Cultural and Cross Cultural Risks in Business

Cultural and Cross Cultural Risks in Business

Introduction

Globalization has become a need for every entrepreneur doing business. Everyone wants to do business at the international level because of the various aspects like technology that keeps giving them uncountable profits. They, however, tend to forget one-minute detail about these factors that promote their businesses, that is, culture. Globally, every nation has its cultural practices, social issues, and various environmental problems. Any company that wants to expand its wings to an international level should be fully aware of the potential risks that come about as a result of these cultures. As an entrepreneur, one needs to get to understand the various cultures of the people in which they want to invest in. By this one, will be able to take note of the little details that will be beneficial to the business as well as those that will harm the company substantially. The ignorance of these cultures may result in weak market share, no or low returns on investments, missed opportunities, among others. An entrepreneur can easily face outright failure if they do not consider these cultural and cross-cultural risks.

Cultural risks involve basic things such as the customers, employees, and the environment, among others. Going international is a good thing, but one may always want to think ahead before investing. One cannot invest in a place where the cultural practices do not favor them at all. Looking at both sides of culture on the business, there are both advantages and disadvantages. Internationally what is accepted in one country is most likely not allowed in the other country. The effects that culture has on international businesses are many, some of which people tend to ignore. When branching out into the international level, an entrepreneur needs to look at the various cultural determinants that will help him in the business. These cultural determinants involve the behavior of individuals around the company. An individual is likely to react negatively to a new culture apart from that which they know and follow (Thomas, Peterson, 2016). Take note of those individuals that will create an impact in your business. The cross-cultural determinants as well include the language, religion, social structure, among others. It would be hard for one to conduct business in a place where the language is a barrier, and therefore this should be an essential part that shouldn’t be left out. Some people tend to judge others because they have a different culture form them; this may not be good for the business. To have your business up and running, you would not want to leave out any single detail on this issue. However, if the company is already established and being faced by the cultural and cross-cultural risks, you can easily control the effects of these risks. One can decide to redesign their work to meet the cultural practices of the place. This could significantly reduce the rate at which these risks tend to affect your business.

Communication is an essential part of business, especially when it comes to meetings and closing deals. This is interconnected to language and the dialect that people use. Some cultures tend to use gestures more than usual talk (Adekola, Sergi, 2016). If one is a foreigner, they may tend to get the wrong image or misunderstand what they are being told. In such an environment, it would be partially hard to conduct business until one gets to know of the signs. This is most common in high context cultures such as Saudi Arabia. During a transaction, communication barriers tend to occur during negotiations, which may jeopardize the opportunity the business had, especially if it was a joint venture into the international market. Saudi Arabia guys tend to answer yes and not almost everything they hear even when not sure about it. This might be hard to try and get the point as to which and what they are answering. In cultures where they use more non-verbal communication, one needs to have to learn this kind of communication, before conducting business with them. The gestures, however, vary from one community to the other, which therefore calls for someone to be careful.

Cultural adaption may be one significant problem form some people, especially when in the vicinity of the local people. Most businesses have reported that they are having a hard time with the expatriates working in their companies (Bader, Schuster, 2015). This results in failures in the business like undone work projects, especially when it involves interaction with people in the community. At the individual level, they might have low confidence to consult the people around them. This way, therefore, as an entrepreneur shifting your employees to go work at an international level, one requires them to be at their best. This is in terms of confidence, communication, and language, among others. Let them be aware of the various cultural practices they will find there and what is expected of them. Failure to this, they may not be able to deliver what the business requires. It would be hard making negotiations and closing deals as well, and this is because of the lack of cultural adaptation. This is most critical when it comes to matters about the business.

Legal challenges as well may arise due to these cultural factors in the community where the business is set up. Before starting up the business, understand how the legal system in that community works and the cultural measures they take to someone who does not comply with their legal concerns. In Saudi Arabia, it is required that every Friday is the holy day for them; therefore, it means no working. If the company has some employees that are Muslims form this country, then it is required that this day is given as an off to them so that they can worship. Failure to doing this, you might find yourself in some significant legal problems. This can go to the extent of having your business shut down or barred from hiring employees from this country.

Conclusion

Everyone wants an up and running business for themselves; therefore, as one plan on how they can join the international market, they need to understand the cultural practices of the people living there. Understanding cultures would mean a lot of respect to the people living there as well as an opportunity for your business to flourish and excel. An entrepreneur is given the work to ensure that all the cultural practices at the desired place, will be an added advantage to the business as well as the employees and people living there.

References

Adekola, A., & Sergi, B. S. (2016). Global business management: A cross-cultural perspective. Routledge.

Bader, B., & Schuster, T. (2015). Expatriate social networks in terrorism-endangered countries: An empirical analysis in Afghanistan, India, Pakistan, and Saudi Arabia. Journal of International Management, 21(1), 63-77.

Thomas, D. C., & Peterson, M. F. (2016). Cross-cultural management: Essential concepts. Sage Publications.