In This Article
- 1 The Importance of Cultural Diversity in International Business Development. [4-min read]
- 2 What is IBD?
- 3 Why is Cultural Diversity in International Business Important?
- 4 Some Examples of Cultural Diversity in International Business
- 5 What are Your Benefits?
- 6 What to do Next?
- 7 Get a Taste of How Chris Presents, Watch his TEDx Talk
- 8 Book Chris Smit as a Speaker
The Importance of Cultural Diversity in International Business Development. [4-min read]
Cultural Diversity in International Business Doesn’t Really Matter…
“When you are expanding your business internationally, cultural differences do not play a role. The Dutch like Italian Pizza and the Italians like Dutch football.”
With this unforgettable quote, the former CEO of KLM dismissed the cultural differences between the Italians at Alitalia and the Dutch at KLM Royal Dutch Airlines in 1999.
The result was that this international merger ended in a financial and catastrophic failure for the Dutch: no less than €250 million had to be paid to the Italians for breaking up a contract between the two companies.
Let alone the number of Dutch “would-be expats” who already had sold their houses in the Netherlands and had bought a place to live close to Rome.
What is IBD?
It is exactly what it is: “Cultural Differences and International Business Development“: develop your business internationally and pay attention to cultural differences. This includes international alliances, partnerships, or mergers.
A keyword here is “development”. You don’t just hop across the border and work internationally. You can’t just buy a fax and are an international company (yes, I still know what a fax is).
But you get my point; too many organizations have tried it: Let’s team up with a company from another country and we’re international and we’ve expanded our market.
Well, a simple Google search on failed (international) mergers and acquisitions will tell you the contrary: the majority actually fail. Or at least will have a difficult marriage.
Why is Cultural Diversity in International Business Important?
Watch this short (6-minute) video about how and why the American company Starbucks failed in (the also Anglo-Saxon country) Australia.
It just goes to show that what works in comparable countries on a cultural level, are no guarantees for success. At the time of this writing (November 2020, Starbucks has (only) 39 locations in Australia…
As I stated earlier, just the fact that you can send emails to a foreign email address doesn’t mean your international business will be a success. Mind you, on the other side of the email there is someone from another culture.
And, given our 20+ years of experience, as soon as you want to develop and/or expand your business across your own borders, you will bump into cultural differences. Whether you like it or not.
You can deny gravity, but that doesn’t make it go away. The same holds true for international business development: You cross a border? Then you will encounter cultural differences (mind you that I talk about differences, not necessarily of cultural difficulties, although they are more often than not part of the deal).
The basic message is: come prepared. Know what you’re doing. Understand your new market. Know why you’re doing what you’re doing and most of all understand your own culture in relationship to the “new” culture you’re trying to expand your business into.
Some Examples of Cultural Diversity in International Business
There are plenty of examples of international mergers and acquisitions that in the accountancy room made perfect sense, but in the real world they turned out to be different.
The list of companies is a little less important (you can find those online). The point here is more that most of the international M&As make sense if you look at them from a financial point of view (profit, economies of scale, procurement, etc.).
However, what the accountants come up with is not necessarily a reflection of what happens out there in the real world.
When it comes to expanding your business internationally, many people get what they ask for, but not what they want. And there’s a huge (!) difference between the two.
What are Your Benefits?
If you prepare well, and not only operationally and/or financially, but primarily culturally your benefits are plain and simple: You will save time and money.
Cultural Diversity in International Business; How?
People will be better prepared and hence less frustrated (ever calculated how much it costs to replace a frustrated colleague who leaves because of cultural differences?).
Processes will run smoother, faster, and with less frustration, thereby saving you time, which often translates into money.
So, if (one of) your objectives is to either return a profit or increase shareholder value, you better invest in preparing yourself for your next international business development.
What to do Next?
Simply put: stop and think.
Who will you be dealing with? What other cultures will be involved? All the legal and labor stuff you can easily outsource to a local expert.
But getting yourself, you, ready for this is something you cannot outsource. So, Cultural Differences and International Business go hand in hand and you cannot leave that up to someone else.
Follow a course on how you and the “others” are different. Where can you expect the friction points? Know the “what” you’re dealing with; it will explain a lot of the “why’s” that are happening.
You can hear Chris and Peter talk about this subject here.
- Should you want to read more on how to adapt to a different culture, read this article.
- A follow-up article (Part II) can be found here. This article is written by Peter van der Lende
- What we can do for you can be found here.
- An article specifically focused on the travel industry can be found here.
- An article about “assumptions in international business” can be found here.
- An article on where you can “find” culture can be found here.
Get a Taste of How Chris Presents, Watch his TEDx Talk
Call Direct: +32476524957
European Office (Paris) Whatsapp: +32476524957
The Americas (USA; Atlanta, GA; también en Español): +1 678 301 8369
Book Chris Smit as a Speaker
If you're looking for an Engaging, Exciting, and Interactive speaker on the subject of Intercultural Management & Awareness you came to the right place.
Chris has spoken at hundreds of events and to thousands of people on the subject of Cultural Diversity & Cultural Competence.
This is What Others Say About Chris:
- “Very Interactive and Engaging”
- “In little time he knew how to get the audience inspired and connected to his story”
- “His ability to make large groups of participants quickly and adequately aware of the huge impact of cultural differences is excellent”
- “Chris is a dedicated and inspirational professional”
In addition, his presentations can cover specific topics cultural topics, or generally on Cultural differences.
Presentations can vary anywhere from 20 minutes to 2 hours and are given World Wide.
Book Chris now by simply sending an email. Click here to do so.
Read more about what Chris can do for you.
- Percentage of People Rating a Presentation as Excellent 86% 86%
- Rating the Presentation as Practical 89% 89%
- Applicability of Chris' presentation 90% 90%
About Peter van der Lende
Peter has joined forces with Culture Matters.
Because he has years and years of international business development experience joining forces therefore only seemed logical.
Being born and raised in the Netherlands, he has lived in more than 9 countries of which most were in Latin America.
He currently lives in Atlanta, Georgia (USA) with his family.
You can find out more at https://expand360.com/
Or find out what Peter can do for you here.
- 166 Douglas Herbert. France24 international commentator - 17 October 2022
- 165 9-More signs you’re not getting it; it’s culture, stupid - 13 October 2022
- It’s Culture Stupid. Nine More Signs You’re Not Getting It - 29 August 2022