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The present paper looks at the issue of challenges in international management from a number of perspectives. From theories to practical implications, the paper argues as to how these challenges can be rightfully addressed without causing any harm to any party (a country or organization). The paper also brings forward evidence from the empirical domain to extend and support the argument.
An Overview of International Trade and Management
It is not only today in the waves of globalization that we know there is something like cross-border, international trade. In an actual sense, Baker (2003) notes that many centuries ago, nations of the world had realized that they needed to trade with other nations of the world. There are a number of reasons as to why international trade has continued for a very long time in the world and with the passage of time growing both in volume and procedures of conduct.
However, there are four major reasons for which international trade is conducted. The first one is that there are differences in natural skills among people; it is more appropriate than those two individuals produce goods of their specialized area rather than producing the same resulting in low productivity. Reason two is that if two individuals have identical skills, it is better that they specialize in their skills because in this way overall productivity will increase from repetition. The third reason springs from specialization resulting in the simplification of jobs and tasks due to the fact that it can lead to the advent of machinery which can produce on a large scale.
Specialization also, as a fourth reason, saves time for each person because one does not have to waste time by switching over from one skill to another. Other reasons are the synergistic approach in acquiring the whole which is much greater than the individual parts of the trade, and different tastes and preferences of different people which are addressed by various items in the market from different parts of the world. Viewed from this angle, it seems appropriate to suggest that international trade is a natural phenomenon and that is why it has been present in the world for away a long time and is still growing (pp.1-2).
The world as of today has realized that international trade is an integral part of the well-being of the world because of the flow of goods and finances. Statistics from the United Nations show manifest this observation. They suggest that since 1970 “the ratio of world exports to total gross domestic product has consistently increased”. Investment and trade liberalization is one factor prominently causative to this growth (Baker, pp. 1-3, 2003).
International Trade and Investment Theory
To better maintain the standard of living to take comparative advantage in trade activities, trading has been put on the weighing scale of theories. As such, comparative advantage has existed in the trade activities of the world even in early civilizations, for example, Phoenicians traded goods with African citizens under the same concept of comparative advantage. Other theories and concepts than comparative advantage have also been carved out by economists side by side. For instance, during the past two decades, a new trade theory has been worked out by economists which are referred to as “the theory of increasing returns” or “economies of scale”.
According to this theory, “trade happens in order to take advantage of economies of scale”. Two countries can achieve lower costs of the unit by producing goods in larger volume and then spreading high expenses of start-up face over the entire span of time goods were produced. This is only possible if the countries depend on each other to achieve such a goal which is actually to result in international trade. As such we today see countries their goods in a different country because there they have a larger market at their disposal for instance Japanese automobile factories in the United States of American or in Germany (Baker, pp. 1-10, 2003).
Challenges to International Trade and Their Management
With the scenario present in the above sections, it is also important to note that international trade has had to face a number of challenges on a bigger scale of the globe. These challenges have always created waves of dissatisfaction among a number of countries. It has always been the topmost priority of nations to overcome these challenges to grow economically by indulging in the activities of international trade.
The transportation and disposal of transboundary wastes of toxic nature have been one of the major problems present to the world up to the very day. Today it has become a major issue hampering the environmental well-being of the entire world and all the countries, ironically, do accept this to be true. Dumping of these wastes on a number of occasions in third-world countries has given the largest share of awareness in this regard.
Legal instruments of international trade have been formed to fight this challenge. One such instrument is the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. However, it is important to note that the transboundary movement of hazardous wastes has increased dramatically since the late 1980s which needs ultra-conscious efforts by the entire world. Although international management of this area has now been active, it is still a big challenge for the world (Kummer, pp. 1-5, 1995).
Another challenge present to the international management and trade activities is that of an entirely different kind: management of human resource capital on the global spectrum hinged on the axis of specific national, cultural, and social outlooks. This issue is present in the multinational corporations of the world which are a major contributor to the growth of international trade. According to Bonache (1999), the management of the human capital of a firm depends on how well this capital is in harmony with the national value system.
The management of the human resource on the international business horizon now reveals that there must be a different HR policy in a different country to adapt to the specific social and cultural needs of that people. If a company fails to address the social and cultural needs of its employees in a particular situation, there is likely to take place a failure to carry of healthy HR procedures. However, this area alone is enigmatic because of a number of complexities carried with diverse cultures and social settings of different people across the planet.
A very critical challenge to international management is the emerging trend of the development and appreciation of global citizens who know how to act in the complex air of globalization in the context of business, management, and other areas.
However, as the membership in this new global club is rising, critics are voicing their concern regarding the distinct threat to a local and national culture that might one day meet complete obsolescence. This simply gives high rise to arguments and is in turn affecting the business strategies which center on the global membership of people from across the world (Bird, & Stevens, p. 395, 2003). Besides these, there are a number of challenges scattered over the entire canvas of international management that needs much more space here even for a scanty reference.
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Management Styles, Methods, and Techniques
As there are challenges present on the spectrum of international management, there are different approaches to address these challenges; these approaches are both abstract and practical and are functional in a number of areas. One such example is the association of technology with multinational corporations. This very area has developed into a bigger picture where now cross-border innovation because of accumulated knowledge world-over.
There are two types of corporations with relation to the association of technology. The one more modern are those which are now duplicating technological activity on a global scale. These corporations have successfully brought their status to the stage of “global-for-global innovation projects within individual fields of technology”. Technology transfer with the network of multinationals is one single factor for this successful transition because it has given birth to polycentric structures of organizations. Government policies have also played a significant role in this area; as such supportive governmental policies are very important.
