This report provides is conduct from the analysis of the current and prospective market trend between United State and France as the convergence and divergence , along with the comparative analysis among the cost of doing business, value of money issue, popularity, as well the corruption and bribery of these two countries. Besides that, the analysis also provides a brief explanation about the future economic development based on their natural resources, , the gross domestic product (GDP), the investment and international trade and technologies innovation, together with the nation’s culture and it affections on their people in business. Other supporting ideas include the recommendation practices and some tips to make the impression for people doing business in US and France. All the related detail and information can be found in the reference. Generally, this report will clarify the relationship between cultures and the economic on the road lead to globalization currently and the evaluation trend in United State and France in term of the performances in the areas of the market’s control
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As time goes by, business grows so fast, together with that is the change in many fields such as learning technology, building the strategy, seeking the financial solutions. The one who can look ahead and track the recent and also future trend owns the advantages to step forward and gain the success. Every company nowadays is willing to widen their business over the geographical gap to develop their operation not only in their own area but in all over the world. Creating the business relationship between individual countries is the most important key trend.
Each country may share the similarities in greeting, social event, belief, dress but they also can be distinguished by their own unique characteristic. They need to mix things up and make the adaption on their own operation before making the investment in any new market to reduce the risk of failure. According to Shashank Nakate (2011) International businesses is not only a way of making profits by the exploitation of international talent, but also building a bridge between different nations all over the world. Tomorrow’s world will rely more on a symbiotic relationship between international businesses and cultures as a whole. “Much of the disaster, as they acknowledged, was caused by a basic lack of understanding of each other’s’ national and, by implication, corporate-cultural differences,” says Solomons (2011).
Agurban (2012) reports that to become the pioneer who can be the leader of the recent globalization trend, every operation tries to learn and understand the different in cost of doing business and practices over the boundaries. Moreover, study recently also emphasized the important of educating the employees about foreign customs, manners and culture in any countries they need to do the business, Agurban (2012). It will give the useful hand to help their staffs in getting familiar actively with any differences they may face with. It leads to the fact that in the future there will have fewer boundaries between nations and communication also open the door to business comes from other countries.
French Republic (also known as France) is a historical country located in the West of Europe with the average population of 65.8 million people (2011). According to the Constitution, the official language of France is French – a language that has some derives from Latin. This nation has a pretty long history and famous for its influences in economic zone and culture over Europe.
Being described as the high fashion centre, France had been observed the fashion’s trend since 17th century, and inspired the entire World with their styles which have pretty much affection from royal. For this reason, there is a huge affection from this culture to the working ways of engineers in France as the shape of buildings, as well the inside and outside decoration of many corporations and plazas. Couple with this, Paris – capital city of this country is also considered as place of birth of many talented fashion designers and the foundation of a lot luxury brands in the World such as Dior, Channel and Givenchy so the dressing ways of people doing business in France also get affected.
Furthermore, during the economics’ continuous evaluation in the past 500 years, France already taken the second place in Europe and achieve the World’s fifth place for its GDP with the total of 2.712 million (International Monetary Fund, 2012). Besides that, this country also attends in the top 10 countries which have the greatest spending in the parity of power (France, 2012) which is a compelling result for the non-stopping operation of the institutions in this country. For these reasons, there is no doubt to say that France is the “major power” of the whole Europe and one of the most developing countries in the World.
Also known as United States of America (USA), United States (US), States, or America, this country is an area includes 55 states and its capital district is Washington DC with the population of 311,591,917 (2011), but most of live in the North. People know about United States as a country where one of the best qualities in education and healthcare has.
Education in USA is remains at top 20 in the World in term of the program and the policies, which taken by its 13 over 15 universities and colleges. Besides the schools that setup by the government, the available of many competitive private schools that setup by the institutions provide higher courses to improve certain level of education. Because of this, the outcome raking of graduations in US are 84.6% (The World Fact Book, 2009) which affect a lot in current and the future business in due to the evaluation of the graduation’s quality.
Next, in average, this country has 1-3 of the population are being overweight and there are many sickness which is the result for this issue as the heart problem and so on. To due with this, America’s government got “outspend” for their country healthcare system in term of GDP and capital spending (OECD Heath Data, 2000), which none of the other nations can be come in term. As the result, US is considers as the World’s healthcare centre and it play an importance role in the evaluation of the income in this country.
Convergence or Divergence.
