globalEDGE Blog - By Tag: cultural-intelligence

We’ve been hearing the words “Cultural Intelligence” everywhere we go lately. So what is cultural intelligence and why is it so important to global businesses?

Cultural intelligence is the ability for people, organizations, and businesses to relate to culturally diverse situations and work effectively in them. It is a vital aspect to international businesses because every country they are based in requires a different cultural approach and the ability to get well with the consumers you are working with. Global collaboration has become a significant aspect for the success of businesses and this cannot occur if businesses do not have the resources, knowledge, and talents of cultural IQ.

In today’s globalized world where businesses are operating in countries scattered around the world, understanding different languages can be extremely advantageous. Many professionals assume that speaking a common language with other cultures is enough for success. While in fact, spoken language is only 30% of communication. Cultural differences are inevitable in global business environments. Therefore, in today’s business world it is simply not enough to share a common language. To be successful, one must develop a diverse cultural perspective.

When looking at the composition of the world over the past years, it is not hard to see that the world is becoming increasingly interconnected. If you look at a basic product, it is more than likely that the product you are looking at is made from components in various parts of the world. This increasing economic integration called globalization is having profound effects on many countries. Advances in transportation and telecommunications, including the rise of the Internet, are major factors contributing to globalization that have generated further economic interdependence and universal cultural activities. However, these are certainly not the only factors contributing to globalization. Today, I will show you how the entertainment industry has been a major driver of globalization.

As globalization affects international business in almost every way possible, it also affects education to great extents. International education is on the rise as the demands of a globalized world bring the need for students to understand broader issues around the world. Students, the future business leaders of tomorrow, have become more mobile than ever in search for global experiences and job opportunities overseas. In past years, many students moved abroad to study in developed economies such as the United States and United Kingdom. However, that trend is starting to shift as many people believe the booming economies in the East offer more job opportunities than the West.

As most of Europe still feels the fiscal repercussion’s from the debt crisis, some companies are leveraging this to target the fiscally conservative consumer. Consumer spending power has declined which means companies are pressed to find ways to squeeze every penny out of the consumer. Many companies are changing the packaging of products to accomplish this.

As businesses continue to expand internationally, it is becoming more important than ever for these companies to adapt their strategies to different cultures in foreign markets.  Companies must extensively analyze the target market and determine whether or not their product or service can be successful in that market.  Often times, cultural differences require changes to be made to a company’s sales and marketing approach and sometimes even the product itself.

The reality of cultural diversity exists not just on the international business scene but also within an organization. As such, if they are to truly make use of the increasing opportunities and benefits that the global economy is providing, they have to make sure that their employees have sufficient intercultural competence. Communication is imperative for success in the business world, and most people would think of the language barrier as the largest hindrance. However, I’m here to argue that just knowing the local language will not help you be successful in an international setting.

With the goal of becoming a developed nation by 2020, Malaysia has some work ahead but recent predictions by Malaysia’s central bank show that this developing country is definitely on the right track. A predicted economic growth rate between five and six percent puts Malaysia in a much better position than other South East Asia economies in today’s global climate. Over the last decade Malaysia has faced tough competition in exports and production from low wage countries such as China. Now, Malaysia is looking forward to a knowledge-based economy lush with opportunities and potential.

I was first introduced to cultural intelligence (CQ) in my international management class this past year, and was highly intrigued by the topic. CQ is a person's capability to function effectively in situations characterized by cultural diversity. When the opportunity rose to read The Cultural Intelligence Difference, I jumped at the chance. Dr. David Livermore wrote the book to essentially give the everyday person, whether you are a teacher, doctor, entrepreneur or CEO, strategies to increase your CQ.  Here is a little excerpt of an example from the book that may apply to you:

When speaking with U.S. business leaders about global leadership and cultural intelligence, I’m often asked, “Is anyone talking to people in China and India about their need for this? After all, shouldn’t this be a two-way street?”