Impact of Culture on International Business essay
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Egyptian government has recently adopted international standards in the field of accounting. Though, is this the right thing to do? On the one hand, the answer seems to be quite obvious. The answer is yes, and there can be no other view on it. On the other hand, it is impossible to implement such standards without taking into consideration local cultural aspects. Let us have a look at international business practice to have a deeper understanding of the reasons why it is impossible.
Each company, when starting international business relations in any form, faces a number of challenges which mainly relate to cultural aspects of the country or countries they deal with. Underestimating cultural difficulties which business may face can lead to very unfortunate results. Many companies due to such underestimations had to withdraw themselves from the foreign markets.
Cultural challenges which companies face while "going international" can be divided into two major groups. The first group relates to consumers. As an example, it may not be an easy task to sell sandwiches which contain pork in Muslim countries. Therefore, a company which sells such sandwiches may have to make a number of adjustments to their marketing strategy in order to educate the consumers to eat the products offered by this company. Another possible scenario is that they would have to replace pork with something else remaining the form of the sandwiches similar to its original.
The history of international marketing is full of such mistakes. Gibson (2006) gives a bright example of Ann Arbor, Mich Company. They were trying to sell pizza internationally, and there was a number of challenges which they had to face. First of all, when they started selling pizza in Japan, it turned out to be not as straight-forward as it had seemed to be. The point was that the houses in Japan are numbered in a different way. It is not in accordance with their sequence in the street, but with their age. A newer house will have a bigger number, even though it is situated in the beginning of the street. Therefore, the delivery procedures, which had been previously worked out by the company, failed. Thus, the company had to adjust them. When they tried to move their business to Aruba, it turned out that strong island winds did not allow to deliver pizza by motorcycles. Therefore, the delivery procedure also had to be changed to using trucks instead. In Iceland, people traditionally stay up much longer than in any other country. Therefore, the stores had to be open much longer compared to other countries. Though, it was a total surprise for one of the world's leaders of pizza delivery when they tried to start their business in Italy, and found out that Italians believed their pizzas was "too American." In the final score, the company had to excuse themselves from Italy.
In many countries difficulties faced by the companies are of bureaucratic character. Therefore, according to Gibson, "For franchisers that means finding the right business partner, someone familiar with the terrain, who can navigate through bureaucratic brambles if necessary, and who knows what will sell and what will not." However, an alternative may be just hiring a person or a few people, who know the culture of the country, which market is planned to be exploited. In any case, it is unacceptable to do international business without taking into consideration cross-cultural realities and cultural peculiarities. They may seem to be of little relevance to the business. What can be easier than selling pizza once you have got a place to do it at and proper equipment, but, as we have seen in the example above, sometimes one can run into absolutely unexpected difficulties if not considering the seriousness of local cultural realities. Another important aspect of this problem is advertising. Different symbols and approaches of advertising may work quite differently in various cultural backgrounds.
Though, let us address the other category of challenges, which relates to international expansion of any business. It is business-related interrogations and business relations with foreign partners. They also need to be held in strict accordance with local cultural peculiarities. For instance, in some countries, partners at business interrogations traditionally show their respect to each other and display the formality of the meeting. As cited by Vader, Forester writes: "In the Muslim world, the sole of the foot should not be shown because it is seen as dirty. In America, we often sit casually with our foot crossed over our knee, but this is seen as insulting in most Muslim cultures." In some countries, it is unacceptable to drink during a business lunch; while in other countries, parties necessarily drink during such meetings and refusing to do so may stand for being a very unreliable partner. Even the way one holds his/her body, the way business partners sit, and what they say about the subjects is very important, Even these little trifles that have no relation to the business, as miserable and meaningless as they may seem at the first glance, may mean a lot for international businesses.
Therefore, when adopting international accounting standards Egyptian authorities have to adjust them to their local cultural background. Only in this case, they are likely to work effectively. However, this is easier said than done. In order to be able to provide necessary adjustments, an international expert comity on the matters of cross-cultural business communications needs to work on the document before it is forwarded to the authorities for adoption. Such committee will need to analyze possible adjustments, so that they will not make the document controversial to the international norms. On the other hand, it will reduce various ridiculous moments, where certain norms and standards would appear to be unacceptable for local culture. The work which needs to be done in this field is very serious, and it needs to be done for effective implementation of the standards. Gathering such committee is a task which authorities need to fulfill. The initiative, however, needs to come from both sides: from Egyptian authorities and International community. Since both parties are involved in the process, they are interested in having the mechanisms defined by new standards in order to work in the most effective of all possible ways. Therefore, all the participants of the process and all parties involved need to work on this issue. It is better done sooner, since in international business, time means a lot, and none of the parties can afford the consequences of possible mistakes made when putting together the paper. However, it is questionable whether or not the parties will express their interest in cooperating in this field in time. Unfortunately, it often makes parties run into a number of challenges and difficulties.