Cultural Challenges of Doing Business Overseas

¶ … Business in Czech Republic

Doing business in a foreign country is never easy. It is not so much about the tax regulations, import/export duties or getting a license. The main challenges accrue from the differences in cultural values and social or religious beliefs. For Steve, it may prove easier to at least communicate with the people and establish a bond with them. It is also important to know that Czech Republic is very keen on attracting foreign investment and a strong U.S. presence is desired. For this reason, Steve doesn't need to worry about whether he will be welcome in that country or not. As for cultural differences, it must be borne in mind that both Czech Republic and the U.S. have some similarities and some differences but these differences can act as a major hurdle if not properly understood. Business is often taken seriously in the Czech Republic and authority is not to be challenged. The same is not true for the U.S. where anyone can question and challenge authority if it appears oppressive. Rebellion has a place in U.S. business culture and innovation is considered a good strategy. Czech people are not exactly big risk-takers and might be more interested in the true and tried.

Greet Hofstede's four important dimensions might help us better understand the differences between the two countries. These four primary dimensions are Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS) and Uncertainty Avoidance Index (UAI). PDI factor tells us just how socially divided a society is. From Hofstede's analysis, we find that low PDI means a country has narrower social gaps and fewer power disparities. In Czech Republic, we notice that PDI falls at 40 on a scale of 100 which indicates relatively narrower social division. This gives us the idea that people have more opportunities to move upwards and destiny is not dependent of one's inherent social status. Similarly in the U.S., PDI falls between 40 and 50 which is closer to Czech's PDI rating and thus we can safely conclude that both countries have almost similar social system of classification. (However we will explain later how this can generate significant differences).

On the Individualism (IDV) scale, Czech Republic falls close to 60 whereas United States almost enjoys perfect individualism with ratings falling very close to 100. Here we see the difference which must be considered carefully because while Czech people would value individualism, they still respect collective achievement. This is however not the case with Americans who believe in individual success. Steve therefore needs to pay close attention to this and make sure that his business plan is based on a win-win strategy and that Czech people can see just how they can benefit from his presence and investment.

On Masculinity (MAS) scale, Czech surprisingly falls below 50 and almost touches 40. This means it has a relatively lower MAS compared to United States' score of 60. Gender-differences are thus lower in Czech Republic compared to the U.S. where male still tend to dominate. However this need not be a huge problem because despite gender differences in practice, most Americans are well trained in tolerating presence of women in all sectors.

On Uncertainty Avoidance Index (UAI) we notice that Czech people fall on the higher side with score of almost 60 while Americans have a score of 40. This difference is meaningful since Americans by nature are risk-takers. They love thinking out of the box and trying something new has actually been the concept on which American corporations are built. On the other hand, Czech people like staying within rules and limits which help them stick close to what's tested and tried. They do not like challenging status quo and authority and traditional ways of doing business are respected. This can cause problems if Steve is not well prepared to handle this difference.

Steve will need to learn that there exist significant differences in terms of cultural notions and traditions. Czech people are more interested in following in the footsteps of their forefathers and trying something new doesn't come naturally to them as it does to Americans. They also do not value individualism the same way Americans do and for this reason, Steve must have a sound plan to lure Czech people out of their moulds and into the new unknown world.