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Cultural challenges of doing business overseas
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Steve Kafka, a franchise owner for Chicago Style Pizza, is contemplating the options of opening a new franchise into the country of the Czech Republic, the country of his family's origin. Though Steve has made several trips into the Czech Republic, speaks the language and knows many people, he must seriously consider all of the opportunities and potential barriers to this new venture. I will explore the cultural differences between the United States and the Czech Republic. Next, potential competitive advantages are examined along with Hofsteade's Primary Cultural Dimensions to reveal clues to the culture pertaining to the new business. Finally, trade barriers and price income and elasticities are discussed.
Culture Differences
There are several differences in culture between the United States and the Czech Republic, though those differences are not unconquerable Steve will have to understand some basic principles of business etiquette that are considered acceptable in the Czech Republic in order to be prosperous. For a business, word of mouth advertising is the best way to gain new customers. If a major advertising blitz is attempted, it may be considered suspicious and might backfire if not coupled with local store marketing(Czech Republic: Travel information, 2008). As contacts with other local businesses are needed to make the new franchise successful, such as produce and drinks, appointments with those businesses should be made weeks in advance. The Czech's prefer not to have last minute engagements. Many marketing techniques should be implemented in person instead of by mail which is impersonal. Mailing could be considered rude and could be perceived as a scam. As an employer, it should be understood that mother...
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...w.geert-hofstede.com/hofstede_czech_republic.shtml
Czech Republic: Country profile. (2008). Retrieved 2008, from Country Insight database
Czech Republic: Travel information. (2008). BuyUSA.com. Retrieved 2008 f rom http://www.buyusa.gov/czechrepublic/en/46.html
GDP. (2008). Bureau of Economic Analysis. Retrieved 2008 from http://www.bea.gov/national/xls/gdpchg.xls
Historical Crude Oil Prices. (2007). InflationData.com. Retrieved 2008from http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
Hofman, I. (2008). Fast food market in the Czech Republic. Retrieved 2008 from http://www.buyusa.gov/czechrepublic/en/90.html
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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.
The hamburger market is the strongest of all franchised food chains. In this market, McDonald’s, the second largest hamburger chain, hopes to expand from its current 64 restaurants to well over 100 in the next two to four years. Pizza Hut controls twenty percent of the pizza restaurant market. Chi Chi’s and Dominos are also present in the Belgian market, but they have experienced much difficulty in successfully penetrating it due to the high cost of labor in
...choices for executives, and gaining rapport with local suppliers, the corporation stands a good chance of achieving success in their foreign expansion.
I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.
By the early 1980's produce retail had become the dominant business among Koreans in New York City (Min, 61). There are several reasons to explain this phenomenon. One reason is because of new immigrants' lack of English language and professional service skills. Although most Korean immigrants arrive in America with high levels of education and professional experience, these skills cannot easily be translated into American white-collar work ("The Koreans," 223). Therefore, the only alternative for them is to invest in small businesses. Furthermore, Koreans entered America at the time when retiring Jewish and Italian produce store owners were willing to sell their stores because their children had already transitioned into the mainstream American economy ("The Koreans," 239).
“So what’s wrong if the country has 158 neighborhood California Pizza Kitchens instead of one or two?” Virginia Postrel inquires in her In Praise of Chain Stores essay (Postrel 348). In rebuttal, I plan to answer her question with more reasons than one. However, the responses I intend to offer apply not only to the CPKs of America, but for all the national retailers, big box stores, chain stores, and the like. National retailers destroy the local character of small towns. Chain stores should be limited to only run in a few highly populated urban areas. Furthermore, the costs saved in the convenience and familiarity of chain stores do not outweigh the negative economic impact and damaging effects that they can have on a community’s well-being.
Political and legal considerations were given first priority in this analysis with primary emphasis given to whether a country's legal or political system prohibits or impedes foreign investment. If a country's political or legal system discouraged or prevented foreign investment, that country was disqualified from further consideration. Factors considered when assessing the political and legal environment:
In the article, Cultural constraints in management theories, Geert Hofstede examines business management around the globe from a cultural perspective. He explains how he believes there are no universal practices when it comes to management and offers examples from the US, Germany, France, Japan, Holland, China and Russia. He demonstrates how business management theories and practices are very much subject to cultural norms and values and by understanding these differences, it can give managers an advantage in global business practices.
One of the following is an environment analysis of “largest Pizza chains” in the US and International. In the following sections, we will assess the environment analysis on “consumer satisfaction” and its re-formulated pizza recipe. Within the re-formulating and the expansion of its menu, we will see how they have been able to recapture some of the market with existing and new customers, with customer satisfaction and excellent delivery. Domino’s Pizza, for example, they have re-formulated their ingredients and added new items to their menu, but like Pizza Hut, Papa John’s, and Little Caesar, we will discuss their strength’s and weakness to be able to survive in the Pizza Industry. Within this report, I will cover the existing/future components of the general environment such as demographics, economics, political/legal, sociocultural, technological culture, and their efforts to remain a competitor in the industry.
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.
... 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.
A major challenge of doing business internationally is to adapt effectively to different cultures. Steve Kafka, an American of Czech origin and a franchiser for Chicago Style Pizza has decided to expand his business to Czech Republic. This is a risky decision and Steve anticipates he will face obstacles as he goes about setting up the new pizza outlet at this new location, Prague.
The contemporary global economy has generated an unprecedented need for multinational corporations to reform their organizational structures to give them a better competitive chance in the international market. The intertwined associations, partnerships, and collaboration among international organizations define the attributes of the global economy. In order for Multi-National Companies to survive the frequent and devastating situations in the global market, they should incorporate the best and most effective organizational cultures. Microsoft Corporation is no exception.
“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.
Since the end of World War II, international operations have become a reality for an increasing number of corporations. Many of these initial efforts began as simple export schemes to sell goods overseas to supplement domestic sales. Over time, however, international operations have become increasingly more complex: from joint-ventures to purchasing existing foreign firms to ‘green-field’ start-ups. While export operations usually require no more than extended business trips overseas, more complex international operations demand long-term assignments of key personnel outside their home-country. What would normally be considered routine business transactions in the home country can become very complicated when they are conducted between individuals and organizations from different cultures. In this essay we will examine how this cultural gap can affect international business and joint ventures.