International Business: Opportunities and Risks in Cross Cultural Environment

This project report evaluates potential opportunities and risks of doing business in cross cultural environment and outlines management response undertaken by John Good Shipping Company to realize opportunities in relation to cross cultural issues. The report highlights the barriers and risks which can be faced and which can hamper business growth in the global economy. Lastly, the report suggests some measures which will be helpful in maximizing cross cultural proficiency and how a business can successfully operate internationally.

INTERNATIONAL
BUSINESS

EXECUTIVE SUMMARY
This project report is based on the concepts of international business and performing
business activities in cross cultural business environment. This project will outline the factors
related to cross cultural business environment and how an organization can gain various
opportunities through operating in international market. This study will highlight the barriers
and risk which can be faced and which a hamper business growth of in the global economy.
Lastly, the report will suggest some measures which will be helpful in maximizing cross
cultural proficiency and how a business can successfully operate internationally.

Table of Contents
INTERNATIONAL BUSINESS.............................................................................................1
EXECUTIVE SUMMARY......................................................................................................2
INTRODUCTION....................................................................................................................4
LITERATURE REVIEW........................................................................................................4
Evaluation of potential opportunities and risk of doing business in cross cultural
environment which can be effectively managed....................................................................4
ANALYSIS AND DISCUSSION............................................................................................8
Management response undertaken by selected company to realise opportunities available in
market selected in cross cultural issues..................................................................................8
Recommendations to achieve cross cultural proficiency which is essential in achieving
success in selected international market..............................................................................10
CONCLUSION.......................................................................................................................11
REFERENCES.......................................................................................................................13

INTRODUCTION
International business refers to trade of goods, services, technology, capital and
knowledge across national borders. International business involves cross border transactions
of goods and services between two or more countries which in simpler term is also known as
globalization. Cross cultural business environment refers to operations in other countries with
consideration to cultural values of the host nation while performing business activities,
determining opportunities, environment and their culture and understanding their impact on
the business. Cross culture in business is the term which defines the efforts of an organization
which can ensure that people interact effectively with professionals from other backgrounds
(What is Cross Culture, 2021). It is the recognition of national, regional and ethnic
differences in such approach and willingness to bridge or minimize such differences. John
Good Shipping Company is a shipping agency and freight forwarder which offers different
sea and air freight services. The logistic company was established by John Good in 1833
which is now operating as John Good Logistic Limited (Goods Logistics website, 2021). The
company is operating in UK, USA and Turkey. This report will evaluate potential
opportunities in risk which can be faced by a business in cross cultural environment that can
be managed by the organization effectively. The project will outline management response
which has been taken by the selected organization to realise opportunities in relation to cross
cultural issues. Lastly, the study will depict some suggestions which can be implemented by
the selected organization in order to enhance their cross-cultural proficiency through which
business can ensure success.
LITERATURE REVIEW
Evaluation of potential opportunities and risk of doing business in cross cultural environment
which can be effectively managed
Cross culture environment refers to interest in cultural diversity with motivation to
effectively function them in organization. It is the effort of an organization which focuses on
interaction among people from different backgrounds and professions. The concept of cross
culture is essential with globalization of business. Cross culture brings diversity to an
organization where innovative approaches and decisions can be formed through which an
organization can generate higher revenues, maximise profitability and strengthen their

competitive position within the global industry. Cross cultural business environment relates
to operations and operations in other countries while focusing on their cultural values and
performing business activities according to the host countries culture. Cross culture is a
significant issue in international business, as success of international trade depends upon
effective interaction of employees from different cultural regions (Cross culture business,
2021). Culture is responsible to create a strong impact on business, as it also influences
functional areas of business, such as- sales, marketing, human resource and distribution.
Opportunities for business in cross cultural environment
An organization can get various opportunities while operating in a cross-cultural
environment. The business expansion in international markets can be helpful in attracting
business growth and development opportunities. The opportunities of cross-cultural business
environment in relation to John Goods Shipping company is discussed below:
 Improved access to wide and diverse talent pool- Cross culture business
environment brings opportunity for business to have access to wide and diversified
talent pool which offers greater number of opportunities for business to get the most
talented and competent candidate for the organisation. In context of John goods
shipping company, the organisation can get higher returns, increased productivity and
creativity of business. Such cross-cultural business environment can support business
in enhancing the competitive position in global market.
 Effectively managed diverse team work- Cross cultural business environment helps
organisation in enhancing employee engagement which can boost employee
productivity and moral through which they can efficiently and effectively perform and
participate in the achievement of organisational objective. In context of John Goods
Shipping Company, this will help organisation in bringing different perspectives
under one roof which will be the source of creativity, innovation, profits and better
decision making. With the help of diversified teamwork, this will also help in quickly
resolving conflicts in the organisation.
 Innovative workplace- Cultural diversity or cross-cultural business environment is
the medium of having multiple, creative and innovative ideas which can help an
organisation in enhancing their competitiveness and quality of their products and
services (Advantages of multicultural workplace, 2016). In context of John Good
Shipping Company, the company can increase their staff retention, bring proactive

