Mgmt 415 Multiculturalism And The International Company

1412 words - 6 pages

Multiculturalism and the International Company

MGMT - 415

American InterContinental University
January 13, 2013

This paper will cover issues that a company may face in a foreign country, as well as what can happen if cultural barriers and diversity is ignored, the importance of diversity in the international arena and the importance of these items in PPQ Parts expansion in Germany and Japan.

Multiculturalism and the International Company
When it comes to a company wanting to expand their business in a foreign country there are some issues that they may face. A barrier that a company will have an issue with is language, as this is the ...view middle of the document...

Starbucks failed to find out that Australia had other similar stores operating in the local markets. Local preference was underestimated as well for their taste in the local coffee available. Starbucks had to close down shop and leave the Australian market.
There is also price standardization that a company needs to be aware of. An example of this would be KFC wanting to enter the market in India. In this area, KFC did not want to price their food in the same range as their other stores around the country. In this target market segmentation KFC failed because their chicken was around the same price of the tandoori chicken meal offered by other local restaurants. Due to this, KFC had to leave India causing their investors to lose confidence and trust in the KFC franchise. This affected the company’s investments for the future.
Along with price standardization, there is the impact on the environment that the business will create in foreign country. According to documented research, Coca-Cola caused major problems in India when it came to corporate social responsibility (SCR), which the company ignored completely. It is stated that Coca-Cola created problems in regards to water shortages, pollution of groundwater and soil, and toxic waste being distributed as fertilizer. Due to the company’s negligence and unwillingness to follow corporate social responsibility (SCR) they had to pay millions in legal fees, as well as losing millions in sales. The company also had to shut down the bottling facility, as well as compensate the community, clean up the contaminated water and soil and recharge the depleted groundwater. In the end, this issue cost the company big money, tarnishing their reputation and hindering any future endeavors in India.
Cultural barriers and diversity issues that are commonly encountered by international/multinational (MNC) and global organizations can cause a business to start tail spinning when they fail to understand local culture. A company can still fail even after they have established a foothold in the host country. An example of this is an Italian mineral water called “Traficante”, which did exceptionally well in Spain’s underworld because the mineral waters name is translated as “drug dealer” in Spain. Another example would be in 2001 Honda introduced a car in Nordic countries called “Fitta”, which means an old word that is used to refer to a woman’s genitals in Swedish, Norwegian and Danish. Due to this issue Honda renamed the car “Honda Jazz”. A company can keep from having embarrassing issues like this if they will just take the time to do market research in the culture in which they wish to do business in.
In the international arena, diversity has become an important topic because local cultures are nationalistic and use local dialect, culture and tradition. Failing to recognize local diversity will cause failure in any global business. Diversity is important in running a successful global business operation....

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