Establishing a New Business Venture in a Foreign Country Essay

Establishing a New Business Venture in a Foreign Country - Essay Example Social, economic as well as legal forces obtaining in developed countries often impact on foreign companies especially from emerging markets that need to establish their businesses in developed countries. As such, this paper seeks to critically analyse the factors that may affect companies from emerging markets in their quest to establish business in developed countries. The paper will also outline some of the measures that can be implemented by the managers in order to overcome these challenges. The main challenge that is likely to be faced by a company from an emerging market when it seeks to establish business in a developed country is related to cultural differences that may affect its ability to effectively manage the people in the host country. According to Ivancervich, Konopaske & Matteson (2011), society is composed of people with their own culture and these people share the same beliefs, norms, values, religion, language education as well as legal systems. Culture is a learn ed dispensation since it does not simply appear from nowhere. A nation’s culture affects how organizational transactions are conducted such as hiring practices, marketing, reward programs as well as supervisor-employee interaction (Ivancervich, Konopaske & Matteson, 2011).... differs and these include the following: power distance, uncertainty avoidance, individualism and masculinity (Ivancervich, Konopaske & Matteson, 2011). Power distance relates to the level of acceptance by society of unequal power distribution in an organization. For instance, emerging countries like Malaysia have high power distance where authority is centralised (Ivancervich, Konopaske & Matteson, 2011). On the other hand, the concept of uncertainty avoidance relates to the situation where people feel threatened by unambiguous situations. For instance, emerging countries have high uncertainty avoidance and they follow a specific set of rules while countries like Britain have lower levels of uncertainty avoidance where risk taking is common (Ivancervich, Konopaske & Matteson, 2011). On the other hand, it can be seen that countries like the US have high individualism where people believe in hard work and individual prosperity while emerging countries believe in socialist ideologies w hich state that they must share what they have. Masculinity is another cultural dimension that is practised in other countries like Austria. As illustrated above, it can be seen that a new company from an emerging market can find it difficult to establish business in a developed country by virtue of culture differences. If a new company has its own cultural values that are not compatible with the host nation, then it can face an uphill task in as far as its quest to operate effectively in the host country is concerned. It is important for a foreign company penetrating a developed market to make sure that they understand the culture of the people in the host country. Failure to do so may negatively impact on its operations since it may be difficult for the managers to manage people in the