International Business Essay Example

Globalization

Since the time globalization started spreading around the world, people debate whether it is good or bad. Globalization has both a lot of supporters and opponents. This paper seeks to explore the main arguments in this debate. Globalization can be examined though its influence on the five main areas: jobs and wages, labor and environmental regulation, income inequality,  national sovereignty, and cultures (Wild and Wild 37).

Jobs and Wages

  • To start with, globalization has twofold influence on jobs and wages. The main arguments against globalization are that it eliminates jobs and lowers wages in developed countries and exploits workers in developing countries. Those who live in the developed countries have low wages which decrease employee’s loyalty and job security. Meanwhile, those who live in the developing countries have to work nights for the sake of awaken U.S. customers. The main arguments for globalization are that it promotes wealth and efficiency around the world. Besides, it creates jobs and boosts wages. The most vivid example is that of IT industry in India (Wild and Wild 40). Outsourcing helps to advance India’s economy, creates jobs for Indian population and gives then an opportunity to earn good money. Wages of Indian IT workers may be lower comparing to other countries (King), but they are high comparing to average wages around the country. Thus, not only does globalization creates labor market flexibility in developed nations, it also improves the economies of developing nations.

Labor and Environmental Regulation

  • The second area of globalization influence is labor and environmental regulation. The opponents of globalization claim that it cuts labor’s bargaining power and pulls down global labor standards. However, the proponents of the globalization say that there is no evidence to support both of these claims. Even when globalization antagonists blame it for exploitation of labor markets and environment to produce goods and return to the home country, there are no grounds for that. Furthermore, such claims create a distorted image of international corporations without a sound reason.

Income Inequality

  • The third area of globalization influence is income inequality, which is measured in three dimensions. The first dimension of global income inequality is inequality within nations. Opponents of globalization argue that it favors closing factories in high-wage developed nations and moving them to low-wage developing nations. According to them, globalization widens the gap between workers who perform manual labor and those who perform professional jobs. However, some research shows that this statement is disputable (Wild and Wild 42). The second dimension of wages inequality is inequality between nations. Globalization is frequently thought to increase the gap between poor and rich nations. Nonetheless, this gap does not necessarily exist in all nations to the same degree. The third dimension of income inequality is global inequality. The critics of globalization argue that it widens income inequality between all people of the world. Meanwhile, the supporters insist that globalization facilitates the poverty decline, though this process differs from country to country.

National Sovereignty

  • The next area of globalization influence is national sovereignty. The arguments of the two sides are crystal clear here. Opponents of globalization argue that it undercuts democracy and destroys national sovereignty. The counterargument of supporters is that globalization spreads democracy and that national sovereignty must be viewed from a long-term perspective.

Culture

  • Finally, the last area of globalization influence is culture. Opponents of globalization say that it promotes sameness among cultures. According to philosophers Theodor Adorno and Max Horkheimer, spreading of products of cultural industry leads to society degradation and to irreparable loss of the essence of being human (Horkheimer and Adorno 102). Those who support globalization believe that its influence on culture is positive, and that globalization fosters cultural individuality. For instance, Richard Hoggart believes that adaptation to the global culture is not passive and automatic. There is evidence that cultures of the developing countries can resist the influence of the developed ones (Hoggart 19).

Knowledge of local religious beliefs and practices is important for business because religion affects many aspects of life of an individual. On the one hand, religion shapes one’s attitude to work, savings, and material goods. Besides, it determines working hours, days and weeks, weekends, holidays, and calendars. In particular, Muslims’ day off is Friday, Jews’ is Saturday and Christians’ is Sunday. Religion also includes diet and food prohibitions (“What Is Religion?” 2/10/2014, notes). Knowledge about all that is important for business to accommodate to it, providing flexible time off on holy days and posting holy days for different religions on the company’s calendar. Religious beliefs are part of a culture, and detailed knowledge of a culture enables a company to function effectively within it.

On the other hand, religion is the origin of human values, ethics, morality, and laws. It is important to know in order not to offend people from another culture unintentionally. Knowing how religion impacts business is particularly essential in countries with religious governments. Businesses and individuals are required to obey the laws of the countries in which they operate or live (“Ethics, Morality, & Law” 4/14/2014, notes).

Cultural literacy

Cultural literacy is comprehension of the influence of cultural differences between nations on the business practices around the world. This comprehension is vital in international business, especially when conducting cross-cultural negotiations. Cultural literacy leads one to the cultural competence, “an ability to interact effectively with people of different cultures and socio-economic background” (“Cultural Competence” 5/12/14, notes). Therefore, every international company should evaluate attractiveness of a certain area as a place for doing business based on the pilot survey of its cultural peculiarities. For that, a firm should get information about cultural worldviews in the chosen area, become aware of cultural differences, which will lead to developing the capability to understand and successfully interact with people of different cultural background.

