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Accepting cultural differences provides you with a wide range of business expertise and gives you novel business insights to overcome business-related problems. It’s your way to cope with potential barriers regarding international business and culture.
A global company needs to understand that there is a difference in the definition of culture per se and culture in relation to international business. Culture is typically defined as a group of ordinary and accepted standards shared by a specific society. When you put it in a global business context, what one society considers professional may be different for another foreign society.
You must understand that cultural differences affect global business in three primary areas – organizational hierarchy, etiquette, and communication. Understanding them and recognizing their effects on your business will prevent you from creating misunderstandings with foreign clients and colleagues.
Effective communication is vital to business success, whether you are a start-up or a big corporation. Although it is common to hear that English is the language of business, it’s never wise to assume that your global business partners will all understand English.
When you venture into the international business arena, one way of bridging cultural differences is through language. Understand the language your target market speaks and know how you use it to convey your message. In India, for example, business professionals typically communicate in nuanced and indirect ways. This is opposite to the Finns, who tend to be direct and brief in their communication.
Aside from verbal communication, it is essential to learn that non-verbal communication is also critical when dealing with international businesses.
Gestures that are commonplace in your own country, like kissing people you meet on the cheek, making eye contact, and shaking hands firmly, may be taken as offensive or unusual by your foreign clients or business partners. As many business coaches will tell you, you must remember the proper professional interactions when dealing with different cultures. Researching accepted and proper business etiquette is essential. In some cases, you need to be extra observant of body language, and at times, it is better to ask than commit a cultural faux pas.
When you are working for a multinational company, you are likely to encounter many differences, which prompt you to learn international business etiquette.
Pay special attention to the formality of address when dealing with foreign business partners and colleagues. In some cultures, it is acceptable to address a person you’ve recently met by their first name, while in other countries, they would instead that you address them by their surname or their title. Canadians and Americans often use first names, even when dealing with new acquaintances. But in many Asian countries, such as Singapore, China, and South Korea, you should always address a person formally by adding Mr. or Ms. before their surname. If you are in doubt, use the formal way of address.
Punctuality is relative. When you deal with business partners, clients, or colleagues from the United States, South Korea, Japan, and Russia, you are expected to be on time. In Germany, you are even expected to be at least 10 minutes early for your appointment. In Greece, they expect foreigners to arrive on time, but just like in Russia, you may expect your counterpart to arrive slightly late. Brazil is ambivalent. They could either be late by a few or several minutes unless you indicate that they should follow the English time, meaning they should arrive at the agreed time.
In Malaysia, expect to wait up to an hour if your counterpart stated that they would be about five minutes late. They are not required to explain either. In China, it is acceptable to be at least 10 minutes late, while in Mexico, it is pretty normal for people to be late by 30 minutes for a business meeting. When doing business in Nigeria or Ghana, the appointed hour for the meeting may be one hour late or within the day. In Morocco, personal meetings could be delayed by an hour and, in some cases, a day. When scheduling meetings in India, understand that being punctual is not one of their ways.
Cultural norms dictate how attitudes towards management and organizational hierarchy are perceived. In some cultures, junior staff and middle management may or may not be allowed to speak up during meetings. In some countries, it is challenging to question decisions by senior officers or express opinions that are different from the rest.
Attitudes are dependent on social equality or the societal values of a country. In some countries such as Japan and South Korea, where respect for elders and people in positions of authority is deeply ingrained in the members of society, the concept is applied to the workplace as well. It helps define responsibilities and roles in the company, and those holding positions in senior management expect deference from junior staff and a higher level of formality and respect.
However, the situation is different in Scandinavian countries. In Norway, for example, societal equality is emphasized, so the organizational hierarchy tends to be flat. The workplace environment calls for cooperation across all departments, and informal communication is prevalent.
Differences in Negotiation Styles
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. Companies must 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 help build 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 see if they rejected or accepted your proposal.
Even the way different cultures handle contracts varies. Americans like to have every detail included in the contract because they want to anticipate possible eventualities and circumstances. The deal equates to an agreement. Therefore everything that was discussed and accepted during the negotiation should be specified in the contract. The Chinese, on the other hand, prefer a contract to have the general principles only because, for them, sealing a deal means forming a relationship with the business partner.
Cultural differences create problems when business is done in different countries because of a communication barrier, workplace etiquette, and organizational hierarchy differences.
Effective communication is essential to the success of any business venture, but it is particularly critical when there is a real risk of your message getting “lost in translation.” In many international companies, English is the most common language of business. But more than just the language you speak, it’s how you convey your message that’s important.
Different approaches to professional communication are just one of the innumerable differences in workplace norms worldwide. For instance, the formality of address is a significant consideration when dealing with colleagues and business partners from different countries. Do they prefer titles and surnames, or is being on the first-name basis acceptable? While it can vary across organizations, Asian countries such as South Korea, China, and Singapore tend to use formal “Mr./Ms. Surname.” In contrast, Americans and Canadians tend to use first names.
Organizational hierarchy and attitudes towards management roles can also vary widely between cultures. Whether or not those in junior or middle-management positions feel comfortable speaking up in meetings, questioning senior decisions, or expressing a differing opinion can be dictated by cultural norms. Often these attitudes can reflect a country’s societal values or level of social equality. For instance, a country like Japan, which traditionally values social hierarchy, relative status, and respect for seniority, brings this approach into the workplace. This hierarchy helps to define roles and responsibilities across the organization. This also means that those in senior management positions command respect and expect a certain formality and deference from junior team members. However, Scandinavian countries, such as Norway, emphasize societal equality tend to have a comparatively flat organizational hierarchy. In turn, this can mean relatively informal communication and an emphasis on cooperation across the organization. When defining roles in multinational teams with diverse attitudes and expectations of organizational hierarchy, it can be easy to see why these cultural differences can present a challenge.
Cultural differences can create problems when conducting business internationally because of business’s preconceived expectations and not completing their due diligence before entering the country’s business sector. Culture is the accepted behaviors, customs, and values of a society. Culture is very important and sets the tone of the way businesses operate in said country. It’s important for a business to research the culture and customs of a country they are doing business with. What is an acceptable business practice in the U.S. might be a large sign of disrespect in another country.
Ethnocentrism is the belief that one’s culture is better than other cultures. It’s important to not waltz into a country with the expectation that you will conduct business similarly to your country. Following the business culture of said country is one of the most important factors to your business’s success.
Communication can also bring its own set of challenges. Good communication can help build relationships. Learning the native language and showing respect for their cultural norms are examples. Bad communication can end in loss business and even add tension between countries.
This discussion reminds me of the documentary “American Factory”. A Chinese windshield manufacturing company, Fuyao, who expanded to the U.S. to a closed General Motors plant in Ohio and brought jobs back to the areas economy. Everyone was thrilled about the job opportunity, however, when the plant began operation there were many Chinese culture norms brought to the U.S. that made the American workers unhappy. Significantly less pay than when they left the GM plant, 12 hour days 6 day work weeks, and Fuyao actively trying to stop a Union from forming (which is against the law in the U.S.). I highly suggest watching it if you have time, it touches base on a lot of what we are learning in this course.