Cultural Challenges of Doing Business Overseas

Essay by cristinaiUniversity, Master'sA, March 2007

download word file, 7 pages 3.3

Doing business overseas has its rewards, as well as its challenges. This paper will analyze the economic environment and the foreign investment climate for the Czech Republic, in order to help Steve Kafka, an American of Czech origin, to expand his business in his country of origin. Steve is a franchiser for Chicago Style Pizza and wants to open a new franchise in Prague, the capital of the Czech Republic. The paper will present the cultural differences between US and Czech culture that Steve must be aware of, the comparative advantages that exist in the Czech Republic, as well as the macroeconomic and investment factors, trade barriers for his country of origin. Based on this analysis, Steve will be able to successfully conduct his new business, knowing how to mitigate the risks that may be involved because of the cultural differences, as well as how to asses the cost structure and the demand for his product.

Differences and Incompatibilities between US and Czech CulturesThe cultural differences between Czech Republic and United States stem from their unique historical evolution across centuries, from their specific traditions, structure of population, geographical position, surrounding peoples and cultures, and traditional cultural and economic ties with other countries.

The Czech Republic was part of the Austro-Hungarian Empire for several centuries. Their civil law system was based on Austro-Hungarian codes. During 1945-1990, the Czech Republic had a communist regime, as part of the Socialist Republic of Czechoslovakia. Nowadays, the Czech Republic developed a free market economy, being one of the most prosperous countries of the ex-Communist bloc. Their legal code was changed to eliminate the Marxist-Leninist concepts and to accommodate the requirements of the Organization on Security and Cooperation in Europe (OSCE). While building-up and maturing their own business legislation, the business practice in the Czech...