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.
Each country has its own culture, with subcultures inside the dominant culture (Schaefer, 2009, p.69). “Culture is the totality of learned, socially transmitted custom, knowledge, material objects, and behavior” (Schaefer, 2009, p.57). Values, artifacts, and ideas are also part of culture (p57). With globalization there is the integration of these cultural aspects, as well as language, social movements, and ideas throughout the world (Schaefer, 2009, p.20). Internationalization helps with this integration. Internationalization is the process of planning and implementing products and services so that they can easily be adapted to specific local languages and cultures (Linfo, 2006). Numerous American retail firms have expanded to other countries. Many have been quite successful due to their internationalization. However, failure to study the culture, retail practices, and consumer market of the country they intend to expand to can be quite costly. Although Home Depot is one of the world’s largest home improvement stores, their expansion to Chile cost them enormous financial loss, resulting in their divestment (Bianchi & Ostale, 2006, section 1, para3). This paper will look at successful international expansion of Home Depot stores, analyze what mistakes were made in Chile, and make suggestions of what could have been done differently.
However, entering into a market as different as Japan is not without its risks, and must be ensured to be successful, with the help of market research, marketing, and operational theories, lest the new venture become a very costly mistake. Target Consumer Market When moving to a market with a consumer culture so different from the home market, a company must be careful to analyse its target audience in detail, to avoid costly cultural faux pas. To get a good feel for the Japanese culture, a good place to start would be the experts in the cultural studies field. Hofstede’s cultural dimensions, created during his in-depth GLOBE study of the cultures of the world, gives a good comparison between the priority differences between Japanese and English culture. A detailed analysis of the cultural differences will be given in the ‘Marketing Issues’ section of the report.
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.
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...
Assuming a country had a favorable political, legal and economic environment; its cultural environment was evaluated. Culture impacts demand and the marketing mix; therefore, if a country's culture was deemed unfavorable, it was not included in the top ten ranking. Similarly, if a country's culture seemed especially favorable, that aspect is denoted later in the analysis. Cultural factors considered in this analysis:
Steve Kafka, an American of Czech origin and a franchisor for Chicago Style Pizza, has decided to expand his business into the Czech Republic. He knows it is a risky decision; when he became a franchisor, he had to overcome a lot of difficulties. Steve anticipates he will face some of these difficulties again at the new location in Prague, Czech Republic. Although he was born in the United States, he has family and friends in the Czech Republic, speaks Czech fluently, and has visited the country of his origin several times. He knows the people and the culture. In this paper, I will analyze the cross-cultural differences between the United States and Czech Republic, determine comparative advantages in this country, and recommend ways to minimize the risks of establishing a franchise overseas.
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.
... 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.
In recent decades, the process of globalization has accelerated and the world economy has become increasingly interdependent. The rise in the number of businesses that extensively operate in more than one foreign country, which is known as multinational corporations, plays an important role in the ongoing procedure of globalization. The United Nations has reported that multinational corporations hold one-third of world’s productive assets and control 70 percent of world trade (Schermerhorn et al., 2014). As there is a considerable growth in international businesses, worldwide economy is becoming more highly competitive. The global economy not only offers great opportunities for multinational enterprises but also on the other hand, creates many difficulties for them. Therefore, success in the large-scale economy requires a number of elements. One of the major determinants is dependent on global managers. In the operation of organizations, managers may encounter different international management challenges that restrict their business development. These challenges often include issues associated with the host countries, the global workforce diversity management, management across cultures, difficulties in competitive global business environment as well as in the process of global planning and controlling. This essay is going to discuss the above international management challenges in a broad sense and giving illustration in aspects of each challenge.
Have you ever had a really awkward handshake where you just did not get a good grip on their hand? A hand shake can tell you a lot about a person by their approach and how they handle the hand shake. Whether it’s just a causal handshake with someone you know or if it’s with the manager that is about to interview you, your handshake can make quite an impression. Some say a handshake is just an empty politeness and others say it is an essential action that helps each person learn more about one another. In my English class here at Appalachian State University, we were sent out to observe the way students here greeted one another. Rarely did I ever see students shake hands with one another. Only one instance in all of the data I recorded did I see a hand shake take place. There are many characteristics that a hand shake shows you and it is an important action to help you make a good impression.
Before the outbreak of World War I, Slovakia was part of the Austro-Hungarian Empire and declared its independence in October 1918, joining the Czech provinces of Bohemia, Moravia, and Silesia to form the Republic of Czechoslovakia. Czechoslovakia in the interwar period was the only functioning parliamentary democracy in eastern Europe. Even though it was the only functioning parliamentary democracy, the Czechs and Slovaks had issues that divided them from one another. In the Czech lands, they were more populated and industrialized than Slovakia’s. The Slovak population was also poorer, less educated, and extremely Catholic. The Prague government (Prague is the capital of Czechoslovakia; and why the government is called the Prague government) “attempted to address these economic inequalities by industrializing Slovakia in the 1920s but these efforts were cut short by the Great Depression (Merriman, Winter 2358). The result from the attempted fixes was the Slovaks grew resentful in the 1930s and a separatist movement began, which was led by Father Andrej Hlinka and Jozef Tiso.
The difficulty of moving to a new culture is that a lot of people would feel fear because they are so use to their own culture, so now they leave what they are used to a new way and it will be hard for them to adapt. Some may like the new food and the pace of life, then later on in the month’s people may feel like the new life and culture is unpleasant life for instance: public hygiene, the language barriers, traffic safety, and food accessibility. Still the most part in relocating to a different culture is the communication because they might not understand the language or might say the wrong word thinking it means the same in the other countries. People adjusting to a new culture often feel lonely and homesick because they are not yet used to the new environment and meet people with whom they are not familiar every day.
We just arrived in the Czech Republic; once part of the Holy Roman Empire and then the Austro-Hungarian monarchy, Czechoslovakia (as it was then known) became an independent nation at the end of World War I.
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?