According to Toffler et al., (2000), international business is a term that is used to collectively refer to Multinational corporations that operate in many countries. Such firms include food companies such as McDonald and vehicle manufacturer such as Toyota. On the other hand, intercultural business methods are rules and norms that are used to transact and carry out businesses across the platform of the cultures of many countries.
Is the world shrinking? Is it expanding?
According to Jandt (2004), the questions that are normally raised in regard to the state of the world in the current times are normally very interesting. He says that it is because in the current times, we can state without doubt that the world has become a global village.
This is due to the fact that information and communication technology has risen so abruptly and rapidly from the introduction of the internet and other communication media. Also, better and improved road networks combined with the production of faster planes and cars have all led to the high speed of transportation from one corner of the world to another. Toffler et al., (2000) also adds that an increase in knowledge and scientific inventions has led to the shrinking of the world into one small and easily accessible place.
Impacts of global economy on businesses
Alleviation of foreign exchange
Due to the technological nature of the global economy, Jackson (2002) states that as technology advances and we move on to the future, there would be no need for organized channels of import and export. This is already affecting the earnings of the developed countries. Many goods that used to be sold through import agents can now be ordered for directly from the manufacturers and manufactures also are running sales cartels thus making foreign exchange earning through international trade reduce.
Low interests rate
In accordance to the book written by Hofstede (2001), I can in summary state that due to the diversity of goods and services that has been caused by globalization, interest rates charged on international goods have reduced drastically. If a country does not reduce its interest’s rates, there exists a high possibility of its goods not being sold in the international markets that has taken the structures of a pure competition. Thus, this has ensured the introduction of low interest’s rates on international goods by countries.
Prevention and resolution of conflict
Hofstede (2001) says that when two countries trade with each other and sign trade agreements across a global platform, it is less likely that such countries will disagree with each other such as to engage in war. Toffler et al., (2000) adds that under the said circumstances, when a problem arises between the two countries, due to their close ties brought about by globalization, they can embrace dialogue as an alternative means to solve such problems. Thus international trade enhances friendship and peace between two countries.
Expansion of trade area
It is not a myth that the world has transformed into a global economy with the rise and advancement of technology. Businesses such as multinational companies have advances their geographical markets throughout the world such that their products are available almost in all corners of the earth. Thus, globalization has led to a successful expansion of trade areas (Mead 2005).
According to Mead (2005), culture influences international businesses through the following ways:
1. The way people dress across different cultures
2. The way people behave across different cultures
3. The manner in which business activities is conducted across various cultures
4. The business legal environment present in different cultures
International cultural conflicts
In regard to international conflict, Guirdham (2005) says that such a conflict in a multinational company or any other international business entity might sometimes be caused by the diversity of culture. He adds that cultural personality issues normally causes misunderstandings on international business platforms because it is at times difficult to precisely identify the effects of culture on teamwork. Business professionals therefore must have to learn to adapt to the different cultures for the purposes of personal growth, interpersonal and intercultural interactions.
Solution to Cultural Conflict
According to Beckwith et al., (1997), the best way to alleviate the problem of cultural conflicts in international companies is through training of employers on the various cultural differences and practices. This lessens the clash of cultures within the multinational company thus creating a collective identity environment. Training also lessens the clash of cultures when dealing with the company’s international clients since you are aware of their likes and distastes. This leads to good communication within and without the business and also excellent business practices.
Is a gift a bribe in America but not in Japan?
According to French (2007), in his book Cross-Cultural Management in Work Organizations, giving a gift is discouraged in many companies in the United States. A gift is normally seen as a bribe and Guirdham (2005), also says that in the rare occasions where you have to give gifts, you should try all that is possible to ensure that it is not perceived as a bribe. On the same issue, Mead (2005), comments that whereas this practice is not normally acceptable in the United States, the act of gift giving is very important in Japan. However, he states that the gift is not as important as the ceremony surrounding its issuance.
This gift being presented should always be wrapped appropriately and ensure the host has prior knowledge of your intentions to offer a gift. The gift should be given with both hands and the giver of the gift should not expect the gift to be opened in his or her presence. He further adds that under normal circumstances, such gifts are given at the end of the visit. However, giving gifts to business executives is not a required practice in Mexico and it is only Small items with a company logo that are normally acceptable. Also,
Do you bow to or shake hands with international colleagues?
In the United States of America, handshakes are normally approved and valued as a sign of trust and friendship. Carroll et al., (1997), says that a handshake should be firm and should last between 3-5 seconds. The handshake is offered upon arriving for the business deal, and also after the deal is sealed. There should also a good eye contact during the handshake period. He further adds that good eye contact during business and social conversations is a sign of sincerity, interest and confidence and a smile is a sign of friendliness.
According to Abbott et al., (1925), the customary greeting in Japan is the bow unlike in the United States. He adds that if you are greeted with a bow, then you should also bow in the same manner of your host.