International business expansion and cultural impacts yielding success or failure: The impact of culture on the global economy

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International business expansion and cultural impacts yielding success or failure: The impact of culture on the global economy Doctoral Dissertation Proposal Business problem Hodge (2001) states: “Securing a global competitive advantage is the greatest challenge facing… business today.” After all, Scott (2004) tells us going “beyond the borders” is the next logical step for organisations once they’re established. In fact, among US franchises along, while only 3,365 had international units in 1971, by 1990 the number increased more than 10 fold to 39,000 franchised units (Scott 2004). Macnaghten and Jacobs (1997) emphasise the need to understand the manner in which the public of a target country identifies with and can support a product line or organisation in order to assure sustaintability, stating that if this is not properly studied, the likelihood of business success in expansion into a foreign country is highly unlikely. Not only is an understanding of how the target country identifies with the product, but it is critical to understand the culture of the target country during all negotiations and business interactions in order to assure success. For example, Ostermiller (2004) cites the incident of a businessman arriving in casual attire inclusive of sandals to dine with Chinese representatives of an organisation. The deal was quickly quashed as straw sandals, like the ones worn by the casual businessman, represent funerals within the Chinese culture and representatives were highly offended at the implication and lack of regard for their heritage (Ostermiller 2004). Frase (2007) states many international deals are often lost due to the misinterpretation of a single word. Thus, the statement made by Shattuck (2006) that suggests a proper business and cultural foundation is critical in order for businesses to succeed in their plans for expansion or start-up in a new country is accurate and presents a growing problem in business today. There is a widespread, yet inaccurate belief that if one is successful in their own country, expanding into another is a natural step that should, theoretically, proceed without any problems. This is clearly not the case in the real world. Research phenomenon Kanter and Corn (1994) tell us which most business negotiations are fraught with tension, when acquisitions of international firms are involved in order to expand business in a target market; yet most frequently their success or failure is based on cultural values. Hodge (2001) believes that, while “hard” factors, including currency fluctuation, economic condition and political stability are critical to assess in a potential country of planned business expansion, it is the “soft” factor, cultural differences and cultural awareness that can make or break your business. For example, how are female managers viewed by the country planned for business entry? Cordana, Scherer and Owen (2002) determined that gender was the ultimate explanation for three times the variance than culture specific issues within a country; however, the attitudes towards gender are part of a country’s culture where resistance to female managers by male counterparts would be a source of friction. This was also highlighted in research on cross-cultural attitudes of organisations in India,

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