A Study on Cultural Blunders in International

Marketing

Contemporary Issue Project

Submitted To:

Faculty of Management Studies,

The Maharaja Sayajirao University of Baroda

Submitted By:

Hardik Pathak(47)

MBA(Regular Program), Sem 4

Batch: 2014-16

M.S.Patel Institute of Management Studies

Faculty of Management studies

The Maharaja Sayajirao University of Baroda,

Vadodara

Declaration

I ensure about the authentication of the material and give guarantee that there will not be any misuse of the data. Data used will only be taken for the academic purpose and will not be used for commercial or any other purpose. Views mentioned in the report are of my own, which are based on my observation and it may or may not be accepted by any individual or/and any entity.

Hardik Pathak

Faculty of Management Studies

MSU Baroda

Date:

Place:

SERIAL NO. TOPIC PAGE

NO.

1. Acknowledgement 1

2. Abstract 2

3. Literature Review 3

4. Introduction 4

5. Objective 6

6. Research Methodology 7

7. Culture 8

8. Importance of Culture 10

9. Home v/s Foreign Culture 12

10. Marketing Blunders 13

11. Learning 18

12. Conclusion 20

13. Recommendation 22

14. Bibliography 23

15. References 24

1

Acknowledgement

It gives me great pleasure and satisfaction in presenting this study as a part of the

fulfilment for the Degree of MBA. I would like to take this opportunity to express

my sincere gratitude to several people, without whose help and encouragement, it

would have been impossible for me to carry out desired work.

I would like to extend my deferential thanks to respected Prof.(Dr.) Jayrajsinh

Jadeja (Dean, Faculty of Management Studies, The M.S. University of

Baroda) for his encouragement and blessings on my way of progress.

I would also like to express my heartfelt thanks to my institute guide, Dr.

Bhargav Pandya, (Assistant Professor, Faculty of Management Studies, The

M.S. University of Baroda)for extending his help throughout the project.

I am also indebted to many individuals whose research works, articles and data

helped me in accomplishing this study.

Hardik Pathak

2

Abstract The number of companies operating internationally is growing constantly. The

world is opening up for foreign firms and new destinations in the company´

business are increasing. Because of high competition the companies operating

abroad are faced with a much larger task then before.

When going international the challenges the company must handle are new and

unfamiliar. Obstacles the firm never faced before are becoming crucial in the

everyday work. Culture is one of these obstacles and can affect the entire co-

operation.

Culture can influence the business in different ways. Language problems, pricing

difficulties and culture collisions are not uncommon, especially in the beginning.

The company must be able to handle these difficulties in a way that is satisfying

also for the other part. Mistakes can be difficult to correct and disrespect for the

foreign culture can destroy the entire operation.

There are some general advices the company always must have in mind before

and during a co-operation on the international market. It is important, even before

entering the foreign country, to inform the personal about the manners and

customs in that new culture. If the first impression becomes negative, this can be

hard to shake. Foreign cultures have different ways of doing business, for

example when it comes to planning ahead and keeping delivery times. Culture can

be both a positive and negative influence and many companies are struggling in

the new and foreign environment.

The important thing to always have in mind is that the foreign culture is not as we

are used to at home and to be prepared before starting the new foreign

operation. Respecting and understanding the new culture without forcing our

own beliefs on people, are things that can be extremely helpful to consider. By

learning the host country’s culture, can respect and trust more easily be won, and

competitive advantages can arise.

3

Literature Review 1. Research Paper on, "The Effects of Globalization on Marketing Strategy and

Performance." by Amonrat Thoumrungroje . The study is aimed at understanding

the globalization in various aspects and how it has affected the business and

working of the company in the terms of marketing strategy as well as the

performance in all aspects of business.

2. Research Paper on, "Cultural Differences and Communication Issues in

Mergers and Acquisitions : A Case Study of BenQ Debacle." by Shuhui Sophy

Cheng & Matthew W. Seeger. The study is aimed at understanding the

importance of cultural differences and communication in merger of BenQ with

Siemens and how miscommunication & misunderstanding of culture led to the

debacle of BenQ.

