As businesses grow, expanding into international markets is one of the main goals of many of them. The expansion is a sign of growth and is embraced by many companies. However, doing business internationally is not a bed of roses and it comes with challenges. One of them is the cultural differences as the company gets a diversified workforce. Diversity is a useful tool for businesses to use in their innovation and to create a positive image and reputation about their company. However, it is also a challenge to many international companies because of the different ways in which people operate according to their culture. Culture affects the mannerisms that people have and the stereotypes and beliefs can disrupt the harmony of the employees. It can also lead to conflicts among workers and can also reduce the ability to handle business within a given context. The ideas, social customs, and social behavior define the culture of a person. For the American (United States) international companies, cultural differences are one of the main challenges that affect their operations.
The cultural differences across the different countries are defined by many factors and it affects the way people respond to different functions of the business. Such functions include marketing and promotions, corporate social responsibilities, human resource management and the general conduct of business. According to Hofstede's cultural dimension, culture refers to the collective programming of the mind that distinguishes one group from the other. Inequalities and the sharing of power are some of the common factors that can define the different cultures (Beugelsdijk, Kostova & Roth, 2017). There are several dimensions that define the culture in a country and they include sharing of power, individualism, collectivism, masculinity or gender differences, risk tolerance, and indulgence among others. The American companies in the international business platforms are affected by a number of cultural challenges as explained in the rest of the essay. The operations of the companies in
Power Distance Index (PDI)
The aspect of PDI refers to the level of inequality accepted in the cultural context. In other words, it is a measure of the acceptance level of the less powerful people in society on how power can be distributed. In some cultures, people accept a large power distance, whereby there are specific hierarchies and definitions of power. On the contrary, the cultures with low power distance do not accept inequalities and they strive to have an equal share of power. In a high PDI culture, centralized organizations and complex hierarchies are common. Ina lope PDI culture like that of the United States, all employees enjoy almost the same powers and employees and supervisors are treated almost the same. Sweden scores 31 as per the Hofstede analysis and this gives the culture the following dimensions; employees are independent, a hierarchy is only used for convenience, supervisors are easily accessible, there are equal rights among all employees and power is decentralized. Communication is direct, control is disliked and the relationship with managers is informal. The United States score is 40 which means the differences are few (Hofstede Insights, 2019). The cultural challenges associated with this index is that companies need to have an organizational structure that supports the views of society. For example, managers are referred to by their first names. In this aspect, international companies like Amazon do not face major problems in Sweden in communication strategies, advertisements, and promotions.
Individualism Versus Collectivism (Idv)
The measure analyzes the level of interdependence and the ties that people have towards each other. A high individualism means that people do not take responsibility for the actions of others and that people do not care about the actions of those people who are not their core family members. In a society with high collectivism, people operate as groups and they support each other. They also take responsibility for the actions of their friends and family. Sweden is an individualistic country, with a score of 71 in the Hofstede scale, whereby people take care of their individual issues and those of the immediate family only. In the United States, the score is much higher (91), which creates a major challenge for companies like Amazon when operating in Sweden (Hofstede Insights, 2019). The American society believes all employees should be treated equally, communication is informal, information is shared frequently and employees approach strangers for any required information. The cultural challenge is that companies have to adjust their communication and performance evaluation mechanisms. Amazon had to adjust in Sweden where the level of individualism is a bit lower.
Masculinity Versus Femininity (MAS)
The above aspect refers to the distribution of roles between men and women. In masculine cultures, men are expected to be assertive and there is a clear demarcation between the roles of men and women. Being strong, smart and demonstrating success and achievement are also associated with masculine cultures. In the feminine cultures, the roles of the two genders overlap and modesty are common. Sweden has a score of 5 while the United States has a score of 62 (Hofstede Insights, 2019). The above scores mean that in the United States, society is driven by competition, success, and achievement. In Sweden, caring for others and the quality of life are the guiding principles. Therefore, for a company like Amazon, the target is to have employees providing the best and competing against each other to appear the best. The management expected to have results-oriented employees. The cultural challenge faced is that in Sweden, employees value the quality of life and they are motivated by liking what they do rather than the results they portray. Companies in this situation have to manage their employees in a manner that is acceptable in this culture and all femininity and masculinity-related decisions were made with caution.
Uncertainty Avoidance Index (UAI)
The cultures that have a high score of this index are associated with people making life as predictable as they can and they avoid instances whereby they are uncertain of their future. They make decisions that have a high chance of succeeding. On the contrary, the cultures with a low score in this index have people who are more relaxed and inclusive about life. They do not struggle to make it predictable. Sweden has a score of 29 as compared to that of the United States which is at 46 (Hofstede Insights, 2019). People in Sweden believe that ambiguous rules should be abolished and if something is not working then it should be dropped or abandoned. The society is relaxed and does not struggle to make things work in their way. They also feel there should no unnecessary rules. In the United States, the culture is associated with the acceptance of new ideas, willingness to try new ways and they do not support excessive rules and control. The Amazon management found it easy to integrate its operations in Sweden as per this index because most of the people it dealt with had the same view of uncertainty avoidance.
Long Term Versus Short Term Orientation
The cultures with a high score in this aspect are associated with modesty, thriftiness, and pragmatism while the opposite ones are associated with an emphasis on consistency, truth, nationalism, and religion. Sweden has a score of 53 while the United States has 26 (Hofstede Insights, 2019). The scores indicate that in Sweden, people consider education and thrift as the ways to achieve their goals and those of the future generations. In the United States, the culture supports analysis of information to determine its validity, they have a strong stand on what is good and evil and this affects the decisions they make. The cultural challenge is that Amazon had to just to meet the cultural requirements in the Swedish market and to avoid confrontations caused by the difference in this aspect.
Indulgence Versus Restraint (IVR)
The cultures with a high IVR allow gratification of emotions and drives while the ones with a low IVR support strict social norms and less gratification for individual expressions. In this aspect, Sweden has a score of 78 and the United States has a score of 68 (Hofstede Insights, 2019). The associated challenges are that for companies like Amazon, they had to adjust to the restraint culture in Sweden because most of their employees are from the indulgent culture. The differences in the two cultures determine the decisions made and the interactions observed among people. The emotional expressions are higher in Sweden than in the US and this affects the way people communicate.
The cultural differences between the United States and Sweden affect the way American companies operate internationally, and specifically in Sweden. The cultural differences determine the way a company like Amazon makes decisions and how they carry out their advertisement, promotions and other business activities. The culture also determines the way negotiations are made, the way people communicate in the workplace, the view about competition and other business operations.
Beugelsdijk, S., Kostova, T., & Roth, K. (2017). An overview of Hofstede-inspired country-level culture research in international business since 2006. Journal of International Business Studies, 48(1), 30-47.
Hofstede Insights (2019). Retrieved from https://www.hofstede-insights.com/product/compare-countries/
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