Extending Business in the Foreign Market: Impact of Cultural Factors

This report discusses the impact of cultural factors on business expansion in foreign markets, with a focus on the case of BeautyPro in China. It highlights the challenges faced by multinational companies due to cultural diversification and the importance of understanding cultural values and norms in decision making.

Running Head:EXTENDING BUSINESS IN THE FOREIGN MARKET
EXTENDING BUSINESS IN THE FOREIGN MARKET
Name of the Student:
Name of University:
Author Note:

1EXTENDING BUSINESS IN THE FOREIGN MARKET
Executive Summary
Cultural norms and ethos are identified as an important factors that the multinational companies
are taken into consideration during expanding their market in abroad. In this context, this report
discusses about the BeautyPro multinational company of Australia that is expanding its market in
China. The Cultural underpinnings are played a significant role in this regard. As a result of that
the Company faces sever challenges in China. Therefore, the report highlights the important
aspect of cultural factor in making business overseas. In fact, the cultural factors are very
important to influence the decision making process. In a conclusion, it is seen that the report
follows an in-depth analysis with covering the important aspects of culture in business.

2EXTENDING BUSINESS IN THE FOREIGN MARKET
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Current situation analysis................................................................................................................3
Different cultural values and etiquette.........................................................................................3
Different cultural norms in decision making...............................................................................6
Conclusion.......................................................................................................................................8
Recommendation.............................................................................................................................8
Communication............................................................................................................................8
Cultural themes............................................................................................................................9
Reference.......................................................................................................................................10

3EXTENDING BUSINESS IN THE FOREIGN MARKET
Introduction
Cultural underpinnings are considered to be one of the major aspects that the corporate
houses must follow in their market orientated decision making process. The problems are
emerged when a multinational or foreign company enters into a new market with different kind
of customers and cultural base. In this case, the stated BeautyPro Company also faces the same
problem while expanding its business in Chinese market. The BeautyPro Company is an
Australian multinational company distributes organic cosmetics in domestic and overseas
market. However, the Company faces some challenges in the Chinese market with cultural
diversification. In response to this given scenario, the role of this report is to identify the cultural
issues that corporate organisations are facing in their foreign market expansion. It is in fact, can
be argued that the cultural perception guides the customers and the organisation as well to
develop a better market and service facilities. In course of the discussion, the report encapsulates
the literature review on the different cultural values and cultural norms that are responsible to
influence the decision making process in the context of business.
Discussion
Current situation analysis
Different cultural values and etiquette
Cultural values as considered to be an important aspect for doing business in a foreign
country. According to Ahern, Daminelli&Fracassi (2015),it can be argued that it is important to
understand the willingness of the customers whether they are attracted by the product or reluctant
to purchase it. In this regard, the cultural values play a pivotal role to convince the consumers to

4EXTENDING BUSINESS IN THE FOREIGN MARKET
purchase the particular product and the organisation must have great deal of understanding
regarding the cultural values of the region. In his study, Turró, Urbano&Peris-Ortiz (2014) have
put a great deal of emphasis on two cultural values in the name of indulgence and individualism.
Indulgence can be identified as the utilitarian needs that bestows into the mind of the customers.
On the other hand the individual aspect is very unique and try to differentiate the perception
among the purchaser on the basis of their distinct specifications. In response to this, Zhouet al.
(2015) advocated that the role of cultural values and etiquette have a long drawn impact on the
financial outcomes in global markets. The instances regarding the role of cultural impacts in
business can be seen in terms of foreign direct investment, equity investment and the venture-
capital flows. Therefore, as per the viewpoint of Demuijnck (2015) it can be ascribed that the
cultural values formulates a commonness among the borrowers and lenders related to expanding
business in different regions. Therefore, it will be beneficial for the multinational organisations
to have a cross-border merge where the organisation and the target customers are able to create a
flexible approach to understand the culture of one another. Furthermore,Welbourne,
Gangadharan&Sariol (2015) described cultural values as a major factor in the effective decision
making in relation to the organisational policies and regulation to maximise the market in a
foreign country. In this regard, it can be argued that the foreign market at first seems to be an
unknown chartered for the newly entered organisation. However, the gradual interaction with the
people and the business associates will give them the light to understand different aspects of the
cultural beliefs and the organisations will get benefits from it by expanding its business
extensively.
Therefore, Demuijnck (2015) opined that cultural values are so important in dealing with
business ethics. Corruption is always be a threat to the healthy business environment and

