Cultural Awareness and International Business

Cultural Awareness and Business-Any Canadian firm that wants to “go global” by starting a business relationship in another country must first determine the extent and importance of the cultural differences between Canada and the target nation.-Canadian businesses account for only 2% of global trade

-Several Factors determine the need for cultural awareness in IB relationships:

- how extensive their operations are- how the business controls its foreign

operations- how similar the foreign culture is to Canada's culture- how many countries are involved in the

business relationship

Cultural Awareness in Foreign Business RelationshipsLittle

Need

Moderate Need High Need

Extent of Foreign Operations

Mostly domestic Similar operations in different countries

Different operations in different countries

Control of Foreign Operations

Foreign management of foreign operations

Foreign division of company's operations

Domestic management of foreign operations

Degree of Cultural Differences

Little or no differences Moderate differences High degree of cultural differences

Number of Foreign Operations

one A few many

Extent of Foreign Operations - how culturally aware a business has to be depends primarily upon how much business it does in foreign countries and the type of business it does there...EXAMPLES:- A small soap manufacturer in Sarnia, ON that sells online to a few customers in Tokyo doesn't need to know about the many cultural differences between Japan and Canada – it needs a translator for the website and needs to research popular soap fragrances in Japan (cherry blossom and baby's breath for example)

Extent of Foreign Operations Cont'd

- Fruits and Passion however, who has opened franchises in China needs to be extremely aware of the cultural differences to become successful there- Owner, Gervais Lavoie speaks Mandarin and has studied the Chinese market in depth- Fruits and Passion brings Chinese store managers to Quebec to help them understand cultural differences between the two countries, because of the extent of their foreign operations

Control of Foreign Operations

- A company that has branch plants or distribution outlets in other countries that are managed by local people doesn't need to spend a great deal of time learning about cultural differences, as the local employees will have that knowledge- In this situation however, a business should research the culture to ensure there is a need for the product- refer to chart to determine level of awareness req'd depending on level of control

Control of Foreign Operations:

• Iroquois Cranb have sold their cranberries on the IM for years

• Owned by the Wahta Mohawks in central Ontario, they did not have the resources to hire marketing experts in their target markets to operate branch plants abroad

• Instead they spent time and effort attending trade shows and conducting market research, and worked with Canadian Govn'ts Trade Commissioner service to get important info re: cultural differences

• The ICG level of cultural awareness in foreign markets needs to be very high because they operate primarily from Ontario

Degree of Cultural Differences- If a business is dealing with a foreign market similar to Canada's ,it doesn't need to spend a great deal of time examining cultural differences- If the language, habits, beliefs, and attitudes are markedly different than it is very important to study the new market and/or business customs

Example:-When Second Cup began expanding into the MEast, reps made numerous visits to various regions where it wanted to set up franchise operations

-Comfort and space were important differences- Since 2003, the company has opened cafes in Dubai, Kuwait, Lebanon, Oman, Qutar, Saudi Arabia, Eqypt and Turkey with more planned

Degree of Cultural Differences Example Con'td

- differences between ME and Canada are huge!- 70% of Second Cup customers in Canada take their coffee to go, which is true for only 10% of the ME customers- Second Cup had to redesign it's restaurants for the ME consumer in mind, concentrating on offering comfort and space- Coffee shops in the ME are considered meeting places and coffee consumption is considered an upscale leisurely activity

Number of Foreign Operations

- The more operations a business has in foreign markets, the greater the need for cultural knowledge- Example; Bombardier (railway, cars, subways, buses, airplanes, etc)- Bombardier has manufacturing, engineering, and service facilities in 29 countries on 5 continents-Each market requires a high degree of cultural awareness – a populations transit needs depend on it's culture, how do people commute to and from work, etc