Culture Is Playing on International Business This Research Paper
- Length: 10 pages
- Sources: 5
- Subject: Business
- Type: Research Paper
- Paper: #94473161
Excerpt from Research Paper :
culture is playing on international business. This is accomplished by comparing cultural traditions of Belgium and South Africa using Arcelor Mittal. Once this occurs, is when we are able to understand how the firm is able to utilize these factors to give them an advantage in the global marketplace.
Over the last several years, globalization has been having profound impact on firms. What has been happening is corporations, have been seeking out those areas that can provide them with the lowest costs. This is part of an effort to increase productivity and their overall profit margins. As a result, a variety of different firms have been establishing operations around the world to deal with these underlying challenges. Evidence of this can be seen by looking no further than the fact that 47% of American and European companies are outsourcing some aspect of their operations. (Sears, 2009) This is important, because it is illustrating how outsourcing has become a major tool that companies are using to increase their competitive advantages.
In the case of Arcelor Mittal they are headquartered out of Belgium and have 70 different plants inside the Europe alone. As the company, has diversified holdings in 60 countries to take advantage of the sudden changes in steel prices around the world. This means that the firm has been focusing on a number of different steel-based products to meet the demands of consumers to include: flat and rolled steel. At the same time, the company has been diversifying into others areas most notably: automotive technology and mining. This has helped to give firm a strategic advantage in comparison with other organizations. To fully understand how this approach has been so successful requires looking at different factors to include: culture, political, legal / common law, civil, economics, geography and competition. Once this occurs, is when we will have the greatest insights as to how Arcelor Mittal is able to use these areas to improve the reach of their organization around the world. This is the point that we can see the external influences on international business. ("About," 2011) ("Financial Highlights," 2010)
Given the fact that Arcelor Mittal is based out of Belgium, means that they will embrace different customs and traditions as a part of the their culture. A few of the most notable include:
Third party introductions are considered to be a proper etiquette.
Do not brag about your accomplishments. This is seen as sign of poor upbringing.
Think carefully before you do anything. In the business, this means that most people will want to look at all aspects surrounding any future business transactions.
Do not appear to be impatient. When someone is showing these signs, it is indicating that they are desperate or the deal is too good to be true.
Do not show feelings or emotions as part of your business. This is considered to be a sign of weakness and instability.
Do not be overfriendly. In Belgium, everyone compartmentalizes their business and personal lives from each other.
Avoid being or blunt or using high pressure tactics. This will make someone feel as if the deal is too good to be true (which will make them hesitant).
There is focus on both the short- and long-term implications of business decisions. This means that any kind of deals are conducted slowly and will take into account these factors.
These different elements are important, because they are showing how executives of Arcelor Mittal will follow these basic traditions during the process of conducting any kind of business. ("Belgium," 2011) ("Financial Highlights," 2010)
However, due to the fact that the company has operations around the world means that executives must be able to adapt to other countries. Where, the people in different regions of the world will embrace select customs as a part of doing business. This means that managers must be able to augment their basic strategy with specific elements of each nation that they have operations in. This is how they are able to take advantage of opportunities in new markets to become on the largest steel producers in the world.
For example, the firm currently has flat carbon production facilities throughout South Africa including: Newcastle, Pretroia, Saldahna, and Veeringburg. In order to maximize productivity at these locations executives must be able to take the cultural traditions of Belgium and combine them with those of South Africa.
The challenge is that some of these traditions are different from those of Europe. A few of the most notable include:
Appointments should be made well in advance.
Mutual trust be must be established first before conducting any kind of business transaction.
Begin negotiations based upon realistic figures. South Africans do not like to haggle over the price or terms of the contract.
There is a focus on creating win -- win situations for everyone.
Do not interrupt when someone is speaking.
There are differences in communication styles depending upon the individual's upbringing and ethnic group.
Many people will use metaphors and sports analogies to make their point.
Networking and relationship building are keys to successfully building long-term connections with officials and other business executives.
They are more transactional based and will not require formal introductions to conduct business.
These different elements are important, because they are showing how company executives must adapt to South African culture in order to maximize productivity at the facilities located throughout the nation.
As a result, managers will take select elements of Belgium culture and integrate it with specific South African traditions. The impact of this approach has meant that the steel produced in these plants are contributing to 52.03% of their AACIS divisions earnings. Once this occurs, is when this segment will help to improve the company's total productivity. Evidence of this can be seen in the below graph that is comparing the growth of the AACIS unit's production with other divisions of the company by looking at the total amount of shipments.
The Productivity of AACIS in contrast with the rest of the Arcelor Mittal
("Financial Highlights," 2010)
This is significant, because it is showing how during these two years this division contributed to 17% and 15% of the company's total steel shipments in the last two years. Therefore, South Africa accounted for 8.84% and 7.8% of these figures. This means that managers are effectively embracing these different cultural characteristics to maximize productivity at the various plants they have located throughout the country. ("South Africa," 2011) ("Financial Highlights," 2010)
As far as the political systems are concerned, the two nations practice the basic principles of democracy. However, South Africa is considered to be a republic. This is when there are two chambers of the legislature and a President that is directly chosen by the people. While Belgium practices what is known as a parliamentary democracy. This is under the direct control of a constitutional monarchy. Under this system, there is Prime Minister is considered to be the leader of the nation. The legislature (Parliament) is chosen through direct elections by the people. The party that controls the majority of Parliament will chose the Prime Minister to serve as Chief Executive. They will have the power to be able to make appoints and form a government. There is also a King and Queen. They are considered to be nothing more than figure heads that used to have power. Now their role is to serve as the head dignitary for the state and other formal functions. This is significant, because it is showing how there are differences between the two political systems. ("South Africa," 2011) ("Belgium," 2011)
In the case of Arcelor Mittal, executives must understand how both systems work. Where, there is a tradition of following the parliamentary procedures and ideas during the process of conducting business. However, once the company established operations in South Africa is when executives had to learn new ideas about how the political system works by understanding its basic functions. Once this occurred, it allowed the company to be able to more effectively use these to its benefits. This is the point that they were able to maximize their efforts in reducing costs and increasing the total amounts profits that the firm is receiving.
The legal systems of the two countries are different and similar to each other. This is because there were a host of historical influences that had an impact on: how it was established and functions. In the case of South Africa, their legal system is based upon influences from the Dutch and British. This means that there is mixture of various aspects of Roman -- Dutch civil law, English common law and customary law. During the process of dealing with disputes and other legal matters this means that different distinctions and definitions will be applied to who is at fault on a host of issues. ("South Africa," 2011) ("Belgium," 2011)
While in Belgium, they are practicing a system that is based upon the French legal code and the EU judicial review.…