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Assignment 2 - International Business (Task 2) External factors and cultural differences
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Case of 5 pages for the course Unit 5 - International Business at PEARSON (Distinction)
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A2. External Factors and cultural differencesTask 2
This report will contain information about how the cultural factors affect international
businesses. Also, it will include a analysis and an evaluation of the impact of cultural
differences existing in Romania and Belgium on Tesco.
P7. The cultural differences that affect international
businesses
Different cultural factors such as: language, values, attitudes to work/business, religion,
ethnic population make-up, social structures, openness to change etc. have a significant
impact on international businesses. The success of an international business depends on the
level to which the business understands the culture of each country in which it operates. A
main benefit of understanding cultural differences is the competitive advantage gained by
the company and, also, increasing profitability.
Language – There are about 7000 spoken languages in the world which are classified into
language families. The Germanic languages (English, German, Dutch) and the Romance
languages (Spanish, French, Portuguese, Italian, Romanian), but also languages such as
Chinese and Arabic are among the most used in international businesses.
The communication is one of the most important aspects of business success. Tesco must
take into account the languages spoken in the countries in which they operates, whereas
language barriers are one of the most common problems affecting them. The
communication needs to be clear and efficient that the business be able to achieve its goals
and success.
The Ethnic Make-up of the populations – It is essential to be considered especially in the
context when the international companies needs to determine if a particular product or
service will be successful in a certain country. International businesses need to do a detailed
research on the customers’ demand, needs and wants. For example, a product sold by Tesco
that is successful in the UK may not be appreciated by an Asian country such as Japan or
China.
Religion – Certain religious beliefs may influence customers in deciding whether or not to
buy a certain product. For example, if Tesco wanted to expand in a country where the
predominant religion does not allow the consumption of a certain type of meat, the
company will adapt and will not sell that type of meal, because they would have losses (no
one will buy it) or could even be considered an offense against their religion and they will
have a bad reputation.
Attitudes towards business and work – are different depending on what are the beliefs of
the people from different places. In some cultures, Saturday or Sunday are considered days
of relaxation and people will not be willing to work. In other cultures, equality between men
and women is not recognized (e.g. only the man has a job while the woman is a housewife
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, and takes care of the children). Also, some countries are more open to international
businesses than others. Moreover, the business meeting take place differently depending on
the culture.
Openness to change – Some cultures are more willing to accept the change than others. For
example, Western countries such as Belgium, the Netherlands, the US are much more open
to change than countries such as North Korea, Cuba, Vietnam.
Social structure – influences the prices that a business will put on products sold in a certain
country. Prices must be fair and in line with the income of potential customers to be able to
buy. For example, an international business like Tesco could not sell products at high prices
in a very poor country, because no one will be able to afford to buy them. For a business to
be successful, they need to look carefully at all aspects before expanding in a new country.
M4, D3 – How cultural differences in Belgium and
Romania affect Tesco as an international business.
Their impact on Tesco.
The culture have a major impact on the Tesco potential customers’ behaviours, attitudes,
needs and wants. If Tesco wants to trade in Romania and Belgium, the company will have to
consider the culture of the two countries.
Culture in Romania
The official language is Romanian, but English is recognized as the language of
business, most people being able to understand it. However, Tesco may use
translators to ensure that all information is clear and accurate, to avoid any
misunderstandings that can appear.
The main ethnic groups encountered in Romania are: Romanians (approx.. 89%) and
Hungarian (6-7%). Other ethnic groups in Romania are: Roma, Turks, Ukrainians,
Germans, Greek, Jews etc. Tesco should adapt to the demands, needs and wants of
this ethnic groups in order to increase its profitability. For example, in countries
where the Hungarian ethnic group is very large, Tesco could introduce traditional
Hungarian products to increase its success.
The predominant religion is Romania is Christianity (Romanian Orthodox – 87%, the
remaining 13% representing other Christian communities such as Roman Catholics,
Greek Catholics etc.). Religion in Romania could affect Tesco only during fasting
when meat products may be less purchased. Tesco needs to meet the needs and
wants of customers in order to achieve success.
Attitudes towards business and work – The Romanian people are hospitable and
friendly with foreigners and very hard-working. Romania is a reliable business
partner with the UK. The Romanians respect the term and conditions of the
contracts and pay their debts on time.
Politeness is an important aspect in business meetings, chewing gum, for example,
can offend them and ruin the business relationship. Especially at the first business
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