The importance of cultural awareness in international business

Cultural risks for global businesses

Today, whether we work in New York or New Delhi, we are all part of a global network where success requires navigating through wildly different cultural realities. Unless we know how to decode other cultures and avoid easy-to-fall-into cultural traps, we fall prey to misunderstanding, needless conflict, and ultimate failure.”

 - Erin Meyer, Author of "The Culture Map: Breaking Through the Invisible Boundaries of Global Business"

In a constantly evolving world, going global must be accompanied by the ability to conduct business efficiently while also being sensitive and respectful of the unique differences that are woven into the fabric of intercultural communication.

Here are five common practices that businesses often overlook:

Studying local business etiquette and managerial practices

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An in-depth understanding of local business practices is crucial to international business success. Unfortunately, many businesses enter new markets without familiarising themselves with their host country's cultural norms and business customs and struggle to win over new stakeholders and employees.

For example, culture shapes how employees view management roles. In Japan, where social hierarchies are valued, senior employees often expect formality and respect from their juniors. In response, junior employees often seek their superiors' approval when making decisions and expect them to delegate responsibilities.

All Japanese employees abide by a mantra called Ho-Ren-So, a mnemonic acronym that is an abbreviation of the words Hōkoku (report), Renraku (contact) and "Sōdan (consult). This means that when a problem occurs, it must be immediately reported, and all decisions must pass through the appropriate chain of command before being approved by a superior.

Conversely, in Western business culture, organisations are flatter, with managers providing guidance while employees make independent decisions and chart their own career pathways. Communication also tends to be more informal.

A big part of embarking on cross-border business ventures is recognising that organisational theory is steeped in culture-specific practices. Yet, the cultural assumptions that precede international business practices remain a recurring issue.

Implementing diversity management

Workplace diversity is a powerful tool for enhancing creativity and an inclusive environment. When it is successfully integrated into a company's business model, it can be a major draw for high-quality global talent. A diverse workforce also fosters an environment that promotes fresh perspectives and approaches to problem-solving.

However, this can go awry if it is poorly managed.

Multicultural teams are made up of individuals with various backgrounds, values, opinions, and business customs. Unless these factors are thoughtfully managed, interpersonal conflicts between team members can arise. Adversely affecting trust, communication, and productivity.

As workplaces become increasingly diverse, challenges like bias, discrimination, and differences in communication styles, can strain team dynamics and hinder collaboration. When companies fail to manage these issues effectively, they miss the chance to harness the strengths of a multicultural workforce.

Watch our podcast below on how leaders can foster a culture of innovation and inclusion in the workplace: 

Adapting HR procedures to local market needs

Globalisation is essential to business expansion, and companies that enter foreign markets and hire local employees must adapt their human resource policies and practices to benefit foreign markets, their employees and subsidiaries.

Cultural values affect how individuals feel about their jobs and often define their workplace expectations. Human resource teams must be mindful of these cultural differences to successfully recruit, retain, support, and communicate with foreign employees.

Tax and employment laws significantly impact international expansion. HR teams must navigate varying compensation, benefits, tax rates, and labour regulations, which may conflict with corporate policies. Failure to comply exposes companies to legal risks, penalties, reputation damage, and financial loss.

Identifying regional and subcultural differences

Not everyone in a country shares the dominant culture's values or behaviors.

Subcultures—shaped by factors like socioeconomic status, language, and beliefs—can vary within a region, affecting perceptions, consumption patterns, and product preferences.

Businesses should educate themselves on the attributes that form the cultural makeup within a national context, as cultural barriers can and do exist on an intra-national level. Companies that cannot identify the diversity within their host country run the risk of alienating potential customers.

Adapting global business models to the local market

Ignoring local culture and its impact on consumer demand can lead to costly failures in international business. Prioritising the people you serve is essential when entering a new market.

Though brands may be globally recognised, adapting product offerings, marketing strategy, and messaging to fit local culture and values is crucial.

This approach, known as "Glocalisation", blends global strategies with local adaptations, strengthening a business's competitive position in each target market. This market adaptation strategy can involve simple changes, like a tagline, or more complex adjustments, like new products suited to local tastes.

By adapting your business model to meet each target market's unique needs, you create truly valuable products and experiences for customers.

How to overcome cultural barriers in international business

Create space for other cultural requirements

Be accommodating to your employees' and co-workers' cultural requirements in your host country. Consider factors such as religious or cultural holidays, prayer times, and dietary needs and incorporate them into your workplace policies so that everyone feels included.

Cultural awareness in the workplace is about establishing common ground so that everyone can understand and respect one another's differences.

Ensure clear and polite communication

Use simple, concise language in all materials to overcome language barriers and ensure effective communication with multilingual employees. Avoid slang and complex jargon, and add visuals to make messages clearer.

Employ diversity training programs

Ensuring that people with different cultural backgrounds feel included and safe is an important step in overcoming cultural barriers in the workplace.

Diversity training can be a useful tool in helping employees become more aware of any unconscious biases and other barriers may get in the way fully embracing diversity and inclusion. Creating an environment that fosters teamwork, creates new opportunities and motivates positive interdepartmental attitudes is essential to creating and maintaining a healthy work environment.

Global diversity programs should be able to adapt their content, language, and approach to account for variations in employees' cultural, political, legal, and social contexts.

Do your homework

Before entering your host country, research its customs, history, and political landscape. Even learning a few key phrases and using them in conversation can go a long way toward making them feel comfortable.

While plenty of resources are available online, don't underestimate your partners and clients as helpful sources of information. They will appreciate your effort in educating yourself about their culture and increase the likelihood of a continued business relationship.

Adapting a product or service to a new market requires an in-depth study of various cultural components.

Here are some memorable cultural blunders from international companies:

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Be aware of how others perceive your culture

When entering foreign territory, we often get caught up in figuring out how best to make sense of everything new to us and forget to consider how and why people respond to us like we do.

Try to take a step back and consider how your belief systems, norms, and values affect your foreign employees and business partners. This can put things into perspective and help you identify what to adjust and how to best adapt to the situation.

Focus on local integration

Instead of getting caught up in inciting "positive change" and revolutionising business processes and practices in a new market, focus on understanding the foundations that make up local business practices and consumer behaviors first.

Start out by adopting a more localised approach. As you gain more insight into how and why things work the way they do, you can incrementally implement changes down the line.

Assimilate to the cultural voice of your host country

As important as it is to establish your brand's voice and message, make sure that you do so in a language that won't end up alienating your new audience.

Working with local branding and language experts who are familiar with the local dialects and communication styles can help you find the balance between showcasing your own unique voice and localising your marketing efforts to your targeted customer segments.

As you communicate your brand, make sure you speak to your target audience in their own language accurately and effectively. Work with language experts, preferably native speakers, who are familiar with local dialects and slang to localise your brand's marketing efforts.

Expand into international markets efficiently with Airswift

For businesses with international expansion plans, Airswift can help you navigate the complexities and nuances of doing business in a foreign location.

As experts in the countries we operate in, we can support you with a wide range of workforce solutions, from hiring local employees to compliance management and HR support.

Contact us to learn more about our services and how we can support your growth.