MN7406 International Business Assignment Sample

Module code and Title: MN7406 International Business Assignment Sample

Essay 1: Discuss how cultural differences affect cross country trade.

Introduction

In this era of globalisation, most business organisations are operating their business in the international market. Moreover, companies nowadays are trying to grab new international markets in order to expand their business internationally. Hence, they have to deal with cultural differences in different countries. It is evident that the culture of a nation has a great influence on its business environment. In other words, cultural differences impact cross-border trades. Differences in cultural norms, values, principles, and traditions can influence the business of a company. Hence, companies can face issues regarding cultural differences, while trying to grab a new market.

The current study would be focused on how cultural differences of countries effects cross country trade. Along with that, the essay would also include real business evidence in order to reflect the impact of cultural differences on business. Apart from that, companies have to face challenges while operating in different cultures or countries, which would also be included in this essay. The essay would also include theories to ground statements regarding the influence of culture on business.

Main body

Along with legal, political, and other factors, a cultural factor also influences cross-country trades. International trade consists of the exchange of products, services, capital, and others. As per the opinion of Moradi (2019), the culture of a country includes a group of people who share a set of values, beliefs, and behaviour. Moreover, the culture varies from one country to another, which has a great influence on business and trade. More specifically, the business process of companies can be influenced by cultural aspects.

The risk associated with doing cross country business

According to Liu et al. (2020), cultural distance has a significant and vital role in international trade. Companies have to face a lot of challenges while operating in the international market. This is because the trading patterns use to vary from country to country. More specifically, companies from a country can face difficulties regarding differences in language, norms, and customer preferences.

Language difference

Along with culture, language differs from country to country. In accordance with the study of Ramlan et al. (2018), language differences can be a barrier for businesses, as it can make misunderstandings among employees. More specifically, language differences can be a barrier to companies while they are operating in a new country. Hence, there is a need for cross-cultural communication skills for doing business internationally. Moreover, if a company cannot adopt cultural aspects of a country it may face a lot of issues and criticism.

In this regard, an example of KFC can be illustrated. KFC ran into a similar problem after it refused to play songs in a regional language in Karnataka, India. The company could not adjust to the regional culture and failed to show respect to the cultural emotions of the people of the country. After this incident, “Reject KFC” started trending in the state of Karnataka (News18, 2021).

This incident caused KFC to lose its goodwill, which is an intangible asset and led to lose loyal customers. KFC employees were accused of not having enough cultural training or cultural sensitivity to be able to cater to the cultural needs of customers (News18, 2021).

Customers are key stakeholders and these kinds of considerations are key for customer satisfaction. Hence, without proper cultural training, the business can suffer considerable setbacks that consume a lot of resources and public relation efforts to rectify. This incident spread to other states through various IoT based platforms and the same slogan started being chanted in other states as well.

This caused KFC to lose customers in other states of India as well. In the case of KFC, this happened as a video of an employee saying culturally hurtful things that caught people’s attention on the internet. In the age of information, such things do not escape public attention. However, this example reflects how cultural aspects can harm the relationship between a company and its customers.

Customer preferences and market research

In accordance with the study of Te et al. (2021), customer’s preference is one of the key factors for influencing customers’ purchasing decisions. Choice of products of customers of different countries uses to be different. Hence, companies, which are new in a country, can face challenges regarding that, because of a lack of understanding regarding customers’ choices. Apart from that, companies have to take initiatives to provide products according to the market demand. Hence, a company that is trying to grab a new market has to do proper market research.

For instance, India is a complex market fragmented along geographic, income, age, and demographic lines. In India, beef is prohibited for Hindus and a large part of the population is vegetarian (Food news, 2022). Hence, organisations, mostly who are offering food and beverage industry, have to be educated about these kinds of beliefs and food choice while operating a country like India. In this regard, an example of Starbucks can be drawn. Culturally, China has been a major tea exporting and consuming country and the traditional culture of China revolves around the consumption of tea (Food news, 2022).

Even, it is a part of their customs and rituals. This reflects the country has deep rooted cultural ties to tea as a drink. This tea loving culture has a limited customer’s base for a coffee company such as Starbucks. Hence, Starbucks is yet to reach its highest potential in a country like China despite its high population.

