The Maharaja Mac is unique, this burger can only be found in India. The McDonald's Big Mac is among the best selling consumer products in the world; it is even used by economists to compare market conditions in different countries, each year economists publish a chart with the different prices of this fast food product in different countries1. The Big Mac is the symbol of globalization; in almost every country where McDonald's is present, the Big Mac is made in the same way, using the same ingredients.
But not in India, where the Big Mac has been renamed, and the recipe is different. In fact, Hindus who constitute 80% of the Indian population don't eat beef, as they revere the cow. Therefore, McDonald's when entering the Indian market had to change its menu to suit the Indian palate and beliefs.
According to Edward Tylor, the culture is "that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society2" (Tylor, 1924). But many sociologists, anthropologists and economists give their own definitions. Most of them generally conclude that the culture is a set of values and norms shared by a group of people.
In International Business, the culture is an extremely important aspect of the success of a company when it operates in foreign countries. The culture is different in every country, which means that a company will have to adapt itself to the local culture. This involves new management methods, new marketing approaches, and new strategies.
In this essay, we will study the different cultural factors that influence international business and how they influence international business, and then, we will apply this information to the case of India.
Firstly, we need to identify the determinants of the culture. According to Charles Hill, there are six determinants of culture that can be easily identified3 (Hill, 2010):
- Religion
- Political Philosophy
- Economic Philosophy
- Education
- Language
- Social Structure
The religion is often considered as a supra-national value, some such as Islam has a direct impact on the way business is done in Islamic countries. For example, the Islamic finance regulates the practice of loans and prohibits interest rates. This is why many financial products have been especially created for Muslim clients.
The political philosophy is related to the political system in a specific country, the main difference arises between totalitarianism, e.g. North Korea, and democracy. Today, most political regimes are democratic. The political philosophy has a direct influence on the way business is done in the country. It defines the economical policies and the relationship between the private sector and the public sector.
The way you run a business in China is different from the way you run a business in U.S.A. In China, the government will be more interventionist while in the USA, the government refuses to participate in any kind of intervention. As mentioned earlier, the economic philosophy is often related to the political philosophy; democracy tends to be more liberal, encouraging free market, while totalitarianism tends to be more protectionist.
Tags: Indian corporate culture, Hofstede cultural dimension index,PESTL analysis
[...] The ownership/control risk deals with the managing and ownership issues. The third step is the operation risk that illustrates the legal issues and to finish, the last step is the transfer risk. For example, a business project will incur high general instability risk if the country of destination is North Korea. In this part, we have seen the different factors that influence business in different cultures. As India is a huge market, we will apply this theory and framework to the Indian culture. [...]
[...] Following independence from the British yokel, India was split in three parts - Bangladesh, Pakistan and India - mainly owing to the religious disparities between the Hindus and Muslims. Pakistan and India have engaged in war on three separate occasions, and both of them are now nuclear powers. - The economical factor As mentioned, the Indian GDP is growing fast, more importantly, the GDP per person has increased from $447 in 2000 to $1061 in 2008, and is expected to reach $1800 in 2015, according to the IMF forecast17. [...]
[...] This will help us understand if investing in India is a good opportunity or not. Before studying the business opportunities in India, let us have a general overview of its history and see why we should be interested in this market. From 1508 to 1947, India was a part of the British Empire. The decolonisation process was pushed forward by charismatic leaders such as Nehru and Gandhi. These two leaders played an extremely important role in the new independent India, their point of view about economy, international relations in the Cold War context had direct impact on the country development during the second part of the twentieth century. [...]
[...] To conclude, the cultural factors in international business are the most important variables to take note of. We have demonstrated the different reasons cultural factors influence business. More importantly, we have seen that the cultural factors can be determined and analyzed in order to establish an efficient business model. Many tools can be used to analyze the cultural dimensions of a country; the Geert Hofstede's cultural dimensions and the PESTL analysis are two such tools. Using this information the case of India revealed us the Indian market is way different from the U.K market. [...]
[...] Hosftede sent a questionnaire to more than 100,000 IBM employees across the world, in 71 different countries. The questions dealt with the culture in their home country. Once the data was collected, he established a chart for each country using five main components of the cultural differences6. These indexes are: - The power distance index - Individualism - Masculinity - The uncertainty avoidance index - The long-term orientation Source: geert-hofstede.com The chart above shows us the world average of the Hofstede dimensions. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
