• Understand how sociocultural forces affect global trade
• Understand how political forces affect global trade
• Understand what governments do to restrict trade
• Understand how legal differences affect global trade
• Understand how physical and environmental forces affect global trade

Factors Affecting Global Business

There are many factors that businesses must learn to navigate if they wish to expand globally. You will recognize these overlap with the external forces affecting business that you learned about in the introductory module.

Sociocultural Differences

Business always exists in an environment shaped by culture. Culture refers to the influence of religious, family, educational, and social systems on people, how they live their lives, and the choices they make.  Organizations that intend to sell products and services in different countries must be sensitive to the cultural factors at work in their target markets. Even cultural differences between different countries—or between different regions in the same country—can seem small, but businesses that ignore them risk failure in their ventures. Several dimensions of culture that require particular attention from global businesses are discussed below.

Language

The importance of language differences can’t be overemphasized, and there are nearly three thousand languages in the world. Language differences can be a challenge for businesses designing international marketing campaigns, product labels, brand and product names, tag lines, and so on. Finding a single brand name that works universally in terms of pronunciation, meaning, and “ownability” is a monumental challenge. Of course, correct and grammatical use of language in business communication is essential for a product, brand, or company to be viewed as credible, trustworthy, and of high quality.

The language issue becomes more complicated when a country has more than one officially recognized language. To illustrate, in Canada, national law requires that labels include both English and French. In India and China, more than two hundred different dialects are spoken. India has more than twenty officially recognized languages. Mainland China’s official spoken language is Mandarin Chinese, and several autonomous regions have designated other additional official languages. Meanwhile, in Hong Kong and Macau, Cantonese Chinese, English, and Portuguese are the official languages. Clearly, language can quickly become a very challenging issue for businesses!

Finally, businesses should be attuned to what they communicate when they choose which languages to use—or not use. In Eastern Europe, for example, the long history of Soviet occupation during the Cold War as well as Russia’s invasion of Ukraine has left many inhabitants with a negative perception of the Russian language. Products that originate in Russia or carry Russian labeling may suffer accordingly.

Customs and Taboos

All cultures have their own unique sets of customs and taboos. It’s important for businesses to learn about these customs and taboos so they’ll know what is acceptable and unacceptable for their foreign operations. For example, in Japan, the number four is considered unlucky, and product packages containing four items are avoided by many consumers. In Egypt, where many women wear the headscarf or hijab in public, an increasing number of younger women choose not to wear a head covering. Businesses struggle with whether to portray women with or without the hijab, knowing that they risk offending some of their target audience with either choice. Businesses should seek guidance from native experts familiar with local culture and customers.

Values

The role of values in society is to dictate what is acceptable or unacceptable. Values are part of the societal fabric of a culture, and they can also be expressed individually, arising from the influence of family, education, moral, and religious beliefs. Values are also learned through experiences. As a result, values can influence consumer perceptions and purchasing behavior.