3. Research Paper on, "Effect of Cultural Differences in International Business

and Price Negotiation." by Hasim Deari, Viktoria Kimmel & Paola Lopez. The

study is aimed at the challenges faced by different companies in International

Business due to cultural difference and how to counter them or take its advantage.

4. Research Paper on, "Brand Failure - Concepts and Causes." by S. Ramesh

Kumar & YLR Murthy. The study is aimed at finding out the reasons and the

causes behind the brand failures in India.

4

Introduction As most of you know the increasing globalization and internationalization has

become of great importance recently. More and more companies start to look

abroad to expand their businesses as the world becomes more and more

interconnected. To manage business operations across international

boundaries has become one of the largest challenges for international

business today. According to Root (1994) the global economy has formed

business environments that require companies to look past the traditional thinking

of the home market, and start instead looking at business from an international

global perspective. The method a company ventures from their home market to

new geographical markets is of great importance for how well the company

succeeds with their business. According to Oland et al. (2001), small and medium

size firms that have taken the decision to internationalize and multinational

companies that want to expand into foreign markets are both faced with the

challenge of choosing the best structural arrangements.

Bennett (1995) discusses many factors that encourage companies to begin

operating internationally. The most obvious are:

Hoped for economies of scale and scope.

Experience Curve effects resulting from increased outputs.

The possibility of the existence of beneficial markets in foreign countries

that are not available at home.

We believe that the development in communication, improvement in travel

conditions, lower tariff barriers and others have conduct foreign markets to be

more accessible and have provided more opportunities for Swedish

companies to go international. According to Dunning (1993) go international

refers to various locations that contribute to value added activities. Root (1994)

said that manufacturing and service companies enter international markets for

several reasons. Some go in a foreign country because markets at home are

growing faster. Other companies may basically follow their home customers who

are going international.

5

Since a high number of businesses from around the world enter the global market,

firms need to be more specialize in order to sustain their competitiveness.

The situation today for Swedish companies is not easy. There is a high level of

competition between Swedish and foreign companies. This is one of the reasons

to why firms should specialize and establish business operations abroad if they

want to survive and grow. According to Slater (1968), the company must keep in

mind that developing countries are very different from industrial developed

countries. This fact becomes very important when it comes to entering a

developing country’s market because developing countries for example often do

not have a well functioning infrastructure and the population is many times poor

and often spend a large part of their income on food articles. The political and

legal issues also become an important part when it comes to entering the market.

6

Objectives

1. To understand the impact of culture on marketing.

2. To study the cultural blunders in marketing.

3. To find out learning's as well as Do's & Don'ts for marketing in foreign

culture.

7

Research Methodology

Sources of Data : Secondary

There are two different kinds of research approaches used: deductive and

inductive. Many times it is difficult to separate these two approaches in field

studies, because they are present together, at the same time, throughout the whole

investigation process (Hyde, 2000).

Deduction

Deduction stands for “the road of evidence”. The Merriam-Webster

dictionary defines deduction as: “the deriving of a conclusion by reasoning”

(Merriam-Webster, 2008). In many dictionaries, the word is explained as logical

evidence gathering. Deduction means that you, from several different premises

that you set up, come to a logical conclusion (Hyde, 2000).

Induction

Induction is defined as “inference of a generalized conclusion from particular

instances” (Merriam-Webster, 2008). Induction can be seen as the “road of

discovery”, where we first start with the empirical part and later on connect it with

the theoretical part (Andersen, 1998).

8

Culture “Culture is the integrated sum total of learned behavioural traits that are shared by

members

of a society”. (Terpstra, 1994)

Levels of cultures

We cannot avoid seeing that the business environment is changing in many ways.

As well does the cultural environment that is one of the most challenging areas for

most international marketplaces. In order to understand and influence consumers’

wants and needs, foreign companies must understand the different cultures.