approach to business, form decisions on the basis of actual data and it will be helpful
in strengthening the competitive position of company in global marketplace.
 More effective hiring practices- Multicultural workplace is a benefit and such
practices followed by an organisation help business in recruiting new and talented
personals. In context of John Good Shipping Company, the company focuses on
adopting systematic, comprehensive and structured recruitment technique which helps
in positioning a business in international markets that supports in business growth and
strengthen the position of organisation in the industry.
 Wide range of ideas and perspectives- Cross cultural business environment brings
wide range of ideas and perspectives as cross-cultural company involves employees
from different backgrounds and culture who will bring their own opinions and
approaches in the organisation through which a business can form strategies which
can be helpful in enhancing business profitability (Buckley, Enderwick and Cross,
2018). In case of John Good Shipping Company, by operating in a cross-cultural
environment this will offer opportunity of variety of ideas and prospect with different
cultures of employees and their different backgrounds through which innovation can
be derived in business which maximize business revenue and profitability in the
industry.
 Diversified and larger market- Cross culture business environment for a market
area to an organisation where they can engage with greater number of consumers. In
context of John Good Shipping company, the company will be operating in cross
culture business environment where they will get the opportunity to get access to
greater market place which can bring advantage, maximize profits and generate higher
revenues of business.
Risk to business in cross cultural environment
Cross cultural risk refers to situation or event where cultural miscommunication leads
to human value at stake. Cross cultural risk is post by differences in languages lifestyle
custom religion and mindsets (Chi and et.al, 2019). There are several reasons and factors
which are reasonable to create risk and threat to business while operating in cross cultural
environment:
 Interactions with and between various political, legal, fiscal, and cultural systems.

 Activities in and with a greater range of product and factor markets, each with
differing levels of competitiveness and efficiency.
 Trades in a larger variety of currencies and regularly utilises foreign currency
markets.
 Unregulated international financial markets
The following are the detailed discussion on the factors which are responsible to
create and possess threat to organization while operating in cross cultural business
environment, these risk factors are addressed below:
 Political risk- When a country's government makes an unexpected policy shift that
seems to have a negative impact on a foreign firm, geopolitical risk, also known as
political risk. Policy changes include trade barriers, which aim to limit or obstruct
international commerce (Risk for international business, 2020). Some governments
will demand more fees or charges in exchange for the ability to export goods into
their nation. Tariffs and quotas safeguard domestic manufacturers from international
competition. This may have a substantial influence on an organization's profitability
since it either decreases revenues due to an export tax or restricts the quantity of
money that may be created.
 Foreign exchange risk- Foreign exchange risk is also known as FX risk, currency
risk, or exchange-rate risk. The exchange rate of a foreign currency is always
changing. As a result, businesses would be forced to convert money generated abroad
at lower rates than expected. This is why it is vital for businesses to have a sound
exchange strategy in place. This will help in lowering the negative impact of changing
rates on sales and procurements, increasing cash flow control and simplifying
domestic and international pricing. John Good Shipping company must first assess
foreign exchange risks in order to build an efficient approach. Understanding the tools
available for mitigating these risks is also crucial, as is conducting regular
comparative evaluations to find the best solution.
 Shipping risk- While delivering items worldwide or locally, contamination, seizure,
accident, vandalism, theft, loss, and breakage can all happen. Before delivering any
things to the buyers, you must check that you have enough insurance. When it comes
to shipping risk, the International Chamber of Commerce has created norms and
duties for all parties participating in international trade (Risk in international trade
and how to manage such risk, 2019). This will help John Good Shipping Company

