Issues in International Business Cultural Environment

Question: Discuss about the Issues in International Business for Cultural Environment. Answer: Introduction This report contains a comprehensive description of Australian business cultural environment. Australia has a comparatively higher standard of living. It generally welcomes foreign direct investments and provides regulatory framework for investors to make them feel confident and secure. The report is designed to give an insight into some of the unique cultural components of Australia, which attract foreign companies to do business in Australia. Moreover, the report comments on the cultural differences between Australia and Singapore as typical examples of Western and Eastern cultures in the Asia-Pacific region. Finally, it points out various factors that the Singaporean companies need to consider in order to operate effectively in Australia. Rationale Australia is the 12th largest economy in the world (Offord et al., 2015). More than 1,000 foreign companies operate in Australia like British airways, Virgin, BP and so on. Along with these characteristics, the most important factor that makes the author to move from his home country Singapore, to do business in Australia is that, it provides a safe and low-risk environment for businesses and offers a lot of opportunities, in terms of growth, innovation and talented workforce for businesses to become successful. The author wants to visit Australia to explore the impact of nature of Australian corporate culture on foreign businesses. This would help him in taking right decision to have a permanent establishment in the country. A Detailed Cultural Analysis of Australia Australia is one of the best-performing economies in the world and is placed at a good position in terms of cultural aspect (Hunter, and Biddle, 2012). Here, a detailed analysis of cultural environment of Australia has been made in order to understand its work-related values and other cultural backgrounds which will help the foreign companies to take right decision. The explanation of eight major cultural components of the country is described as follows: Physical environment: Australias physical environment is favourable and provides opportunities for the companies to grow and prosper (Strigel, 2012). The political system of the country is relatively stable, which attracts foreign companies to invest in with lower rate of risk (Head et al., 2015). Australia has specific laws which regulate bribery and corruption issues, in order to protect investors interests. The entire worlds climate is found in the country. Its GDP has also been increased in 2016, by 3.2%. It has enormous natural resources like coal, iron, copper, natural gas, uranium and various sources of energy. It has a liberal-capitalistic democracy, which means that the state interferes in the economy in various matters. It has lower unemployment and public debts. Moreover, only 10% tax rate is imposed on sale of most goods and services and a very nominal tax rate is charged on exporting activities in Australia (Austin and Huang, 2011). However, non-residents earning in Australia is subject to hi gher tax regime. There is a strong awareness among the people in the country about water, air and land pollution. In addition, the policy of free trade agreements indicates a competitive advantage for the economy. Values and attitudes: Australia is a product of new beliefs and traditions, which encourage innovation, experiments and risk taking. It is a multi-cultural country as it is a collection of diverse people. Australians are enthusiastic adopters of technology (McKeown, 2016). All Australians have the right to express their culture and beliefs and also have the freedom to enjoy Australias national life. They are friendly in nature and open-minded. There exists equality for men and women, respect for equal worth and peacefulness. In Australian companies, being punctual is critical. Australian business people take punctuality seriously and are efficient and profit-oriented. The work weak consists of five working days with longer working hours but working environment in the companies tends to be good. They take personal responsibility for the consequences of their efforts and show complete honesty in their commitments. They value honesty and it is reflected in their work (Solomon et al., 2012). Drinking wine is very common in Australia but in offices it is allowed only on special occasions. Australians respect people having strong views, even if they dont agree fully. There is a positive response to the cultural changes in the country. Manners and Customs: In Australia, greetings among people are casual and relaxed, with a handshake and a smile. They used to be informal in their day-to-day interactions, but they tend to be formal in professional situations (Montagu, 2013). The dress code for business people in the country differ according to the location and situation. Generally, it consists of dark-coloured, conservative business suit for both men and women. Offering gifts is not the custom of the Australian corporate culture, as it is often seen as bribery. However, if someone is invited to the home then, bringing small gifts like flowers, chocolates and wine is common. It is customary to use words please, thank you, excuse-me and sorry, while having conversation with either friends or strangers and while conducting business transactions. Sports are a national passion in Australia (Keen, 2010). Playing Beach cricket and backyard in the summer is popular among Australians. Education: Traditions, beliefs and customs are transferred to the Australian people through parenting, schooling and group membership (Crossley, 2015). Higher education offers well-paid jobs in the country. Students studying in Australia, get great advantage from countrys innovative technology and research resources. Education in Australia also includes promoting peace and serving justice. Degrees obtained from Australian Universities and Institutions are recognizes all over the world. Australian government keeps evaluating these universities to make sure that they are maintaining high standards. Today, Australians are more highly educated than ever before. Personal communication: Australians prefer modes of communication according to their cultural background and upbringing (Burgess et al., 2014). They are little more familiar facial expressions, tone and body language than other countries. For example, while making conversation, eye-contact is essential. It