The Role of Cultural Differences in Forming a Business Strategy

Date: 2015-10-07; view: 577.

When working in the global commercial environment, knowledge of the impact of cultural differences is one of the keys to international business success. Regardless of the sector in which you operate – finance, technology, or computers and consumer electronics – global cultural differences will directly impact on you and the profitability of your business. Improving levels of cultural awareness can help companies build international competencies and enable individuals to become more globally sensitive.

International business covers all transactions undertaken between enterprises from two or more countries. In order to finalize a transaction, companies have to form international operational structures distinct from those applied in their domestic market. Besides knowledge of international strategies managers need to comprehend the interdependence between the strategies and their financial results. Differences between international and domestic business concern commercial practices, the scope of managerial decisions, disparities in legal systems, as well as restraints put in place by governments, limitations connected with different currencies, not to mention cultural differences. Different business cultures in different countries lead to distinct commercial practices. Therefore, executives operating internationally encounter difficulties that people managing enterprises on a local scale do not have to face. Cultural differences are of fundamental importance for running an international business.

On the one hand, globalization and business activity of large companies all over the world increasingly links various nations and cultures; however, on the other hand, it reveals profound differences between people and nationalities on the level of communities, individuals and organizations.