In: Economics
There are certain advices the company always must have in mind before and during a co-operation on the international market. It is important to notice that before entering the foreign country,inform the personal about the manners and customs in that new culture. If the first impression becomes negative, this can be hard to shake. Foreign cultures have different ways of executing business, for example when it comes to planning and keeping accurate delivery times. Culture can be both a positive and negative influence and many companies are struggling in the new and foreign environment. The important thing to keep in mind is that the foreign culture is not as we are used to at home and to be prepared before starting the new foreign operation. Respecting and understanding the new culture by not forcing our own beliefs on people, are things that can be extremely helpful. By learning the host country’s language, we can win respect and trust more easily, and from there competitive advantages can arise.
Portugal’s economy, compared to other economies in South Europe, is characterized by market-oriented economy as well as by a high level of foreign trades.Markets all around the world has started to become similar already in the because of technological advantages and increasing the international travel. Companies that offer high quality, low price and standardized products can win over local companies that offer adapted products but for higher prices. This can be explained by the fact that people’s preferences became more homogenous. Most international firms began their foreign business in countries that are similar psychologically and culturally to their own home country. The cultural distance effect explains this fact. If the company starts doing business in a country similar to its own, previous experience becomes relevant. If the firm is successful in one foreign country, it can also make profits by doing the same thing in another, similar country. Japan, for example, started trading with the South East Asian countries before entering South America. This pattern has a reason behind. Going far away from home increases transaction costs and the chance that the home market skills will be useful are decreasing. If the company gradually enter more countries in an expanding circle away from its own market, the firm develops new resources in form of for example learning and understanding.