MN7406 International Business Assignment Sample
Module code and Title: MN7406 International Business Assignment Sample
Topic 1
EFFECT OF CROSS-CULTURAL DIFFERENCES IN CROSS COUNTRY TRADE
Introduction
Cross cultural differences are considered to be major influencers of international businesses. In the modern world, sensibility regarding the culture of a particular country is seen as an essential factor for an international business. In the modern era, globalisation has enabled various companies to operate internationally and earn profits. As more businesses grow, they have the opportunity to expand their businesses internationally and trade resources and goods from other countries. However, in order to perform effectively in the international market, it is essential for the companies or the businesses to understand the culture of the countries they want to trade with.
Efficient knowledge on cultural differences is helpful in conducting successful trade in order to meet the demands of the customers by being faithful and respectful to the people or the employees of the companies they are trading with. This can also help them have a good reputation in foreign countries. However, if the companies fail to completely understand foreign cultures then that may significantly impact the businesses and the economy of that country may suffer to a great extent. This study will explore how cultural differences impact international or cross country trade. Various risks associated with doing business internationally will also be discussed in this study.
Discussion
Culture is considered to be the social behaviour, customs and ideas of a society in a region or in a country. In the context of a business, culture is considered to be the behaviour that might be considered professionally appropriate in a region. It might be possible that in a particular place practices related to business might be very different from that of another place (Beugelsdijk et al. 2020).
Therefore, it is important for the companies to understand the cultural differences in order to perform efficiently in the foreign market. This can also help reduce misunderstandings between the parties or the companies that are interested in collaborating with each other or trading. However, there are several areas where the impact of cross-cultural differences can be seen to a great extent.
The operation of various companies is influenced by national, company, individual and industry culture. These cultures play a significant role in determining how a company can conduct business with other companies. While conducting negotiation with foreign companies, these factors strongly influence the process. However, areas such as communication, attitude and etiquette strongly influence these cultures (Sznycer et al. 2018). These are some of the major areas that businesses should pay attention to in order to mitigate cultural issues and trade successfully.
Cross cultural factors in internal trades
Communication
Communication is considered to be an important catalyst that can either drive the international businesses to success or can play a big role in their downfall (Mundia et al. 2019). Communication in an effective way makes a difference between failing and succeeding in a brand new foreign market. However, while doing international trades, it might be possible that the intended message might be completely “lost in translation”.
Therefore, it might be possible that the companies fail to conduct successful international trades. Therefore, it is important for the companies to make efficient communication while dealing with companies or clients from a foreign background.
Communication also plays a vital role while negotiating with companies or clients from another country. It is also essential if a company wants to conduct business across multiple countries (Gürhan-Canli et al. 2018). First and foremost, a company has to understand whether there is a strong barrier regarding language that might prevent them from communicating effectively with other organisations from different cultures.
However, only learning a new language does not define the success rate of a company. In order to successfully conduct a business it is necessary for the companies to effectively convey the intended message. The way of conveying messages is different in various regions.
For example, it can be seen that in western countries such as the United States and the United Kingdom, people tend to speak loudly and in an assertive tone while sharing ideas or doing trades among each other. If the representatives of a company manage to convey their message loud and clear then that also reflects that they have self-confidence and they are eligible to conduct businesses or trades successfully (Tian et al. 2018).
However, in countries such as Japan, it is more common for representatives to convey their message or share ideas in a more polite and passive tone. This reflects that they are respectful towards each other and have the capability to complete trades without hurting anyone’s personal beliefs.
Basic customs and mannerisms
Another important thing that needs to be considered while conducting business is the necessary basic customs, gestures and mannerisms. Behaviour in the working culture of one country might be completely different from that of the other one. It might be possible that behaviour of representatives or employees of one place might be considered in one place but might be seen as an act of offence in another place (Mundia et al. 2019).
Therefore, it is necessary for the business representatives to adjust their body language to successfully conduct trade with companies of other countries. For example, in the western countries, handshakes are considered as a primary norm for businesses. However, it is seen differently in other countries such as Middle East countries. They emphasise on only using the right hand while shaking hands with other individuals as they consider the left hand to be less hygienic.
