Development of business relations Essay
Hakansson offers two stages of the development of business relations, which are the episode stage and the adaptation and institutionalization stage. The episode stage involves the early establishment of business relations, finding suppliers or customers, for instance. At the adaptation and institutionalization, business achieves the target customer behavior and starts growing on the ground of stable business relations. For instance, when customers grow confident in the reliability of the brand they turn into loyal customers that is the adaptation and institutionalization stage.
Tyler (2006) expanded the adaptation and institutionalization stage stating that this stage requires trust and interdependence between parties involved in business relations.
Dwyer (1987) distinguishes five stages in developing business relations, including the awareness stage, exploration stage, expansion stage, commitment stage and dissolution stage. As business relations step to the next stage they progress until the stage of dissolution, when the business relations fall apart and parties give up business relations.
At the same time, Scazoni (1979) distinguishes three stages only, which are the exploration stage, expansion stage and commitment stage.
On the other hand, some specialists (Hofstede, 2001) point out that the cultural interaction often plays the determinant part in the development of business relations. Hofstede (2001) distinguishes four cultural dimensions, including power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance. The researcher (2001) stands on the ground that the relationships between these cultural dimensions determine business relations. For instance, the power distance widens the gap between the average population and the authorities. Therefore, companies attempting to develop their business in countries, where the power distance is high, they should distinguish themselves from the authorities to gain the interest of the public. Furthermore, applying Hofstede’s model to countries with the prevailing individualism or collectivism, business relations focus on individual customers or groups of customers, depending on local cultural norms and traditions. Similar changes may be traced in the development of business relations taking into consideration other cultural dimensions identified by Hofstede (2002).
Nevertheless, so far there is no universal or perfect model of the development of business relations. Nevertheless, it is obvious that companies developing their business cannot ignore cultural factors. In fact, understanding of business relations requires the understanding of the impact of cultural environment on business relations because business relations emerge within the cultural framework. What is meant here is the fact that business relations cannot develop outside certain culture. In stark contrast, they develop within the specific cultural environment. This is actually why many companies operating internationally often have difficulties, while entering new markets abroad because they confront the new cultural environment, which they are not acquainted with. Hence, they have to develop new business relations taking into consideration the cultural background of customers, employees and other stakeholders.
At this point, it is possible to refer to the case of Colombia, the country which is quite different from the US or the EU but where business relations also exist but they adapt to the local specific cultural environment. In fact, the development of business relations in this country especially by a foreign company, for instance the US-based company, may be quite challenging. First of all, it is necessary to take into consideration enormous cultural differences (Hackman & Wageman, 1995). In this respect, it is possible to apply the Hofstede’s model. Even though the level of individualism in the US and Colombia is similar and is very high, other cultural dimensions are consistently different in these two countries.
To put it more precisely, the power distance in Colombia is high because of the lack of democracy and considerable socioeconomic disparities aggravated by the limited access and under-representation of the considerable part of the country’s population in the political power. In stark contrast, the power distance in the US is low due to historical traditions of democracy, which stimulated the development of the representative democracy and low distance between the authorities and the average population of the country. Moreover, the authorities are under the public control in the US, while they are virtually unattainable in Colombia that also widens the gap between the authorities and the average population. In such a situation, the development of business relations in Colombia is likely to start from obtaining the permission from the local authorities to expand business in the country. Therefore, business relations involve the establishment of business relations with the authorities, who are corrupted. In contrast, the low power distance in the US makes the authorities responsible in face of public and it is easy to develop business relations, when there is no corruption or permanent pressure from the part of the authorities.
The masculinity femininity dimension reveals the higher impact of patriarchal traditions on Colombian society because the society is still male dominated, while women’s rights and opportunities to exercise their rights are relatively limited too. In contrast, there is no such a wide gap between men and women in the US. Even though the inequality in the US between men and women persists, it is still not as significant as is the case of Colombia. Therefore, the development of business relations in Colombia may confront the problem of gender inequality. For instance, the US-based company should better be represented by a male representative during negotiations with Colombian business partners. Otherwise, they may not take the negotiations seriously.
Finally, the uncertainty avoidance index is also quite different in Colombia and the US, for instance. The level of uncertainty in Colombian population is consistently higher because Colombia is unstable in terms of its political and economic development (Deresky, 2008). Therefore, citizens can hardly forecast accurately the further development of the country. On the contrary, the US is one of the most stable economies and societies. As a result, companies developing business relations in Colombia should be aware of the high rate of uncertainty of customers and businesses in Colombia (Rollinson, 2005). This means that business partners of the company may be uncertain that it will develop business relations at all or that those relations will be long lasting.
Finally, the language is another important factor that affects consistently the development of business relations. In fact, language barriers can become unsurpassable for the development of business relations, especially if the foreign companies fail to overcome language barriers (Schein, 1999). For instance, if the US-based company avoids shifting the documentation and internal communication to Spanish in its Colombian outlets, the company is likely to face a failure because local employees will not be able to work in this company because of the poor English language skills. on the contrary, the elimination of language barriers can boost the development of business relations.
Thus, business relations are vulnerable to the impact of multiple factors and companies developing their business internationally have to take those factors into consideration.