5EXTENDING BUSINESS IN THE FOREIGN MARKET
business organisations are keen to generate maximum profits by any means. As a result of that it
becomes inevitable for the corporate houses to take opportunities of the situation and bribing
people and government in order to extract more profit. In response to that the cultural values and
ethos play significant role to restrain the company in doing illegal immoral tasks (Chipulu et al.,
2014). Moreover, the cultural values and virtues are entitled to influence the cross cultural moral
relativism that inspires a clear ground for business ethics. In addition to this, the role of the
cultural values and etiquettes encompass the concept of healthy workplace environment (Real,
Roldán& Leal, 2014). As a matter of fact, it can be seen that attitude and behaviours have
correlation with the workplace incivility and the unique cultural facets will provide information
regarding the development of a better workplace practice. Welbourne, Gangadharan&Sariol
(2015) argued that one of the major factors behind the workplace incivility is the lack of cultural
values in the workplace practice. This, in return caused great damages to lowered the job
satisfaction and unable to identify any opportunities for the progress of the workers. Cultural
values helps them to develop certain practices that facilitates values and moral standpoint in
course of shaping better workplace environment (Wu&Shen, 2018).
Based on this understanding, it can be argued that the cultural values are considered to be
one of the determinants regarding the behaviour of the Chinese consumers. As far as the research
of Zeng & Greenfield (2015) is concerned, it can be stated that the rising consumer awareness in
China with the progress in technology, communication and information new forms of behaviours
have emerged that is based on the Cultural values. As a matter of fact, the shared values and
beliefs in culture puts impact on the purchasing attitude of the customers in China (Ahammad et
al., 2016). In this regard, Liu et al. (2016) advocated that the cultural values and ethos are poor in
condition in countries like China but the cross cultural significance has immense impact on the

6EXTENDING BUSINESS IN THE FOREIGN MARKET
digital buying practice of the Chinese people. Therefore, it can be stated that the Chinese culture
be an important aspect for the foreign and multi-national companies in order to increase the
market capitalisation. On the other hand, He & Wang (2015) revealed that the Chinese luxury
fashion market has a deep influence of the cultural values and the customers are liked to be opt
for the best products that is resembled with their culture. Therefore, most of the luxury fashion
companies tries to go with the Chinese culture and tried to maximise their market capitalisation
(Di Guardo, Marrocu&Paci 2016).
Different cultural norms in decision making
Decision has a long drawn impact on everyday lifestyle. However, the decision making
process does not retrain itself in everyday lifestyles only rather it transcends its dynamics in the
professional world as well. For an instance, nowadays it becomes a popular practice among the
corporate business organisations to accept the importance of decision making. In addition to this,
Li et al. (2015) showed that the cultural implications have a deep rooted impact on the role of the
decision making in business. The logical approach and the analytical framework of the decision
making process finds its way to develop with the cultural norms. As a matter of fact, the recent
studies has revealed that the characteristics of decision making has been influenced by the rich
cultural norms. In his studies Vohs et al. (2018) pointed out that in Asian continent the cultural
underpinnings leads to support fast, effective and efficient decision making and with the help of
the cultural variations it will be caused a significant impact on the decision making process. In
addition to this, choice is considered to be an intricate part of the decision making process. As far
as Betsch et al. (2016) is concerned, it can be argued that there are a number of influential factors
that are entitled to influence the decision making process in personal life as well as in business as
well. In this context, culture is undoubtedly one of the major aspect that can deliver a strong