Culture has been defined in many different ways, reflecting the variety of cultural

phenomena that can be observed. According to Morrison (2002), cultural symbols

include language, religious rituals and art whose shared meanings from the unique

fingerprint of a particular society.

According to Czinkota (2007), cultural factors have an important impact on the

flow of business. Each society has its own elements of culture. These

elements of culture are manifested through:

Language

verbal

nonverbal

Religion

Values and attitudes

Manners and customs

Material elements

Aesthetics

Education

Social institutions

Adaptation of these elements for an international company depends on its level in

the market participation –for example, licensing versus direct investment and the

product or service marketed (Czinkota, 2007).

9

The most important issue for a foreign company is cultural analysis, which

includes information that helps the company´ staff to take planning decisions.

This information from the cultural analysis must be more than collecting the facts;

these must also be interpreted in the proper way (Czinkota, 2007).

Business culture

Brazil is a country with real business opportunities for foreign companies, but

doing business in this county can be seen as a significant cultural challenge.

Brazil is a colourful culture that attracts many people to learn and experience the

core of this vibrant environment. If we see broadly on Brazil culture we can

discover that it is a combination of European, American and Asian culture (Maps

of world, 2008).

Culture in each country is meditated through three factors: cultural forces,

cultural messages and consumer decision process. Family, education and

national identity manifest cultural forces. Ethics and morality, behaviour and roles

and design influence cultural messages. Culture is also influenced from universal

needs and wants in the society and consumer trends.

These cultural differences are different in country A and country B. The foreign

company must analyze and cope with these cultural differences and harness the

tension to bring about reconciliation between these countries. With combining and

synthesizing cultural differences the foreign company can integrate different

cultural perspectives and seek a dynamic solution to problems that may arise

(Bradley, 2002).

Hofstede (2001) states that masculinity versus femininity describes the degree to

which societies display the stereotype male female or related to division of

emotional roles between men and women.

Confucian dynamism is the new dimension added of the cross-cultural

framework. It relates to whether a culture is universalistic or particularistic.

Culture that is universalistic believe what is true and good can be applied

everywhere, whereas particular culture believe circumstances and relationships

are more important in determining what is good and right (Hofstede, 2001).

10

Importance of Culture The international business that the company has decided to begin can get some

consequences that have strong effects on the success of the firm. A bad choice of

a new country reduces opportunities and increases the risks for high financial

losses. This in turn can lead to loss of control on the foreign market.

When conducting international business it is of great importance to consider the

political, legal and economic environment. However, according to Mayrhofer

(2004), the socio-cultural environment is an even more important aspect. For

instance if the issues regarding political, legal and the economic environment

are successfully fulfilled, the cultural aspects can seriously affect the

company’s future if not properly considered in advertising. Mayrhofer (2004)

even said that companies, who want to be “a step ahead” of their competitors,

need to be aware of the importance of the home-country factors. By this he means

that companies should not neglect the cultural and institutional differences.

Zacharakis (1996) also points out that a company seeking international markets

must consider cultural differences before entering. These differences can be of

language, political states, culture, and religion and even demand types. It is easier

to enter a new market if the company can create partnerships in the new country.

By doing this, many obstacles can be reduced and the entry can be much more

successful. Companies seem to have most success if they are expanding to a

country that has similar culture as their home origin country has. Even if a country

seems to offer once-in-a-life-time opportunities for the company, it must consider

the risks and difficulties that an entering to an unknown country and culture

means. If the company sells product that need specific adaptations, the firm is

forced to learn more about the country´ culture. This learning can lead to benefits,

but these benefits can be out weighted by the cost that this learning includes. Ellis

(2000) states that the company’s market entry decisions are one of the most

important issues before entering a new market. Questions like which country to

enter, how to enter it, are essential to answer before making further decisions.

