Economic sciences / 2.Foreign economic activity

Hlushachenko N.A.

Ukrainian Academy of Banking, Sumy, Ukraine

The Importance of Cultural Barriers Overcoming while Entering the International Market

In the modern era of globalization the companies of different sizes sooner or later try to enter the international market. But to become first international and then global each company is to deal with the numerous barriers that appear both in the domestic and foreign markets. The aim of this work is to analyze the cultural barriers that the companies face while entering the international market and to structuralize the ways of overcoming of these barriers.

Generally the barriers to international markets include:

· limited access to financial and labor resources in the domestic country;

· government regulative factors of both domestic and foreign countries including quotas, tariffs, limitations, the necessity of getting visas to cross the border;

· high transport costs;

· cultural barriers, including language difficulties;

· lack of information and the inability to adequately analyze the foreign markets;

· inability to contact the potential foreign customers without let or hindrance, etc. [1, p. 3-4].

Let’s concentrate our attention on the language and cultural barriers that the company faces on its way to entering the foreign markets. It should be mentioned that the level of cultural and business interrelations of different countries are highly correlated and influence each other greatly [2, p. 3].

The cultural factors may be conditionally divided into two groups: managerial cultural barriers (the difficulties and cross-cultural conflicts that occur between managers and workers) and cultural difficulties concerning the overseas customers.

Managerial cultural barriers usually take place when the company enters the foreign market because there is a need to decide whether to hire domestic or foreign managers and workers. Most of the companies simply transfer their managerial staff to the newly formed foreign affiliates because they are already common with the company’s business model, vision, mission and specific features. But in such a case there is a possibility that cross-cultural conflict will occur due to the fact that managers and staff represent different cultural, religious, customs, language, national groups [3, p.34-35].

On the other hand while entering the new market it is important to analyze the cultural environment and the particular qualities of the behavior, habits and preferences of the potential overseas customers.

To better understand the needs of the potential customers on the foreign markets it is extremely important to take into account the religiosity, family traditions and relationships, level of education, geographic conditions, and even gestures treatment. For example, the same gesture in different national cultures can carry completely different content. For instance, a gesture signifying the Americans "go away" on the contrary means "come here" in Argentina. However, the hand movement that expresses the Americans’ "come here" means "goodbye" in some parts of southern Europe. Failures in these sign systems can easily reduce the effectiveness of advertising campaigns and lead to financial losses of the multinationals [4].

Besides, while entering the foreign markets it is important to pay attention to the language specific features, especially concerning the brands names and slogans. Transliteration of different brand names sometimes leads to the situation when the meaning is completely changed. That’s why the soviet cars "Zhiguli" were exported under a different name "Lada" due to the fact that in French it has the meaning as "girl", "gigolo". Likewise the car manufacturing company General Motors was forced to change its model name "Nova" when exporting to Spanish-speaking countries, as the word "nova" is the Spanish equivalent of "does not work, does not go" [4].

To avoid such situation it is vital to hire the best translator team and to contact potential customers (for example, in the form of survey) to make sure that the goods or services are able to meet the consumers’ expectations.

Summarizing the facts above it should be said that the thorough analysis of the cultural environment of the potential foreign market is one of the most important steps the company should make to be successful and to avoid big losses caused by cultural failures. Although a lot of companies already became international and global and are a good example to follow, it is still impossible to gain success in the foreign markets just because of being successful at home. So, deep analysis and quality preparation are the best activities that help overcome the cultural barriers on the way to the overseas markets expansion.

Reference List

1. European business development group (n.d.). How to overcome the barriers in international business [Electronic source] – Mode of access: http://www.eurodev.com/wp-content/uploads/Whitepaper-BD-How-to-overcome-the-barriers-in-international-business.pdf

2. Otten, S. (2013). Language and Cultural Barriers in International Factor Movements [Electronic source] – Mode of access: http://www.econ.uzh.ch/dam/jcr:00000000-0db7-f8ad-0000-000044c703d0/Otten_Sebastian_Language_and_Cultural_Barriers_in_International_Factor_Movements.pdf

3. Chung, M., Smith, W. (2007). The importance of overcoming cultural barriers in establishing brand names: an Australian company in China. Innovative Marketing, Vol. 3, Issue 2.

4. Гордеев Р.В. Кросс-культурные проблемы международного менеджмента [Электронный ресурс] – Режим доступа: http://www.cfin.ru/press/management/1998-1/01.shtml