Doing Business In Czech Republic

Executive summary

Steve Kafka, an American born Czech origin is one of these hundreds of entrepreneurial, who is considering expanding his pizza franchisee to Czech Republic. Going into a new market blindly could prove costly and lead to many disputes, resulting in huge losses. The biggest dispute could arise from not understanding the cultural differences between United States of America (U.S.) and Czech Republic. To help Kafka with his endeavor, this paper will present an understanding on the general cultural differences between U.S. and Czech Republic by applying the cultural dimensions of Hofstede. This paper will also identify the risks that might arise due to these differences and will identify mitigation techniques for the risks identified. This paper will help Kafka understand the business environment in Czech Republic and the pricing strategies that can be adopted for the new pizza business to be successful in this new market.

Introduction

21st century is an era of world globalization of business, opening many countries to foreign investors. According to Sherman, Each year, hundreds of entrepreneurial and growing companies consider international expansion as a marketing and growth strategy. When developing a strategic plan to launch an international business program, growing companies and their advisors must always consider the potential barriers and adjustments they might need to make to their product and service offerings. One of the major barriers that a business faces while doing business overseas is the cultural differences between the nations. According to Hodgetts, Luthans, and Doh, A major challenge of doing business internationally is to adapt effectively to different cultures.

Size of market

Czechs do not prefer to dine out often, whereas most Americans dine out quite often. According to Ebbin, the typical American age 8 and older consumes an average of 4.2 commercially prepared meals per week. Most meals are eaten using utensils and very few items are eaten with hands by Czechs, while in U.S. many foods are appropriately eaten with the hands, including pizza. Recently, in Czech Republic, hotdogs and Pizzas have become a popular snack that can be purchased from street vendors, whereas in U.S. pizza is considered a meal. As per country watch, the Czech Republic is known for its hearty dishes accompanied by a tasty beer. However, it is not common in U.S. to serve beer at a pizzeria. This is the reason why the size of the market might be smaller than US, but more productive. (Mole, 66).

Socio-cultural acceptance

Kafka needs to be aware of the cultural differences between Czech Republic and U.S. to make his pizzeria successful. Although Kafka has roots in the Czech Republic and knows culture of the Czech Republic, as culture is not inherited or biologically based; it is acquired by learning and experience (Hodgetts, Luthans, Doh, 200). Having roots in Czech Republic is not enough to learn the culture of Czech Republic, to understand their culture, it should be experienced. As Hodgetts, Luthans and Doh state that Culture can affect technology transfer, managerial attitudes, managerial ideology, and even business ...