Kogut (1988) states another issue by mentions that the type of the entry mode a

company chooses can also be an essential matter. Studies show that if there is a

11

large cultural difference between the new market and the company´ home market,

joint ventures are to prefer. This is due to the fact that if the company goes

together with a local company, the cost and efforts to learn the new market and

culture will be lower. How much experience a firm has, also affects the choice of

the entry mode. Moreover, according to Adsit D. et al. (1997) the culture may

affect the behaviour of individual managers and subordinates as they interact with

others. This influences even the way employees view a manager, i.e. the

content of the perceptions (leader, coach, and trainer) and also the structure

(characteristics, behaviour and expectations). Further the authors state that

expected behaviours are likely to be associated with cultural values. Some

cultures are simple and others are complex in terms of the number of formal roles

that managers and employees are expected to perform. In the case of large

companies, they may tend to hire similar types of people worldwide,

thereby reducing national differences. Also a company with such a strong

organizational culture would have a levelling influence on employee's values that

would further reduce national influences.

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Home culture versus foreign culture

Tayeb (1998) says that the decision to become involved in international business

depends, among others, on the size of the company´ domestic market, its

production capacity and capability, and the financial and other resources that the

foreign market requires. In that way, firms can be placed on an

internationalisation scale ranging from domestic single nation to totally globalise.

The extent to which national culture becomes relevant to a firm can be shown in

the following table. The company’s own home country culture is of high

relevance, though the managers and other employees may not be aware of its

influence. The relevance of other people’s culture becomes greater for a firm as it

spreads its activities and products past its national boundaries to reach foreigners

with different value systems and tastes (Tayeb 1998).

13

Marketing Blunders 1. In June 2008, Renault launched its new SUV on the European market called by

the sweet name of Koleos, a rime in –eo very trendy in product names and

trademarks at the time (Poweo, Veolia, Keolis, Vimeo …). The communication

team of Renault also felt that the name would be particularly suited to the Greek

market. But it would have been necessary to know that in modern Greek Koleos

meant « vagina. » Not very appropriate, wouldn’t you say ?

2. An American phone company wanted to promote its services to the United

Arab Emirates. The visual of the poster they created showed a businessman

holding his phone, sitting at his desk, feet on the table, the soles of his shoes well

in sight. The problem is that shoes are considered in Islam as an unsuitable object

and therefore totally degraded the brand image of this company.

3. When the Belgian sandwich retailer Panos decided to export to Russia, it would

have been helpful to know a bit upstream the meaning of « Panos » in Russian, as

its translation « diarrhea » is quite unappealing for a food product!

4. In 2002, the British sporting goods company Umbro called it new pair of shoes

“The Zyklon”. Many NGOs and consumers complained about the use of this term,

which is the name of the gas used by the Nazis to exterminate millions of Jews in

the camps during WW2.

5. A few years ago, the American brand Pepsodent tried to sell its toothpaste in

Southeast Asia, noting in its advertisement that the product « made your teeth

whiter. » The problem is that in this part of the world, local people regularly chew

betel nuts to blacken their teeth, since black teeth is a seduction asset in this

region. It’s called shooting yourself in the foot, don’t you think?

6. Wanting to fit in Mexico, the famous American campaign promoting milk

consumption « Got Milk » translated into « Do you milk? » or » Are you

lactating?” This mistranslation cost a huge amount of money as the entire national

campaign had to be changed after initial launch.

7. When the American baby food brand Gerber was launched on the African

market, they packaged their products as in the United States, with beautiful baby

14

pictures on the boxes. What they didn’t know was that, at that time, in Africa, a

label generally illustrated what it contained, to be explicit to the many people who

could not read. Guess what consumers had the feeling to buy?

8. Another more dramatic error concerning products for infants, this time by the

American Mead Johnson Nutritionals. In this example, it is not the packaging that

is the problem but the instructions for use accompanying the product in Spanish

speaking countries. Poorly translated, following the Spanish instructions could

result in infant death, heart problems and kidney failure…

9. Another car story. This time with Ford, who launched its new model Pinto in

Brazil, before realizing that in slang Portuguese, the word « Pinto » meant « small

penis. » As a result, this poster spoke for itself: « Put a small penis under your

tree. » The campaign was quickly changed with a new car name « Corcel » which

means « Horse » … with all the budgetary impact than you can imagine.