Another type in this area is the multinational that has developed within its own network a number of specialized centers of distinction. More often the origin of this type is found in the local embeddedness of subsidiaries that are foreign-based. This way the multinational can take the edge over locally rising business trends and opportunities. “The introduction of new and unrelated products through international mergers and acquisitions has also contributed to the formation of multicenter structures in the multinational network”. What is noteworthy in this example is the fact that this multinational involves entry to those technological capabilities that are specific to the country it is operating in.
It not only caters to the growing needs of business management in that very country but also makes it convenient for that country where the technology transfer is being made. As such, the creation of complex production systems becomes possible and higher quality with bulkier productivity is that result. This is where cross-border innovation is seen to be the greater likelihood of addressing the present and forth-coming challenges to international management.
It is said to be more effective in the sense that a multinational corporation can join hands together with the local government and business organization to set up a framework, a code of conduct through which basic issues can be resolved and settled to later result in a harmonic business managing which won’t have such impending dangers as dumping problems and sense of deprivation among the third world countries. The basic idea then is the active exchange of knowledge between the two parties. However, it must be noted that up to today, cross-border innovation remains a largely unexplored area world-over in multinational corporations.
Only limited case studies are available that are also fragmentary and leave much of the area unexplored. Moreover, large sample research is scarce in this area which is indicative of its being too unexplored. Cross-border innovation has the advantage of being the effective source of a competitive advantage which holds ripe fruits for the forthcoming international management of the business and the role of multinational corporations in this area. As the global culture of management and business is developing further and further, the need for cross-border innovation is also making its role to be noticed. Henceforth, it is essential that this area be explored adequately to rightly address the challenges to management (Zander, & Solvell, p. 44, 2000).
International Management and Self-Monitoring
Self-monitoring is considered to be one effective tool in the context of international management. It is due to the fact that expatriate managers working in a different environment can make greater use of this tool to boost up managerial effectiveness as well as to play a vital role in the cohesive whole of addressing the challenges present to the international management today. Based on social learning theory, the critics argue that those expatriate managers who show greater openness (that is ready to learn and adapt to new situations and work environments) are those who have a greater interest in new cultures.
They also extend more efforts to learn about the new cultures they are now in. This is where astute competencies of interpersonal skills are existent. These skills are required to support the organizational goals and work plan in that very country. There are a number of areas in which the expatriate, however, needs to work to achieve interpersonal competencies. They are integral to the fabric of adaptation and higher productivity not only of an individual but based on them the organization the individual is working for. First of all, the most important thing for the expatriate is to be fluent in the local working language so that a number of procedures can be personally screened by the expatriate.
The best option in this area is to hire those managers who are already fluent in a local working language of a setting; this is to surely save much time. This is not enough to depend on the local employees who can speak the expatriate’s language. The second important point is to train the expatriate in the context of international management and its operation. This is critically important for an organization’s attempts to reduce the factor of risk and failure in a particular area of work. Another important factor that follows closely the above-noted points is how expatriate managers go about controlling themselves in situations of psychological stress.
Literature suggests that a better way to handle psychological stress is to adjust as much as possible and as quickly as possible to the new work environment in the local country. Adjustment in a hot environment leads to flexibility of expatriate norms and beliefs and ultimately to reduced psychological stress. The result is the person focuses more on work that results in higher productivity. On the other hand, non-adjustment or slow move toward it will lead to high psychological stress which might result in a number of difficult situations not only for the individual but also for the organization.
Adjustment here means interaction adjustment with a number of stakeholders such as in the marketing area, sales, and others. With these points in view, a company can produce not only a better work environment for local people at any level of managerial hierarchy but can also bring a number of benefits back home addressing a number of international management challenges. Thus it is important to equip expatriates with these essential tools for successful management (Kim, & Slocum, 2007).
For successful management of the international business in the context of the twenty-first century, it is important for multinational corporations and the countries where these corporations are operating, to indulge in a number of initiatives to address the challenges present to international management. Working in a close association is the only solution. Although it is highly motivating to find international legal instruments, there is a dire need for more effort from both sides.
Problems such as adjustment to technological change and advances, its aftermaths (such as toxic dumping in the third world countries and its threats to the environment) are all central issues to international management which must be addressed properly. Exchange of knowledge is seen to be the solution to a number of such problems. Moreover, training of expatriates for host environment is another very important area by which challenges can be properly addressed and taken to sound settlement.
Threats to national and local culture are another area that needs to be handled adequately for higher gains. There is no doubt that growing awareness of the present and emerging challenges is one reason that the entire world must join hands to curb such evils as environmental, social, and cultural so that the entire world can live in harmony and work together for a better world.
Baker, J. C. (2003). Financing international trade. Westport, CT: Praeger, pp. 1-10.
Bird, & Stevens (2003). “Toward an emergent global culture and the effects of globalization on obsolescing national cultures”. Journal of International Management, Vol. 9, 4.
Bonache, J. (1999). “The international transfer of an idea suggestion system”. International Studies of Management & Organization. Vol. 29, 4.
Kim, K., & Slocum, W. (2007). Individucal differences and expatriate assignment effectiveness: the case of U.S.-based Korean expatriates. Journal of World Business, Vol. 43, 1, pp. 109-126.
Kummer, K. (1995). International management of hazardous wastes: The Basel Convention and related legal rules. Oxford: Clarendon Press, pp. 1-10.
Zander, I., & Solvell, O. (2000). “Cross-border innovation in the multinational corporation”. International Studies of Management & Organization. Vol: 30. 2. p. 44.