Participants will explore ways banks can continue their strategic transformation in Explore additional resources and insights Get ahead of coming regulatory compliance trends. Access the archive Banking Industry Outlook. Get in touch. Scott Baret Partner sbaret deloitte. Latest news from DeloitteFinSvcs Sharing news, research, blogs, and more. Join the conversation. Firms can choose to concentrate their efforts in countries such as Canada, Australia, South Korea, and Japan that have very low levels of political risk, but opportunities in such settings are often more modest Kostigen, Executives who lead companies that do business in many different countries have to take stock of these various dimensions and try to anticipate how the dimensions will affect their companies.
Because economies are unpredictable, economic risk presents executives with tremendous challenges. Car sales by Hyundai Motor Co. Kia has achieved sales volume growth in Europe every year since , increasing market share from 1. If inflation and interest rates were to increase in a particular country, this would make it more difficult for consumers to purchase new Kias. If currency exchange rates were to change such that the euro became weaker relative to the South Korean won, this would make a Kia more expensive for European buyers Kia. The history of business is full of colorful examples of cultural differences undermining companies.
For example, a laundry detergent company was surprised by its poor sales in the Middle East.
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Executives believed that their product was being skillfully promoted using print advertisements that showed dirty clothing on the left, a box of detergent in the middle, and clean clothing on the right. A simple and effective message, right? Not exactly. Unlike English and other Western languages, the languages used in the Middle East, such as Hebrew and Arabic, involve reading from right to left. To consumers, the implication of the detergent ads was that the product could be used to take clean clothes and make them dirty.
Not surprisingly, few boxes of the detergent were sold before this cultural blunder was discovered. A refrigerator manufacturer experienced poor sales in the Middle East because of another cultural difference. The firm used a photo of an open refrigerator in its prints ads to demonstrate the large amount of storage offered by the appliance. You would likely be disgusted. In some parts of world, however, horse and dog meat are accepted parts of diets.
Firms must take cultural differences such as these into account when competing in international markets. Cultural differences can cause problems even when the cultures involved are very similar and share the same language. In , RecycleBank expanded its operations into the UK. Differences in the meaning of English words between the United States and the UK are also vexing to American men named Randy, who wonder why Brits giggle at the mention of their name Figure 7. Carmichael, K.
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The Star. Isidore, C. July 2. Made in USA: Overseas jobs come home. Best-ever monthly and quarterly retail sales for Kia Europe.
Kia Corporation. Kia sales climb strongly in 10 countries in May. Kostigen, T. Market Watch. Wall Street Journal. Maltby, E. Expanding abroad?
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Avoid cultural gaffes. Miller, D. Ovsey, D. How U. National Post.
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Philip Morris International. Our Brands. Szczesny, J. GM sells more cars in China than US again. MSN Autos. Clove-flavored Marlboro now in Indonesia. The Economist.
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Stateside substitutes. The Korean Herald. University of Oregon Investment Group. Consumer Goods.
Wikipedia Organization. Canada-United States relations. Comparison between U. The domestication of the camel by Arabian travelers fueled two early examples of international trade: spices and silk. Today, camels have been replaced by airplanes, trains, and ships, and international trade is more alluring than ever. Here are three key reasons why executives are enticed to enter new markets. Figure 7. Firms venturing into new markets must be willing to face the three risks on the global battlefield that we outline below. An important part of fitting in is avoiding behaviour that locals consider offensive.
Below we illustrate a number of activities that would go largely unnoticed in the United States but could raise concerns in other countries. Cultural differences rooted in language — even across English-speaking countries — can affect how firms do business internationally. Below we provide a few examples. Skip to content Increase Font Size.