to consider is the religious beliefs of these cultures. For example, religious influences may affect what an individual believes to be ethical and therefore this impacts on the type of work that he/ she is willing to perform (O'Brien, et al, 2006). It may also affect work patterns on the basis that varying religions may view different dates of the year as sacred resting days. It is important to consider this if a business is to succeed.

The Difference in Cultural Components

These different countries each have their own distinctive culture which makes it easy to distinguish between them. For example, while in Chile Roman Catholicism is deeply embodied in their culture and history, Saudi Arabia is predominantly Islam. Singapore on the other hand is quite a diverse, multi-religious nation. Buddhism, Christianity and Islam are just but a few of the religions that it contains. There are also other differences that do exist in the business etiquette observed by these cultures. For example, while in Saudi Arabia Islam religion may bar certain gifts for example portraits of dogs this is not such a big deal in Chile and in some fractions of the Singapore population.

Suitability of the US management Style in these Countries

The American management style can best be portrayed as an individualistic one on the basis that managers are responsible for decisions they make within the scope of their responsibility (Benfari, 2013). Though the verdict to beneficial undertakings can be taken in an open forum, the individual accountable for these decisions is the manager; as such managers tend to ignore their subordinates and juniors’ opinions, a case similar to the Chilean situation whereby managers rarely seek consensus prior to making a decision. Usually employees heed to their managers instructions without questioning them. A US management style would therefore be suited for the Chilean people because in a way they are already accustomed to it. In Singapore the situation is quite different. Though managers are tasked with the responsibility of making decisions this does not mean that the decisions are never debated albeit in a respectful manner. This usually creates harmonious teams where everybody is at ease. I would therefore not implement an American management style in this case. In the same light I would also not implement the style in Saudi Arabia. Despite having a business environment which is very instructional, leaders tend to include their team in consensus style discussions though the still leader makes the final decision.

Economic System Classification

The Chilean economy can be identified as a market oriented economy. It is characterized by strong financial institutions and large quantity of foreign trade and this has ensured that its economic achieves a very strong sovereign bond rating, the strongest in South America to be precise. Singapore on the other hand is state capitalist mixed economy. The central government owns and regulates firms which make up roughly 60% of the country’s GDP. The company uses a blend of both the free market and economic planning. Finally, Saudi Arabia uses a free market economic system. This has seen the country change from an agricultural society to an economic power house. After carefully studying and analyzing these countries I see it best that we set up our centers in each of them, because they all offer suitable business incentives and are ranked high in this regard by the World Bank.

Conclusion

Cultural values are beliefs, ideas and knowledge which are shared and upheld by a social group and passed down from one generation to another generation. An organization that wishes to invest in a foreign country with a different culture would be advised to understand this culture first and adopt cultural sensitivity before proceeding. My business has decided to expand its operations into three countries, which are Chile, Singapore and Saudi Arabia. Though these countries have varying cultures, the similarity they hold is that they all offer a suitable business environment and this is why I would invest in them.