use Hofstede’s characteristics to differentiate international and domestic busin
ID: 428860 • Letter: U
Question
use Hofstede’s characteristics to differentiate international and domestic business operations. This exercise will help identify the key characteristics that drive business decisions on an international and domestic level.
Part 1: Pick three individual countries, one in the Middle East, one in Asia, and one in Europe. Apply Hofstede’s characteristics to each one, and state if the characteristic is low, medium, or high in each country. Also, explain why each country deserves that description.
Part 2: Given your descriptions, explain which country is most like the United States and which country is most unlike the U.S. Your response must be a minimum of three pages in length.
Explanation / Answer
Part 1: Pick three individual countries, one in the Middle East, one in Asia, and one in Europe. Apply Hofstede’s characteristics to each one, and state if the characteristic is low, medium, or high in each country. Also, explain why each country deserves that description.
Part 2: Given your descriptions, explain which country is most like the United States and which country is most unlike the U.S. Your response must be a minimum of three pages in length.
We are assuming Three Countries- Saudi Arabia, India and Netherlands from Middle East Asia and Europe.
The main intention of the business is to continuously grow and stay profitable and provide benefits to all its stake holders. Conducting business internationally and Exporting products / service is both highly profitable and challenging.
Business operations in international market and domestic market are never same. It’s extremely important for any company to understand the differences between domestic and foreign markets, at the same time they should also not try to retrofit their predefined standard and solutions to new market as its already tried and tested in domestic market and there is no guarantee that it would work in same way and provide same results as seen in domestic sector.
There are always new services to offer, new things to learn and new aspects to ecosystem to be studied about the new country business will be entering. Business will have to acquire knowledge about the different domestic and international laws and regulations, Different customer demands and buying patterns and purchasing power. Accordingly business will have to change / modify their business strategies to make their product more lucrative to new country and market it’s entering into.
It is extremely significant to understand that business operations will be governed and moderated by the local market conditions and culture and not by the culture of business operations you have in your home country.
Difference always exists in cultures, local politics / government policies, legal Authorities rules and systems, technologies, competition, logistics, and media.
Even in big countries like India you observe there is a huge difference in culture and business operations among north and south, so when you compare cultures of two countries, there will be certainly many differences both in their social and business culture.
Social norms and prevailing Business practices determine how business operations are carried out in any society and how customer patterns vary from market to market and how their preference and choices change over a period of time. These also influence the perception of consumers about goods and services of companies and their offerings.
For the comparison purpose we will take example of Products like Condoms being sold by a company in Countries like Saudi Arabia, India and Netherlands
Cultures: There is a huge cultural difference between India, Saudi Arabia & Netherlands.
For a company to sell product like a Condom, application and use of which is same and pretty much common / standard across countries, its business strategy cannot be same.
For e.g. in Saudi where people follow Islamic rules consider using condoms is against Islam and do no highly support it. Where as in India which is highly developed and technologically advanced Condoms are still sold and brought with a secrecy, whilst in Netherlands you can find condom vending machines even in school and colleagues as it’s considered as a product of need for daily life and there is no fuss about it.
Women cannot purchase these products in Saudi, and in some Asian countries like India if a women purchase condoms she is judged and is considered with low moral values. While in Netherlands it’s common to have condom and anyone can freely by it from anywhere.
Competition: Local and other international players always are a threat to business operations, it’s highly difficult to change the buyer’s perception and their loyalty to a brand. In some cases we have observed a particular brand becomes synonymous to the name of product and brand is used by buyers to identify the product, for instance Coca Cola or otherwise known as Coke is synonymous to Carbonated / Aerated soft drinks or to soda, even when there are multiple vendors and multiple products available in market. Identifying the competition and formulating and strategy for your product according to that is extremely important when entering a new country and in new market.
Political conditions /Government policies /Legal Authority rules & Systems
Various countries have various laws, legal systems, authorities and their local political and government policies determine how business operations are conducted in country.
For e.g. In Countries like Saudi and India you cannot sell clothes or article which are not acceptable to any particular religion for instance you cannot have images of God on your clothes in India or in Saudi while there is no such restriction in Netherlands.
In Saudi there are restriction on the type of cloth people can buy and wear, there are even restrictions on the color thus the companies and brands which are sold in Netherlands or India cannot be sold as it is in Saudi and vice versa.
For instance government policies don’t allow consumption and sale of beef in India while there is no restriction on export of beef, similarly there are restrictions ion Pork in Saudi Arabia while there is no such restriction in Netherlands.
Based on these political and local government policies and guidelines companies like McDonalds have adjusted their Menu as per the respective countries.
International Law: International law governs and controls the business operations to a very high degree. Production and sale of certain items for example medicines is different across countries. A simple medicine which is sold in India as an Over the counter medicine cannot be the case in Netherlands or Saudi Arabia, certain medicines which are banned in India are ok to be manufactured in India and to be sold in international market, so is the case with other countries.
Another example could be sanctions imposed by countries like USA on the purchase of Crude oil from countries like Iran, these kind of scenarios also affect and impact the business conditions and scenarios.
Technology: There is a huge technological difference between available technologies and system across countries, for instance 4G cellular network and readily available in countries like Netherlands across the country but same was not the case for countries like India or Saudi where not the entire country had the technology to use 4G network across the country.
Thus the mobile manufacturers had different products and different strategies for these countries. Every country have different development and technological advancement levels and hence the business strategies should change according to that
Logistics: Logistics is considered as the backbone of business operations, it’s never same across countries and like technologies, and infrastructure in foreign markets will be at different levels of development. This will have impact on the ability of business to bring product to market. It’s important to study the market and logistical operations and business process how product reaches in market before entering into new market.
Media: Product branding and promotion or in other words advertisement of product or service is one of the important factors in of business strategies and operations. Different products have to be advertised in a complete different way in different countries. For e.g. an advertisement of condom in India would not be the same what they have in Netherlands. Whatever is acceptable in west may not be acceptable in countries like India or Saudi.
There are various platforms to advertise your product like print media, TV, Internet etc. but these all vary across countries. And the market penetration of these media channels would be different within and across the countries hence the strategy should be formulated according to that considering all these aspects.
Western countries like European Countries are more like USA and Countries in Middle East or in Asia for e.g. India and Saudi are different from USA.
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