Any company can use cultural literacy to its benefit. When it can adequately assess human and environmental differences among cultures, it can evaluate whether a particular area is attractive for doing business. Cultural literacy embraces knowledge of aesthetics which will help the company to determine which colors and symbols will be effective in promotion and advertising. Being culturally aware of local values, the companies can predict future employees’ attitude toward work and probable achievements. Knowledge of a culture’s education level helps to predict the quality of the workforce and people’s standard of living. Awareness of physical and material environments helps to foresee local work habits (Wild and Wild 67). The most important for evaluation of the attractiveness of a particular place for doing business is knowledge of local social structure. It helps to assess business decisions about advertising methods, production-site selection, and the costs of running business in a certain country. Finally, cultural literacy helps company’s leaders to better manage employees, improve and market products, and conduct cross-cultural negotiations effectively.

The comparison of culture to an iceberg fits well into cultural literacy. If one depicts culture as an iceberg, the associations are rather clear. People cannot see an iceberg as a whole. Only the part that is above the water surface is visible. The same is with culture. There are some cultural features that constitute only the tip of the iceberg. These are visual features that strike the eye of a foreigner immediately. They include flags, language, dress, food, literature, visual arts, performing arts, music, games, festivals and holiday customs. These are the things that tourists can observe during the first week of their stay in another country and that they will tell their friends about after they return home.

However, culture is much more complex than that, and the iceberg model of culture reflects its complexity. Only as the time passes, businessmen can get a deeper insight into a culture of another nation. Gradually, they can grasp the essence of communication patterns, which embrace body language and etiquette.  As the level of cultural literacy deepens, the business managers learn about different things. In the course of time, the sub-surface parts of the iceberg may reveal themselves. These include social values, norms and rules; gender roles, religious beliefs and expectations; attitudes toward social status, learning styles and problem solving, importance of time and space, assumptions about different things, perception (Martinelli and Taylor 20). All these are invisible for the first-time comer, but they play a crucial role in everyday communication and leading successful business anywhere. Only those who possess this knowledge can have a prosperous business. They can choose effective strategies in negotiating, marketing products, and managing operations in other cultures. They can rely on both the parts of the iceberg that are above the waterline and those that are hidden below the waterline. Otherwise, they would fail in establishing successful business worldwide.

Religion plays an important role in understanding a culture. Culture and religion shape the character of society. While culture defines the social forces within a community, religion delineates the way the community views its mission in the universe based on the local culture. Considering the correlation between religion and culture, Paul Tillich stated: “In abbreviation: religion is the substance of culture, culture is the form of religion” (Zhigang 192). Religious beliefs usually do not surface but are preserved inside of society and culture. Religion is important to culture understanding because no matter what the company sells, it should care about people it serves. Therefore, it should base its business on some common thread rooted in understanding local people’s beliefs and practices.  The more so, in some places, religion is very significant in the lives of people. However, it permeates history, art, beliefs and customs even in secular societies.

It is obvious that religion is essential for people of all cultures. The ones who understand religion can understand a culture better for the following reasons. First, religion is a significant forecaster of health and other cultural variables. Second, it is the origin of certain motivational values. To sum up, religion has a powerful impact on the beliefs and practices of cultures. Nevertheless, cultural norms, behaviors, and changes also influence religion. For instance, cultural beliefs and practices can shape an individual’s perspective on death (Tarakeshwar, Stanton, and Pargament 390). For that reason, culture and religion can give one a better understanding of cross-cultural similarities and differences only when examined together. Because of the fact that culture and religion are inseparable from one another, both are important in understanding society, its beliefs and practices.

Modern world is diverse and consists of various cultures

It is true especially in relation to business, as people from different cultures are likely to respond differently in similar business situations. As cultures can differ greatly from one another, people need some patterns of cultural behavior to deal appropriately with each of them. For that reason, there are a few acknowledged ways of classifying cultures. These are cultural models by Kluckhohn and Strodtbeck, Hofstede, Trompenaars and Hall, which reveal the degree of difference in comparing the cultures. The mentioned cultural models are based on differences in characteristics such as values, attitudes, social structure, etc. With the help of these models, business managers can study culture and develop their cultural literacy. According to Treven, these skills are vital as she says, “…studying culture is essential for managers. They have to think globally, notwithstanding the country they live in. No matter what their company produces or to what market it sells the products, it will encounter global competition everywhere” (Treven 557).

The most popular culture models are the Kluckhohn–Strodtbeck and Hofstede frameworks. Each of them can be used to analyze a culture in a way that benefits business. When considering the Kluckhohn–Strodtbeck framework, one should mention the following benefits. This cultural model compares cultures using six dimensions. These include relation to the environment; focus on past, present, or future; trustworthiness; desire for accomplishment; group–individual responsibility; and public versus private nature (Wild and Wild 69). In regard to the first dimension a company can find out about the relationship of humans to nature and what people consider the more powerful source, environment or humans. The second dimension determines how people value their time and place there their actions. The third dimension gives the insight into beliefs about basic human nature and whether people are easily controlled, trustworthy and responsible. The fourth dimension reveals the key orientations of the people’s life. It is important to know in order to motivate employees correctly. The fifth dimension deals with distribution of responsibilities for the common and private welfare. The sixth dimension distinguishes whether people prefer to conduct most activities in private or in public. This framework can be used successfully when comparing western and eastern cultures.