Attitude
It is also seen as individuals of various countries having different attitudes towards businesses. Attitude towards business also defines how successful international trades can be. In the modern world, it is important for international businesses to be aware of the attitude towards businesses in the market they want to perform in or conduct trades with (Sharma et al. 2020). However, it is considered to be easier said than done.
Businesses have difficulty in defining roles in teams designed to conduct international trades. For example, Scandinavian countries such as Norway, Denmark or Sweden tend to put an emphasis on social equality and as a result they have a very flat hierarchy in the organisation. Therefore, an informal approach towards cooperation and communication can be observed in the organisations operating in these countries.
However, in various international countries such as Japan, employees tend to have a high respect for the senior employees and management (Nam, 2018). This highlights the traditional organisational hierarchy. Therefore, it can be seen that senior management expects junior employees to greet them politely and show them proper respect. Therefore, it is important for the representatives to be respectful towards the employees if they are to conduct business across various countries.
Etiquette
Etiquette while conducting business is another thing that defines the success rate of an international trade. It is seen that in different countries, etiquette related to operations of an organisation tends to differ from that of the other country. There might be different ways to address employees or individuals in different countries (Beugelsdijk et al. 2020). Therefore, if a company or a business fails to properly address the employees of foreign companies while they are trading with them, then that might reduce the chances of a successful trade-off of a company.
Therefore, it is necessary for the international businesses to learn proper etiquettes that can help them be respectful towards foreign cultures. However, etiquettes not only involve the way to address the employees. It also highlights the rules and regulations while conducting business and or the number of hours that are given to conduct business.
For example, in the western countries such as the UK and the US, it is common for people to address each other with their first name within the organisations. However, in Asian countries such as China, it is more common for people to address by their last name (Gürhan-Canli et al. 2018).
Therefore, to conduct business or trade in these countries, it is important to learn proper etiquettes to address them. In terms of the working hours, in some countries it is seen that if business executives dedicate most of their time to conducting businesses ten they have a strong desire and dedication for their work. However, in other countries it is seen as negligence towards their family or society.
Conclusion
From the above study, it was discovered that cross cultural differences are considered to be major influencers of international businesses. In the modern era, globalisation has enabled various companies to operate internationally and earn profits. However, in different countries, there are different cultures that are observed in businesses and trades done by various organisations.
However, it is often seen that difference in culture severely limits the scope of businesses to perform well in the international market. Due to cross-cultural issues, international companies sometimes have a hard time effectively communicating with and adapting to the international businesses.
The operation of various companies is influenced by national, company, individual and industry culture. However, these cultures are influenced by different factors. Factors such as communication, mannerisms, attitude and etiquette strongly influence international businesses. Therefore, this makes it hard for the companies to conduct trades.
Thus, it is necessary for the companies to pay respect to the culture of the companies they are conducting trades with in order to conduct business effectively in the international market.
References
GetSmarter Blog. 2022. The Influence of Culture within Import and Export Trade. [online] Available at: <https://www.getsmarter.com/blog/career-advice/culture-import-export-trade/> [Accessed 21 April 2022].
Gürhan-Canli, Z., Sarial-Abi, G. and Hayran, C., 2018. Consumers and brands across the globe: research synthesis and new directions. Journal of International Marketing, 26(1), pp.96-117.
Mundia, C.W., Secchi, S., Akamani, K. and Wang, G., 2019. A regional comparison of factors affecting global sorghum production: the case of North America, Asia and Africa’s Sahel. Sustainability, 11(7), p.2135.
Nam, T., 2018. Examining the anti-corruption effect of e-government and the moderating effect of national culture: A cross-country study. Government information quarterly, 35(2), pp.273-282.
Nambisan, S., Zahra, S.A. and Luo, Y., 2019. Global platforms and ecosystems: Implications for international business theories. Journal of International Business Studies, 50(9), pp.1464-1486.
Sharma, P., Leung, T.Y., Kingshott, R.P., Davcik, N.S. and Cardinali, S., 2020. Managing uncertainty during a global pandemic: An international business perspective. Journal of business research, 116, pp.188-192.
Sznycer, D., Xygalatas, D., Agey, E., Alami, S., An, X.F., Ananyeva, K.I., Atkinson, Q.D., Broitman, B.R., Conte, T.J., Flores, C. and Fukushima, S., 2018. Cross-cultural invariances in the architecture of shame. Proceedings of the National Academy of Sciences, 115(39), pp.9702-9707.