demonstrates attention, involvement and sincerity. Social structure: Australian society is generally a collection of young diverse people and is relatively more liberal. Social classes in the country are divided into three categories, i.e. working class, middle class and upper class (Uhlmann, 2016). However, class cant be identified by cars, clothes and living circumstances. Way of speech, participation in sports, consumption patterns, etc are the useful indicators of class. It is also allowed for people to move between classes from one generation to another. It is not customary in the corporate culture of the society to make social contact with customers outside the office. In Australia, no one is discriminated on the basis of its cultural heritage, religious belief, gender, or language. Everyone is assessed on the basis of are character (Jang, 2015). Many people who migrate to Australia feel a strong sense of belonging to Australia and gradually get attached to its beliefs and values. Religion: There is no official religion of Australia and people are free to practice any religion, they wish, provided that they do not break the law (Grim et al., 2015). However it is basically describes as Christian country. Extensive migration from different parts of the world has given this nation an identity of religiously diverse society. People in the country enjoy freedom of religion and all religions and faiths like Buddhists, Muslims, Jews and Hindus are equally respected in the country. Also 19% of the Australians have no religion. Every religious community has its own place of worship. Aesthetics: Australian culture is basically a Western culture, mainly derived from Britain. Music is an integral part of Australian culture. Didgeridoo is the most famous feature of Aboriginal music (Sb, 2016). However, they have also turned to Western popular music forms for commercial success. Architecture is also predominant throughout the country. It includes Harbour Bridge in Sydney, Port Arthur in Tasmania, and Royal Exhibition Building in Melbourne and many more. The National Trust of Australia is in charge of Australias built heritage. Aboriginal rock art is the oldest tradition of Australia. Australian foremost landscape painters include John Glover and Eugene Von Guerard. Australian schools of painting are associated with Heidelberg school of late 1800s. Dance is also an important part of Australian culture (Nah and Tan, 2016). In many states of the country, various youth dance companies have been established, providing opportunity for youngsters to participate in dance. It gives them a broad understanding of artistic process. Moreover, theatrical and dramatic aspects are also found in Australian cultural ceremonies and they have experienced a new sense of national identity. Comparision of Business Culture of Austrlia With That of Singapore In Australian culture, business people are polite and speak of their minds. But they are less aggressive and are more compatible with their colleagues (Bharati and Pratyush, 2010). In Singapore, interpersonal communication is primarily influenced by Western culture. Here, people are argumentative, even if the matter is controversial. Australian work culture give more priority to individual needs while, Singaporean culture mainly focus on organisational needs rather than individual needs. Working hours: Another big corporate cultural difference between two countries is working hours. In Singapore, working hours are longer than that of Australia. Particularly in the field of architecture, working hours are longest and quite harsh in Singapore. On the other hand, in Australia, things happen quicker in daily operations (Spoehr, and Jain, 2012). On the other hand, in Singapore, business deals are completed at slower pace. Greeting: Since Singapore is a multi-ethnic society, greetings are based on the ethnic origin. For example, Muslim men do not shake hands with women. However, Western culture of shaking hands with everyone (except older and more reserved Singaporeans) is widely accepted in the country by younger people and people working in multi-nationals (Sirgy et al., 2015). On the other hand, shaking hands is a common practice in Australia, before and after the business meeting. If anyone refuses to shake hands, when offered, it is considered rude. Negotiations: When it comes to meetings and negotiations, Australians businesspeople are more relaxed and calm and willing to share information. Here, negotiations happen quickly. On the other hand, business negotiations take place at a slow pace in Singapore and follow the strict hierarchy (Lee 2010). They are a little bit tough on price and deadlines. Decision-making: In Singapore, business decision making involves agreement of majority of the people in the group (Chhokar et al., 2013). On the other hand, in Australia decisions are taken by the top management of the company. Business meeting etiquette: In Singapore, appointments are made before at least two weeks (Djajadikerta and Zhang, (2015). While in Australia, appointments are relatively easy to schedule. Gift giving etiquette: In Singapore, flowers are not considered appropriate for gifting as they are given to the sick people and used at funerals. However, one can gift sweets, fruits or cake saying that it is for the children and gifts are not opened when received (Aung and Myo, 2015). On the other hand, in Australia, it is considered polite to bring chocolates or flowers when invited to someones house and gifts are opened when received. Dress code: In business culture of Singapore, businesspeople wear dark or light-coloured long-sleeved shirts and dark trousers with no tie and no jackets or blazers whereas women tend to wear blouses, skirts or dressy slacks (Sharkey, 2012). On the other hand, in Australia, business attire for men is a dark-coloured black or navy suit with white shirt and a tie and for women, it is skirt or trouser with white blouse. Hofstedes Six Cultural Dimension Theory Hofstedes cultural dimension theory is a model which illustrates cross-cultural communications among different national societies. It describes the effects of bringing together various groups of people having different preferences and values (Piepenburg, 2011). It is the most valuable pieces of work in the field of international business management (IBM) which evaluates how values in workplace are influenced by culture and helps in better decision-making. This model assists the organisations in operating effectively across cultures. Hofstedes