Impact of Foreign Culture on Business

Culture is formed based on beliefs, attitudes, assumptions, values and a host of other social factors. Every culture
is different, and has different styles of etiquette. Every day deals are lost through misunderstandings, even
between relatively similar cultures. Culture varies from nation to nation. It is necessary to study the cultural
variables:
 Level of Education: Effectiveness of any organisation depends upon the level of skills an individual
possesses, understanding of the job, application of processes and interpersonal/inter-group behaviour. A
country when has high level of educational standards of its population, is obviously going to be a leader-
organisation understanding of educational standards are necessary for the following purposes:
 It will dictate a minimum level at which the training and development can be planned and conducted.
 To ascertain human skill-technology match.
 Leadership style that can sustain.
 Staffing and organising of workplace.
 Expectations and growth that can be expected from the employees.
Russians and Indians are good at formal education under an instructor. The Japanese learn by practice.
Americans are carefree about educational levels. Indian education system and its product could be considered
best among the various countries.
Family Bond and Relationships: There are joint family and nuclear family systems. China, Japan, India and
practically most of the Asian countries have a joint family system. Families are broken due to job requirements.
Family bonds are very strong and have a positive impact on human behaviour and higher productivity. Family is
a base where people from their value system and formulate behaviour pattern that last for the whole life. In many
societies, family roles and relationships are very traditional, personal, and predictable. The husband is the
provider, the wife supervises the household, and males in the household are more valued than females. Each
member of the family has a designated role and the responsibility for maintaining status quo for such a role. Peer
pressure preserves the roles, and work situations and business interactions are less influential than familial
responsibilities.

Health: This is an important factor to determine the culture of a nation. Mortality rate of children, percentage of
youth and old age people infrastructure for health, medical support facilities available for production of drugs.
Expertise available is an important indicator of the health of a nation. India is considered a young nation because
it has over 65 per cent people below 35 years of age. It has a vast skilled population and has a rich cultural base.

Religion: Spiritual beliefs and values have a far-reaching impact on the culture of a nation. It canalises individual
behaviour and enhances productivity. Indian are considered to be better human resource the world over because
of their thought process, efforts, honesty, loyalty and hard work, which are the outcome of religious teachings in
the formative stage of the life.
Association: Like-minded people come together and form an association. It is an ideal channel for grapevine.
Associations are important due to their cohesiveness nature. The groups thus formed help in attaining group
objectives. Associations take a mega form, like Central India Trade Union (CITU) or Science Congress. They
indicate cohesiveness and form national culture that is so useful for organisation effectiveness.

Recreation: This is closely related to culture. In the U.S.A., employees pay special attention to recreation. They
spend weekends on sightseeing, going out on picnics. Whereas in Arabian countries, visiting close relatives on
weekends is the norm. In India, there is a mixed reaction to spending holidays. They prefer to stay at home with
family members and go out for dinner or visit relatives. Recreation is studied to determine culture because it
denotes feelings, attitudes, and emotional expressions. These collectively display organisation culture that has an
impact on productivity, work stress and level of conflict in the organisation. Individuals should be creative and
the leader should encourage that.

Changing Preferences: A major socio-cultural factor influencing businesses and business decisions is changing
consumer preferences. What was popular and fashionable 20 years ago may not be popular today or 10 years
down the road. Different styles and priorities can undermine long successful products and services. For example,
a clothing company must constantly be aware of changing preferences when creating new products or it will
quickly become outdated.

Demographics: Changes in demographics are also a significant factor in the business world. As populations age,
e.g., markets for popular music and fashions may shrink while markets for luxury goods and health products may
increase. Additionally, changes in the proportion of genders and different racial, religious and ethnic groups
within a society may also have a significant impact on the way a company does business.

Advertising Techniques: Advertising is perhaps the area of business most closely in touch with socio- cultural
changes. Advertising often seeks to be hip and trendsetting, and to do this, advertising agencies and departments
cannot lose track of the pulse of the societies in which they engage in business. Changes in morals, values and
fashions must all be considered when creating outward facing advertising.
Internal Environment: In addition to a company’s interactions with the market and its customers, socio-
cultural factors also impact a company’s internal decision-making process. For example, changing gender roles
and increasing emphasis on family life have led to increased respect for maternity and even paternity leave with
organisations. Additionally, attitudes towards racial discrimination and sexual harassment have changed
drastically over the years as a result of socio-cultural change.

What is Social Responsibility?

