international trade and language barrier

international trade and language barrier



Research Problem & Purpose statement:

The major issue in international trade is cultural differences such as (language) barrier. Businesses trading internationally may have problems with communication and not getting enough information on the products they are importing from.

The purpose of this research is to analyse the cultural differences regarding languages barriers between companies and its effect on the business day to day operation. We are also going to investigate what kind of difficulties the company can face and how it can be avoided.

Review of the relevant literature

The number of companies operating internationally is increasing constantly. The world is opening up for foreign firms and new destinations and international trade is increasing. However firms operating abroad are faced with a few difficulties in terms of creating new relationships and partnerships. When expanding internationally, some challenges the company must handle are new and unfamiliar.

Zacharakis (1996) points out that a company seeking international markets must consider cultural differences before entering. These differences can be of language, political states, culture, and religion and even demand types.

Obstacles the firm never faced before are becoming crucial in the everyday work. Culture is one of these obstacles and can affect the operations of the firm. Culture can influence the business in different ways. Language problems, pricing difficulties and culture collisions are not uncommon, especially in the beginning. The company must be able to handle these difficulties in a way that is satisfying also for the other part. Mistakes can be difficult to correct and disrespect for the foreign culture can destroy the entire operation.

To start with, there has to be a good definition of the expression “culture” which can be defined as the inherited values, concepts, and ways of living which are shared by people of the same social group (TI Kawar, 2012). As businesses all over the world today are extending their frontiers beyond domestic markets (Udobong, 2009), global cultural differences between countries becomes an issue. There are several cultural issues that arises when a trade happens between two countries, for example, Australia would like to trade goods and services in India. In the Australian Business Consulting Solutions (2013) website, NSW Business Chamber’s India-based senior trade adviser, SP Joshi, provides the following helpful tips on Indian business culture.

1. Welcome to the family
The Indian community have a very strong family values and these values are also structured in their company. Of course, the CEO holds a parental role and must be respected by the company staff. the company staff are like the “brothers and sisters” in the family, the hold a very close relationship and at times have disagreements. In India, business people want to build a professional understanding with the other party first before welcoming a company or someone in their family.
“To do business with India you need to have a professional relationship built on a personal relationship. You must reach an understanding personally before you can start negotiating.” -SP Joshi

2. Get to know your business partner
Like any other company, before getting into business with someone it is highly recommended to get to know you’re soon to be/potential business partner. This makes the company you’re representing professional and determined. Talking about the country’s national sport wouldn’t hurt either. In this case, it’s cricket. It is good to not rush the company you want to do business with. Make sure their relax before having the “business talk”. Getting to know your potential partner might take a few days to process.

3. Entertaining
Entertainment is a big part in the indian culture. Indian entertainment comes with all sorts of food and activities. For example, if you soon to be business partner invites you to a party is best to bond and get to know the people around personally rather than take business. As its understood that in Australia this can somehow be seen as “not professional”, the person that wants to do business with the other needs to adjust and get familiar with how they do things in that specific country.

4. Adopt to a flexible approach
Of course adopting to the culture is always a must when a relationship has been established. Flexibility with time, clothing and food is a must.

5. Be clear and direct in communication
Like any other communication between two parties, its best to know and understand well what the other is saying. When things get unclear its best to force either a yes or no answer, or ask them to lay out what they can commit to/options.

6. Always negotiate
Negotiating in business is encouraged especially in Asian countries. Although, its important to know how this is done in the chosen country.

Focusing on the language differences, According to Ku and Zussman (2010), the language barrier – the fact that different countries have different native languages – has been documented in numerous studies as reducing international trade. Language barriers are a significant deterrent to trade between countries (Lohmann, 2011). Egger and Lassmann (2013) examines to which extent language as a cultural aspect affects international trade? It is brought to their attention that language can have a major effect in countries dealing with international trade. Language is the key to a person’s self-identity. It enables the person to express emotions, share feelings, tell stories, and convey complex messages and knowledge. Language is our greatest mediator that allows us to relate and understand each other (Imberti, 2007). This is therefore a struggle to potential partners/customers to communicate and have a mutual understanding about the information brought to their attention.

There is importance to prepare for the challenges as well as educate in order to begin new foreign operation. Respecting and understanding foreign culture without forcing our own beliefs on people, are things that can be extremely helpful to consider. Learning the host country’s language and culture shows respect and trust more easily be won. Competitive advantages can arise.

The increasing globalisation and internationalisation has become of great importance as more and more companies start to look abroad to expand their business abroad. Countries are becoming more and more interconnected and to manage business operations across international boundaries has become one of the largest challenges for international business today. According to Root (1994) the global economy has formed business environments that require companies to look past the traditional thinking of the home market, and start instead looking at business from an international global perspective. The method a company ventures from their home market to new geographical markets is of great importance for how well the company succeeds with their business. According to Osland et al. (2001), small and medium size firms that have taken the decision to internationalize and multinational companies that want to expand into foreign markets are both faced with the challenge of choosing the best structural arrangements.

