In International Business, Cultural Knowledge is Power

Updated: Sep 23


Receiving the Pe’a is an often long and painful process. Originally given to chiefs and fathers, the tattoo resembles a man’s rite of passage. The Samoan women have their own tattoo, the malu, that similarly acts as a woman’s rite of passage. One native stated that seeing the Pe’a design on a woman would be “a total disregard of cultural protocol.”


As shown by this example, the phrase “knowledge is power,” often attributed to Sir Francis Bacon, rings just as true in international business as it does in Bacon’s fields of science and law. When decisions are made by culturally educated individuals, success often follows; but when knowledge is lacking, decisions are likely to fail. Perhaps Nike could have avoided this blunder, and found success in their new line, had they followed some of the tips below to develop stronger cultural intelligence.


CircusTrix is the world’s largest developer, operator, and franchiser of trampoline parks in the world. When expanding into Hong Kong, their first international location, chairman and founder Case Lawrence knew that finding reasonably-priced, suitable real estate would be extremely difficult. With the right local connections, however, the perfect location was found in just one week. With continued help throughout their preparations, CircusTrix’s Hong Kong opening brought in half a million during the first month, their largest opening to-date.

Such ease and success in Hong Kong left Lawrence and his team unprepared for the regulatory and cultural struggles typically involved in expanding abroad. Moving forward to their next international openings, in the UK and Europe, Lawrence learned that “without a local partner who understood the culture…there is simply no way to function and fight off any adversity.” Taking time to communicate and partner with locals can be instrumental in ensuring a successful expansion. Now, CircusTrix always finds a local partner when expanding into a new country.

Research


While studying international corporations, Dave Sutton, President and CEO of TopRight, observed that brand expansion is challenging because “brands are formed in home markets where there are generally different underlying economic, demographic, cultural, and regulatory factors.” One company he researched, however, has successfully introduced their clothing and accessory brand into 77 foreign markets. That company is Zara. Sutton explains that the reason they have been successful is because, they spend extensive time before expansion researching their new target market and allow new customers to sample their products before they purchase them.


Easy to access resources exist to help leaders grow their cultural intelligence. Geert Hofstede and Erin Meyer have websites and have written books discussing cultural dimensions important to international business relations. And internationalhub.org provides numerous insights into world-wide markets from people experienced in global business. Leaders who consistently explore informative resources and take the time to understand their new target market before expanding will find themselves more prepared to lead in a globalized society.


In the 1970s, P&G decided to introduce their disposable diaper product, Pampers, into Japan. Although demand was anticipated to be high, P&G received little revenue as the months passed. At the time, the Pampers’ brand highlighted a stork carrying a diaper in its mouth, a reference to the Western tale of storks delivering babies. After recognizing something wasn’t right, P&G surveyed Japanese locals and learned that sales were low because the Japanese didn’t understand why a stork was on the packaging. P&G learned from their mistake and quickly adapted their branding strategy for the Japanese market. Because they took the opportunity to learn from experience, Pampers is now one of the most popular brands of diapers in Japan.


Experience is a great teacher, especially when it comes to cultural intelligence. Often, like with P&G, the quest to develop cultural intelligence is fostered by learning from mistakes. But knowledge also grows out of successes. As global leaders take time to reflect on past experiences, their ability to interact and perform in foreign markets will rise.


Conclusion


Global leaders will be able to make more informed decisions and avoid major blunders as they develop their cultural intelligence. Whether by partnering with locals, taking time to read and research, or reflecting on recent experiences, cultural intelligence can be cultivated to improve future expansion and foreign interaction. As Sir Francis Bacon said, “knowledge is power.”

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LEARN HERE. GO ANYWHERE.

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