The Challenges of Doing Business Overseas

The Challenges of Doing Business Overseas

Introduction

Steve Kafka is an American business man of Czech origin and a franchisor for Chicago Style Pizza. Steve has determined he would like to extend his business into the Czech Republic. Steve will encounter cultural challenges and will have to overcome risks related to starting up a business in a foreign country. By looking at the major differences and incompatibilities between the U.S and the Czech Republic it will be identified what it will take to get the business to a successful start overseas. Looking at what comparative advantages the Czech Republic has will identify any opportunities for Steve to take advantage of in his business. An evaluation of Hofstede’s four primary dimensions will assist Steve in assessing the business environment for cultural differences in business, and possibly opposing customs and protocols. In addition Steve will have to research any trade barriers, and assess the demand for his product and what type of cost structure he will need to have for his pizza business.

Cultural Differences between the U.S and the Czech Republic

The Czech Republic has changed from when it was a part of the communist regime. Western practices are becoming more common among European countries that are no longer under the reign of communism; however, the culture in the Czech Republic is still more formal than in the United States. When first meeting someone, make eye contact and continue while shaking hands firmly but briefly. “To show respect, one addresses adults by their professional titles (engineer, professor) and last names.”(Culturegrams, 2008). One of the more challenging aspects of starting a foreign business would be getting to know what the workforce in the country is like and to become accustomed to the way the country does business. In Steve’s case the adaptation to a foreign country will entail a sympathetic understanding of cultural variety, insights, labels, and morals (Hodgetts, Luthans, and Doh, 2005). The Czech Republic’s population has developed a reputation as diligent workers and is well known for the skills and discipline of the workforce. The Czech Republic has the second highest secondary level completion rate worldwide, only second to the United Sates. Some cultural differences that would seem relatively minor are a bigger concern to a different culture. The use of utensils is not common when eating pizza in the United Sates, but in the Czech Republic, “When eating, always use utensils.