Abstract
The growth of the global business is accompanied by increasing complexity as well as an increase in the number and types of risks faced by corporations. Unpredicted extreme events such as terrorist attacks and natural disasters continue to occur, further adding to the problems corporations face. The global economic crisis of 2008-2009 is an example of how extreme events have affected businesses throughout the globe. Although the crisis had been predicted by some, its timing and impact were greater than what had been foreseen before 2008. The analysis of the global financial crisis by many researchers and financial analysts has brought to light the inadequacy of good management practices and in some cases the application of poor management practices.
Introduction
The global expansion of any company requires wise strategic management. It is very important for the company’s leadership to develop such a strategic management plan which will take into consideration political and economical issues that might arise during the process of global expansion. In the following paper, a few major political and economical issues that the company under consideration may face during its expansion will be considered. Generally, evaluating the situation currently existing in the world including France (the country of the company’s expansion) it appears that possible problems may occur in the area of crediting, tax collecting, and cooperating with local governments.
Political and Economical Issues that may Rise during Global Expansion
Indeed, the global economical crisis brought to light several weaknesses of risk management practices that are to be implemented during creating a strategic management plan (Shah, 2012). The credit crisis affected most global financial institutions. Nevertheless, some financial institutions performed better than others, indicating differences in risk management practices. To a certain extent, a strategic risk management culture should incorporate broad business goals into risk-aware decision-making. Risk management should not be left to an independent function but rather it should penetrate the culture of the organization in its entirety to ensure its effectiveness in minimizing risk. As a result, developing its strategic plan, the leadership of the painting company under consideration should remember about the economical problem of crediting system (Johnson, & Turner, 2009).
In addition, the other important economical issue which is to be considered in the strategic plan is constant changes in the sphere of the transportation business. The company’s activity will be definitely connected with transporting different objects related to its business to the new areas. For this reason, it is very important for the company to include the regulations which will help it cope with possible transportation risks.
Next, the company may face such a global political issue as revolutions taking place in a number of lands beginning from the 2000s (Shah, 2012). This issue is very important as with the change of current authority in the country its economical laws and policies change which might greatly affect the company’s business (Deresky, 2007).
Further, the strategic plan is to address such political issues as the war on terror (Shah, 2012). Unfortunately, a number of companies appear to have significant losses in their business as a result of the activity of terroristic groups.
The Company’s Expansion to France
Getting entry and success in the France Market is a serious task. It is related to a number of serious issues. France has rather strict legislation for tax collecting which is aimed to protect its local companies (Wallerstein, 2009). Thus, the leadership of the company is to develop strategies helping to overcome this difficulty.
Positive Example of the Company that Handled its International Expansion Issues
Harvey Industries is a Canadian company specializing in high-pressure washer systems sales and repair. In 2007, the company’s management decided that the time for global expansion has come. Organizing its activity in European countries, the company’s leadership faced a problem of tax protection which local governments provided for their local enterprises. Initially, this became an issue for the competitive ability of the company’s prices. However, working on this issue the company’s leaders developed effective strategies helping them make their products and services cheaper. This strategy assisted the company’s successful operation in more than 45 countries of the world by now.
Conclusion
. In sum, the recent global financial crisis had many lessons for businesses, and most especially for management. Many business management practices that were considered as “best practices” were put into question. The management practices adopted made the difference between the firms that survived the credit crisis and those that collapsed. This proved the importance of developing strategic management for the company’s expansion. Such strategic management should consider major political and economical issues that might prevent the company’s success. Evaluating the situation for the company under consideration, it appears that the major issues its leaders should address in their strategic plan are crediting crisis existing in the world after the global economic crisis of 2008; changes in the sphere of transportation business; possible revolutions in different regions of the world causing a lot of financial losses; and the threat of the world’s terrorism which often causes a lot of harm for the companies work in the affected regions.
References
Deresky, H. (2007). International Management: Managing Across Borders and Cultures, 6th ed. The United Kingdom: Pearson, PLC.
Johnson, D., & Turner, C. (2009). International Business: Themes and Issues in the Modern Global Economy. London: Routledge.
Shah, A. (2012). Geopolitics. Web.
Wallerstein, I. (2009). Emerging Issues in the 21st Century World-System: Crises and Resistance in the 21st Century World-System (W. A. Dunaway, Ed.). Westport, CT: Praeger.