Social responsibility is a moral obligation on a company or an individual to take decisions or actions that is in
favour and useful to society. Social responsibility in business is commonly known as Corporate Social
Responsibility or CSR. For any company, this responsibility indicates that they acknowledge and appreciate the
goals of the society, and therefore, would support them to achieve these goals.
Advantages of Social Responsibility
A company can boost its morale and enhance work culture when they can engage their employees with some
social causes. There are many factors that can have a positive impact on the business while delivering social
responsibilities. Such few factors are
 Justification for existence and growth
 The long-term interest of the firm
 Avoidance of government regulation
 Maintenance of society
 Availability of resources with business
 Converting problems into opportunities
 A better environment for doing business
 Holding business responsible for social problems
Disadvantages of Social Responsibility
Like there are many advantages of social responsibility there are similarly many disadvantages for business. Few
factors are mentioned below.
 Violation of profit maximization objective
 Burden on consumers
 Lack of social skills
 Lack of broad public support
Types of Social Responsibilities
Following Are the Different Types of Social Responsibilities:
(1) Economic Responsibility
 Every business is engaged in economic activities.
 So, the prime social responsibility of every business should be economic responsibility.
 Hence they should sell products and service which can satisfy the need of the society.
(2) Legal Responsibility
 The company should comply with the political and legal environment of the country.
 The company should consider protecting the environment.
(3) Ethical Responsibility
 This type of responsibility expects a certain type of behaviour or conduct from the company.
 This behaviour may not be documented by law.
(4) Discretionary Responsibility
 These are voluntary actions taken by the entities in case of natural calamities, helping poor people etc.
 They help them by providing a charitable contribution, education activities etc.
 It prevents investments of charitable funds into speculative activities.
Opinions in Favour of Social Responsibilities:
Following Are the Opinions in Favour of Social Responsibilities:
(1) Justification for Existence and Growth
 Good quality products help in expansion of the business.
  When the business organisation keeps on providing good quality products, it’s actually a fulfillment of
social responsibility.
(2) Long Term Interest of the Business
 Every business wants long term profits and gains.
 If increasing no. Of stakeholders are not giving their best, there may be the withdrawal of cooperation of
society.
 It can be noted that the public image of the business can be improved by focusing on social goals.
(3) Avoidance of Government Regulations
 Good social behaviour is an ethical aspect of the business. They are beyond the law.
 Business entities avoid government regulations as it their freedom.
(4) Maintenance of Society
 The business should take social responsibilities.
 However, the law is not made for every situation.
 People who are against the organisation can come into conflict. They can also harm the organisation.
 This situation can create criminal intent in society.
(5) Availability of Resources With Business
 Business entities have huge set-ups and good infrastructure.
 These organizations have access to different types of resources.
 These resources should be used for fulfilling social responsibilities.
(6) Holding Business Responsible for Social Problems
 Business activity should see if any type of activity is causing harm to society.
 The business should themselves held responsible for causing harm rather than waiting for any
government or social team to come and correct them.
Opinions Which Are Against the Idea of Fulfilment of Social Responsibility:
Following Are the Opinions Against Social Responsibilities:
(1) Violation of Profit Maximisation Objective
 The sole motive of the business is profit maximization.
 Supporting social responsibilities is violating the profit-making objective of the business.
 It would be better if entities increase the profits through increased efficiency.
(2) Burden on Consumers
 Social responsibilities like environment protection, pollution control are very costly in nature.
 If entities opt for these social responsibilities, they always try to shift their burden on ultimate consumers.
 It is not reasonable to charge the customers on the name of social responsibilities.
(3) Lack of Social Skills
 Every entity does not have enough skills and knowledge to solve each and every social problem.
 This can be the reason for a poor image in the society.
 So, these problems should be solved by some specialized parties.
(4) Lack of Broad Public Support
 Generally, society does not accept the involvement of business entities in social programs.
  That is why it gets difficult for the business to solve the problems without the participation of the public.
Social Responsibilities for Different Interest Groups
(1) Responsibility Towards the Shareholders
 Shareholders are the owners of the company.
 The company should make all the efforts to maximize and protect shareholder’s wealth.
 Sharing of useful information with the shareholders, utilization of funds etc.
(2) Responsibility Towards the Workers
 Workers are the key persons behind company success.
 Management of the enterprise must provide the proper working conditions to the workers.
 Workers should get fair salaries and wages.
(3) Responsibility Towards the Consumers
 It is the consumer who buys the company’s product & services.
 So, it is the responsibility of the company to provide the right quality, right quantity with the right price
to the consumer.
 There should not be the unfair trade practices like adulteration, poor quality, courtesy to the customers
etc.
(4) Responsibility Towards the Government & Community
 Enterprises must follow the laws and regulations of the country/ state in which it is operating.
 The organisation should interact with society to know what they require.
 It should maintain proper infrastructure, proper disposal system and should not cause harm to the society
in any manner.