Differences That Matter

 I wrote this essay as part of evaluation for a course Foundations of International Business taught by Prof. Sascha Albers. This is one of my favorite courses in the first semester of my business economics education.

I emigrated to Europe in September 2021 to obtain my first master’s degree in environmental science. I was privileged to be enrolled in a program that allowed me to live in three countries. When I was younger, I already knew that every individual is unique, and every society is of different characteristics. However, in the wake of social justice and equality movements, I became convinced that everyone is inherently human, and we are all equal - the same. Back to my experience living for a relatively extended time in different European countries, I noticed the subtle nuances of how people think and behave differently. Even within the same country, the culture may be divided by multiple factors (suburbs vs urban areas, languages, political views, history, etc.). Then it raised a question to me: are we the same inherently, or are we different?

Photo by Toni Ferreira: https://www.pexels.com/photo/crowd-of-people-on-street-1518419/

I later enrolled in a second master’s degree in business economics, after working almost a year on my PhD in soil biology. I took the course Foundations of International Business where I met a handsome and seemingly always positive professor Sascha Albers, of German descent. The course builds up from the cause/history of international business through globalization, the (national) differences that matter, and the strategy of international business. Along with other courses in my first semester, such as Intro to Managing and Organizing and Principle of Marketing, I got more in-depth views on how humans can be the same and different at the same time.

Yes, everyone is human, and we are inherently similar in some ways. We have both biological and psychological needs and desires. We need to eat, desire to love, and we require each other to sustain society. Our evolution has provided us with the instinct to survive by “thinking,” which sets us apart from other species. That is why in the history of humankind, our cooperation has become the key to our development (and wars the key to our collapse). The advent of industrialization has improved our ability to fulfill our needs and desires by leveraging the economy of scale (mass production, distributing fixed costs, lower consumer prices).

The development of technology (ICT and manufacturing) and logistics have facilitated us to reach the modern society we are today – globalized. Humanity has never been more interconnected than ever before. When I eat my banana in the morning, it is grown in Costa Rica, almost 9000 km away. And a teenager in Singapore may use a smartphone with around 12 countries (and dozens of hands) involved in value creation. The shift towards interdependence and interconnected world economies, including the people, that is the essence of globalization.

I then realized how globalization fundamentally transforms both business strategies and leadership practices. My experiences in different countries reinforced the significance of understanding not only the shared human nature but also the deep cultural nuances that distinguish individuals, regions, and nations. Foundations of International Business emphasized the critical importance of adapting to these differences, especially for business leaders aiming to manage multinational organizations or navigate cross-border markets.

Moreover, this course introduced me to various strategies that companies use to address the dual pressures of efficiency and localization. Globalization may bring people closer together, but it also exposes the varied preferences, needs, and behaviors of different markets. For instance, multinational companies face the complex challenge of balancing standardized global operations with the need to tailor products and services to local tastes and norms. The strategies of international, standardization, localization, and multinational approaches each offer different paths to success, yet none is a universal solution.

The international strategy focuses on leveraging home-country advantages, with minimal adaptation to local markets. This can be a cost-effective approach in markets that share similar consumer preferences. However, the drawbacks become evident when these markets are more culturally diverse, and the standardization of products fails to meet local expectations. On the other hand, the localization strategy entails customizing products to fit local preferences, which may foster stronger connections with consumers but can be resource intensive. The multinational strategy aims for a balance between the two by allowing subsidiaries to operate with a degree of autonomy, enabling local adaptations while benefiting from global economies of scale.

I also learned about the importance of organizational structures in implementing these strategies. In a globalized business environment, companies must ensure their structures support coordination across multiple countries, each with its own cultural and regulatory landscape. Different organizational models, such as functional and matrix structures, have their own advantages and challenges, depending on a company’s size, geographic spread, and strategic objectives.

Yet, what became most evident to me during the course is that analytical thinking and cultural sensitivity are key skills for top managers. A great manager must go beyond applying generic strategies; they must possess the ability to analyze market trends, understand historical and cultural contexts, and make decisions curated to markets (classical example is the failure of GM in adapting to European market). This mindset is essential for navigating the complexity of international business and managing the subtle yet crucial differences that influence success in diverse markets.

Ultimately, I am convinced effective leadership in international business hinges on the ability to blend strategic insights with awareness of cultural/national differences. By embracing both analytical thinking and empathy, a leader can navigate the complexities of global markets, making decisions that are not only effective but also mindful of the diverse perspectives that shape success. I believe that is the quintessential of what I learned from this course.