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Doing Business Isn't All About Profit

When doing business overseas, it is often easy to overlook that American business culture is not universal. As an American business owner seeking to conduct business with overseas foreign companies, it is imperative that you study up on the business culture of your overseas business partners. In the American way of doing business, it is sometimes assumed that the company will look to maximize its profits, often to the exclusion of all else. Many American universities are some of the best in the world, and the business/economics courses that are taught there, often teach that the purpose of a company is to maximize its profits.

However, some foreign countries have different historical experiences that impact how they view the purpose of a company. For example, many Swiss companies tend to be in what Americans would consider to be small towns. Companies such as these, even some world class ones, are viewed to those among its culture, as contributing jobs and social stability to the area. While it is culturally understood that a company must make a profit to continue to function, profit is not viewed or accepted as the overarching justification for the company’s existence. A company that cuts jobs to squeeze a few extra cents on it earnings-per-share is likely to find its management and owners under attack. That doesn’t mean that if the company is in deep financial distress that job cuts aren’t culturally acceptable. They absolutely are. It’s just that if the company is doing reasonably okay, cutting jobs because the owners aren’t making quite as much money as they would like, can be considered to be bad form in this type of cultural context. Even in Germany, organized labor participants have a seat on the board of directors of major companies. This fact has often meant that German companies are maybe less profitable than an American company in a similar situation. However, the practice has resulted in labor peace in many cases and has historically-overall lead to a more stable society.

While many foreign companies may be familiar with American business culture, it’s a good idea to not rely on their understanding and acceptance of you as a basis for doing business. A foreign business, especially if they are a smaller business, is going to be looking for a partnership of some kind, which means that it is culturally anticipated that both sides need to feel that they are getting something out of it. And while you can negotiate and try to squeeze your prospective partner to maximize your profitability (and maybe he has no choice but to deal with you), leaving your overseas partner with a negative view of your company doesn’t help with long-term loyalty.

While giving something up in negotiations might make you feel like you have “lost” something, an alternative way of viewing it is that you are possibly strengthening the partnership and showing that your company can adapt to another type of business culture. Especially if you are new to doing business in a foreign country, having a loyal partner on the ground with whom you can do business may advance your ability to negotiate and work in these new markets.

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