in understanding the regulations and take the necessary measures through which they
can mitigate such risk.
 Legal risk- The risk that occurs as a result of the legal enforceability of a contract or
transaction is known as legal risk. The contract is frequently unenforceable due to
ongoing or freshly formed political and legal struggles between the two trading
countries. Risk factors or elements in foreign trade and finance flows that John Good
Shipping Company may face whenever they expand their business in the international
market include various legal taxes, controls, regulations, exchange and trade controls,
financial transaction controls, tariff controls and quotas systems.
 Cross- cultural risk- Cross-cultural risk refers to a situation or occurrence in which a
cultural misinterpretation compromises some human value. Cross-cultural dangers
can be found in language, habits, ideologies, norms and in religious differences
(Enderle, 2015). Culture-specific values are passed down from generation to
generation and tend to last a long period. These ideas impact employee's attitudes and
work methods, as well as customer's purchasing patterns. Such barriers hinder
effective communication and lead to misunderstandings. As a result of this cultural
risk, John Good Shipping is exposed to miscommunication due to cultural
differences which leads to ineffective company strategies and customer interactions.
ANALYSIS AND DISCUSSION
Management response undertaken by selected company to realise opportunities available in
market selected in cross cultural issues
Cross cultural issues
Conflict between individuals or social groups who are differentiated by cultural
boundaries is referred to as "cross-cultural conflict." Ignorance of cultural differences may
result in a loss of market share, a low or negative return on investment, missed opportunities,
and reputational harm, as well as legal challenges, productivity losses, expatriate failure and
contract, joint venture and partnership terminations. Misunderstandings, disputes and biases
can arise as a result of cultural differences which can result in failure. Some of the cross-
cultural issues which has been faced by John Good Shipping company are addressed below:
 Failing to adapt global business model- Culture has a significant impact on
consumer attitudes and behaviours. When a corporation enters a new market, it should
change its business models to match local values, cultures and habits. International

business should not be approached in a "one-size-fits-all" strategy. Foreign enterprises
have a greater probability of failing unless local cultures have an impact on business
ideas (Cultural risk for global business, 2018). Failure in a foreign market may be
costly: international companies often lose money for years before shutting their doors
or selling to a local competitor.
 Communication issues- Communication is one of the issues which has been faced by
companies while operating in global markets. Due to cultural diversity and people
belonging to different countries, it becomes a barrier in communicating which is an
outcome of multilingual organization and thus this leads to lack of understanding.
Poor communication has been an issue which can affect organizational performance
in global market (Ferraro, 2021). In context of John Good shipping company, the
organization is operating in UK and while expanding their business in countries like
UAE, this can lead to poor communication as the language in both parent and host
country is different which will be an issue while communicating with employees. This
will affect operations and alter profitability of the organization in the international
market.
 Different attitudes towards conflicts- Cross cultural business involves people from
different countries where employees will have their own perspective for resolving
conflicts send such differences among employees can lead to lack of cooperation
affect employee relationships and will majorly create an impact on organizational
performance in global marketplace. In context of John good shipping company, cross
culture business environment will involve people from different backgrounds which
makes them distant and they will have their own opinion regarding solving the
conflicts faced by business. Therefore, such conflicts can hamper business
performance send ability to communicate adversely.
 Different approach towards decision making- Individual decision-making duties
vary greatly between cultures. Being aware that a person's assumptions about their
personal role in influencing a decision may be influenced by their culture that is
different. In context of John Good Shipping Company, while the company will
operate in cross culture environment, they can face issues regarding decisions making
which will be an outcome of differences between cultures and perspectives of
employees.
 Inability to determine regional and subculture differences- There may be cultural
obstacles on both a national and international level. Within developing nations, there

are significant regional differences in consumer preferences and market conditions,
but within-country variations are often neglected (Gligor, Esmark and Gölgeci, 2016).
Cultural or geographical disparities are not the only factors that influence subcultures.
In context of John Good Shipping company, if the company fails to recognise the
cultural variety of their marketplaces, this can risk losing out on valuable customer
segments.
Management response to tap opportunities
The response of organizational and in context of John Goods Shipping company for
maximizing business opportunities has been discussed below:
 Respecting our differences and working together- Understanding these six patterns
of cultural diversity may help in understanding others who are different from us, as
well as ourselves and our own cultural points of reference. Understanding cultural
differences can assist an organization in processing what it means to be different in
ways that are respectful of others rather than blaming or damaging (Kingsley,
Noordewier and Bergh, 2017). In context of John Goods Shipping company, the
organization will focus on accepting and respecting different cultural background
which will foster strong interpersonal relation and will be helpful in developing a
sense of understanding among all employees through which they can collectively
work towards the achievement of organizational objectives and support in business
profitability and success in international marketplace.
 Multicultural collaboration- In context of John Good Shipping company,
multicultural collaboration can be helpful in embracing cultural differences which can
enhance innovation and organization performance. By listening and respecting others
choice and opinions will be helpful in fostering collocative working place which can
mitigate cultural differences and will be helpful in developing strong interpersonal
relationship through which an organization can successfully operate in cross cultural
business environment.
Recommendations to achieve cross cultural proficiency which is essential in achieving
success in selected international market
Cross cultural proficiency is the ability to understand people who belong from
different cultured and engage with them effectively. Cross cultural competence is the term

