Module 4: Investigating the cultural factors influencing international business

Cultural factors

The cultural factors in a country relate to the beliefs, norms and attitudes of the population.

Language

It is estimated that around 7,000 languages are spoken worldwide. Different languages are an important factor when a business exports. If the people of the country speak a different language, then the business has to consider how to communicate with other agencies and businesses in that country as well as how to communicate with employees and customers.

Ethnic composition

An ethnic group is defined as a community or population consisting of people who share a common cultural background or descent.

Countries usually have a mix of ethnic groups.

The UK Census records ethnic background in 19 categories in 5 main sections:

White
Mixed or Multiethnic Groups
Asian, Welsh Asian or British Asian
Black, Black Welsh, Black British, Caribbean or African
Other Ethnic Group

Pause for thought

Use the information below and then answer the questions that follow

Proportion of usual residents (aged 16-64) within each ethnic group

UK Census

Which ethnic group has the most people

who are not in work?
who are students?
in management positions?

Can you think of reasons for these differences?

Social structures

Social structures are concerned with the status of people in the society. For example, in the United Kingdom, it is often noted that people belong to a working class, middle class or upper class. Differences in education, income and culture can exist between the different classes. In other countries there are also social structures similar to this, e.g. in countries like India, Pakistan and Nepal a caste system still exists. In India this system classifies people into 4 classes namely the Brahmin (priests), the Kshatriya (rulers, administrators and warriors), the Vaishya (traders and farmers) and the Shudra (labourers).

It can be important for businesses to understand the social structures of a country in order to determine how to target their products.

Religion

About 85% of the world's population identifies as religious. The largest religion in the world is Christianity, followed by Islam, Hinduism and Buddhism. Beliefs that go hand in hand with religion can have an impact on businesses, e.g. Muslims believe that money has no value in itself and therefore their banking systems are very different to other countries.

Pause for thought

Follow the link to the McDonald's India web site:

McDonald's India

The majority of India's population are Hindu.

What impact has this had on McDonald's menu in the country?

Values

In some countries, bribery and corruption are a big part of how business happens. A bribe is a payment in order to persuade someone to do something and although it is customary in a number of countries, it is not generally acceptable.

Transparency International combats corruption in business and publishes a transparency index showing which countries are counted as more vulnerable to corruption.

Attitudes to business

Countries around the world have different approaches to doing business. For example, punctuality to meetings is very important in China but in India it is more usual for people to be late to meetings. In both countries saying 'no' is considered rude, so the use of the word should be avoided. It is important that businesses ensure they research and understand local practices.

Attitudes to work

You will also find different attitudes to work around the world. For example, in the graph below you can see the percentage of people in a country who say that work should come first – even if it means less free time (research by World Values Survey, King's College London). You can see a very wide range between the largest and the smallest.

The stratification system

Pause for thought

Watch the video:

How do meetings in Japan differ from meetings in the USA?

Openness to change

Some countries are more open to change than others. These countries are more likely to be at the technological cutting edge, which can be beneficial for businesses.