Author Question: Describe some of the cultural challenges of doing business with countries of Central and Eastern ... (Read 41 times)

RRMR · **on:** Jul 7, 2018

Describe some of the cultural challenges of doing business with countries of Central and Eastern Europe. How do these challenges compare with the challenges of doing business with ASEAN countries?

What will be an ideal response?

Question 2

What is the integration-responsiveness framework? Describe the two main components of the framework.

What will be an ideal response?

kiamars2010 · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

The countries of Central and Eastern Europe that belong to the EU represent a land of opportunity. But like doing business anywhere, understanding of local culture can be a big advantage. Entrepreneurs who have succeeded in the Czech Republic offer this advice.
Formalities-Czech society is rather formal, hence it is necessary to use titles like doctor and mister. It's rarely appropriate to use first names unless they are close friends.
Business Relationships-Making money is obviously important and the ultimate goal for any business. Still, building personal relationships, establishing good references, and doing favors for others can smooth the way for newcomers.
Czech Partners-Being communist for 40 years before it became a capitalist democracy has left its mark on the Czech people and their culture. Finding a local partner who can handle the inevitable cultural difficulties that arise is crucial.
Local Professionals-It is a good idea to hire a Czech accountant or someone familiar with Czech laws, taxes (including a VAT tax of 19 percent), and red tape. An attorney who is bilingual can also interpret differences between Czech and U.S. laws.
Who's in Charge-Companies need a responsible person (or jednatel in Czech) who is in charge of all aspects of the business. Some Czechs still feel more comfortable working with this jednatel rather than unfamiliar company reps.
Businesses unfamiliar with operating in ASEAN countries should exercise caution in their dealings. Some inescapable facts about ASEAN that warrant consideration are the following:
Diverse Cultures and Politics-The Philippines is a representative democracy, Brunei is an oil-rich sultanate, and Vietnam is a state-controlled communist country. Business policies and protocol must be adapted to each country.
Economic Competition-Many ASEAN nations are feeling the effects of China's power to attract investment from multinationals worldwide. Whereas ASEAN members used to attract around 30 percent of foreign direct investment into Asia's developing economies, it now attracts about half that amount.
Corruption and Shadow Markets-Bribery and shadow (unofficial) markets are common in many ASEAN countries, including Indonesia, Myanmar, the Philippines, and Vietnam. Corruption studies typically place these countries at or very near the bottom of nations surveyed.
Political Change and Turmoil-Several nations in the region recently elected new leaders. Indonesia in particular has gone through presidents at a fast clip recently. Companies must remain alert to shifting political winds and laws regarding trade and investment.
Border Disputes-Parts of Thailand's borders with Cambodia and Laos are tested frequently. Hostilities break out sporadically between Thailand and Myanmar over border alignment and ethnic Shan rebels operating along the border.
Lack of Common Tariffs and Standards-Doing business in ASEAN nations can be costly. Harmonized tariffs, quality and safety standards, customs regulations, and investment rules would cut transaction costs significantly.

Answer to Question 2

The discussion about the pressures on the firm of achieving global integration and local responsiveness has become known as the integration-responsiveness (IR) framework. The IR framework has become popular for examining a firm's strategic objectives in international business.
Since efficiency and learning objectives are related, they are often combined into a single dimension, called global integration. Global integration refers to coordination of the firm's value-chain activities across countries to achieve worldwide efficiency, synergy, and cross-fertilization in order to take maximum advantage of similarities across countries. The flexibility objective is also called local responsiveness. Local responsiveness refers to meeting the specific needs of buyers in individual countries.