which defines the effective interaction with people belonging from different and diverse
cultures and backgrounds (Kolk, 2016). However, cross cultural competence is helpful in
developing mutual understanding and human relationship which are helpful in meeting
organizational objectives.
Some of the strategies which can be suggested for enhance cross cultural efficiency in
order to accomplish success in global market ad in context of John Good Shipping company
has been listed below:
 Learn about different cultures- learning about different cultures will be helpful in
accepting people from different backgrounds and this will be helpful in brining
diversity and creativity in the organization (Nambisan, Zahra and Luo, 2019). Such
practices adopted by John Good Shipping company will be helpful in in successfully
operating in cross cultural environment where they can understand the perspective,
and different cultural values of their employees belonging to different backgrounds
through which they can effectively perform managerial activities and accomplish their
goals which can ensure business success.
 Interact with diverse groups- Through interacting with diverse groups, this will help
in understanding and embracing diversity in the organization through which an
organization can effectively perform their managerial activities in the international
marketplace (Rohlfer and Zhang, 2016). In context of John Good Shipping company,
the organization must develop and encourage their employees to participate in diverse
groups which will be helpful in enhancing their understanding, collaboration and
communication through which the organization can create string interpersonal
relations which will support employees in meeting planned objectives.
CONCLUSION
From the above-mentioned report, it can be summarized that, international business is
the approach of expanding the business in international market place through different
mediums which will be helpful in widening and diversifying the business environment. Cross
culture business environment refers to business function which are performed in host country
while considering their cultural aspects and factors which can create an impact on the
organization. The components of cross culture involve- technology, language, social
organisation environment, social history, conceptions of authority and non-verbal
communication behaviour. It can be stated that a business working on domestic level can face

different types of risk related to finances, legal factors and others which can possess threat
and risk to the organization while expanding their business into international markets. Due to
cultural differences, there are various issues and challenges which are faced by business
while operating with a cross cultural organization. It can be stated that while mitigating the
cross-cultural risk, this can be helpful in resolving such conflicts in the organization and can
be helpful in bringing opportunities for business growth, innovation and development through
which an organization can create their position in international markets. Cross cultural
proficiency will be helpful for business in achieving success while operating in global
markets as this can be helpful in boosting their organizational performance, enhancing their
competitive position and business can make progress towards profitability and success.

REFERENCES
Books and journals
Buckley, P. J., Enderwick, P. and Cross, A. R. eds., 2018. International business. Oxford
University Press.
Chi, T and et.al., 2019. Real options theory in international business. Journal of International
Business Studies. 50(4). pp.525-553.
Enderle, G., 2015. Exploring and conceptualizing international business ethics. Journal of
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Ferraro, G. P., 2021. The cultural dimension of international business. Prentice Hall.
Gligor, D. M., Esmark, C. L. and Gölgeci, I., 2016. Building international business theory: A
grounded theory approach. Journal of International Business Studies. 47(1). pp.93-111.
Kingsley, A. F., Noordewier, T. G. and Bergh, R. G. V., 2017. Overstating and understating
interaction results in international business research. Journal of World Business. 52(2).
pp.286-295.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
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Nambisan, S., Zahra, S. A. and Luo, Y., 2019. Global platforms and ecosystems: Implications
for international business theories. Journal of International Business Studies. 50(9).
pp.1464-1486.
Rohlfer, S. and Zhang, Y., 2016. Culture studies in international business: paradigmatic
shifts. European Business Review.
Stahl, G. K. and Tung, R. L., 2015. Towards a more balanced treatment of culture in
international business studies: The need for positive cross-cultural scholarship. Journal
of International Business Studies. 46(4). pp.391-414.
Online
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business/>
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<https://www.investopedia.com/ask/answers/06/internationalfinancerisks.asp>
Risk in international trade and how to manage such risk, 2019 [Online]. Available through
<https://www.universalcargo.com/6-risks-in-international-trade-how-to-manage-them/>
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