7EXTENDING BUSINESS IN THE FOREIGN MARKET
impetus to the process of decision making. The person having a strong cultural background
possesses a different decision making procedure in compare to an individual without cultural
dominance (Wach, 2015). Therefore, the cultural dominance over decision making process is
very important for an organisation to get acknowledged with.
Beyond the general understanding of the cultural impact on decision making process
Ashman, Solomon &Wolny (2015) showed more clearly the professional approach of culture in
the decision making process. In his words, Dutta & Islam (2016) ascribed that the role of culture
can be best seen in the healthcare management system that witnesses a strong thrust on the
professional decision making process. In course of the research, cultural norms has been used as
a professional factor to influence the decisions taken by the medical practitioners and the medical
staff while taking important decisions. It can be related to the health and safety of the patients or
completely encompasses the paradigm of healthcare management and change in the course of the
medical practices and administrative measures. In relation to this, the customers’ decision
making also considered to be another important aspect that can be facilitated by the digital
culture. Chang & Lin (2015) argued that with the advent and new development in the
technological objectives, a change is also made in the course of the perception of the culture. In
the post-modern era the digital technology is also identified as a part of the culture in the name of
the digital culture. Therefore, the digital culture and its facets help to shape the decision making
of the consumer decision by making them more agile and interested to some specific products.
Besides this, technology in terms of the big data is also included in the paradigm of culture that
enables the organisation to develop and plan their decisions accordingly (Nasim et al., 2018).
Therefore, it can be argued that the role of culture in decision making is extensive and dynamic.

8EXTENDING BUSINESS IN THE FOREIGN MARKET
In fact, technological penetration makes it more important and essential for the companies to use
digital tools in order to take decisions accurately.
In this context, a pertinent question comes in mind that how far the technological
methods can be defined as culture. Henceforth, culture can be defined as a continuous process
that can be developed with change in time and also has a reflection of the past. Culture is a
practice that determines the role of the decision making through the glance of the tradition,
beliefs and trust. Therefore, there is a high possibility for the organisations to use culture as a
strategic tool in order to attack the customers as much as they can (Soo-Hoo&Bakar, 2018). In
case of the Chinese people, they have some strict cultural norms and most of their decisions are
vested upon their cultural beliefs (Sagi, 2015). Therefore, using culture will be a beneficial
measure for the multi-national companies to capitalise the Chinese market rigorously. Moreover,
the cross cultural perspective is also a useful tool for influencing the decision making process.
For an example, cross culture formulates an environment where people from different culture can
share their tradition and norms. As a result of that it becomes a blend of culture where both the
culture can be attracted to each other (Nouri, Georgila&Traum, 2017). However, one must keep
in mind that respect is one of the major aspect to focus on. Any kind of disrespect can contribute
to the hostile environment for business.
Conclusion
From the above discussion, it can be asserted that there are a number of factors that can
influence the business in a foreign market with different environment in terms of customers and
their purchasing behaviour. Therefore, it is important for the organisations to perceive a deep
insights of the customers’ behaviour. As a matter of fact, the decision making of the customers in

9EXTENDING BUSINESS IN THE FOREIGN MARKET
terms of purchasing attitude and the marketing strategy of the foreign company in order to
capitalise the market robustly will depend partially on the cultural factors. Therefore, the purpose
of this report was to figure out the impact of culture on the decision making process. For a better
understanding, the report sought help from the empirical information and scholarly works to
portray an extensive and effective impact of cultural norms and beliefs in business and issues
that can be created due to lack of understanding of the cultural factors.
Recommendation
Communication
Communication can be identified as a strategic step to get more information regarding the
existing culture of a country. Language differences can be a serious challenge in this regard.
Therefore, non-verbal communications are the best way to develop communication in foreign
business. In case of capitalising the Asian market culture is identified as an important aspect to
understand. Therefore, it will be beneficial for the organisations to open themselves up so that
the people of the foreign country could feel friendly environment and in result it will help the
company to expand its business successfully in the foreign market.
Cultural themes
It can be argued that the cultural themes can be played a strategic role in this regard.
Every society has its cultural theme that creates distinctiveness. For an example, the Chinese
follow the Confucian values that is based on belief and trustworthiness. As a result of that the
BeautyPro can leverage this factors and at the same time injects its own culture so that it will be
a blend between the existing and new culture. However, it has to be keep in mind that the

10EXTENDING BUSINESS IN THE FOREIGN MARKET
existing culture will never be harmed. Equal respect and mutual understanding will be the
cornerstone of doing business in China.

