paper instructions

FACULTY OF MANAGEMENT

Field of Study: Management

Specialty: International Management

Dinara Kabykenova

Cultural differences in doing business.
Study of Finnish SMEs in France and Singapore

DIPLOMA THESIS AT FIRST-CYCLE STUDIES

I. Substantive plan

  1. Analysis of the initial situation (current state, imperfections, target state).

As globalization is becoming more of a rule than an exception for companies to survive, Finnish SMEs are looking for new opportunities outside of Finland to have a possibility to grow might encounter, such as, cultural differences. The whole concept regarding culture is quite wide and rather hard to comprehend. Companies have to take cultural differences like: languages, religions, social standards and demographics into consideration. If the company has the information and knowledge it needs, the entering process and the cultural shock will be less painful.

The Singapore economy is one of the most competitive and stable in the world, with no foreign debt, high government revenue and a consistently positive surplus[1]. It is mainly driven by exports in electronics and precision engineering, but the service sector, particularly the information and communications industries, tourism, and finance are key drivers of growth, too. Singapore also has the world’s busiest container seaport, with one fifth of the global trans-shipment trade passing through each year, making it a central node in the global logistics chain.[2]

In 2019, France was Finland’s 10th biggest export country (€1 920 million), with a GDP of EUR 37,440 per capita at current prices in 2019[3]. France is the world’s fifth largest economy after the United States, China, Japan and Germany. The country was Europe’s leading host country for foreign subsidiaries in 2015, with more than 28,000, compared with 27,700 in Germany and 22,200 in the United Kingdom[4] which attracts Finnish companies.

Culture is the “software of mind” that can influence people’s patterns of thinking and behaving. Mental programming influences people’s living and working all over their lives.[5] For example, Finland, France, and Singapore are immersed in different cultures which lead to different ways of thinking and behaving. Because of this fact, these three countries face challenges on the way in doing business and interacting with other cultures. In this diploma thesis author will emphasize on the impact of culture differences in running business of two Finnish SMEs in France and Singapore.

2) Research problem

For all the talk about the potential of emerging markets, developed economies in North America, Western Europe and Asia remain the best places to do business, according to The Economist Intelligence Unit’s latest Business Environment Rankings (BER)[6]. Singapore looks set to remain the world’s most investor-friendly location in 2014-18, retaining its number-one spot from the 2009-13 period[7]. By penetration in these international markets with huge opportunities, Finnish SMEs may increase the percentage in generating a profit and do their company more recognizable. Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster[8]. It explains the importance of gathering the information for Finnish SMEs before entering in international market in order to prevent potential conflicts and avoid misunderstandings. Differences between countries´ cultures may cause significant problems for companies when entering a new market. In order to explain the research problem, it was decided to formulate the following research question: Which country, considering the aspect of cultural differences, is most suitable for the expansion of Finnish SMEs?

3) Purpose and scope of activities aimed at solving the research problem

The main aim of the research is to answer the question which country, considering cultural differences, is the best for Finnish SMEs to run an effective business. The study will provide knowledge on cultural barriers for Finnish SMEs, based on an analysis of the previous experience of Scandinavian companies considering expansion into external markets.

In order to achieve the above-mentioned goal, the author will read the literature on the impact of cultural differences on running a business in selected regions of the world. Secondly, the author will analyze case studies of Finnish enterprises that have decided to locate business activities in the countries selected for the study. The analysis will therefore not be theoretical but practical. The analyzes will use the PESTLE method, an analysis used to identify specific differences or similarities in cultures (Hofstede dimensions). The theoretic knowledge obtained in this way, supported by the analysis of cases, will make it possible to provide answers to the formulated research problem.

4) Determining the requirements that must be met by the solution

The aim of the research would be achieved if the study was designed and implemented in accordance with the guidelines resulting from the literature on the analyzed issue. Theoretical indications constitute a determinant of the substantive correctness of the report of the planned research undertaking. The analysis of cultural differences in economic activity cannot be an end in itself. Based on the findings of the research, it will be possible to answer the formulated research problem, thus contributing to building knowledge about the directions of geographical expansion of economic entities representing Scandinavian SMEs, allowing to minimize the negative consequences of cultural differences.

