Question

What are the principal cultural and behavioural differences that international financial managers need to take account of, in terms of both how these differences impact the conduct of business and how managers should deal with them? (600 WORDS)

Answer 1

Let us first understand what are cultural differences means. That is it consists of Knowledge, beliefs, attitudes, values. And behavioural differences related to the ability for representative thinking and social learning. These difference may occur externally or may be internally. such as from people, traditional beliefs, values, ethnic, religious, professional, country, society and technology.

In these situations how are finanicial managers need to take account of. Financial managers will always think from finance perspective. They shall understand these differences and make strategies which are financially viable. And also in case of any cultural or behavioural differences if a company is facing any issue, finance managers should take care in such a way that company shall have least or low cost on such and avoid huge finance impace.

Recently TIKTOK china based company started receiving negative ratings due to external cultural difference. Attitude or behaviour of a tiktok user costed the company to receive nagative rating. Therefor Finance managers shall understand that what are the principal cultural and behavioural difference existing are may occur in the future.

With these changing times finance managers should stay and look out for competitive opportunities. Take decisions keeping in mind these cultural and behavioural differences.

Decisions may be regarding risk taking, Cash holdings, expenditures etc.

The differences in these causes finance managers to deal with the decision making on factors like Tax advantage, Risk taking, Debt financing, leverage ratio, working capital investments, cash flows, Credit periods , retained earnings, dividend payouts.

Conclusion: Therefore these above differences not only impact the decision making but also on the conduct of business. If finance manager is well aware of all the cultural and behavioural differences then the same shall be strategised to gain competative advantage in the market.