Cultural Diversity and International Business

2474 Words Jun 4th, 2012 10 Pages
CULTURAL DIVERSITY AND INTERNATIONAL BUSINESS
What is International Business?
International business is a term used to collectively describe all commercial transactions (private and governmental, sales, investments, logistics,and transportation) that take place between two or more nations. It consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons. It refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations. Transaction of economic
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International businesses that are ill informed about the practices of another culture are unlikely to succeed in that culture. One way to develop cross-cultural literacy is to regularly rotate and transfer people internationally.

Ethnocentrism
One must also beware of ethnocentrism, or a belief in the superiority of one 's own culture. Individuals who are ethnocentric frequently demonstrate disregard for other cultures.
Culture and Competitive Advantage
For the international business, the connection between culture and competitive advantage is important for two reasons. First, the connection suggests which countries are likely to produce the most viable competitors. Second, the connection between culture and competitive advantage has important implications for the choice of countries in which to locate production facilities and do business.
THE ELEMENTS/DETERMINANTS OF CULTURE
The values and norms of a culture do not emerge fully formed. They are the evolutionary product of a number of factors including prevailing political and economic philosophies, the social structure of a society, and the dominant religion, language, and education.
1) Social Structure
A society 's social structure refers to its basic social organization. Two dimensions stand out when explaining differences between cultures. The first is the degree to which the basic unit of social organization is the individual, as opposed to
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