Tian, M., Deng, P., Zhang, Y. and Salmador, M.P., 2018. How does culture influence innovation? A systematic literature review. Management Decision.
Appendix
Appendix 1: types of culture in industries
Appendix 2: Factors that influence international trade
Topic 2
IMPACT OF CHANGING DEMOGRAPHICS ON THE OPPORTUNITIES AND RISKS OF INTERNATIONAL BUSINESSES
Introduction
Demographic refers to the statistical characteristics of a number of groups or the entire population of a particular region or of a particular country. In order to perform effectively in a particular country, it is important for the companies to identify a target market in order to appeal to a number of individuals. Usually the individuals are particularly interested in the products or services offered by them. However, on the other hand, as time changes, so do the demographics within a region or a country. Therefore, the companies always have to stay active in order to give proper services to the customers.
However, it is often seen that due to shifts in the demographics, requirements of the customers also change. Thus, many organisations find it difficult to adjust to the changes and cannot produce efficient results. This is also visible in international businesses.
As the demographics change in foreign countries, the companies have a hard time adjusting to the requirements. On the other hand, change in demographics also opens up opportunities for the international companies. The impact of change in demands of the population will be discovered in this study. On the other hand, it will also be discovered whether businesses within the countries are being impacted by change in demographics.
Discussion
Shift in demographics has been observed in various countries around the world. Therefore, it is important for various organisations to adapt to the changes. However, requirements of the population also change as time passes by. On the other hand, it is important for the companies to ensure that they properly analyse the international demographics and markets so that they can bring changes to their operation (Alshaketheep et al. 2020).
However, it is often found to be difficult among the companies because they provide services to the foreign population in one manner but cannot bring changes as the interest and the demand of the population shifts. There are certain variables that determine the performance of the organisations.
Impact of demographic change on international businesses as per demographic variables
Income
The product or service of an international company usually targets the income of a certain group. This is due to the fact that the companies tend to appeal to a particularly larger group. Income of particular demographics is often subject to change. In the modern era, income of the demographics has risen significantly. However, due to the COVID-19 pandemic, the economy around the world has suffered to a great extent (Hay and Eagle, 2019). Therefore, the companies had to ensure that they bring changes to the prices of the services or products.
For example, premium services brought out by companies such as Netflix tend to target a group of people who have higher income. The company has also introduced basic plans for the group of people who have relatively lower income. On the other hand, as the economy of the company suffered during the COVID-19 pandemic, the income of various demographics around the world also got affected to a great extent.
Therefore, people around the world demanded that the subscription fees of Netflix should be lowered as it was not possible for them to afford a high price anymore (Ghauri et al. 2021). Thus, it was necessary for the company to lower the service plans which included basic, standard and premium plans.
Meanwhile, due to the rise in consumption of digital media, the majority of the demographics started to consume more electricity. More electricity consumption suggested that more power consumption was needed (Alonso et al. 2020). Therefore, this also puts stress on the environment. Thus, environmental sustainability also gets affected to a certain extent.
Age
Age of the demographics is also considered to be a variable that majorly impacts the operations of international businesses. It is seen that the companies tend to provide services or launch products to appeal to certain age groups (Terziev, 2019). Choices of different age groups often vary and the companies also have to adjust themselves to appeal to the age groups.
On the other hand, the companies tend to make sure that they have enough resources to appeal to the targeted demographics. However, age is also subject to change. Therefore, the average age of a particular region or country may often decrease or increase over time. For example, in the US, people who belong to the boomer generation used to contribute greatly to the economy of the country.
Therefore, in the past, international companies who would operate within the countries used to mainly target that particular generation and would bring services or products that did not necessarily have to be technologically too advanced (Ashraf et al. 2018).
However, the demographics have changed since then and millennials mostly contribute to the economy of the country. Millennial also demand products or services that are technologically evolved so that they can multitask easily with ease. Therefore, this opened up an opportunity for the international companies to enhance their services and earn more profit within a short period of time.
Level of education
Level of education of the buyer also defines the rate of success of a particular business. Level of education differs among different demographics. Therefore, the companies also tend to target demographics that have a certain level of education (Alshaketheep et al. 2020).