Another factor that encourages companies to begin operating internationally is the possibility of the existence of international markets in foreign countries that is not available locally.



Qualitative research:

The advantage of a qualitative method produces a wealth of detailed information about a much smaller number of people and qualitative data is the most important part for every research field. According to Patton (2002) there are three ways to collect the information required for our research as follows:

• Interview
• Observation
• Information for written documents and article

We are not going to analyse statistical data as our research is more related to data through interview and journals.

List of interview questions for our research:

1. Do you believe that culture in particular language differences is one of the main issues that affect international business?

2. What are the main obstacles you believe your company has to overcome when it comes
to doing business abroad?

3. How does culture affect the negotiation process?

4. How can language affect the negotiation process with a foreign company? What
are the main issues to have in consideration?

5. Did you ever feel that culture specially the language barrier affected business negatively?

6. Do you believe that it is important to educate the person/ employee about the language spoken by the business branch/ company abroad before sending them abroad?

7. Other overall recommendations?

We will gather information from both primary and secondary sources, (i.e.) from companies or people in the respective fields.
Primary Research will provide information that is needed to support the overall study and any recommendation. The questionnaire will be up to date and specific in order to collect relevant information on the topic of the research.
Secondary Research will be collected from articles related to international business from sources such as newspapers, journals, textbooks and the internet.



Project Report

Students will be aware that this subject requires students to produce and present a report on some aspect of their chosen specialty.

The project is open-ended because it is intended that students should pursue topics in which they are interested. (Research proposal topic (attached))

There is no prescribed word limit for the report; however the following guidelines must be followed.

Guidelines for Producing a Technical Report
a. The structure of the Report

The following is a list of the required sections of the report, in the order of appearance.

Table of Contents
List of Tables
List of Figures
List of Abbreviations – necessary only if the report uses a large number of special abbreviations
Literature Survey
Theoretical or Conceptual Framework
Methods and data
Based on the proposal an interview questions has been developed however no need to conduct an actual interview. It required to write about the significant of each question and why it was developed and how the answer for the each question will assist with our research.
Results and analysis
Summary and conclusions

Abstract or Synopsis

The abstract must be informative not just descriptive: it should inform the reader by providing a summary of the key information of the report. It should be capable of standing alone in that it acts as a substitute for the report for a busy person. The abstract should adequately address the following questions: a) what is the main research question or problem and why is it important to find an answer to the question? b) How was the research conducted or the project undertaken: methods and data? c) What were the significant results including the answer to the main research question? and d) What are the major conclusions and their implications?

Table of contents

The table of contents should list all the major chapters and the sections of the report including the following: Abstract, List of Tables, List of Figures, References, and Appendices. The table of contents should: – be single spaced, – not include more than four levels as Chapter, section, sub-section, sub-sub-section, – contain titles of chapters and sections that are identical to those in the body of the report, and – have accurate page numbers.

List of Tables, List of Figures, List of Abbreviations

These three lists are included only if a large number of them is used in the report. Follow a uniform style for tables and figures. All captions must be identical to those in the report body and the page numbers must be accurate.

Style and format

1. Paper and font:
The report must be typed single sided on A4 size paper in 12pt font (preferred fonts are Times New Roman and CG Times), left and right justified.

2. Line spacing:

The main body of the report must be 1.5 spaced b. Table of contents, direct quotes, table and figure headings, list of references, and the material in the appendices should be single spaced.

3. Margins: top – 2.5cm; bottom 2cm, left – 3cm; right 2.5cm

4. Paragraphs:

Separate paragraphs with either a blank line or indentation (1 cm) of the first line (but not both).

5. Headings:
Use Bold and Bold-Italic for headings and sub-headings. For chapter and major sections headings use a larger font (maximum of 14 pt). Do not underline any headings or sub-headings.
6. Page numbering position:

Page numbers should be at the top right corner, the initial sections of the report should be numbered using Roman numerals starting with the cover page, the page number should not appear on the cover page. The first page of Chapter 1 should start with the Arabic numeral 1 and the following pages should be numbered in numerical order until the end of the report, including the appendices.
7. The tables and figures

should be numbered progressively including the chapter number as a prefix. Example: Table 5.4 would refer to table number 4 in Chapter 5. The first table in Chapter 6 would be Table 6.1.

8. Referencing style: Follow the Harvard (AGPS) style for citing references, footnote style, tables, figures, equations, etc. The style must be followed uniformly throughout the report. Please refer to

9. The appendices
must include the following: a. All the data used in the analysis and the instruments used for collecting primary data. For data obtained from standard sources such as the publications of ABS, OECD, World Bank and other organisations include accurate detailed information about the source, such as a catalogue number. You have to include any data that were collated from publications such as company annual reports. b. Special computer codes, not the regular ones used in standard statistical packages; and c. ALL material and information required for replicating the results of the study.
10. Headers and Footers: Use them if you feel they are appropriate.


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