Cultural Factors Affecting International Business

There are numerous cultural factors affecting international business. Culture can be defined as a
way of the life of a group of individuals. This encompasses the beliefs, behaviors, knowledge,
skills, motives, values and attitudes. Cultural factors are simply factors that come from various
components that relate to a cultural environment or culture where a business operates or
consumers belong. On the other hand, international business refers to an entity like an
international company or a multinational corporation that has business operations in multiple
countries. International business also means the exchange of services and goods among
businesses and individuals in multiple nations.

Culture is the ideas, customs, and social behaviour of a particular person or society. But how
does culture affect international business?
In a business context, culture relates to what behaviour is common and accepted
professionally in one location, compared to another. What may be acceptable business
practice in one country, may be very different from the approach that is used by businesses
overseas. Therefore, recognising how culture can affect international business is something
that should be understood in order to avoid misunderstandings between colleagues and
clients, and also to make sure that businesses are presenting themselves to their new market
in the best way they can.

The major cultural factors affecting international businesses:

 Language and communication

In any business, communication is a vital element that determines how successful it becomes.

However, communication of an international business can be affected by language barriers.
Communication both orally and use of body language plays a vital role of enabling a business to
know what the basic needs of consumers are. An international business that knows how to
communicate in different international languages enjoys the benefit of being able to convey the
right messages to consumers or prospects. On the other hand, language barrier can be off-putting
and a serious challenge in conducting international business even when there is a translator. There
are times when language barrier leads to ridicules and anger because physical gestures may vary
among countries.

Communication plays an important role in international business, and sometimes effective

communication can be the difference between succeeding or failing in a new market.
Effective communication is particularly important for international businesses as there is a
risk of your messages getting ‘lost in translation’. There are several things that need to be
considered when looking at how effective your business’ communication is at an
international level.

The first thing that should be considered when looking into communication is any language
barriers that may hinder the communication between you and your new market. However,
this goes deeper than just the language that is used to communicate, it’s how the messages
are conveyed that’s important. Language barriers not only relate to people speaking different
languages, but also to the tone used in those languages. For example, The number “3” enjoys
both praise and abuse alike. In Monaco, people like this number very much because they
believe it will bring them prosperity. The Hong Kong people like this number, too, because in
Cantonese, “3” is homophonic with “promotion”. But the Europeans generally consider it
ominous. 
in countries like the US or Germany, it is common for people to speak loudly and be more
assertive when sharing ideas amongst colleagues. However, in countries like Japan people
typically speak more softly and have a more passive tone when making suggestions to
colleagues.

 Negotiations

Business people in different countries tackle negotiations differently. Chief executive officers and
managers of international businesses should adapt to how negotiations are tackled in different
countries. Due to cultural differences and personality in most countries, business persons seem to
approach the process of making a deal with the attitude that both parties can win, or one side can
win while the other loses. While entering a negotiation session, it is crucial that international
businessmen know the negotiation attitude of the other party. Negotiation is a principal
component of international business. Culture influences the way people behave, communicate
and think. These characteristics are reflected in the way they negotiate. It is crucial for
businesses to understand cultural differences during business transactions and find ways to
hurdle the barriers these differences present.

Spanish speakers view negotiation as the means to have a contract, while in some Asian
countries, negotiations are taken as the way to build stronger and firmer business
relationships. The Japanese regard negotiation as a win-win process while the Spanish look at
it as a win-lose process.

The way one communicates during negotiations should be carefully considered. Israelis and
Americas are very direct, so you immediately know if the transaction is approved or not. The
Japanese, however, tend to be indirect. You have to read and carefully interpret vague signs
to know if they rejected or accepted your proposal.

 Religion

Religious beliefs in different countries vary. International businesses should know the religious
beliefs of different countries where they operate and respect them fully. Religion affects the
attitude or values of customers on the products or services that are offered by international
businesses. Religious factor can’t be ignored, especially for those states ruled by religious
authority, since religion lays down a set of fundamental principles and values which govern
the behaviour

The impacts of religion on can be indicated in individuals’ material life and their attitudes
toward purchasing and using merchandise and services.  Sometimes religious traditions even
prohibit the use of certain goods and services altogether, like Islam forbids the eating of pork
and Hindus do not consume beef. Therefore, when Macdonald entered Muslim countries, it
has changed its menu to get used to their specific religious practices

 Etiquette

How people show business etiquette in different countries vary. In some countries, business
professionals shake hands as a way of showing business etiquette. There are countries where
culture requires business people to bow, hug or even kiss on the cheek. This affects international
businesses because international business professionals should know how to show respect for
other parties. Being aware of the culture’s etiquette of the other party enables international
business professionals to avoid making mistakes because some people can be offended by even
small gestures.

Workplace etiquette is something else that businesses need to be aware of if they are working
internationally.
The formality of address is another key thing to consider within international businesses
when communicating with colleagues and clients from different cultures. Are they
comfortable with being approached on a first-name basis or do they prefer titles and
surnames? Asian countries such as China seem to prefer the latter, whereas Americans
usually use first names.

While some may consider working long hours a sign of commitment and achievement, others
may consider these extra hours a demonstration of a lack of efficiency or the lack of
prioritisation of family or personal time.

 Tastes

Culture plays a role in shaping the preferences of tastes and color of different people. It is
important that international business appreciates the local taste sense and customs. Taste affects
international businesses because they are forced to modify their products so that they can satisfy
the specific needs of the target consumers.

Attitude
Businesses also need to be aware that different cultures have different attitudes towards
business.

Scandinavian countries such as Sweden emphasise social equality and therefore they tend to
have a relatively flat organisational hierarchy. This relates to their informal approach to
communication and cooperation normally at the heart of their organisations. In Japan, their
traditional values of relative status and respect for seniority are reflected in their
organisations and there is a very clear organisational structure. This means that senior
management command respect at all times and expect a level of formality from junior
members of their teams.

Why it is important to know cultural factors affecting international business

Variation in cultural factors should be considered by the management of an international business
in order to succeed. This is because culture has a lot of power in the world of business. This
power creates insensible ideas and pictures’ matrix whose impacts are exceptional for
international businesses. When an international business fails to consider culture, it loses
credibility from its target customers. It also gets a negative response from the public. Eventually,
it loses revenue. To avoid this, it is important that an international business knows the cultural
factors that are likely to affect its operations.