ECONOMICS

Economics

Economics

Question 1

During the last few decades, companies have been dealing with an increasingly competitive environment. Forces making possible globalization such as the international trade liberalization, the integration of international production, research and marketing by major Multinational companies, as well as the emergence of major economic regions like the European Union have facilitated companies to invest overseas in order to get competitive advantage. While operating globally, global company's influences and are influenced by the local national cultures of host countries. Most of the successful international business relies on having a clear strategy, pricing, cost control, product quality, effective quality management and understanding of national cultures.

Culture can be viewed as an onion with several different layers that can be peeled back to reveal core values. The outside layer feature explicit manifestations of the culture that includes product, food, language, markets, arts etc. The intermediate layer includes the norms and the values relative to individual cultures; these includes that norms gives us a feeling of this is how I normally should behave whereas, values is that norms that provide us feeling of this is how I desire to behave”. International companies must not only have empathy with other cultures rather they also need to have information on how to devise strategies for conducting business successfully in the host countries (Sitkin & Bowen 2012, p.132).

Religions and languages are significant constituents and main determinants of national cultures that influence the global companies while operating in host countries. The impact of religion has often affected the conduct of international business, whether it is in the days of Venetian maritime trade, the difficulties and complexities of commerce along the central Asian silk route, or the triangular trade that has involved the transportation of African slaves to North America in the eighteenth and nineteenth centuries. International companies are greatly influenced by the religions while operating in host countries, because of complex conflict between religion of their own country and religion of host countries. The differences in religion overrode the similarities between the countries and thus create many complexities for international businesses while operating in host countries (Sitkin & Bowen 2012, p. 136).

Another major determinant of national cultures is language that is being considered as medium of communication in each nation and in different parts of the world. Language greatly affects the operations of international businesses in host countries. According to Edward Hall's (1976) the national cultures that influence and get influenced by global companies can be categorized as low context and high context cultures. Low context national culture influence and get influenced by global companies through language and special signals. Low context cultures value logic, value verbal abilities and reasoning. Whereas, high context cultures influence the global companies by identification of the fact that physical context and the nature of people are key ways by which communication is made (Sitkin & Bowen 2012, pp. 138-144).

The high context business culture is reflected very clearly among Chinese that is expressed with the concept of ...