As the twin forces of liberalization and globalization gain momentum, all across the world, multinational firms are increasingly realizing that they cannot superimpose or export their business models which made them successful in their domestic market to their foreign subsidiaries, as cultural difference plays a major role as a business barrier. It is because of this that not many foreign firms have succeeded in Japan or Germany. Hence, the key to success is a thorough grounding of managers in cross-culture, a term that is gaining popularity among Multinational Companies (MNCs). It's also a lesson for MNC aspirants from emerging economies like India and China.

Understanding local cultures is an essential part of good business practice. It helps to avoid tribulations and adds value. In today's times, it is imperative to go intercultural, to ensure value, profits and thus survival.

Wal-Mart, the world's largest retailer, announced recently that its Japanese operation continues to bleed as a stunning revelation to many market analysts, who felt that the US retailing giant would take corrective actions to stem the string of successive losses of the last five years on Japanese soil. Wal-Mart made its entry into Japan in March 2002, by picking up a small stake of little over 6%, which is, however, raised to close to 53%, as of now. A section of experts, at that time, had raised concerns that it would not be easier for the Bentonville, Arkansas-based firm to succeed in a market, which many experts refer as one of the world's most fickle consumer markets and with a history of many failed foreign ventures where companies had to shut their shops. Vodafone became the latest to join the list of casualty (failed operations), when it announced to sell off its Japanese operation, last year.

In fact, in the last couple of years, the British mobile major makes a hasty retreat, not just from Japan but also from a host of other countries like The Netherlands, Denmark, and Belgium. Meanwhile, Wal-Mart too was facing music in many of the other overseas markets like Indonesia, Hong Kong, South Korea, and Germany, apart from Japan. Finally, it culminated in the shocking exit of the retailing major, first from South Korea and later Germany, a year ago, which industry experts attributed to the failure on part of the firm to understand and adapt to the local conditions, the very reasons, which humbled it in Hong Kong during the 1990s. A section of experts felt that the world's biggest retailer tried to superimpose its American cultural philosophies like `service with a smile' from the counter staff, which offended the German shoppers as it is uncommon in German society to exchange smiles between strangers. Further, chanting the firm's name to boost staff morale and its not-so-staff-friendly ethics code, too, were not taken kindly by the Germans. These are just a few examples in the long list of foreign firms, which abandoned their overseas ventures as they failed to implement the philosophy—`Think Global, Act Local'.

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