Cultural Challenges of Doing Business Overseas Term Paper

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Business in Czech Republic

Doing business in a foreign country is never easy. It is not so much about the tax regulations, import/export duties or getting a license. The main challenges accrue from the differences in cultural values and social or religious beliefs. For Steve, it may prove easier to at least communicate with the people and establish a bond with them. It is also important to know that Czech Republic is very keen on attracting foreign investment and a strong U.S. presence is desired. For this reason, Steve doesn't need to worry about whether he will be welcome in that country or not. As for cultural differences, it must be borne in mind that both Czech Republic and the U.S. have some similarities and some differences but these differences can act as a major hurdle if not properly understood. Business is often taken seriously in the Czech Republic and authority is not to be challenged. The same is not true for the U.S. where anyone can question and challenge authority if it appears oppressive. Rebellion has a place in U.S. business culture and innovation is considered a good strategy. Czech people are not exactly big risk-takers and might be more interested in the true and tried.

Greet Hofstede's four important dimensions might help us better understand the differences between the two countries. These four primary dimensions are Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS) and Uncertainty Avoidance Index (UAI).

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PDI factor tells us just how socially divided a society is. From Hofstede's analysis, we find that low PDI means a country has narrower social gaps and fewer power disparities. In Czech Republic, we notice that PDI falls at 40 on a scale of 100 which indicates relatively narrower social division. This gives us the idea that people have more opportunities to move upwards and destiny is not dependent of one's inherent social status. Similarly in the U.S., PDI falls between 40 and 50 which is closer to Czech's PDI rating and thus we can safely conclude that both countries have almost similar social system of classification. (However we will explain later how this can generate significant differences).

On the Individualism (IDV) scale, Czech Republic falls close to 60 whereas United States almost enjoys perfect individualism with ratings falling very close to 100. Here we see the difference which must be considered carefully because while Czech people would value individualism, they still respect collective achievement. This is however not the case with Americans who believe in individual success. Steve therefore needs to pay close attention to this and make sure that his business plan is based on a win-win strategy and that Czech people can see just how they can benefit from his presence and….....

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