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Cultural effect on cost Cultural effect on cost of doing businessof doing business

Cultural effect on cost Cultural effect on cost of doing businessof doing business

By: Manish Goyal (157)By: Manish Goyal (157) Suvash Timalsina (142) Suvash Timalsina (142)

Cultural effect on cost of doing business

What is culture?• Learned behavior, transferring

from generations• Custom, tradition and way of living• Norms and values• Varies in different places

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Elements of culture• Language• Religion• Manners and customs• Aesthetics• Education • Social institution

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Language • Mirror of culture• People highly comfortable

speaking their own language• Verbal and nonverbal

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Verbal • Written and formal • Difficult language may cause in

promoting or publicity; difficult pronunciation

• Mainly in country like China and Japan

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Non-verbal• Sign language or silent language,

body language and gestures• Example- Latin Americans and

Arabs like to stay close to people they are talking with, if other just stays far it might give negative impression to them

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• Example- an American manager may after successful completion of negotiations, impulsively give a finger-and-thumb OK sign, French manager perceive that the sale is worthless, Japanese think a little bribe has been asked for the gesture and insulting to Brazilians

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Religion • Defines ideals for life• Existence of Supernatural beliefs• Example- When beef or poultry is

exported to an Islamic country the animal must be killed in the ”halal method”

• Major holidays often tied to religion

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Manners and customs

• Way of behaving or presumed thought• Example- American interpret silent as

negative sign, Japanese executives tend to expect that their silence can get Americans to lower prices or sweeten the deal

• Even small deal might take many days

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• Concerns use of right hands and left hands

• Example General Foods Tang is positioned as a breakfast drink in the United States in France, where orange juice usually is not consumed at breakfast

• A company decided to launch new peanut packed chocolate bar in Japan targeting teenagers; quick energy during exams

• Failed because children were told eating chocolate with peanuts cause nosebleed

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Aesthetics • Concerned with taste, art, and colors• Color often used as brand identification,

for differentiation• Example- British bank wanted to expand

operation in Singapore, wanted to use blue and green as identification color

• Had to make some change in green color as it was associated with death in that country; green was made shade and dark

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Education • Formally or informally plays role in

sharing culture• Less education may increase cost of

business• Extra training expenses required• For instance a high level of illiteracy

will suggest the use of visual aids rather than printed manuals

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Social institutions• Family and kinship• Family size differ in western countries

and country like ours• In country like ours, joint family• Consumption pattern high in such family,

need to identify market potential• In country like Nigeria, concept of kinship

in human resource management

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Conclusion • Knowledge of culture plus point in

International business• Culture awareness can avoid a

huge loss• Keep in mind “Culture eats

business strategy as a breakfast”

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