10. And finally, a story about France. A few years ago, Colgate marketed a

toothpaste under the American name of « Cue ». It is pronounced the same in

French as « Cul » (Ass), and was also at the time the name of a famous

pornographic magazine. Ooops!

11. Avon, one of the largest manufacturers of cosmetics entered Japan in 1969

(Knight, 1995). Avon tried to do business as it always had in America for the first

four years they occupied Japan, but could not turn a profit. There were many

reasons why the same door to door selling initiative did not work. First of all,

Japanese housewives are did not feel comfortable selling products to people they

did not even know (Knight, 1995). "Second, Japan is a crowded place and the

home is considered a private refuge-it is unusual for Japanese to accept strangers

into their homes in the same way Avon ladies are welcomed in the West" (Knight,

1995). The third reason is that Japanese are timid when it comes to strangers

because they are afraid that someone, with them or the stranger, will suffer some

kind of embarrassment (Knight, 1995). Avon suffered much loss in the first four

years, but quickly learned from their mistakes and assigned each Avon

Representative to a specific area in which they already knew their customers, or

could get to know them easily (Knight, 1995).

15

12. Let's discuss translation problems that have occurred many times. Braniff's

slogan "Fly in Leather" translated to "Fly Naked" in Spanish (Helin, 1992).

Eastern Airlines used the slogan "We Earn Our Wings Daily" and the "Spanish

translation of the Eastern slogan evoked a final destination in heaven, following

death" (Helin, 1992). The Coors slogan "Turn it Loose" translated to Spanish,

"Suffer from Diarrhea" (Helin, 1992). "Budweiser's 'King of Beers' became

'Queen of Beers' in Spanish because the Spanish word for beer, 'cerveza,' has a

feminine ending" (Helin, 1992). Frank Perdue was ridiculed when his "It Takes a

Tough Man to Make a Tender Chicken" slogan was translated into Spanish to say

"It Takes a Sexually Stimulated Man to Make a Chicken Affectionate" (Helin,

1992).

13. When Parker Pen marketed a ballpoint pen in Mexico, its ads were supposed

to have read, "It won't leak in your pocket and embarrass you." Instead, the

company thought that the word "embarazar" (to impregnate) meant to embarrass,

so the ad read: "It won't leak in your pocket and make you pregnant.

14. In Spain, when Coors Brewing Company put its slogan, “Turn it loose” into

Spanish; it was read as “Suffer from diarrhea”.

15. When Pepsi started marketing its products in China a few years back, they

translated their slogan, "Pepsi Brings You Back to Life" pretty literally. The

slogan in Chinese really meant, "Pepsi Brings Your Ancestors Back from the

Grave."

16. Volkswagen named the sedan version of Golf the Jetta. However, the letter "J"

doesn't exist in the Italian alphabet, so Jetta is pronounced "Ietta", which means

Misfortune... It's true... the letter J don't exist in the Italian alphabet but it is in use

a long time. (e.g. There is also an old city called Jesi and Italian names like

Jacopo...). The word ietta don't exist in Italian but Jella exists (yes, you write it

with the letter J!) and there are two or three words derived from this one, e.g.

jettatore/iettatore (evil-eyed man) or jettatura/iettatura (bad luck). In neapolitan

dialect Jetta means throw, throw away!!! Jetta has good sales in Italy.

16

17. Group-buying deals site Groupon in Aug 2011, shut down 13 of its outlets in

China and fired over 300 full-time staff. Groupon now holds a minority share, of

the local Chinese daily deals website site Gaopeng which it launched in

partnership with Tencent. Groupon is an example of a western internet company

to fail in china. It can be inferred that the company lacked local understanding

which resulted in its failure. Lack of local understanding - One example is

Groupon’s sales team in China. In the beginning it urged that the partnering

vendor split profits 50:50. It neglected the group buying attitude of Chinese

customers. With many seasoned players in the market, the upper hand lay with the

vendors when negotiating with group buying operators and the percentage of

profit is only 10% as opposed to 50%. Local vendors were so taken back by

Groupon’s aggressive sales tactics that they often told the company’s sales people

to calm down and come back later with more realistic expectations.