11EXTENDING BUSINESS IN THE FOREIGN MARKET
Reference
Ahammad, M. F., Tarba, S. Y., Liu, Y., &Glaister, K. W. (2016). Knowledge transfer and cross-
border acquisition performance: The impact of cultural distance and employee
retention. International Business Review, 25(1), 66-75. [Retrieved from
http://daneshyari.com/article/preview/1001819.pdf]
Ahern, K. R., Daminelli, D., &Fracassi, C. (2015). Lost in translation? The effect of cultural
values on mergers around the world. Journal of Financial Economics, 117(1), 165-189.
[Retrieved from
https://msbfile03.usc.edu/digitalmeasures/kahern/intellcont/Ahern_et_al_JFE_2015-1.pdf]
Ashman, R., Solomon, M. R., &Wolny, J. (2015). An old model for a new age: Consumer
decision making in participatory digital culture. Journal of Customer Behaviour, 14(2), 127-
146. [Retrieved from
https://s3.amazonaws.com/academia.edu.documents/40762032/Ashman_Solomon_Wolny_20
15.pdf?
AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1536493585&Signature=8CB
ehLWzRoD2wgeoKOGNaOzPp4A%3D&response-content-disposition=inline%3B
%20filename%3DAshman_Solomon_Wolny_2015.pdf]
Betsch, C., Böhm, R., Airhihenbuwa, C. O., Butler, R., Chapman, G. B., Haase, N., ...&Nurm, Ü.
K. (2016). Improving medical decision making and health promotion through culture-
sensitive health communication: An agenda for science and practice. Medical decision
making, 36(7), 811-833. [Retrieved from

12EXTENDING BUSINESS IN THE FOREIGN MARKET
https://kops.uni-konstanz.de/bitstream/handle/123456789/41443/Betsch_2-
1pwfffv3iyuxh3.pdf?sequence=1&isAllowed=n]
Chang, C. H., & Lin, S. J. (2015). The effects of national culture and behavioral pitfalls on
investors' decision-making: Herding behavior in international stock markets. International
Review of Economics & Finance, 37, 380-392. [Retrieved from
https://pdfs.semanticscholar.org/d741/020c19ba1e7b900de99d7f4dbc526f589638.pdf]
Chipulu, M., Ojiako, U., Gardiner, P., Williams, T., Mota, C., Maguire, S., ...& Marshall, A.
(2014). Exploring the impact of cultural values on project performance: The effects of cultural
values, age and gender on the perceived importance of project success/failure
factors. International Journal of Operations & Production Management, 34(3), 364-389.
[Retrieved from https://eprints.soton.ac.uk/345918/1/Chipulu%2520et%2520al%2520IJOPM
%2520Accepted%2520Manuscript.pdf]
Demuijnck, G. (2015). Universal values and virtues in management versus cross-cultural moral
relativism: An educational strategy to clear the ground for business ethics. Journal of
Business Ethics, 128(4), 817-835. [Retrieved from
https://www.researchgate.net/profile/Geert_Demuijnck/publication/271738426_Universal_Va
lues_and_Virtues_in_Management_Versus_Cross-
Cultural_Moral_Relativism_An_Educational_Strategy_to_Clear_the_Ground_for_Business_
Ethics/links/598f00fba6fdcc10d80206c2/Universal-Values-and-Virtues-in-Management-
Versus-Cross-Cultural-Moral-Relativism-An-Educational-Strategy-to-Clear-the-Ground-for-
Business-Ethics.pdf]

