Pitfalls of Cross-Cultural Business, Essay Example

Body language and gestures are often interpreted in different manners around the world. Thus, one of the most common mistakes made by business leaders in other cultures is the use of body language or gestures that are socially acceptable in their native countries but have different meanings in the host cultures. Business leaders should learn about other cultures before visiting them because any misstep may send a signal that the visitor didn’t deem the culture important enough to learn about it. Similarly, visitors also make the mistake of judging behavior of host individuals according to their own social norms. In America and Germany, one is expected to arrive on time but in some countries, being a little late is expected and a norm(Wade, 2004).

Other misunderstandings occur due to differences in communication styles and business cultures. Some cultures such as Americans prefer direct communication style while others such as Japanese and Chinese tilt towards indirect communication styles in order to preserve individual dignity. Similarly, in America, executives usually enjoy informal relationships with their subordinates but in other cultures such as Latin America and China, informal relationships between leaders and subordinates exist mainly in social gatherings and not in formal environments(Wade, 2004).

Another mistake American businessmen make abroad is their failure to understand standard business practices in other cultures which are often vastly different from the U.S. Cultures such as Germany often take an authoritarian approach to decision making. Other cultures like Middle-Eastern and Japanese prefer relationship building before proceeding to usual business. This is in a huge contrast to Americans who prefer quick decision making processes and getting down to business as quickly as possible (Wade, 2004).

Ethnocentric ideas may also prevent smooth cross-cultural dealings. Ethnocentrism often leads to stereotypes that may or may not be true. For e.g. Americans have different reputation in different parts of the world and similarly, Americans may also have preconceived notions of individuals from other cultures. Stereotypes may shape conduct of American businessmen overseas and discourage them to learn more about other cultures.

Domino’s Pizza is the world’s largest pizza-delivery company and the company has a history of accommodating local cultural characteristics into its business operations even though sometimes the exit may turn out to be the best strategy. In Japan it redesigned its delivery procedures, in Aruba it replaced motorcycles with small trucks as modes of delivery, in Philippines it chose locations according to feng shui, and in Iceland it kept its stores opened for longer hours. But the company had to pull out from Italy because its pizza was considered too American by Italian tastes(Gibson, 2006).

The companies often seek global expansion because it allows them to leverage their brand in other markets and increase revenues and profitability due to economies of scale. Similarly, the franchise concept also assumes that business models are often transferable to other cultures. But Domino’s experience indicates that sometimes modifications are needed to the business model to accommodate local characteristics and Domino’s has shown the willingness to do so to accommodate unique local characteristics. But the company’s experience in Italy indicates that while the company has been willing to modify its business model to accommodate unique local characteristics, it has been less willing to change its products. Food is also part of culture and different cultures often have different preferences in some food items. Domino’s might have pulled out of Italy because it wanted to maintain standard product line around the world.

Domino’s can take different routes when operating in different cultures. One solution may be to modify the product to suit local tastes. In Italy, the company could have used different sauce and fewer toppings. It could also have researched consumers’ preferences before deciding the product line. This is why the marketing concept of 4Ps is so important because one of the Ps is product. The company should make sure it is offering a product or service that is desired by the targeted consumer segments.

Another approach would have been to sign a local franchisee with local knowledge who knew what Italians prefer and how company’s products could be modified to suit local tastes. Such an approach would have taken advantage of Domino’s strong brand as well as local approach to pizza to build a loyal consumer base.

Domino’s could have taken the same approach that it did in the U.S. which was to admit its mistake and announce plan to revamp its entire pizza product line (Li, 2011). The company could have developed a marketing campaign admitting to its Italian consumers that it made mistake in understanding their preferences and has taken their feedback into account by revamping entire product line. Such an approach would have improved company’s reputation and goodwill among local consumers. The companies should not be afraid to admit their mistakes in other cultures because it may also be viewed as gesture of appreciation of local culture.

References

Gibson, R. (2006, September 25). Small Business (A Special Report); Foreign Flavors: When going abroad, you should think of. Wall Street Journal, p. R.8.

Li, C. (2011, March 28). The Art of Admitting Failure. Retrieved October 20, 2012, from http://www.washingtonpost.com/wp-dyn/content/article/2010/01/12/AR2010011201696.html

Wade, J. (2004, March). The Pitfalls of Cross-Cultural Business. Risk Management, 51. 3, pp. 38-42.