Since the increase in the globalization process has become evident, the gap between different cultures and societies has lessened considerably. This has given rise to a new branch of management which focusses on cross cultural issues. Managing a business on an international basis can prove to be a highly challenging task as there are different cultures involved. Here businesses need to study the market before making their entry and take effective steps to ease in the entire process. These challenges that the managers have to face can be internal as well as external. In both these cases it is necessary for the organization to have all the required details and information before venturing out in new unexplored markets.
To understand the challenges that business face in foreign transactions it is important to understand the concept of international management. International management can be explained as the branch of management which focusses on the international business operations and plans. It refers the unidirectional crossing of domestic borders to conduct business operations at a global level. The definition of international management does not just cover the basis of a new unknown market but also has cultural aspects. The four dimensions of international business management are economical, educational, legal political and socio cultural. To manage a cross cultural venture a business must realize that it must undergo a radical change process to accommodate the culture and other related factors of the newly located market. There is no specific formula to have the perfect cross culture interaction but a business can study the challenges and barriers that exist and devise efficient ways of tackling them. One such important challenge faced by managers while communicating to different cultures is ethnocentrism. This is the biggest barrier faced by most business entities and their managers regarding this issue. Ethnocentrism is the belief that ones own culture is morally and rationally right and having prejudice against other cultures. Any business entity that wishes to conduct international trade and business in a foreign country must realize that such prejudice could lead to a financial loss in the long run. There should be a mutual respect between the people of different cultures for the business to flourish. The reason for the failure of most cross cultural communications is the ethnocentric mindsets of the organizations involved. This ends up putting the entire venture into jeopardy.
Another important barrier that exists is inflexibility. The inability of a manager to adopt the new approaches and practices of a different culture ends up affecting the business in the long run. A manager must realize that to achieve a positive market response the organizations must first fit into the market. Even though it is true that consumers sometimes expect specialization and foreign culture variations in their product, the majority of them want their own culture embedded in it. Thus the final product or service offered must be tweaked and redesigned for the host country in such a way that the customers are willing to spend their income on it. This also applies for trading organizations in dealing with the host country’s trade organization.
Most managers are open to cross cultural business ventures but there is always the problem of a communication gap in the new market. This barrier is the most difficult to overcome and requires pre planned actions. The business entities must be able to develop a suitable structural plan and framework to challenge this issue, and all this must be done before undergoing the venture. The communication gaps are mostly due to the different languages and cultures involved in the entire process. The final challenge that is limited to the managerial sector rather than the business, is personal values and prejudice. Hofstede devised a framework for cultural values at an individual level and apart from mentioning ethnocentrism he also goes on to suggest that the personal beliefs and values of an individual are essentially important in cross cultural mergers. A managers personal feelings about his own culture or the culture of the host country should not get in the way of the business operations. This has always been a big challenge in international trade and has hindered its growth highly. These challenges are mostly internal and can be dealt with an open mind. But there also exist external challenges like mass domestic competition and consumer ignorance. Such factors cannot be controlled entirely but can be taken care of by efficient and effective management techniques. The basic principles of management are similar in every country and thus it is the most logical way of dealing with external forces and challenges. To deal with cross border business problems, the organization will require the assistance of a domestic organization which can help in understanding the market. Market research and segmentation is highly crucial for such cross border ventures because they affect the final result in an adverse manner. To deal with an international market it is a must to have an international strategy which is completely new and innovative. The successful implications of these aspects is important for an organization to achieve good international market relations.
A three step model has been suggested by experts which managers can utilize to improve the level of cross cultural communication in their ventures. This model suggests that a manager must firstly understand the style of communication that is required or needs to be created in the foreign market. Then the cultural values of the new market should be explored and integrated in the business’s approach. And finally the manager should accommodate only the right and required competencies that will help in creating subtle and effective relations in the new cultural market. This three step approach can help immensely in overcoming the challenges faced by managers and organizations while conducting business in cross cultural borders.
International management has been evident in todays world due the mass globalization process that has taken off rapidly. In such a globalized world, it is absolutely necessary to take advantage of cross cultural platforms. The business organization have realized this fact and this has led to a massive increase in foreign business opportunities. But there are many challenges that managers have to face while venturing out in other terrain like ethnocentrism and domestic competition. These challenges, both external and internal, can be warded off by subtle planning and controlling of the business activities. Innovation is a key factor in such cross mergers and could end up being the sole decisive factor of a company’s future growth and expansion.