18. Fosters is the Australian beer brand company. It entered the Vietnam market

in 1998 and sold beer under the tagline “The Australian styled beer” it failed to

capture the Vietnamese market because of its positioning. For taking a brand

global the three elements of internal analysis are important – organization, brand

expression and marketing. Fosters business strategy needed to be ready to take the

brand global. Often the business strategy is rooted in the organizations home

market and not applicable to the foreign market. Fosters tried to replicate the

consumer experience of “The Australian styled beer” in Vietnam and failed – in

the initial stages, the slogan caught the attention of the Vietnamese customers.

The brand expression was that of the home country, Australia but soon it caught

the unpleasant eyes of the host country for the reason that the Vietnamese people

thought that they were giving into another foreign brand and were losing their

identity.

19. Dunkin' Donuts had to apologize after it showcased an advertisement in

Thailand which featured a woman in "blackface" make-up. The advertisement,

was used to promote the Dunkin donut "charcoal donut". It was called "racist &

bizarre" by a top human rights group. The chief executive of Dunkin Donuts

defended the campaign in Thailand, on Friday a spokesman from the company

17

told the Guardian it would pull the planned television spot immediately that

features the imagery.

"Dunkin' Donuts recognized the insensitivity of this ad and on behalf of the

Thailand franchisee and its company, it apologized for any offense it caused,"

Karen Raskopf, chief communications officer for Dunkin' Brands, said in a

statement provided to the Guardian that they are working with franchisees to pull

back the television spot immediately and to redesign the campaign."

20. The latest Coca Cola ad campaign “Share a coke” is all about sharing your

favourite drink with your loved ones with a new twist where you can add yours

and your loved ones names on the cans and bottles. It turned out that the brilliant

social campaign was criticized in Israel. In launching the campaign Coca Cola

identified and printed the top 150 most popular first names. The goal is to attract

new customers. However in Israel it was just the opposite.

It becomes very tricky to conceptualize the concept of individualizing the coke

bottles especially in a country where cultural identity is bound by religion and

ethnicity. The problem surfaced when one Arab-Israeli citizen accused coke for

not printing any Arabic name among the popular Israeli names. According to the

citizens creating a campaign by adding the first names is like challenging the

already existing socio-cultural dilemma. Coca Cola reacted to this by telling the

customers that they can get their names printed at designated stores.

And the list goes on.......

18

Learning While these are distinct and separate situations, what they have in common is they

all woke the hive mind of social media in a negative way and inspired drama and

controversy. At first glance, you might think, “hey, at least these brands were

being talked about,” but the rules are not the same as broadcast media. The old PR

adage of “I don’t care what you say, just spell my name right” holds true

frequently but not in these types of cases. These are dangerous situations for the

image of a brand for today and into the future.

“...Did we just waste our Company's Money?”

Now, on to marketing mistakes

Sometimes, the most valuable lessons are those learned from other’s mistakes.

Real money has been spent. Fortunes are on the line. Yet often the most basic

rules of profitable advertising seem forgotten.

What can we learn?

1. Being “cute” is a poor substitute for salesmanship, and inevitably does more

harm than good.

2. Scrupulously avoid deception or manipulation. You may generate more

responses initially, but when people find out they were tricked, their opinion of

your company will instantly sour. Worse yet, you’ll offend many who were

excellent prospects.

3. Don’t blow your budget on what little you can cram into 30 seconds on TV.

Instead, choose advertising formats that allow you to make a compelling case,

focused on benefits.

If you stop and analyze the impact of every phrase you use, and cost-analyze all

reasonable options before allocating your advertising funds, you can avoid many

expensive mistakes.

