The effect of globalization on business worldwide cannot be overstated. The phenomenon of the world becoming a global village has led to the rise of multinational enterprises (MNEs). As Kleinert (2001) aptly states, “MNEs are the vehicles that have fostered international trade, international knowledge transfer and technological advancement.”
The very existence of a “multinational” entity implies the need for the business to span across diverse cultural beliefs, languages and norms .It is thus imperative that cultural diversity is considered closely when forging business strategies of MNEs.
Undoubtedly, various factors have contributed significantly to the ascent of MNEs. A factor such as the increased prominence of the internet has brought about easy access to information especially in business decision making and in gaining access to prospective consumers. Also, technological advancement has aided the creation of MNEs. This is because easy machines for communication, fast travel and advertisement have helped allow business owners to have good control of their business from anywhere they find themselves worldwide. Another pivotal factor said to aid MNE business success is the MNE’s ability to adopt the local language of its host country in advertisement, recruitment and sales. Meija and Palich (1997) buttress this point by stating that “The host country’s language is the most distinctive cultural feature that an MNE must leverage on when seeking business success in a foreign country.”
The effect of the differences in cultural beliefs and arrangements in various countries suggests that the factors to consider when starting and managing an existing MNE differ from place to place. In terms of the above mentioned factors, cultural diversity can be used as both an advantage and a handicap depending on how well it is handled.
Every country has its own defining language, sometimes determined by its colonial masters and other times as a result of evolution. Language creates a sense of belonging and solidarity within a group of people (Meija and Palich, 1997). Thus, for an MNE to succeed in a host country, it has to leverage on the common language spoken in the host country. It is by making use of local language that advertisements about their products can be effectively broadcasted.
Parading the service that an MNE has to offer in local languages brings their product down to the common everyday user. For example, in Nigeria, MTN, a telecommunications company leveraged on making use of our 3 major local languages, Yoruba, Ibo and Hausa in servicing its customers from its customer service centers. This increased its customer base by 20% in its first year of offering this service (MTN News, 2010). This confirms the fact that an MNE needs to adopt the local lingua franca of its host country in order to maximize its sales and overall acceptance level.
Another factor that has had great effects on the growth of MNEs is the level of technological...