5) Characteristics and choice of solution concept (methods, tools, techniques used, etc.)

The author decided to use the qualitative method to explain and justify certain phenomena. According to Hofstede, culture is the collective programming of the human mind that distinguishes members of one human group from members of another. In this sense, culture is a system of shared values. Therefore, the author decided that the qualitative data collection method would best suit the title of the thesis.

The author plans to use the method of in-depth interviews with representatives of Finnish SMEs in the aspect of their experiences from cultural differences and their impact on the conditions for doing business in countries outside Scandinavia.

The analysis will therefore have two dimensions. The first one will refer to the identification of cultural differences between Finland, France and Singapore. The second will analyze their translation into the conditions of running a business in these countries, taking into account the impact on business of cultural differences describing each of the analyzed countries.

6) Review and development of a list of literature, information databases and other resources

  1. https://data.worldbank.org/
  2. https://ec.europa.eu/eurostat/web/main/data/database
  3. https://www.businessfinland.fi/en/
  4. https://www.businessfinland.fi/4a84ca/globalassets/finnish-customers/05-go-to-market/locations/doing-business-reports/doing-business-in-france.pdf
  5. https://www.iberglobal.com/files/business_climate_eiu.pdf
  6. https://www.hofstede-insights.com/
  7. Hofstede, G. (2003). What is culture? A reply to Baskerville. Accounting, Organizations and Society, 28(7-8), 811-813.
  8. Hofstede, G. (1997). Cultures and Organizations: Software of the Mind. New York: McGraw Hill.
  9. Tretyak, O., Weck, M., & Ivanova, M. (2013). The importance of cultural adaptation for the trust development within business relationships. Journal of Business & Industrial Marketing.
  10. Hofstede, G. (1994). The business of international business is culture. International business review, 3(1), 1-14.
  11. McKenna, S., & Richardson, J. (1995). Business values, management and conflict handling: issues in contemporary Singapore. Journal of Management Development.
  12. Gabrielsson, M., Sasi, V., & Darling, J. (2004). Finance strategies of rapidly‐growing Finnish SMEs: born internationals and born globals. European Business Review.
  13. Ojala, A., & Tyrväinen, P. (2007). Market entry and priority of small and medium-sized enterprises in the software industry: An empirical analysis of cultural distance, geographic distance, and market size. Journal of International Marketing, 15(3), 123-149.

Table of content:

Introduction

Thesis Aim

Chapter 1. The influence of cultural differences on running a business

1.1. Introduction to the issue of cultural differences in business

1.2. The influence of cultural differences on the ability to run a business

1.3. Models of foreign enterprises adaptation to the conditions of the destination country

Chapter 2. Application of PESTLE analysis and Hofstede dimensions in the analysis of the influence of cultural differences on business

2.1. PESTLE analysis in relation to France and Singapore

2.2. Models of dimensions of national cultures for Finland, France and Singapore

2.3. A model comparing the national cultures of Finland, France and Singapore

Chapter 3. The influence of cultural differences on the conduct of business by Finnish companies in France and Singapore

3.1. Research on the impact of cultural differences on Finnish companies

3.2. Identification of areas of business activity that require adaptation due to cultural differences

3.3. Recommendations for Finnish companies planning to enter the markets of France andSingapore

Conclusion

Attachment

Bibliography

Summary


[1] https://www.business-sweden.com/markets/asia-pacific/singapore/ (2021 01 20).

[2] https://www.business-sweden.com/markets/asia-pacific/singapore/ (2021 01 14).

[3] https://www.focus-economics.com/country-indicator/france/gdp-per-capita-EUR (2021 01 20).

[4] https://www.businessfrance.fr/en/discover-France-France-s-key-strengths (2021 01 14).

[5] Hofstede, G. (1997). Cultures and Organizations: Software of the Mind. New York: McGraw Hill. (2021 01 09).

[6] Unit, E. I. (2014). Business environment rankings—Which country is best to do business in. London: Economist Intelligence Unit.(2021 01 19).

[7] https://www.iberglobal.com/files/business_climate_eiu.pdf   (2021 01 15).

[8] Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions and organizations across nations. Sage publications. (2021 01 19).

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