As per the opinion of Abd Aziz and Hanafiah (2020), franchising has been experiencing significant growth in this current era and it supports the economy of a country. However, for this kind of initiative to expand business, companies have to expand a lot for market research. In this regard, the example of McDonald’s can be illustrated, as it has faced challenges in business expansion in China. Customers of the country are unfamiliar with Western culture and cuisine (Sixthtone, 2017). Hence, the company has faced issues in operating business there, because of cultural deference and customer preferences.

Solution

In order to grab a new international market and operate the business effectively, companies use to send expatriates. Moreover, the need for expatriates has been increasing among global companies, as they are focusing on overseas business expansion (Dang et al. 2021). More specifically, as firms face a lot of competition in the international marketplace, they involve expatriates to make easy business operations in foreign countries. Hence, this can be seen as a solution to companies for operating business in the international marketplace. However, they have to spend a huge amount on sending expatriates to foreign countries, which may impact their financial stability.

Hofstede’s cultural dimensions theory

In order to understand the influence of culture on cross country trade the cultural dimension theory of Hofstede can be described. The theory shows effects of cultures of a society on values of its members and the relation of these values to the behaviour of people by factor analysis. As the theory six categories that can define culture are “Power Distance Index”, “Collectivism vs. Individualism”, “Uncertainty Avoidance Index”, “Femininity vs. Masculinity”, “Short-Term vs. Long-Term Orientation”, and “Restraint vs. Indulgence” (Pirlog, 2020) (Refer to appendix).

According to Campo et al. (2020), considering these six variables, cross-cultural communication can be done and it can help to understand cross-cultural differences, which helps companies to make effective marketing strategies. Moreover, companies can utilise these variables to understand the culture of a country and can make effective strategies, which would help them to achieve success. For instance, Unilever has been facing a significant growth in India, as it has adopted the culture of India. The market capitalisation of the company was approximately INR 5 trillion in 2021 (Statista, 2022).

Conclusion

After the overall discussion, it can be concluded that as in this current era most business organisations are willingly expanding their business in the foreign market, they have to deal with cultural aspects of those countries. More specifically, culture plays a vital role in the business, as it can have a great impact on the business operations.

Culture differs from country to country and along with those beliefs, values, principles also vary from country to country. This reflects companies have to know the culture of a country before trying to grab the market, as this can help them to satisfy their customers according to customer’s choice and demand. In other words, culture has a great influence on customer preferences, which influence their purchasing behaviour.

Hence, in order to influence customers’ purchasing behaviour companies have to know their cultural beliefs. For instance, in India beef is strictly prohibited for Hindus; so, companies from the food and beverage industry have to keep this information in mind while serving food products to Hindu customers. Moreover, language differences can be a problem to companies while operating in another country. Companies should respect cultural aspects of other countries otherwise, they can face issues.

KFC has faced the similar issue in Karnataka India, as it disrespect the regional language of the place. This kind of incident can influence the customer base in a negative manner. As the Hofstede model reflects, its six variables can help to understand cross cultural differences, which can help companies in their cross border operations activities. Companies nowadays are use to send expatriates in foreign countries for business purposes. However, the involvement of expatriates may impact the financial stability of companies, as companies have to spend a significant amount of capital for sending expatriates.

Essay 3: Impact of changing demographics on the opportunities and risks of international businesses

Introduction

Demographics of the countries play an important role in the growth and development of businesses in the country. It influences the opportunities prevailing in the market for the business organisations both in a positive as well as negative manner. Demographics define the size of the market in the country, target audiences for the business organisations and other such aspects of the business. In addition to that, it also exposes the business organisations with a number of risks as well.

Demographic changes provoke the companies to redesign and improve their business strategies in order to successfully establish itself in the concerned country. In this context, the current study will include the demographic changes and its impact on international businesses.

The study will highlight both positive as well as negative implications of demographic changes on the international businesses with the help of some evidence. In addition to that, the study will also include the relevant examples of two countries in accordance with the context of the study. The current study will focus on the impact of population, age, literacy and income rate of the countries on the international businesses along with the risks of higher crime rates on the businesses.