American with open-minded cultures in the ways of thinking and also the policy and regulation here are easy for the entering of immigration population from many countries over the world. Mary (2009) stated that the acquisition of dissimilar cultures (Mexican, Korean, Saudi, India, Pakastan) collectively living in a society based on a shared set of values, goals and practices (American Culture)while retaining their original culture and applying it to every day life with a disregard to American culture. The trend of U.S nowadays is more open in learning and importing the new cultures to be suitable such as many societies appears due to the mass-immigration. But the new term in government policy failed to enforce immigration laws designed to preserve American culture and heritage. So that U.S. is defined as a cultural divergence country because of the various differences between their cultures and subcultures (Sam, 2011).
In the other hand, France aligned their economic policies more strictly in sensitive areas like wages, pensions and taxation to be known as the leader of the euro zone. In the way to encourage the globalization, study of Economist (n.d) estimated that the aim of French to do that is to encourage the convergence which will reduce the economic imbalances that contributed to the sovereign-debt crisis. But in terms of splitting the euro zone from the rest of the EU it could also have a deep political impact.
Cost of doing business.
Norms and processes.
Chart 1: Comparison of cultural dimensions between France and USA
According to Aswathappa (2008), the change of cost of doing business under influences of culture can eventually lead to vast difference in competitive advantage. Firstly, Alston, Hawthome and Sailet (2003) state that the country which is more likely feminine society as France stimulates the sympathy between individuals. As a result, the conflict among employees is less likely favored so the organization can save the cost for resolving conflicts. On the contrary, American culture which more values the masculinity and individualism may result in higher probabilities of individual conflicts and lower coordination among employees. Therefore, the organizations may have to spend more on solving the conflict as well as improving the teamwork efficiency.
Among the cultural dimensions, the uncertainty avoidance can be considered as the factor that having the significant difference between French and US culture. Whilst French culture is more avoiding the risk, US culture is more likely risk taking. According to Lantos (2010), the higher uncertainty avoidance is, the more careful people will be in selecting the product. Therefore, it influences the business by requiring more or less effort to address new products or brand to the customer. In this regards, the culture with high uncertainty avoidance as in French make people to consider quite carefully before making decision of purchasing. Hence, to run successful business in France, the business manager needs to pay more cost for promotion effort to improve product knowledge of customers. Meanwhile, the Americans who are more likely risk takers can find it easy to accept new products from new brand with thorough consideration. Therefore, the cost of doing business can be reduced as a result of less advertising effort in such market.
Value of monetary issue.
Furthermore, it can be seen that both French and US culture are quite short term oriented. According to Trompenaars and Woolliams (2003), such cultural feature makes people less focus on saving. Instead, people in these cultures spend a lot in the ventures having quick results. Consequently, on one hand, it causes positive impacts on the economy via stimulating the cash turnover and trading. On the other, this may directly lead to unexpected growth of inflation which definitely threatens the business in various ways. In the other words, this is a twin blade to the business because it can boost company’s sales but reducing trading value of product.
Corruption and bribery.
Additionally, another negative impact of French and USA culture on business is corruption. According to Lantos (2010), the high power of distance is correlated with the bribery and corruption. Indeed, Lantos (2010) claims that the centralized power will motivate people to spend power on making illegal money. According to the study of Guardian (2012), high power of distance made the corruption rates of both France considerably ranked at 25th position in the world corruption rank. The obvious example is bribery involvement of Jacque Chirac, the former president of France (USATODAY, 2011). As a result, the business operated in France will face more risk of corruption than the one in USA since the US culture maintains relatively lower power of distance. Meanwhile, the cost of corruption is usually massive to the company so this is very significant issue of operating in France.
Popularity of language.
Finally, culture also separates the efficiency of communication in French and US business through the popularity of language. That is, French is merely 9th popular language in the world with 169 speakers or 3.2% of world population (Souffle, 2012). Meanwhile, mother tongue language of US is English which is not only the most popular language in but also the international language used in international business. Therefore, the international companies can find it easy to operate and communicate with the USA residents. Reversely, the US based company can also easily find the common communication with the international market. This is quite opposite in France since the cost for language training is required so that the French company can access the non-French speaking area. Furthermore, because of the language barrier, certain costs related to miscommunication may occur.
In a consequence, it can be seen that the culture maintains quite significant impacts on both micro and macro dimension of business. Firstly, it causes influence on either increasing or decreasing the cost of doing business. From the above research, it could find that the factors such as high uncertainty avoidance, high power of distance and language barrier cause more challenges for the business to operate in France by adding certain cost, the much lower ones in USA help causing more competitive advantages via deterioration or void of cost. On the contrary, the more likely feminine culture helps French business to create internal competitive by offering more friendly working environment to the employees. Furthermore, the culture also dramatically influences the future economic development of each country.
