Local markets’ cultural differences

International companies have a particular interest in

local markets’ cultural differences

When a company intends to move beyond its domestic market, then local markets’ cultural differences come out

Cultural differences in local markets Signewords

Their international expansion offers access to massive customer bases and, therefore, rapid growth.

For such a move, it is of vital importance to take into account:

  • cultural variations and cultural barriers to communication
  • local customs
  • manners
  • taboos
  • legal environment
  • negotiation and consumption habits
  • and a multitude of other challenges

Marketing and communicating across cultures poses several questions due to

local markets’ cultural differences

A company’s management will need to answer them when moving to new markets, and so:

Communicating across cultures Signewords

  1. Will the company’s product or service work right for a specific geography, local demand, and cultural variations?
  2. Will the language barrier and cultural preferences require translating marketing stuff and re-adjusting products to be attractive in a local market?
  3. How to overcome the difficulties of cross-cultural communication?
  4. How to fit into the local regulatory environment, understand existing risks, or movement of product and finance?

Any mistake may upset sales, cause legal problems, or leave customers unhappy.

Let us focus on the need to take into consideration local negotiation cultures

As it is practically impossible for any company to get into a local market without negotiating terms with possible:

  • regulators
  • partners
  • customers

Success requires a lot of patience and understanding of cultural differences and ways of conducting business, as culture strongly influences how people perceive, communicate, and act.

Wrongly enacting or misinterpreting communication across cultures affects transactions, while cultural differences between business executives can hamper or disrupt transactions

One such case was Enron’s massive, $3 billion investment in liquefied natural gas power plant project in India:

  1. Begun in 1992, the Dabhol power plant in Maharashtra state was to generate a fifth of India’s electricity.
  2. However, endless disputes between Enron’s subsidiary, Dabhol Power Company, and the Maharashtra state government over the deal’s terms went so wrong that the deal collapsed.
  3. The Indian side mistrusted the speed of negotiating process imposed by the Americans.

Local markets’ cultural differences may define many aspects of negotiations

Cultural specificity in negotiations Signewords

So, for North Americans, a negotiation goal is quickly concluding a contract, while only a minority of Indian executives would have a similar view,

valuing establishing a trustful business relationship as characteristic of high-context cultures.

While Japanese businessmen claim that they approach negotiations as a win-win process among Spanish executives, few would agree with that.

There are other subtle examples of cultural variations that influence the atmosphere of negotiations,

such as physical distance between persons.

Especially in the case of different gender

So, an Iranian businessman would never publicly shake hands with a female counterpart.

Attitude towards time and punctuality

  • Germans renowned for punctuality
  • Latin Americans forever late
  • Japanese proceed with transactions only too slowly
  • while Americans are ever in haste to strike a deal

Role of leadership and consensus within negotiating teams

international team Signewords

Americans demonstrate authoritarian tendencies and small negotiating teams while the Chinese pursue agreement in their bigger crews, which are slower to act.

Using a mobile in public

It is considered rude in Japan but common among Italians or Indians.

Finally, Americans are quick to address negotiating partners by their first name to demonstrate friendliness, while the Japanese consider it an act of disrespect.

Glossary applied to local markets’ cultural differences

Cross-cultural communication

A verbal or non-verbal communicational activity involving people from differing cultural backgrounds.

The increasingly widespread communication across cultures is an essential characteristic of globalization and the internalization of businesses.

As a global flow of information, capital, and people necessitates:

  • Interaction between representatives of different nations
  • Cultural and religious traditions
  • Societal and educational systems and habitats

This type of communication requires an understanding of how people from different cultures:

  • act
  • think
  • communicate
  • perceive the world around them

High-context culture

Cultural backgrounds Signewords

As opposed to the low-context culture → in which case businessmen and people in general, predominantly Westerners:

  • tend to base decisions on facts and evidence rather than interpersonal trust,
  • preferring all transactional specifics noted in contracts and other detailed documents.

Trust is considered the most critical part of social interaction and business dealings, as characteristic for areas in:

  • the Middle East,
  • South and East Asia,
  • and Africa.

Organizations in high-context cultures are collectivist and focus on interpersonal relationships, → while individuals are focused on getting to know well their business counterparts,

to get an intuitive feeling on the issues in question → while also being more concerned about group success rather than individual achievement.

Cultural barriers to communication

Cultural barriers to communication Signewords

Obstacles to successful communication between representatives of different cultures that imply differently:

  • mindsets
  • languages
  • perceptions
  • values
  • attitudes

Between the communicating parties, also accompanied by various:

  • prejudices
  • ethnocentrisms
  • confessional devotions
  • business traditions
  • political opinions

Among the most manageable barriers to observe and cope with is the language barrier

The language barrier Signewords

As commonly representatives of different cultures would also speak other languages that may:

  1. on the one hand, require the need of an interpreter as a mediator between communicating parties during verbal interaction,
  2. but may also imply different interpretations of words and concepts that may look very similar (e.g., the so-called translator’s friend),

causing the risks of misinterpretation and misunderstanding.

Cultural variations

It refers to the diversity in predominant:

  • mindsets
  • traditions (such as habitat, food, folklore, music, or clothing)
  • languages (including mimics and body language)
  • confessions
  • social practices and taboos
  • values
  • skills
  • opinions
  • prejudices
  • attitudes (such as esthetical or consumer preferences),

that different cultures exhibit around the world.

Different linguistic practices Signewords

Examples of local markets’ cultural differences are numerous

But maybe well illustrated by the multitude of different linguistic practices, e.g.

  • There are 122 major languages and around 1600 other languages in India alone, → while in much smaller Papua New Guinea, more than 750 languages are spoken.
  • Or in the forms of greeting that range:
    • from a simple handshake and occasional kiss, in the Western cultural tradition
    • to hongi – traditional Maori greeting in New Zealand, done by pressing noses and foreheads simultaneously.

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