In creating his own cultural model, Hofstede concentrated on the work-related values. The framework of this Dutch psychologist compares cultures along five dimensions. These are individualism versus collectivism; power distance; uncertainty avoidance; achievement/ nurturing (or masculinity/femininity); and long-term orientation. This framework can be used successfully when comparing western and eastern cultures too. A vivid example of beneficial application of Hofstede’s cultural model to business can be found in the cross-cultural study of Herbig and Gulbro (1997, 158–168). The results of the study show how cultural literacy and working with Hofstede’s cultural model help in cross-cultural negotiation. This framework can help companies understand many aspects of a culture, including individual or collective actions preferences, accepted power and status, attitude to the future, prevailing gender stereotypes and a culture’s view about the future. Treven also points to the comparison between two opposite cultures, that of the US and that of Japan. The United States represent a culture which is individualistic, masculine, with lower level of uncertainty avoidance, and with short-term orientation. Meanwhile, Japan is a collectivistic feminine culture, with high level of uncertainty avoidance and long-term orientation (Treven 551).

One more framework applied to general business and management is the Trompenaars’ culture model. This framework is even better developed as it has seven dimensions. These are as follows: universalism/ particularism; individualism/collectivism; neutral /emotional; specific /diffuse; achievement/ascription; sequential/synchronic; internal/external control. The first dimension defines priorities of rules over relationships or vice versa. The second dimension determines group or individual preferences of a certain culture. The third dimension is about the level of emotiveness in a particular culture (for instance, southern nations against northern ones). The fourth dimension deals with separation between private and working lives. The fifth dimension concludes how one achieves status, by their efforts of by other people’s recognition. The sixth dimension is related to distribution of tasks within a particular timeframe. The last dimension helps the company with determination of one’s control compliance.

Trompenaars’ culture model is especially effective in understanding a culture’s relationship to change is its orientation toward time. While cultures with past orientation may resist change, the ones with present orientation display would rather accept it. To add even more, cultures with future orientation are likely to perceive change as desirable and even inevitable. Due to the Trompenaars’ culture model, managers can recognize sources of resistance to change as well as foresee and reduce them. The most popular forms of resistance to change are traditions, threats to power and influence, resource limitations, and fear of the unknown. These are typical for all societies.

Finally, Hall’s model is about two dimensions, low-context and high-context approach to culture based on verbal and non-verbal signs to transmit meaning. According to this model, high-context cultures prefer long-lasting relationship, exploiting context, spoken agreements and slow change. Meanwhile, low-context cultures favor shorter relationships, being less dependent on context, written agreements and rapid change. This framework can be best used for understanding the differences in cultures and motivation. Each culture in which a business operates influences the way of motivating employees to a great extent. For instance, “in collective countries, such as Japan, giving an individual reward to an employee could embarrass the recipient and thus be demotivating. In high-context collective cultures there are often expected norms of behavior for particular situations” (Treven 552). It is doubted if an individual who acts against the group norms will be rewarded. Therefore, company managers have to be aware of different cultural peculiarities in order to manage the business well.

Works Cited

Herbig, Paul, and Robert Gulbro. “External Influences in the Cross-Cultural Negotiation Process.” Industrial Management & Data Systems 97.4 (1997): 158–168. Print.

Hoggart, Richard. The Uses of Literacy: Aspects of Working-Class Life. London: Penguin Books Limited, 2009. Print.

Horkheimer, Max, and Theodor Adorno. Dialectic of Enlightenment: Philosophical Fragments. New York: Stanford University Press, 2002. Print.

King, Rachael. “The New Economics of Outsourcing.” Bloomberg Businessweek. 7 Apr. 2008. Web. 30 May 2014.

Martinelli, Silvio, and Mark Taylor, eds. “The Iceberg Model of Culture.” Intercultural Learning T-kit.. Strasbourg: Council of Europe, 2003. Print.

Tarakeshwar, Nalini, Jeffrey Stanton, and Kenneth I. Pargament. “Religion: An Overlooked Dimension in Cross-Cultural Psychology.” Journal of Cross-Cultural Psychology 34 (2003): 377-393. Print.

Treven, Sonya. “International Training.” Education + Training 45.8/9 (2003): 550-557. Print.

Zhigang, Zhang. “Re-understanding of the Social Role or the Cultural Function of Religion.” 2008, 183-195. Web.

Wild, John J., and Kenneth L. Wild. International Business. Upper Saddle River: Prentice Hall, 2012. Print.