International Business Management


Effect of Culture on a Foreign Company’s Business Conduct


Executive summary
In the environment of business today, a popular study area is cross-cultural study. This is due to the negotiating parties’ different modes of conducting business, legal and ethical considerations, dress, preferences and language. One of the aspects of succeeding in international business is the understanding of the cultural variables of the host country. This thesis investigates how cultural aspects affect business transactions between locals and foreigners. It illustrates the impact of the host country’s culture on the choice of a market of foreign firms. That local country’s cultural variables like avoidance of uncertainty and trust influence the location of firms. Foreign firms like to invest in nations with very low risks of uncertainty but with high levels of trust. Using an example of the Sweden U.S business relationship, it narrows down to show entry, strategy, structure, marketing, production, finance, government - business relations and management style.
In today’s business world, stakeholders are no longer from the host country as it was in the past. Due to stiff local market competition, companies have started going global by investing in other countries.   They end up facing competition both locally and globally. It is even tougher taking the intercultural differences into consideration. Managers have to be more considerate on cultural issues to succeed in the foreign market arena. Francesco and Gold, (1998) define culture as a complex whole that encompasses knowledge, beliefs, art, morals, laws, customs and other capabilities and habits acquired by man as a member of society. According to Czinkota & Ronkainen (1998), culture consists of interdependent elements including language, customs, morals and values among others. Foreign Companies should always consider...