The Cultural Challenges of Doing Business Overseas
Steve Kafka, an American of Czech origin and a franchiser of Chicago Style Pizza, has decided to expand his business and open a franchise in Prague, Czech Republic. Before venturing into the global business sector, Steve needs to conduct an in-depth analysis in order to become familiar with the Czech culture. This analysis will present opportunities and risks that Steve will need to achieve and overcome so his end-state goal of expanding his Chicago Style Pizza business can be realized. This paper will investigate and discuss the major cultural differences and incompatibilities between the United States and the Czech Republic defining the apparent risks, and how to mitigate those risks that may develop from these differences. Discussion will then turn to the comparative advantages within the Czech culture, how using Hofstede’s four primary business decisions will help Steve evaluate the business environment, how trade barriers may impact business, and analyze the demand for pizza and how to assess its cost structure.
Cultural and Economic Overview
Czech Republic
The cultural differences between the United States and Czech Republic stem from their unique historical evolution across centuries, from their geographical position, specific traditions, surrounding peoples and cultures, structure of population, and traditional and economic ties with other countries. Over the last 15 years, the Czech Republic has transitioned from a centralist socialist economy to a democratic capitalistic economy. In May 2004, the Czech Republic joined the European Union, which has allowed the Czech economy to obtain a larger market share resulting in greater monetary prosperity. A free market economy has helped the Czech Republic become one of the most prosperous countries to exit from the socialist regime (CountryWatch, 2008).
Situation Analysis
Differences and Incompatibilities Between the U.S. and Czech Cultures
The major challenge that Steve needs to overcome is learning how to adapt to the Czech culture effectively. Adapting to different cultures requires an understanding of cultural diversity, perceptions, stereotypes, and values (Hodgetts, Luthans & Doh, 2006). The culture in the Czech Republic emphasizes conformity and cooperation while the U.S. values freedom and independence as both individuals and a nation. To show respect people in the Czech Republic shake hands firmly and state the person’s last name. Czech people are persistent when stating opinions; they are very obedient and cooperative, value traditions and are disrespected if eye contact is not kept constant when spoken too. Americans generally use a firm grip and smile when conducting a handshake.
Business in US and The Czech Republic The purpose of this document is to present solutions and recommendations for Steve Kafka, an American of Czech origin and a franchisor for Chicago Style Pizza, who has decided to expand his business into the Czech Republic. This document focuses on the major differences and incompatibilities between the U.S. and Czech cultures. The script also shed lights on the business risks and mitigation on Czech culture. The paper also talks about the comparative advantages that exist in the Czech Republic and Hofstedes four primary dimensions for Steve to evaluate the Czech business environment.
“Death to God, all hail reason!”, cries out the secular world, fervent for nothing but themselves. The new age of skepticism has come, ushered in by God-hating men and dictators bound to satan; and its zealots follow in the footsteps of the rest of the world. They lay down cheerfully in valleys of dry bones and their banner stands, waving through air that is choked by the smoke that rises from their fathers burning in Hell, its motto, “Love and Tolerance.” Words bought by the blood of anyone who dissented. This is the fruit of the religion of Atheism.
Today the Czech Republic and Slovakia are known as two separate nations. Both nations have been fairly successful over the years, politically, and economically. Another aspect area of success to arise out of these two nations has been athletics, as they have been known to participate in several international competitions over the years. Earlier in the 20th century however, these two nations were combined into one nation. This country was known as Czechoslovakia, and like its predecessors, this country endured years of success in regards to athletics.
The objective of this report is to determine the best location for the Cheesecake FactoryⓇ to globalize to. The two options for the company to internationalize is Columbia and Chile. To determine which country the company will expand to, each country will be analyzed based on several factors including, economy, culture, geography, political standing, risk, expenses, and many more. One of the most important factors to be taken into consideration is social and cultural qualities of the region. As tastes and preferences will differ in the specialized market of foods and customer service. Along with the culture and social differences, taking a look further will be most beneficial in analyzing the decision to do business. Surrounding countries can be highly influential on the population of the particular state. With this being said, how often and likely are other consumers likely to transport to the country? Is the are a tourist attraction or a place a lot of business takes place? These are only a few external ideas of this report.
“Red is a positive color in Denmark, but represents witchcraft and death in many African countries,” (Understand and heed, 1991, p.1). Simple understandings, such as this one, can make the difference in a business’ success or failure in a foreign country. Various countries have different customs and beliefs that need to be accustomed to when business are to be successful. American businesses especially have difficulties with this concept. “At times in the past, Americans have not had a good track record of being sensitive to cultural distinctions,” (Understand and heed, 1991, p.3). Perhaps this is because America is made up of so many different cultures that American people have become so used to easily adjusting to each other’s differences that they forget that other cultures are not as flexible. Today, more American’s are becoming more sensitive to the differences of other cultures. This sensitivity and understanding has come with a price, after a long string of business failures. It is not until a business fails miserably in another country that they see the adjustments that should have been made in order for their success to be a possibility. With an understanding and sensitivity to the customs and beliefs of other cultures, it is possible for successful businesses that have originated in western cultures to also be successful in foreign countries as well.