If the education level of the targeted demographic is high then it can be concluded that they have a higher income rate. However, it is not only limited to their wealth. A buyer with a higher educational level also has better judgemental skills to judge the quality of the products before purchasing. In the past, the educational level of people in various countries used to be relatively lower than what it is today.
However, due to the globalisation and rise of the internet, the education level of the people in various countries has risen to a certain extent. Therefore, the companies have to make sure that they enhance their services as the judgemental skill of the demographics has also been improved (Ghauri et al. 2021).
People now tend to collect more knowledge on products or services they seek. They also read reviews to get an idea on the extent of the services provided or products manufactured by various companies. Therefore, companies have to ensure that they enhance services or products so that they can live up to the expectation of the customers (Wen et al. 2020).
However, in order to make innovation to services or products, the companies have to consume a vast amount of resources. For example, the demographics of Japan tend to have relatively more technological knowledge than other countries. Therefore, international businesses have to utilise the best available equipment to bring innovation to their products or services (Hay and Eagle, 2019).
This has resulted in the environment of Japan being negatively impacted due to an increase in consumption of resources. However, people of Japan have been able to use innovative products by combining knowledge of the current generation to create an eco-friendly environment. This can help them achieve environmental sustainability.
Geographic location
Geographic location has been one of the variables that also define the choices and behaviours of a particular demographic. It might be seen that the choices of individuals change due to change in the geographic region. In the past, it was seen that people in the United Kingdom used to consume tea and cookies in the past. However, in the present era, people in the country have been more health conscious (Wen et al. 2020).
Therefore, they seek and consume foods that have more calories and contain nutritious ingredients. Due to the rise of globalisation and the internet, they also seek foods that can be found in the country and can help them sustain in the environment of the UK. The average temperature of the UK tends to be colder than many Asian countries. Thus, if an Asian country wants to target the demographics of the UK, then they have to produce foods that are usually warm and nutritious.
Conclusion
From the above study, it was found that demographic refers to the statistical characteristics of a number of groups or the entire population of a particular region or of a particular country. In order to perform effectively in a particular country, it is important for the companies to identify a target market in order to appeal to a number of individuals.
It was also seen that a shift in demographics has been observed in various countries around the world. Therefore, it is important for various organisations to adapt to the changes. However, requirements of the population also change as time passes by. Demographics of the modern era have different choices than that of the bygone era.
It has also been seen that the demographics of different countries and different locations also have different preferences. Thus, if a company wants to operate internationally, it has to consider all the hazards or challenges that they might come across in order to get competitive advantages over their competitors. On the other hand, preferences might change due to the shift in demographics. Thus, it is necessary for the companies to thoroughly analyse the shift in demographics so that they can appeal to a larger audience and earn a good reputation among its customer base.
References
Alonso, A.D., Kok, S.K., Bressan, A., O’Shea, M., Sakellarios, N., Koresis, A., Solis, M.A.B. and Santoni, L.J., 2020. COVID-19, aftermath, impacts, and hospitality firms: An international perspective. International journal of hospitality management, 91, p.102654.
Alshaketheep, K.M.K.I., Salah, A.A., Alomari, K.M., Khaled, A.S. and Jray, A.A.A., 2020. Digital marketing during COVID 19: Consumer’s perspective. WSEAS Transactions on Business and Economics, 17(1), pp.831-841.
Ashraf, S., Ilyas, R., Imtiaz, M. and Ahmad, S., 2018. Impact of service quality, corporate image and perceived value on brand loyalty with presence and absence of customer satisfaction: A study of four service sectors of Pakistan. International Journal of Academic Research in Business and Social Sciences, 8(2), pp.452-474.
Ghauri, P., Strange, R. and Cooke, F.L., 2021. Research on international business: The new realities. International Business Review, 30(2), p.101794.
Hay, R. and Eagle, L., 2019. Impact of integrated sustainability content into undergraduate business education. International Journal of Sustainability in Higher Education.
Kahiya, E.T., 2018. Five decades of research on export barriers: Review and future directions. International Business Review, 27(6), pp.1172-1188.
Terziev, V., 2019. The role of social policy in economic development. IJASOS-International E-journal of Advances in Social Sciences, 5(14).
Wen, J., Kozak, M., Yang, S. and Liu, F., 2020. COVID-19: potential effects on Chinese citizens’ lifestyle and travel. Tourism Review.
Appendix
Appendix 1: Variables of demographics
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