model contains six cultural dimensions, which are: Here, a meaningful analysis of Australian culture has been made, using Hofstedes cultural dimension theory. In addition, some factors are also discussed which foreign countries (here, Singapore) should consider to operate business in Australia successfully. Power Distance: The term power distance deals with the issue of human inequality. It indicates the extent by which less powerful people accept that power is spread unequally (Robbins, 2014). People having high power distance generally accept autocratic power relations and unequal distribution of power, while people having low power distance question and expect to participate in decisions taken by the authority that affect them. Australia scores 36 in this dimension, which is lower as compared to that of Singapore. It indicates that managers and employees in Australian companies expect to be consulted and involved in decision-making process. If Singapore wishes to do business in Australia, it needs to delegate its power and authorities to employees as much as possible. Also, the top management should involve employees in all those decision-making processes which may affect employees directly. Individualism: It indicates the degree of interpersonal connection between the individuals and social groups. Higher individualism represents individualist culture. In individualist culture, people take care of themselves and their family only (Newman, 2014). They live with I mentality and emphasize on individual achievements. Lower individualism represents collectivistic culture, in which people emphasize more on groups and We mentality, exists there. Decisions are taken which are best for the entire group rather than any particular person. Australia scores 90 in this dimension, which indicates highly individualistic culture in the country. It means that Australians give more importance to their personal goals and freedom. Since, individualism is high in Australia, it is important for Singaporean companies to let employees to express their own ideas and appreciate individual accomplishments in order to encourage them. Masculinity: Masculinity places value on ambition, power and material goods. A high masculine society generally has more difference between genders and tends to be more competitive (Newman, 2014). In contrast, lower masculinity represents feminine society, in which more emphasis is on quality of life and relationship building. Australia has high level of masculinity (61), which shows that it places more value on money and material gains. Therefore, if a Singaporean company wants to operate business in Australia, it should recognize that it is operating in a hierarchical, deferential and traditionally patriarchal society. Here, long-hours are the norm and this can make difficult for female members to gain advancement, due to family commitments. Uncertainty Avoidance: This dimension reflects societys tolerance for uncertainty and the ways by which members of the society deals with future unknown changes and threats (Shackleton, and Ali, 1990). Australia scores moderate, i.e. 51 in this dimension, which shows that business culture of Australia, is tolerant of uncertainty and there are very few rules and regulations to cope up with the anxiety of unexpected events. Singaporean companies should encourage employees to become more open to different approaches but at the same time, it should be ensured that people remain focussed and do not create too much structure. Singaporean companies also need to recognize and learn Australian unspoken expectations in order to function there in a better way. Long Term Orientation: This dimension represents the extent to which members of a society deals with their present and future challenges while linking them with their past. Long term orientation shows that people see time as linear and looks to the future rather than the past or the present. It is goal-oriented and values rewards (Shi, and Wang, 2011). On the other hand, short-term orientation is characterized with emphasizing on respect for tradition, personal steadiness and stability. Australia scores very low (21) in this dimension which means that it is a normative cultural society. Australians fosters on achieving quick results and care more about immediate gratification than long-term fulfilment. Singaporean companies may need to sell themselves to be taken seriously, in order to operate effectively in Australian normative culture (Gulsrud, 2014). Here, people are less willing to compromise as it would be seen as weakness. Singaporean companies may need to promote self-enhancement of employees and value their short-term gains. Indulgence: Indulgence cultural societies are more concerned with optimism, personal life control and freedom of speech (McSweeney, 2002). Low indulgence represents a restraint culture where people feel helplessness about their personal destiny and have rigid behaviour. Australia scores higher (71) in indulgence, which indicates that these people have control over their future events and they actively participate in life activities. It also reflects that Australian customer service representatives visibly demonstrate their happiness with a smile and friendly behaviour. In order to operate well in Australia, it is required for Singaporean companies to prioritize feedback, coaching and mentoring (Xiumei et al., 2011). Companies should provide employees flexible working environment along with work-life balance. Comclusion From the above detailed analysis, it has been concluded that Australian culture is primarily influenced by Western culture, which are characterized as low in power-distance, individualistic, high in uncertainty-avoidance, masculine, short-term oriented and high in indulgence. Hofstedes cultural dimensions model enables foreign business firms who want to do business in Australia, to evaluate their approaches, decisions and actions based on corporate culture of Australia. A little research has found several key differences in context of working hours, greetings and business etiquettes, in the business culture of Australia and Singapore. Additionally, the above studies provide information on business decision-making style that foreign business firms can utilize to operate in Australia by formulating more effective strategies. References Hunter, B and Biddle, N. (2012). Survey Analysis for Indigenous Policy in Australia: Social Science Perspectives. Australia: Anu E Press. 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