Future economic development
Culture has a closed relationship with the likely future economic development. France and United State are no exception for. Some cultural aspects influence on economic development two countries such as: natural resources, policy, GDP, technological innovations, international trade and investment.
Firstly, we can discuss about natural resources of France such as: coal, iron ores, bauxite, uranium and soils cover almost half the country’s surface so agriculture of France plays an important role in exporting of food (Daniel N, 1993). With the fertile soils which have supported a robust farming culture since antiquity and the French landscapes also support so much for a thriving timber industry. Nowadays, approximately one-quarter of France is forested, and commercial tree farms also contribute a significant share of this total. Moreover, according to Daniel (1993), France manufactures products about uranium which is used in nuclear reactors, bauxite and is very rich in natural mineral resources. So France is one of the largest exporters of agriculture goods in Europe. They open many opportunities for employees to work and bring many advantages in developing economy there.
Natural resources of United State include: coal, copper, lead, molybdenum, phosphates, uranium, bauxite, gold, iron, mercury, nickel, potash, silver, tungsten, zinc, petroleum, natural gas, timber. The United States exported over four billion dollars’ worth of cotton (anonymous 2009) and rank the first position in the world. Moreover the US consumed 567.3 million tons of coal and made up more than 18.4% of the world total according to British Petroleum (anonymous, 2006). So US ranks the second country in that category only standing behind China with 38.6% of the world total. Government has invested and increased quality as well as quality in order to export it in the world. Natural resources play an important role in motivating and developing economy in US.
Secondly, we can talk about GDP between France and US. The Gross Domestic Product (GDP) in France has not increased in 2012. However, from 1978 until 2012, France GDP got averaged 0.5 Percent reaching an all-time high of 1.6 Percent in June of 1978 and low of -1.6 Percent in December of 2008. France ranks the second largest economy and the second trading nation in Europe. GDP expresses development of each country. Through the bar chart, we can see historical data for France GDP growth rate from 2010 to the middle of 2012 GDP of France has changes. It increased in 2010, decreased from 2011 and 2012 because of economic crisis over the world. The prices of goods and services have many bad effects to market so economic France developed slowly and GDP is not improved gradually.
Description: France GDP Growth Rate
Chart 2: France GDP Growth rate
On the other hand, the United States is the largest market economy and the Gross Domestic Product (GDP) in the United States has increased 1.5 percent a haft of year in 2012 .However we can see historical data of the United States GDP Growth Rate through the bar chart. As France, GDP of US increased in 2010 and decreased in 2011 and 2012. The reason of recession is that Stock futures and oil prices dropped sharply while the euro fell and got at $ 1.4329 from $ 1.4280 on Friday night. While the dollar was at Y78.48 from Y78.045 and the euro was at Y112.17 from Y111.01. So there was economic crisis there and affected the other countries over the world strongly. Many firms and markets did not operate as well as before. Economic disaster left many people without jobs; lots of companies went bankrupt or cut the jobs, caused oil and real estate prices to fall so many other countries fell into recession and it really affects almost everyone and everything in the world negatively
Description: United States GDP Growth Rate
Chart 3: United State GDP Growth rate
International trade and investment.
Thirdly, international trade and investment influence on economic development between France and US. France is one of top ten economies exporters in the world with 9.3 percent in 1997, 9.8 percent in 1998, and 9.4 percent in 1999, standing behind the United States, Germany, and Japan. France is one of the fourth largest exporters to the world, with over 5 percent of the world export market as well as the biggest trade member of the EU. Government developed over 31000 new jobs in 1999, up 8 percent from 1998.Goverment invests many fields such as: technology, education, trade and tourism…so can bring many opportunities for employees to find new jobs and increase GDP there. They impact directly on business operating in international markets and motivate economic development sharply.
US are one of the few countries that can export the largest goods and services in the world. They export goods and services over $1.83 trillion (2008) and $1.55 trillion (anonymous, 2009). Exporting supports millions of jobs for employees. Companies in US recruit more than 50 million workers for international trade and gain the success in economy. Government has invested more than 3 trillion abroad and increased revenue with 500 companies. Investments of US open many benefits for operations of goods and services there and motivate economy rapidly. Exporting of services reached $507 billion last year. So The United States becomes the largest exporter of services in the world and strong competitor in service industries.
