What Are the Cultural Problems Encountered by Multinational Companies?


Quick Answer

Multinational companies face various cultural problems such as understanding societal trends to individualism versus collectivism, time relationships, language barriers and cultural traditions. Nevertheless, many multinational firms have successfully tackled such issues and thrive in international markets.

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Some cultures, such as Chinese and Japanese, are collectivist, while others, such as the American and British nations, are individualistic. A multinational company can thrive only if it can tailor its approach to suit the foreign markets it enters. The strategy a multinational entity pursues to motivate local employees and connect with consumers should be selected based on the values the society emphasizes. In individualist cultures, multinational corporations are more likely to succeed if they try to motivate consumers and employees through individual rewards. Likewise, in a collective culture, such companies should try to reward teamwork.

Each culture has a different understanding of the concept of time. These differences affect schedules and punctuality. Whereas Americans consider tardiness a sign of disrespect, Latin Americans arrive late to show respect. Therefore, companies that operate in multiple countries have to learn how the locals perceive time. In addition, Americans tend to get right down to business, while professionals in some countries, such as Japan, prefer to build a relationship before discussing business matters.

Verbal and written communication across cultures is often a major concern for multinational companies. They not only need to overcome language barriers, but also cultural dimensions that affect meaning of words. Multinational companies must also familiarize themselves with the host country’s taboos, traditions and superstitions. Gift-giving, which in the United States is often viewed as bribery, is expected in other cultures.

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