One thing that is easy to spot in a culture is the way that people great each other. The way that people great each other in America vs. Mexico may seem similar but actually are very different. The greeting in America’s pop culture has a variety. First off the greeting between two people that now each other is very relaxed. Usually a hug or a custom handshake is used to greet a friend. However greeting some one that you don’t know is different. People great with a normal handshake and make eye contact to try and make a good impr...
In the article “An (ESL) Student’s Perspective on Internationalizing the Canadian Campus” by Stephanie Hobbis (2013), the author experienced the problems caused by ESL students in Canadian universities’ class as an ESL student, and now strongly criticize the Friesen’s negative perspective about internationalizing in the Canadian campus as a current ESL instructor. Her main perspective is that ESL students could do better jobs in an academic environment than native students, and I fully agree with this. In fact, ESL students have greater advantages than native speakers because most of ESL students are trained on academic skills like research paper and essay writing which local students did not, before get into undergraduate classes. We have
American’s introduce themselves right away when meeting a new person. That is usually the socially acceptable occurrence that happens. In business, “A firm handshake and friendly smile are appropriate in a corporate setting, regardless of the other person’s gender, age, or seniority in the company.” (6). We usually have small talk, and are expected to give positive answers and be appropriate in this
The following is a summary of the market audit and competitive analysis of incorporating Domino’s pizza into the country of Cuba. One will learn about product analysis and the relative advantages compatibility, complexity that Domino’s may face while setting up their new business venture. Additionally, one will have a better understanding of the market, marketing strategy, what needs to be modified or adapted as the plan is moved into place. Determining the type of promotional mix, distribution and one of great importance is the determination of the price. As it is already known that this is a poor country and the annual income does not exceed $2000 per month.
Some of the major differences and incompatibilities between the United States and Czech cultures are norms, values, beliefs and behavior. These differences will create a business risk for Steve because even though he is of the Czech origin, has friends and family living there, visits several times and speaks the language fluently he does not the full knowledge of how businesses are conducted in Czech. Though he is a franchisor for Chicago Style Pizza, he cannot operate internationally as he does locally because of the differences in value, as it will affect his management functions.
The Capitalism versus Communism showdown that occurred during the Cold War has left profound effects on Europe today. In 2014 The fourteen poorest countries in Europe, by GDP per capita, hailed in Eastern Europe (World Economic Outlook). Nearly all of those countries subscribed to a Communist philosophy during the Cold War. Furthermore, Eastern European countries are still suffering the consequences from underdevelopment during and after the Cold War. Consequently, Eastern Europeans are still trying to catch up to their Western brethren. Furthermore, much of the political power within Europe is held by Western Europeans and several Eastern nations have not yet gained admittance into the European Union. Overall the East-West divide during the Cold War is still having systematic consequences on how Europe is shaped today and how it will be shaped moving forward. Another divide in modern Europe is the North-South divide. The recent European debt crisis highlighted the vast economic discrepancies between Northern and Southern European countries. Southern countries like Greece, Cyprus, Portugal, and Spain suffer tremendously from piling debt and Northern European nations have felt burdened by their neighbors to the South. However, if Northern countries do not come to the aid of their fiscally irresponsible brothers than the entire economic system of the Euro
Our economic development will forever be defined as our ability to succeed internationally. PwC forecasts India’s real annual GDP growth until 2050 at 8.9 percent, Vietnam’s at 8.8 percent, and China’s at 5.9 percent. The list of fast-growing emerging markets goes on and on. The U.S. forecast is a meager 2.4 percent, comparable with most Western economies. The domestic companies that are likely to see incremental growth in the coming decades are those that are not only doing business internationally, but that are developing the strategic skill set to master doing business across cultures. Cross-cultural core competence is at the crux of today’s sustainable competitive advantage. For example, political environment will tell us, as to how and why political leaders control, whether and how of international business. Legal environment, both national and international will tell us about many kinds of laws by which business firms must work. The cultural environment will tell us about attitudes, beliefs and opinions important to business people. Economic environment will tell us about the economic system being followed by the host country, which may or may not be different from home country. It will also explain the variables such as level of development, human resources, Gross Domestic Per Capita and consumption patterns that determine a firm’s ability to do business. Geography will tell us about location, quantity, and quality of the world’s resources.
ESSAY TOPIC (1) :A joint venture is affected by the cultural distance between two partners. In what ways are joint ventures and types of international collaboration affected by cultural differences?
This great controversy, along with years of tensions, caused the Czech’s and the Slovakian’s to split effective January 1, 1993. After the “great split” Slovakia took several big hits to its economy. Some of which almost “crippled” the entire Slovak economy. After many years the Slovak economy had a revival.
... conclusion, to compete with the intense competition in today’s fast-food market, KFC China differentiates the company by being innovative. Three significant innovative strategies are localizing the menu, understanding the Chinese culture, and hiring local management. KFC demonstrates that one size fits all approach in the global market does not always work. Many typical Western approach to foreign expansion is to deliver the same products or services as their original establishment. For instance, Domino’s Pizza, an American restaurant chain, nearly failed in Australia due to the underestimation of the need to adapt their offerings to the local tastes. KFC China offers important lessons for global firms. It is essential to know that to what extend the company should keep the existing business model in emerging markets and to what extend it should be thrown away.