The Cultural Challenges of Doing Business Overseas

Running head: THE CULTURAL CHALLENGES OF DOING BUSINESS OVERSEAS

The Cultural Challenges of Doing Business Overseas

University of Phoenix

MBA/501 - Forces Influencing Business in the 21st Century

Week 1 - February 21, 2006

Introduction

Many American corporations are successful because of the crisk taking culture of the United States. Steve Kafka, an American of Czech origin, realized this fact when he became a franchisor for Chicago Style Pizza and decided to expand his business into the Czech Republic. The first risk Steve took was becoming a franchisor, to be a successful franchisor Steve had to overcome many difficulties. Steve also anticipates that he will encounter some of the same hurdles at the new location in Prague, Czech Republic. Steve has family and friends in the Czech Republic, speaks Czech fluently, and has visited several times. Nevertheless, he was born in the United States and needs to completely learn and understand the people and culture of the country of his origin in order to make his business venture successful.

Differences and Incompatibilities between U.S. and Czech Cultures

Steve wants to expand his pizza restaurant into the Czech Republic. To be able to make the expansion successful Steve must analyze the differences between American and Czech eating and diet cultures. CultureGrams (2006) states, while Americans eat with a fork in the hand with which they write, Czechs tend to eat with the fork in the left hand and the knife in the right. In addition, Pizza is a popular food in America, often consumed as an entire meal, is eaten with hands, is often delivered to the front door, served in a restaurant or carried out on the way home. As dining out is a rare occasion in the Czech culture, pizza is considered a snack that can be purchased from a vendor on the sidewalk. In America, beer is frequently consumed with pizza. In the Czech culture, beer is a beverage that is consumed throughout the day. Because of these differences, Steve must figure out a way to attract the Czech culture to the fast food and restaurant industry. Steve must also develop a plan to incorporate beer on his menu with the pizza. In addition to the actual food product, Steve must also understand the Czech culture in order to establish successful business relationships with others to support his business venture. For instance, in America, direct eye contact is necessary to ensure that the conversation is genuine, but, eye contact is not needed during the entire conversation. In contrast, Czechs feel that eye contact is important during a conversation and tend to issue a harmless stare. The hours of operation are also different in Czecholslavakia, workdays begin between 7 and 8 a.m. and end between 3 and 4 p.m while . business hours in the United States are long, and many are open 24 hours a day. In the Czech Republic, Respect for these aspects of Czech culture is important to nurture business relationships and ensure that individuals are not offended.

Evaluation of Czech Business Culture Applying Hofstede's Four Primary Dimensions

Culture affects the beliefs and actions of different people from different places in different ways. Hodgetts, Luthans and Doh (2006, p. 3) state that culture has several characteristics and is defined as "acquired knowledge that people use to interpret experience and generate social behavior." Because people and their respective cultures are so diverse, we must be aware of and attempt to understand the cultures of the individuals with whom we associate. Dealing with individuals in a culture that is different from the culture in which we have become accustomed can be difficult, even when we may have once lived in that culture. Although Steve's origin is Czech, he was born and raised as an American, and he may not necessarily know what differences exist between the two cultures. Steve's values, customs and his way of doing business were instilled in him in the American culture; therefore, he must remain open-minded and pay attention to the Czech actions.

Power distance exposes an employees' desire to fall within the good graces of his or her superiors. The individual in this subpart understands and accepts that he or she is at the lower end of the hierarchy. They are willing to receive and follow orders and find exceptional pride in doing so. This person is not looking for any type of personal praise for doing his or her job, as long as the superiors are pleased and satisfied, and that the result is beneficial to the company. The concept of power distance can be subdivided further. Low-power-distance exists in organizations with flatter structures in which the employees on the lower-levels are just as qualified as the employees in the supervisory/management positions. CultureGrams (2006) suggests that the Czech culture is one of low-power distance because the people are loyal, well-educated and obey orders given by superiors. The Czech society has a high regard for skilled professionals and tradesmen. These aspects should prove to be an important asset to Steve, as they will enable him to employ dedicated, hard-working individuals who take pride in their jobs and in doing a good job to make the business appealing to their

customers.

Uncertainty avoidance describes the extent to which people want to stay away from the unknown. Uncertainty avoidance also explains how individuals generate beliefs and conventions because they feel intimidated or pressured by unclear or confusing situations. Some people do not like to be in situations in which the outcomes or reasons why they are doing things are unknown. They feel that those situations foster insecurity, which further breeds fear. Organizations with employees that are from high-uncertainty-avoidance cultures tend to be loyal to their positions, an example being the Czech culture. This aspect of the Czech culture should also prove to be a positive influence on the success of Steve's business. His employees should be extremely loyal and dedicated to providing exemplary service to the restaurants' patrons. They will perform their duties with confidence, as they will feel secure in their positions.

The spectrum that lies between individualism and collectivism is a vast spread. Hofstede describes individualism as the tendency to look after oneself and his/her family only, while collectivism is defined as one's tendency to belong to a group and for the group members to look after each other in exchange