13EXTENDING BUSINESS IN THE FOREIGN MARKET
Di Guardo, M. C., Marrocu, E., &Paci, R. (2016). The concurrent impact of cultural, political,
and spatial distances on international mergers and acquisitions. The World Economy, 39(6),
824-852. [Retrieved from
http://fondazionemasi.it/public/masi/files/Di_Guardo,_Marrocu,_Paci.pdf]
Dutta, B., & Islam, K. M. (2016). Role of Culture in Decision Making Approach in Bangladesh:
An Analysis from the Four Cultural Dimensions of Hofstede. Bangladesh e-Journal of
Sociology, 13(2). [Retrieved from
http://www.bangladeshsociology.org/RoleofCultureinDecision13.2.pdf]
He, J., & Wang, C. L. (2015). Cultural identity and consumer ethnocentrism impacts on
preference and purchase of domestic versus import brands: An empirical study in
China. Journal of Business Research, 68(6), 1225-1233. [Retrieved from
http://or.nsfc.gov.cn/bitstream/00001903-5/357814/1/1000013295561.pdf]
Li, L. M. W., Masuda, T., & Russell, M. J. (2015). Culture and decision‐making: Investigating
cultural variations in the E astAsian and N orth A merican online decision‐making
processes. Asian Journal of Social Psychology, 18(3), 183-191. [Retrieved from
https://pdfs.semanticscholar.org/9800/e65efbf4414ab7dcba298474adb29f9e0f9c.pdf]
Liu, S., Perry, P., Moore, C., &Warnaby, G. (2016). The standardization-localization dilemma of
brand communications for luxury fashion retailers' internationalization into China. Journal of
Business Research, 69(1), 357-364. [Retrieved from https://recherche.inseec.com/wp-
content/uploads/2015/09/WP-2015-112-01.pdf]
Nasim, S. F. M. Y. A., Sidek, M., Mobidin, H. Z., & Adam, S. N. A. (2018). Big Data towards
Decision-Making Culture in Organization. Development, 7(3), 103-115. [Retrieved from

14EXTENDING BUSINESS IN THE FOREIGN MARKET
http://hrmars.com/hrmars_papers/Big_Data_towards_Decision-
Making_Culture_in_Organization.pdf]
Nouri, E., Georgila, K., &Traum, D. (2017). Culture-specific models of negotiation for virtual
characters: multi-attribute decision-making based on culture-specific values. AI &
society, 32(1), 51-63. [Retrieved from http://ict.usc.edu/pubs/Culture-specific%20models
%20of%20negotiation%20for%20virtual%20characters%20multi-attribute%20decision-
making%20based%20on%20culture-specific%20values.pdf]
Real, J. C., Roldán, J. L., & Leal, A. (2014). From entrepreneurial orientation and learning
orientation to business performance: analysing the mediating role of organizational learning
and the moderating effects of organizational size. British Journal of Management, 25(2), 186-
208. [Retrieved from
https://s3.amazonaws.com/academia.edu.documents/36671041/2012_BJM.pdf?
AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1536494061&Signature=vV
WxU2WOatjonuDFBTIQArjmPvg%3D&response-content-disposition=inline%3B
%20filename%3D2012_BJM.pdf]
Sagi, D. (2015). The Use of Power and Authority in Decision Making Process: A Cross Cultural
Perspective. [Retrieved from
https://www.researchgate.net/profile/Drsrilalitha_Girija_Kumari_Sagi_Sagi/publication/
274701580_The_Use_of_Power_and_Authority_in_Decision_Making_Process_A_Cross_Cul
tural_Perspective/links/55f79a7608aec948c4712b63/The-Use-of-Power-and-Authority-in-
Decision-Making-Process-A-Cross-Cultural-Perspective.pdf]

