The paper "How Differences in Cultural, Legal, Political and Economic Factors Affect Multinational Companies" is a good example of business coursework. When a business decides to go global in terms of business operations, it is important to consider changing the manner in which it undertakes its business operations. Achievement of objectives is contributed by different factors. Taking businesses to an international level entails proper planning, analysis and ability to take not only risks but the ability to take calculated risks. A multinational company is a company that undertakes its business operations beyond the boundaries of a nation.
However, before going global in terms of business operations, it is important to consider how cultural factors, legal factors, political factors and economic factors affect business operations. Multinational companies should understand how culture affects their business operations. Different cultures necessitate that businesses be undertaken differently. For example, different cultures negotiate for business dealings differently (Acheampong and Kumah, 2012). Legal factors like taxation rules affect business operations in terms of reduced profitability. This essay, therefore, seeks to explain how differences in cultural, legal, political and economic factors affect Multinational companies. How differences in culture affect international businesses When a business decides to take its operations to international levels, it must consider changing its method of doing business.
One of the factors a business entity should understand is the difference in culture. According to Mohe (2008), culture refers to a trend that shows assumptions held by a given society with respect to religion, ethics, forms of communication as well as social characteristics. With respect to international business operations, culture is an important aspect to consider. Differences in culture most at times affect the way business transactions are carried out besides also affecting business negotiations.
For example, because McDonald's like adding pork into their menu in order to attain growth, McDonald had to change what to produce in India because for a fact, Indians and Muslims do not eat pork. Most often, in an attempt to attain a common business goal through negotiations, different business leaders approach the issues of negotiations differently. For example, business leaders of businesses doing operations in countries like Spain, US and parts of European nations, approach negotiations from a perspective where leaders seek fast closure to meet set objectives (Gö rg et al. , 2009).
However, in other countries like Asia, Business leaders there engage in very lengthy stages of negotiations with the aim of solidifying partnerships before engaging in actual business operations. Culture additionally affects negotiation strategies and other outcomes. For instance, in other countries, business negotiators approach negotiations from a win-win perspective, whereas another approach it from a win-lose perspective. According to Kurian (2015), successful business negotiations require not only an understanding of communication techniques but also a clear understanding of the context in which the negotiations are being done in order to enter into profitable business contracts.
Cultural differences affect engagements in business deals which consequently affect sales and profits in the long run. In fact, a study that was conducted by Mohe (2008), proved that a multinational company present in different cultures will always experience a smaller gap in terms of culture compared to a business operating in few different cultures. Additionally, the study notes that the result of the bridged gap is the learning experienced in different cultures.
Culture affects the way in which employees relate to one another (Caligiuri, 2014). Understanding cultural diversity helps in rational decision making. The main reason why a business entity decides to take its business operations beyond the boundaries of a nation is to maximize profit (Acheampong and Kumah, 2012). Therefore, in order to achieve this, a company must understand the culture in the host country. Multinational companies benefit both the host country and the mother country. Multinational companies benefit the host country in terms of increased economic growth and technological advancement, whereas in the mother country, Multinational companies contribute to economic development through repatriation of profits.
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