Avoiding mistakes in business is like putting money in the bank. Learning from

other’s mistakes is an inexpensive way to help build your profits.

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A Basic Lesson

There is a general, larger lesson to draw from these examples: Do a good job on

your homework so you’ll get a good grade! A little patience, common sense, and

analysis go a long way towards helping you avoid costly mistakes in marketing.

Before implementation, step back and look at both the short term and long term

ramifications of your marketing activities. How will customers react? How will

competitors react? Have you planned and budgeted to handle those reactions? If

you have, you can avoid many costly mistakes.

Here are some tips on how to avoid costs that can be incurred when preparing an

international marketing campaign:

"Don't Be Over-Confident or Over Optimistic About the Potential of Your

Product."

"Don't Overlook the Importance of Learning in International Markets."

"Avoid Ethnocentrism."

"Avoid the Self-Reference Criterion."

"Do Your Homework Properly."

"Seek Relationships, Not Transactions, in International Marketing."

"Avoid the Pushy Businessman Approach."

Each of these tips will help any business overcome and prevent the marketing

mishaps that have occurred in the past. It is imperative to understand that every

country and ethnic background have different beliefs, cultures, and meanings for

words.

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Conclusion

Companies cannot avoid culture when going abroad. If the country they enter

has a cultural dimension that is far from the home country’s culture, the affects

of this element can be even greater.

Cultural differences that can affect the business can be many. For example can

we mention language, manners and behaviour and differences in the negotiation

process. Culture can thereby influence the company’s entire co-operation with a

foreign country and not being able to handle the cultural differences can lead to

conflicts and misunderstandings. Companies who are not aware of this fact can

suffer large losses and thereby fail to be able to manage future business abroad.

Mistakes can be difficult to correct and future co-operations therefore

sometimes can become impossible.

The most important issue is to be prepared for the different culture and all that

comes with it.

If people are open and respectful for the country´ way of living and thinking,

without forcing its own beliefs on people, co-operations have a good chance

to be successful. To give information to personal before sending them abroad

can be a good investment that a larger number of companies should consider. I

believe that this is a crucial issue and must be handled in a correct way.

Because culture and all the differences that culture includes, being prepared

and to know what to expect makes it possible to minimize the risk for

misunderstandings and conflicts.

Smaller mistakes, of course, can be managed but if the mistake continue or

grow, they can be very difficult to correct. Mistakes can come from for example

sending the wrong kind of personal abroad which in the worst case scenario can

lead to failures that cannot be corrected. Some cultures are very strict when it

comes to mistakes and cultural reverences. Trying to cope with mistakes can be

a much more difficult assignment then being properly prepared and do the right

things from the very start.

The companies should also have a follow-up system, which helps them to

analyze both mistakes and successes. This is also a good way to learn from its

21

own failures and try to correct them so that they do not influence international

business in the future.

The companies and the countries are learning from each other and can in the

future do business with each other much more easily.

22

Recommendation

Today, every company that like to do business internationally must

understand beliefs and values that underlie their own country’s business and

management practices, avoid cultural mistakes and understand the

organizational and national culture of others.

People with different cultural backgrounds often do not share the same basic

assumptions and this has an influence on international business negotiations

on several levels. For example, the trust between parties, attitudes toward

each other during negotiations and tactics and flexibility while

negotiating can be affected.

When the company is preparing for negotiation, it must think in the other

side of culture, such as on the elements of another country’s culture. This is

one of the reasons why culture is a main issue that affects international

business. From the elements of culture, language is one of the most

important issues that can affect international business.

When entering a new location, it is a great advantage to speak the local

language. The advantage can come from easier negotiations and respect

earnings. It is even easier to understand contracts and to interact with

business associates during leisure time. This in turn can also lead to gaining

respect and the trust of the other part. Because language is a part of a

country’s culture, the foreign negotiator can thereby feel that the company

invests in the co-operation and thereby even in the cultural issues.

23

Bibliography

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