Domestic production and exports are no longer enough to ensure that a business remains on the competitive edge or its success since the world is always changing in order to support globalization. With the changes in globalization comes new quality standards created to ensure that production for jobs which have been outsourced to a third-party company will still remain to have the same quality in their products; that an abundance of parts can be outsourced and assembly completed allowing for increased productivity, cost reduction, all the while maintaining high standard and good quality. Diversity can cause culture issues for a business even though value has been added on their services and products. Companies can actually benefit from accept diversity and the many different cultures. By doing this, a company can become successful in global operations.
There are some potential issues due to global expansion to the host foreign country such as legal risks, political risks, and economic risks. From a legal standpoint, if a country appears to be at high risk, a company may be hesitant in wanting to create an endeavors or long-term contracts. There are political risks such as riots, demonstrations, and social conflict which cause huge changes in a business environment, which can affect the overall bottom line concerning profit. Negligence by the government can cause economic risks such as social conflict (AIU Online, 2013). Other issues are ethical and cultural issues. Some of these issues are child labor, environmental issues, and bribery. What may be quite normal for the U.S. may not be normal for another country; it may not be accepted and could possibly be illegal. Also, changes in international agreements, conduct codes, and international laws can cause ethical issues (Heizer & Render, 2012).
When dealing with multinational, international, and global organizations, there are going to be diversity issues and cultural barriers to contend with. It is important for a business going global to understand the policies and procedures that each country has for a guide in business matters. There are some issues that a business needs to keep in mind. One issue is social chain of command. One example is that some cultures show women to be secondary to men therefore not allowing women and men to intermingle within the workplace. Every culture views personal space differently. For example, In North America, a person’s personal space is also known as there comfort zone which can be anywhere from 2-5 feet but this is different from culture to culture (International Business, 2011). There is also the issue with language barriers. Some countries have multiple languages as their official language. One example is that Canada has French and English as their official language. In languages, there are also diverse dialects. It is important to learn all the most important phrases commonly used in each country such as please, thank, hello, and good-bye. Non-verbal language, such as a person’s body language is different in other countries. One example is eye contact. In some cultures, direct eye contact is considered to be disrespectful and rude. Religion can also be an issue for different cultures. When you are working with other cultures it is disrespectful to inquire about their religion. With some cultures, their religion is their way of life. For example, Muslims pray throughout their work day due to their religious customs. Some customs also don’t allow you to work on religious holidays. Personal appearances are also an issue in some cultures, such as your clothing attire, personal hygiene, and how you eat. An example of this is that Muslim women are required to wear a headdress (International Business, 2011).
Sometimes colors, numbers, words, or even phrases can mean different things in different cultures. What one word may mean here in the U.S. be able to mean something totally different when translated in another language.