Cultural differences and their impact on business

From various flavors of Pepsi, through exotic sandwiches from McDonald’s, to unconventional product names – let’s take a look at examples of how cultural differences influence business, and also whether Europeans are far from Asians in terms of business. Read on.

Cultural differences - table of contents

About cultural differences

If you plan to expand your startup, read this article. You will find plenty of useful tips on expansion – from assessing your readiness, through market analysis, to “test” expansion.

Here, we will quote one of the statements by Piotr Smoleń, CEO of Symmetrical.AI, which directly relates to the topic of today’s article and touches upon cultural differences.

“First and foremost, we need to understand the competitive landscape of the new environment. It may turn out that our company, being a leader in Poland, is just mediocre elsewhere. We need to know it in advance,” – he said

In his opinion, before entering any new market, we should understand the pricing strategies prevailing in that market – they may differ from those in Poland. It is also important to understand how customers acquire products and services – communication and distribution channels may also work differently.

Another important element to consider is the product offering and the value consumers expect. Just because you sell two products separately in Poland doesn’t mean you can sell them separately in a foreign market. It may turn out that you need to bundle them, otherwise customers won’t see the value.

Conclusion? There are cultural differences between various geographic areas. Sometimes they are smaller, and sometimes they are larger. Either way, they cannot be underestimated when doing business globally. To better understand the impact of cultural differences on products and the way they are communicated, let’s look at a few examples.

The impact of cultural differences on business

We would like to emphasize that these cultural differences manifest across various aspects – from the offer and marketing strategies to pricing considerations ( we’ve written an article on pricing).

We would like to emphasize that these cultural differences manifest across various aspects – from the offer and marketing strategies to pricing considerations.

Cultural differences and the product

Let’s start with McDonald’s and the culinary preferences of people in different regions of the world. Just because we can have a McCountry in Poland doesn’t mean it’s available in other countries. And vice versa. Regional sandwiches served by this restaurant chain in New Zealand, the Philippines, or France are not accessible in Poland. For example, in New Zealand, McDonald’s used to serve the “Kiwi Burger” with egg and beetroot; in the Philippines, the “Burger McRice” with a rice patty instead of a bun; and in France, the “McBaguette” with a baguette, symbolizing Paris.

PepsiCo, on the other hand, launched a limited-edition cucumber-flavored Pepsi in Japan in 2007. Sprite did the same ten years later. In 2017, it offered “Sprite Cucumber” in Russia. Apparently, the Japanese and Russians like the vegetable, and both brands wanted to respond to their tastes.

Cultural differences also influence the furniture and clothing industries. Take IKEA, for example, which, inspired by small apartments in Tokyo, decided to work on a furniture series designed for spaces up to 25 square meters. Similarly, during the Rio de Janeiro Olympics, Nike introduced a sports hijab as a gesture of respect towards the Middle East and women from Arab cultural backgrounds.

Cultural differences and marketing

Cultural differences greatly impact how brands market and communicate. This includes the language in ads, symbols used, and even the names of products. Brands often change names in different markets to suit local preferences.

For example, the well-known Burger King in Poland is not called Burger King in Australia but Hungry Jack’s. Why? The name was already taken by another chain. Meanwhile, KFC, which is almost universally known by that name, is referred to as PFK (Poulet frit à la Kentucky) in the province of Quebec, Canada. This is because the official language in Quebec is French. Everyone uses it, and companies wishing to offer their products and services in the region are required to do the same.

The potato chips brand Lay’s is called “Lay’s” in almost every region worldwide. The exceptions are essentially two countries – the United Kingdom and Brazil. In the UK, Lay’s is known as “Walkers,” and in Brazil, it is called “Elma Chips.”

Cultural differences and pricing

Another area heavily influenced by cultural differences is pricing. Any company that operates globally tries to tailor its prices to the needs and capabilities of a particular market. You can see this clearly when you look at Netflix, for example.

In developed countries, such as the United States, where living standards are higher, Netflix offers access to its platform at slightly higher prices, while providing viewers with a somewhat different catalog of movies and series. Meanwhile, in countries with lower incomes, such as Poland, subscription prices are also lower. For instance, in Poland, the basic account costs 29 Polish złotys, while in the USA, the same package costs 42 złotys.

Moreover, differences in pricing not only involve the level of prices but also extend to the way fees are calculated, thereby impacting the product structure. In 2022, Netflix introduced an ad-supported subscription plan in twelve countries – for this package, customers still have to pay, but the cost is simply lower.

Where are cultural differences most evident?

They will be most noticeable between the West and the East, which means that Europeans may find it easier to do business in other European countries or in the United States than in Asia. Paweł Łopatka from SoftServe confirms this, with whom I once talked about cultural differences and running a business in Asia.

Why do Europeans find it so challenging to do business in the East? We will provide a few examples.

Relationships and the culture of doing favors. European entrepreneurs focus on goals, while Asians prioritize relationships. Building these connections often involves doing favors for others. When you do someone a favor, you can expect them to want to return the kindness – it creates a sense of obligation.
Added value for business partners. Companies from outside Asia, to succeed in the region, need to offer more than just products or services. This could include getting involved in the local community’s development. Asian culture is a collectivist culture.
Language barrier. Europeans may have difficulty communicating with Asians if they rely solely on the English language. To establish a presence there, it is advisable to learn the local language and build a local team of specialists.
Patience and a lengthy purchasing process. Due to the relational approach to business, the purchasing process in Asia is longer than in Europe or the United States. Consequently, it is also more expensive, especially when building a local team and just starting to establish relationships.
Authority and final decision. In Asian culture, business owners are highly respected. Their employees do not question their decisions or challenge their authority. Business partners should also refrain from doing so.

Understanding these differences, respecting them, and adapting to local conditions and customs is a good start to take the first step on “foreign business ground.”

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Author: Adam Sawicki
Owner and Editor-in-Chief of Rebiznes.pl, a website with news, interviews, and guides for solo entrepreneurs and online creators. In media since 2014.
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