The Cultural Challenges of Doing Business Overseas 1 Running head: OVERSEAS THE CULTURAL CHALLENGES OF DOING BUSINESS

The Cultural Challenges of Doing Business Overseas

The Cultural Challenges of Doing Business Overseas 2 Abstract [This should describe the value of problem-based learning in your MBA program. Be sure to end with a transition word or sentence to lead into the Conclusion of your paper. Triple click anywhere in this paragraph to begin typing.]

The Cultural Challenges of Doing Business Overseas 3 The Cultural Challenges of Doing Business Overseas Building a successful international relationship that transcends societal, cultural and lingual barriers has always been a delicate matter fraught with potential stumbling blocks (Townsend, 1999). The objective of this paper is to identify the differences and incompatibilities between United States and Czech Republic cultures, evaluate the Czech business environment using Hofstedes four primary dimensions and determine whether individualism or collectivism is prevalent in Czech culture. Finally, the paper assesses marketing alternatives to attract conservative Czechs to fast food consumption. Differences and Incompatibilities Between U.S and Czech Cultures In the scenario, Steve Kafka, desires to expand his pizza franchise into the Czech Republic. An American of Czech origin, he believes that he knows the people and the culture of the Czech Republic; however, he must anticipate the differences between American and Czech cultures. Since joining the European Union in 2004, the Czech Republics market is steadily growing and increasing the demand for luxury products such as fast food. In order to analyze the marketability of pizza, Steve must analyze the diet and eating customs between the United States and Czech Republic. Pizza, along with other fast food, is popular in America; however, traditional Czech food is heavy. At most, pizza is considered a snack to Czechs. Due to the fast

The Cultural Challenges of Doing Business Overseas 4 nature of the American culture, many food items can be delivered, carried out or served at restaurants. Dining out is not as prevalent within the Czech culture. Eating habits vary for people of different cultures within the United States boundaries. Czechs tend to have a more formal setting with the food prepared in the kitchen and carried to the table. Very few items are eaten with the hands in the Czech Republic (CountryWatch: Czech Republic, 2006). Conversely, many foods are eaten with the hands in the United States (CountryWatch: United States, 2006). Another point of consideration is the hours of operation. Many businesses within the United States are open late into the evening. Some businesses are open 24 hours. The workday in the Czech Republic usually begins around 7 a.m. and ends around 4 p.m. Steve needs to understand the differences between the two cultures and evaluate these differences using Hofstedes four primary dimensions. Hofstedes Four Primary Dimensions Power Distance One of Hofstedes dimensions is power distance. Power distance is the extent to which less powerful members of institutions and organizations accept that power is distributed unequally (Hodgetts, Luthans, & Doh, 2006). The effect of this dimension can be measured by how members within an organization

The Cultural Challenges of Doing Business Overseas 5 tolerate unequal distribution of power between managers and employees. Countries that are considered to have high-powerdistance generally are centralized and have tall organization structures with a large proportion of supervisory personnel and the workforce often consists of highly qualified people. Low-power-distance countries tend to be decentralized and have flatter organization structures with a smaller proportion of supervisory personnel and the workforce often consists of highly qualified people. As part of Czech Republics privatization program, the country sold stock to Czechs vice outside interests to allow the Czechs to have a stake in the countrys performance. Additionally, the Czech labor force is cohesive and well-educated lending to the country to be categorized as a low-power-distance country. Uncertainty Avoidance Hofstedes second dimension is uncertainty avoidance. Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these (Hodgetts, Luthans, & Doh, 2006). The effect of this dimension can be measured by avoiding uncertainty within the organization. Cultures with fewer written rules, higher labor turnover, managers that take more risks and employees that are more ambitious are low-uncertainty-avoidance

The Cultural Challenges of Doing Business Overseas 6 cultures. Low-uncertainty-avoidance encourages initiative and allow for people to assume responsibility for their actions. Cultures with written rules, less risk taking by managers, lower labor turnover, and less ambitious employees are considered high-uncertainty-avoidance. These cultures such as the Czech Republic are much more structured. The employee base tends to be more loyal and dedicated to maintain job security which would promote success in Steves business. Individualism Hostedes third dimension is individualism. Individualism is the tendency of people to look after themselves and their immediate family only (Hodgetts, Luthans, & Doh, 2006). The effect of this dimension can be measured by the emphasis of achievements by either an individual or a group. Countries with high individualism allow individuals to make their own decisions, tend to have greater individual initiative, and personal achievement. Conversely, low individualism countries provide for the group to make decisions for an individual, are relationship-oriented and emphasize networking. Czech Republic are individualistic with regard to a personal level since Czechs work to ensure their families have what they need and work towards self-promotion; however, the Czech families are characterized as close and tight-knit. Masculinity

The Cultural Challenges of Doing Business Overseas 7 Hofstedes fourth dimension is masculinity. Masculinity is a situation in which the dominant values in society are success, money, and things (Hodgetts, Luthans, & Doh, 2006). The effect of this dimension can be measured by assertiveness, competitiveness and material success. Low masculinity cultures, also known as feminine, are cooperative and encourage a friendly atmosphere. High masculinity cultures favor ecomonic growth, are career-oriented and are more stressful than that of feminine cultures. Czech culture places more value on the quality of life and family than success and profit. Individualism vs. Collectivism Collectivism is the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty (Hodgetts, Luthans, & Doh, 2006). Individualism is high within the Czech Republic. Czechs are more private and consider family as a matter of highest priority. Although the local market is growing, Czechs are less likely to congregate to form professional relations. Czechs have a reluctance to meet new people which in turn make networking and establish business ventures a challenge. In order to conduct business within the Czech Republic, businesses need to be aware that Czechs are methodical in business planning and are meticulous in all business dealings. Marketing Alternatives

The Cultural Challenges of Doing Business Overseas 8 Since joining the European Union, the Czech Republics economic market has had steady growth. As the disposable incomce of Czech household increases, so does the opportunity to have a successful franchise. Steve needs careful consideration as to how he can market his product. Utilizing tools such as benchmarking, he can research the successes and failures of other business ventures within the country. Another tool is to capitalize on the individualistic nature of the country and appeal to the Czechs sense of family. By maintaining awareness of the Czech culture, he attract customers by creating a restaurant with a family atmosphere. Conclusion Cultural differences and incompatibilities can impact any business venture. Each culture had a different way of doing business. In order for Steves franchise to be successful, he will need to determine the needs of his target market within the Czech Republic. By keeping an open mind and adapting to a countrys culture, Steve can integrate into the Czech culture and expand into the global market.

The Cultural Challenges of Doing Business Overseas 9 References CountryWatch. (2006). Czech Republic. Retrieved March 12, 2006, from CountryWatch database. CountryWatch. (2006). United States. Retrieved March 12, 2006, from CountryWatch database. Culturegrams World Edition. (2006). Czech Republic. Retrieved March 11, 2006, from CultureGrams database. Culturegrams World Edition. (2006). United States. Retrieved March 11, 2006, from CultureGrams database. Hodgetts, R., Luthans, F., and Loh, F. (2006). International management: Culture, strategy, and behavior (6th ed.). New York: McGraw-Hill. Townsend, L. (1999, July 30). Conduct business overseas without offending. Dallas Business Journal. Retrieved March 12, 2006 from http://www.bizjournals.com/dallas/stories/1999/ 08/02/focus3.html. Varner, I. & Beamer, L. (2005). Intercultural communication in the global marketplace. New York: McGraw-Hill.