15EXTENDING BUSINESS IN THE FOREIGN MARKET
Soo-Hoo, P. L., &Bakar, H. A. (2018, March). Mediating Role of Interdependent Self-construal
on Cultural Norms and Interaction Goals between Chinese and Malaysian Business
Negotiators. In SMMTC Postgraduate Symposium 2018 (p. 61). [Retrieved from
https://28536699-376730838878981982.preview.editmysite.com/uploads/2/8/5/3/28536699/
proceedings_final_version.pdf#page=61]
Turró, A., Urbano, D., &Peris-Ortiz, M. (2014). Culture and innovation: The moderating effect
of cultural values on corporate entrepreneurship. Technological Forecasting and Social
Change, 88, 360-369. [Retrieved from
https://s3.amazonaws.com/academia.edu.documents/34930141/1-s2.0-S004016251300262X-
main.pdf?
AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1536494194&Signature=Oldz
XZnC%2F8Ul0S89zOOQCGncFoI%3D&response-content-disposition=inline%3B
%20filename%3DCulture_and_innovation_The_moderating_ef.pdf]
Vohs, K. D., Baumeister, R. F., Schmeichel, B. J., Twenge, J. M., Nelson, N. M., & Tice, D. M.
(2018). Making choices impairs subsequent self-control: A limited-resource account of
decision making, self-regulation, and active initiative. In Self-Regulation and Self-
Control (pp. 45-77). Routledge. [Retrieved from
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.465.4357&rep=rep1&type=pdf]
Wach, K. (2015). Impact of Cultural and Social Norms on Entrepreneurship in the EU: Cross-
Country Evidence based on GEM Survey Results. Zarządzanie w Kulturze, 2015(Numer 1),
1529. [Retrieved from http://ejournals.eu/sj/index.php/ZwK/article/download/6219/6134]

16EXTENDING BUSINESS IN THE FOREIGN MARKET
Welbourne, J. L., Gangadharan, A., &Sariol, A. M. (2015). Ethnicity and cultural values as
predictors of the occurrence and impact of experienced workplace incivility. Journal of
occupational health psychology, 20(2), 205. [Retrieved from
https://www.researchgate.net/profile/Jennifer_Welbourne/publication/
267753624_Ethnicity_and_Cultural_Values_as_Predictors_of_the_Occurrence_and_Impact_
of_Experienced_Workplace_Incivility/links/5727a68808aef9c00b8b4e31.pdf]
Wu, X., &Shen, J. (2018). A Study on Airbnb’s Trust Mechanism and the Effects of Cultural
Values—Based on a Survey of Chinese Consumers. Sustainability, 10(9), 3041. [Retrieved
from www.mdpi.com/2071-1050/10/9/3041/pdf]
Zeng, R., & Greenfield, P. M. (2015). Cultural evolution over the last 40 years in China: Using
the Google Ngram Viewer to study implications of social and political change for cultural
values. International Journal of Psychology, 50(1), 47-55. [Retrieved from
http://greenfieldlab.psych.ucla.edu/Cultural_and_Cross_Cultural_Studies_files/
A267%20Zeng%20%26%20Greenfield%20ijop_12125_Rev4_EV%5B3%5D_2.pdf]
Zhou, Z., Jin, X. L., Fang, Y., & Vogel, D. (2015). Toward a theory of perceived benefits,
affective commitment, and continuance intention in social virtual worlds: cultural values
(indulgence and individualism) matter. European Journal of Information Systems, 24(3), 247-
261. [Retrieved from
https://www.researchgate.net/profile/Zhongyun_phil_Zhou/publication/
270855833_Toward_a_theory_of_perceived_benefits_affective_commitment_and_continuan
ce_intention_in_social_virtual_worlds_Cultural_values_indulgence_and_individualism_matte
r/links/55acabea08ae815a042b1d52/Toward-a-theory-of-perceived-benefits-affective-

17EXTENDING BUSINESS IN THE FOREIGN MARKET
commitment-and-continuance-intention-in-social-virtual-worlds-Cultural-values-indulgence-
and-individualism-matter.pdf]