How do I Develop Foreign Markets: Social and Cultural Factors?

The world is too big, broad and varied for one business to work exactly the same in one area as it does another.

Basic economic theory assumes that all economic actors are perfectly rational and therefore would act roughly the same under similar circumstances. However, that theory gets mangled when applied across cultures and societies. In reality, class, race, culture, gender, family structure and a number of other factors impact individuals' economic behavior. For a business seeking to develop foreign markets, social and cultural factors become less of an ancillary consideration and more of a core consideration in the construction of the most appropriate business plan for the area.

Instructions

1. Study the area you seek to develop. For a couple of reasons, learning about a society and culture requires acquiring background knowledge before studying it intimately. First, some parts of culture require research to understand, such as religion. Second, without background knowledge, you may find the society itself inaccessible. For example, a woman seeking to operate a business without a man at her side in Saudi Arabia might find her business proposals fall on deaf ears. To learn about a society and culture, visit your local library and/or simply read whatever you can online about the area--of course, be wary of the quality of your source material.

2. Visit the area, and spend time learning general information about the society and culture. According to former music and entertainment mogul Max Siegel, success in business anywhere requires "knowing what makes people tick," information that can be best acquired from having direct relations with them. For example, business matters in Russian and Chinese society, in particular, are notoriously more based on interpersonal relations than in the United States. Get a sense of the foreign society and culture to know how to navigate those relations. In general, you will do this by visiting the area after studying the language and society for some time. Also, try dressing in that society's style of clothing--people will appreciate it when you show that you respect and mean to assimilate yourself into their culture.

3. Study the unique business practices of the area. Visit different types of establishments there and attempt to use the services. You will likely develop important insights about the society and culture. For example, unless you study Islam or Islamic banking before visiting the Middle East, you may be surprised to learn about the concept of "riba." According to Islam, Muslims cannot accept or request interest payments on loaned money, which dramatically changes the business model of banks operating in the area.

4. Make local friends who understand you well. Final and perhaps most important, cultivate personal relationships with business associates who understand your perspective and want to help make your business work. Contact local commerce bureaus in the foreign area for assistance.

Tips & Warnings

• Visit the website of the International Trade Administration of the U.S. Department of Commerce for more information on making contacts and developing your business in foreign markets.

References

• Max Siegel; "Know What Makes Them Tick"; Harper, 2010.
• Lawrence E. Harrison and Samuel Huntington; "Culture Matters: How Values Shape Human Progress"; Basic Books; 2001.

Resources

• U.S. Commerce Department: International Trade Administration
• Entrepreneur
• The Economist