Main body

Demographics of the countries play an important role in the growth and development of the countries as well as business organisations operating in those countries or its neighbouring countries also. Demographics of a country includes a number of factors such as population size of the country, age of the population, literacy rate and other similar factors (Lutz et al. 2018). All these factors influence the risks and opportunities of international businesses to a great extent. These risks and opportunities are briefly discussed below.

Age and population

It has been observed from the studies that the age of the population of a country significantly influences the growth of international businesses (Nasution and Rossanty, 2018) . For example, in a country where the majority of the population belongs to the younger generation, the businesses operating in those countries witness massive opportunities of growth.

The workforce is easily available to the business organisations and it increases the productivity of the companies to a great extent. Apart from that, the health conditions of the employees also depends largely on the age of the employees as older people face more health issues as compared to younger people (Acharya et al. 2018).

Hence, the age of the employee directly influences the performance and productivity of the organisations. In addition to that, the companies are adapting to different digital marketing strategies in the countries with higher young populations as the new generations are more involved in social media platforms.

This has somewhat increased the chances of risks of loss for the companies along with increasing the opportunities. Social media marketing sometimes spreads negative publicity, which influences the profitability of the business in a negative manner.

For example, a renowned fast food chain Burger King tweeted on the occasion of women’s day “women belong in the kitchen” in order to attract customers (Forbes, 2021). The company had to face massive backlash and it created a negative image of the company on consumers’ minds.

Another factor, which impacts the opportunities and risks of international businesses, is the population of the country. Increases in population, decreases the net wages of the worker. As the population will be high in the country, workers would be willing to work for less pay and it will be a good opportunity for the workers. In addition to that, a higher population also increases the demands of the products (Marques et al. 2019).

On the other hand, increase in demand for products also increases the supply of products. In some instances, managing the supply chain and restocking the products becomes a challenge for the international businesses. This proves to be a risk for the international business organisations. In addition to that, changing population also increases risk of damage to the environment by increasing pollution (Ukaogo et al. 2020).

Education and income

Education or literacy rate of the country defines the skills and talents of the countries to some extent. Education increases the opportunity of employment by raising productivity and creativity (Mellander and Florida, 2021). Higher literacy rate increases the digital literacy of the population and it encourages online business and e-commerce significantly.

It has been already mentioned in the study that online businesses are flourishing in recent years. For example, the UK’s e-commerce market revenue was approximately 693 billion GBP (Coppola, 2022). One of the factors responsible behind this is the increased literacy rate as well as an increase in the digital skills of the people. This has created a number of opportunities as well as risks for the businesses.

For example, competition has increased in the market due to the introduction of several new businesses. This has forced the companies to adapt to several advanced technologies in order to enhance the quality of the services and to introduce innovations in the organisations to gain competitive advantage in the market. For example, a renowned automobile company Ford utilises robotics in the business operations extensively (Wired, 2021). This has increased the carbon footprint of the companies (Lenzen et al. 2018).

It exerts a negative impact on the corporate social responsibilities of the organisations. Apart from that, average income of the citizens of the country also conforms to the business strategies of the organisations. For example, a company operating in a country with low average income cannot adapt a dynamic pricing strategy. The companies tend to alter the prices of the products and services based on the demand and situation of the market.

Crime

In addition to the above-mentioned demographics, the crime rate of the countries also impacts the establishment of the international businesses in the countries (Mishchuk et al. 2020). For example, in countries like Nigeria, with extremely high crime rates the inward flow of foreign direct investment is likely to be low. Hence, the establishment of businesses becomes difficult in such countries.

India is one of the most populated countries of the world. As mentioned earlier, high populations have increased the demands of the products in the country remarkably. Increases in the demand of products have notably increased the manufacture of the products and establishment of the factories significantly in the country. Increases in the factories have increased the carbon footprint and greenhouse gas emission of the country to a large extent.

According to a report, India is the third largest emitter of CO₂ in the world (Karstensen et al. 2020). This shows that the increase in population has reduced the environmental sustainability of the country as well as businesses significantly.

