What are the aspects of doing business across national borders that complicate managers’ jobs? Use the PLOC or the strategic management process to give examples of why international management is different from domestic management. Give an example of a company that is successful at cross-border management.
Global businesses face quite a several challenges and managers in charge have a big responsibility of ensuring that the business becomes successful. The complexity involved often makes the manager’s job very difficult. Various aspects affect cross-national border business that needs to be addressed to successfully manage an international organization. Managers running international organizations encounter language barriers that complicate their work. Although managers handling international business are expected to be fluent in many languages, it always a great challenge to the majority of them (Adekola 36). Conducting business in a foreign language is always a great challenge even if a manager is somehow conversant with the language. Managers can only communicate effectively in terms of business using their first language.
The language barrier has made many international companies lose business opportunities in foreign countries. A difference in culture is another aspect that complicates international business. Every country has its unique set of culture and norms and it is always a great challenge for managers to clearly understand the needs of customers in a foreign country. Managers are unable to carry out most of their duties and in most cases, they have to hire local people to run some errands for them. It is always a great challenge for managers to carry out administrative duties on their own and it takes them some time to adapt to local systems. It is always a great challenge for international managers to win the trust of employees in a foreign country because the employees are always reluctant to change to a new way of doing things introduced by foreign managers (Adekola 36). The manager is also faced with the hurdle of trying to understand the local people. Time zone challenges complicate the work of international managers in the sense that decision-making and planning may not be as accurate as expected especially during the early days.
International managers may also be faced with the challenge of encountering new work practices. Each country has its unique work practices and it takes an international manager quite some time to fully understand the work practices in a foreign country. Managers working abroad are always bound to encounter a lot of challenges before settling in their unfamiliar work stations. Marketing managers doing international business find it difficult to market their products on the international market since customers in different countries have unique tastes and preferences. Financial managers also have a complex role in handling a global business. Since transactions are made in foreign currencies, is difficult to have definite financial records because the exchange rates keep fluctuating now and then. The other complication that financial managers face when conducting international business is the issue of tax laws (Adekola 36). Laws and policies governing taxation are normally different across national borders. International business requires a lot of capital for expansion and it is sometimes difficult to come up with the exact amount of capital needed for expansion. Supply chain management is always expensive in a foreign country which increases the cost of operation.
International business management is very different from domestic business management in terms of strategies. There is always a great difference in terms of planning, strategies, and the general management of a global business when compared to domestic management. In international business, the probability of failure is very high if the local people are not integrated into the business for it to adapt to local conditions. The time taken for an international business to completely settle and become stable is much longer compared to a domestic business (Adekola 114).
The strategy of integration is very much emphasized in international management compared to domestic management. International business deals with diverse investments and markets and therefore international managers have to put strategies in place to deal with uncertainties in foreign currencies and other unfamiliar regulations in foreign countries. The level of uncertainty is very high for a global business compared to a domestic business which forces global organizations to set up extensive risk management systems. Marketing management for a domestic business is less complicated since it is easy for marketing executives to predict the spending patterns of domestic consumers. There are a lot of bureaucracies in doing international business which forces international managers to adopt long-term strategies. Government regulations together with different product preferences lead to constant modification of products and services in international business (Adekola 115).
The cost of setting up a business in a foreign country is very high as well as the cost of operation. A global business is bound to face many logistical challenges compared to a domestic business and this poses a great challenge to managers. The success of a global business largely depends on the political goodwill of the host nation which requires managers with excellent negotiation skills. The management of a global business is very demanding compared to a domestic business. All aspects of management in international business have to be strictly followed for a global business to achieve its targets and goals. It is always a difficult task to penetrate a global market compared to a domestic business and this calls for extra effort from managers running global businesses. Although a global business requires high initial capital to become stable, the returns are good due to the expanded market at the global level. International market segmentation is very different from domestic market segmentation since consumer preferences are different. In international business, segmentation is done regionally and in this sense country.
The challenges involved in international business management are immense and only companies that have adequate resources and a culture of aggressiveness manage to survive. The roles and responsibilities of a business manager in a global business are completely different from a manager running a domestic company (Adekola 115). Many business schools are laying much emphasis on international business due to the many opportunities brought about by globalization. One of the major functions of global business managers is setting up strategic goals for the organization based on a solid knowledge of international markets. The policies designed by international managers have to be of international standards and thus being able to be operational in any country that the company decides to set up a business. Strategic decision making coupled with cultural awareness is other aspects of international business management that makes it different from domestic business management. An example of companies that have managed to succeed in cross-border management is Nokia.
Works Cited
Adekola, Abel. Global Business Management: A Cross-cultural Perspective. New York: Ashgate Publishing, 2007. Print.