Cultural Diversity and International Business

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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 resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc. Importance of International Business:-

Every company is trying to expand its business by entering foreign markets. International business helps in the following ways:- 1. Helps as growth strategy: - Geographic expansion may be used as a business strategy. Even though companies may expand their business at home. 2. Helps in managing product life cycle: - every product has to pass through different stages of product life cycle-when the product reaches the last stages of life cycle in present market, it may get proper response at other markets. 3. Technology advantages: - some companies have outstanding technology advantages through which they enjoy core competency. This technology helps the company in capturing other markets. 4. New business opportunities: - business opportunities in overseas markets help in expansion of many companies. They might have reached a saturation point in domestic market. 5. Proper use of resources: -Sometimes industrial resources like labor, minerals etc. are available in a country but are not productively utilized. 6. Availability of quality products: - when markets are open, better quality goods will be available everywhere. Foreign companies will market latest products at reasonable prices. Good product will be available in the markets. 7. Earning foreign exchange: - international business helps in earning foreign exchange which may be used for strategic imports .India needs foreign exchange to import crude oil, deface equipment, raw material and machinery. 8. Helps in mutual growth: - countries depend upon each other for meeting their requirements. India depends on gulf countries for its crude oil supplies. 9. Investment in infrastructure: - international business necessitates proper development of infrastructure. A company entering international business must invest in roads. What is Culture?

Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living. The fundamental building blocks of culture are values (abstract ideas about what a group believes to be good, right, and desirable) and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations). The term society refers to a group of people who share a common set of values and norms. Value and Norms

Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture. Norms are the social rules that govern the actions of people toward one another. Norms can be further subdivided into folkways (the routine conventions of everyday life) and mores (norms that are seen as central to the functioning of a society and to its social life). Culture, Society, and the Nation-State

A society can be defined as a group of people that share a common set of values and norms; that is, a group bound together by a common culture. But there is not a strict one-to-one correspondence between a society and a nation-state. Nation-states are political creations. They may contain a...
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