Countries with high income possess opportunities of profits for international businesses. It has been observed that the United States is one of the highest income countries of the world (World Population Review, 2022). This fact provides the business organisation with the opportunity to implement profitable prices for the products as it is ensured that people of the country will be able to pay the fixed prices for the products. Hence, the business organisations in the United States have the opportunity to gain huge profitability in the country and international businesses are trying to expand in the mentioned country as much as possible.

Conclusion

It can be concluded from the study that demographic changes in the country brings a number of opportunities for the international business organisations. For example, it has been observed from the study that increased population in a country increases the demand of the products in the country. This creates an opportunity for the growth for international business organisations in the country. In addition to that, the presence of a younger population in the country provides the companies with large human capital and talented workforce, which increases the profitability of the businesses largely.

Apart from that, high income of the country also serves the international business organisations with the chances of increased profitability as the companies can implement the prices of their choices for the products and services. This case has been noticed in the United States. Additionally, education and literacy rate of the countries also exerts a positive influence on the performances of the business organisations by providing the companies with skilled and qualified workers. Furthermore, it also promotes the establishment of online businesses in the countries.

Current study has also suggested that the demographic changes also expose the international businesses with a number of risks. For example, high population increases the demands of the products due to which companies sometimes fail to restock the products on time. In addition to that, it increases the establishment of factories and manufacture of the products, which eventually increases the carbon footprints and harmful gas emission of the countries as well as companies. A similar impact has been observed in the case of India. Apart from these, the crime rate of the country also influences the inflow of FDI in the country in a negative fashion, which affects international businesses negatively.

References for essay 1

Abd Aziz, N.A. and Hanafiah, M.H., 2020, December. Fostering Factors of Malaysian Food and Beverage Franchisors’ Expansion into International Market. In Proceedings of the 4th UUM International Qualitative Research Conference (QRC 2020) (Vol. 1, p. 3).

Campo, R., Rosato, P. and Giagnacovo, D., 2020. Less salt, same taste: Food marketing strategies via healthier products. Sustainability, 12(9), p.3916.

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Forbes., 2021. Women Belong In The Kitchen’: Burger King’s International Women’s Day Tweet Goes Down In Flames [Online] Available at: <https://www.forbes.com/sites/suzannerowankelleher/2021/03/09/women-belong-in-the-kitchen-burger-kings-international-womens-day-tweet-goes-up-in-flames/?sh=6004342c65c2> [Accessed 16 April 2022]

Karstensen. J., Roy. J., Pal. B. D., Peters. G. and Andrew. R., 2020. Key Drivers of Indian Greenhouse Gas Emissions [Online] Available at: <https://www.epw.in/journal/2020/15/special-articles/key-drivers-indian-greenhouse-gas-emissions.html> [Accessed 16 April 2022]

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Moradi, E., 2019. Intercultural sensitivity: A comparative study among Business English Undergraduate Learners in two Countries of Iran and China. Journal of Ethnic and Cultural Studies, 6(3), pp.134-146.

News18, 2021. ‘Reject KFC’ Trends After Karnataka Outlet Refuses to Play Kannada Music. [Online] Available at: <https://www.news18.com/news/buzz/reject-kfc-trends-after-karnataka-outlet-refuses-to-play-kannada-music-4362125.html> [Accessed 16 April 2022]

Pirlog, A., 2020. Intercultural “Diagnosis” of Management in the Republic of Moldova According to Geert Hofstede Model: Comparative Analysis. Centre for Studies in European Integration Working Papers Series, 1(16), pp.119-128.

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References for essay 3

Acharya, P., Boggess, B. and Zhang, K., 2018. Assessing heat stress and health among construction workers in a changing climate: a review. International journal of environmental research and public health, 15(2), p.247.

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Lutz, W., Goujon, A., Kc, S., Stonawski, M. and Stilianakis, N., 2018. Demographic and human capital scenarios for the 21st century: 2018 assessment for 201 countries. Publications Office of the European Union.

Mellander, C. and Florida, R., 2021. The rise of skills: Human capital, the creative class, and regional development. Handbook of regional science, pp.707-719.

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