Finally, technological innovations also play an important role in developing economy for two countries. Government of France focused on inventing engine, machine (1642), electric genera (1832) and was the first country in the development of high-speed transportation systems-notably the supersonic Concorde and the high speed train. There are subway companies which have built there in order to provide equipment for mass transit systems in Montreal, Mexico city and other countries. Furthermore France is a leading exporter of nuclear technology and has developed the first commercial verification plant (anonymous, 1965).
Over the past 50 years, the United States is one of top countries leading the world in science and technology. NASA was established to increase the productivity of scientists, engineers, and support personnel by innovative and secure IT services President Eise¬n¬hower (1958). NASA helps customers achieve their goals and objectives. Moreover it is able to identify, analyze and update information technologies in economic development there. NASA was invented a particularly important affects the economic growth because it will bring efficiency, reduce risks, increase educational achievement, quantity of labor and capital. Furthermore according to Cristen C (2012), NASA supported the competitive balance in industries with other countries. If new products or services want to be good they need have innovative technology and exact progress. So this technological became attractive with many people and US is a leader about technology in the world.
Aspects are reminded above which can prove how cultural differences influence on the future economic development so Culture and economic development have a closed relationship.
Different countries have different cultures so they also have different perceptions to run their own business. As the result, abroad businesses have to face with one of the most important factors – cross culture challenges; because to begin and develop a good deal with international organization, the company needs to know and understand about the business practices of their business partner.
Table 1: Business practices in France
Being the biggest country in the West of Europe and a third- largest in overall Europe so the behaviours and activities of French play an important role in the whole Europe, especially in business (according to George Friedman). Besides that, this country is a leading country in the high fashion world due to its inspirations and creativities so its people chose their clothes really careful. This factor implicates a lot in its business, French only charge people base on two main things. According to the Kwintessential, the first impression begins with the way their partner look as their outfit, their hair and their overall body language. Secondly, the attitudes during the conversation of their partner will slowly charge and analyses carefully while they are talking. Because of this, they need to ignore the factors that cause the interruption during the discussion and do not interrupt the French while they are talking, they will consider this action as rude and disrespectful (Table 1).
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In overall, the way French do business can be a little bit formal; their partner can have the first impression right away by the way the France people greeting people by shaking hand, the way they talk during the conversation can appear quite cold, stuffy or unfriendly. Based on this, their business partner should not attempt to be over friendly or relaxing.
Smile and shake hand
Evident and data
Table 2: Business practices in United State
American people tend to take the initiative, they do not wait to be introduced, and they can begin to have a conversation with the stranger if they feel like to. Partner who from other countries may surprise by the way they lead direct to the point, sometimes even a bit rude.
Next, to have a good impression with the American, the partner need to make sure their punctuation because US businesses estimates their people’s character based on “time”. For example: people who are on-time are considered as good people and deserve to be count on. People really punctual and they will show some disrespect for person who waste their time (according to ezinearticles). In order to make the good business relationship, besides the traditional actions in business as handshaking, a smile will give a friendly impression on America’s people.
Last but not least, to improve the professional and make them believe in your words, here is a high light- American are easy to be impress by data and evidence. For this reason, in any of the situation that you are require to present your proposal or idea, you should provide evidence for any comment or suggestion that you want them to focus (Table 2).
Overall, France and United States are two different countries that have their own culture and traditional but in a developing world with growing economic; these two countries are doing a very good job to manage their people and organize their business to become a part of the globalization. In the future, they are going to expand their business to become the leaders in the World’s business.
Together with the difference in many dimensions between France and United State, those two countries share some similarities in business practice and doing business. While United State emphasizes the freedom of thinking, speaking and doing business, Frances still, sometime, prefer stick to the original things in the past. But two of those countries are on the way to renovation to development more day by day. Global economic nowadays changes every day, to be more open in term of policy actively in getting to know new culture may help France to have more chances to cooperate with more nations. They need to omit few boundaries of tariffs and taxation between import and export from outside nation to attract more business opportunity. In the other hand, United State should tighten the policy of immigration to make it become integration and prevent the chaos of many cultures from over the world.
In term of culture, the cost of doing business, the development of economic together with the business practices involve not only in those mentioned countries but also in global dimension. It will help the worldwide economic to change in positive ways of getting to know news thing or importing new technology from outside the nation boundaries. So that it will boost the efficiency of economic development in each country that applied the globalization inside.