The modern business environment combines diverse cultures, customers, and social behavior that affects international operations. Cultural sensitivity has become a top priority for global businesses to overcome the cultural and social forces (Zapp, 2019). They engage in diversity training to enable their employees to identify hidden prejudices, biases, and other obstacles and create opportunities to learn how to embrace diversity. Furthermore, prior to conducting business operations in a new market, international business has made a habit of understanding cultural and social practices that might adversely hinder their operations (Zapp, 2019). Global organizations are adopting open communication to manage people from different cultures effectively. Therefore, international businesses confront social and cultural forces by engaging in operations that promote cultural integration.
International businesses have adopted mechanisms to counter the effects of demographic, political, governmental, and environmental forces. They undertake market research on the external business environment to determine the aspects that adversely impact the performance of the business (Vlados & Chatzinikolaou, 2019). Prior knowledge of demographic factors such as age, gender, and income help an organization develop products and strategies that align with forces. In addition, analyzing the political environment and extent of government involvement reveal the aspects that could impact business operations. An organization will use outcomes obtained from environmental analysis to identify whether to venture into the market or not (Vlados & Chatzinikolaou, 2019). As a result, the analysis of external forces is among the approaches adopted by international businesses to mitigate the forces.
Legal and competitive forces are confronted by involving experts’ opinions. Seeking professional guidance benefits gaining great insights from people and organizations that know exactly what the organization needs to know while receiving objective, precise, and valuable answers (Reid & Sanders, 2019). In addition, experts in finance, legal aspects, marketing, green technology, and a variety of other businesses related to the circular, impact, and sustainability sectors will assist businesses in avoiding mistakes that could prohibit them from attaining goals. For example, an organization can hire an attorney practicing in the identified country to help them with legal interpretation. Thus, legal and competitive forces experts offer information that businesses would use to make informed decisions.
Language, Culture, and Value Systems
Countries have a unique language characterized by differences in words, pronunciation, tone, and dialect. For example, in the US, the language is English, while people in China speak the Chinese language, which is different. Furthermore, culture differs from country to country because it is influenced by shared experience, history, and environment (Altan, 2018). For example, Saudi Arabian individuals do not embrace punctuality, while in China and westerners, punctuality is valued. In addition, the value systems differ from country to country. For example, some countries have high regard for humane actions and disregard immoral behaviors such as corruption, while others create a platform that supports unethical conduct (Altan, 2018). Therefore, countries across the globe have their language, cultural beliefs, and values that influence their behaviors and interaction locally and internationally.
Language, culture, and value systems impact people’s communication and management. The most noticeable barrier to communication is a difference in language (Altan, 2018). Two people who speak different languages cannot share information and understand each other. For instance, a person from the US goes to Japan and does not know how to speak the Japanese language, and most Japanese do not know how to speak English. In addition, people from different cultures and with varied values can be hard to manage because they have different points of view, needs, and expectations, which can show up in different ways on multicultural teams (Altan, 2018). Therefore, culture, language, and value systems make communicating and managing individuals difficult.
The Role of Regional Organizations
A good understanding of regional organization is a concept that plays an integral role in the success of an international business. Firstly, it enables an organization to make an informed decision regarding expansion (Kurdi & S Ahmad, 2019). In addition, regional organizations develop reforms and agreements that businesses can use to enhance their operations. Secondly, it will help to create a cooperative environment where regions are not competing for block-to-block but are becoming building blocks of a reformed new multilateral governance system. Finally, a good understanding of regional organization will allow organizations to venture in environments that support their operations (Kurdi & S Ahmad, 2019). As a result, an effective investment approach will depend on the information a business has regarding an organization of regions.
Regional integration is a complex and creative process that can assist an international organization in enhancing its success. When countries in a given region work together, a business finds a conducive environment to expand into the market (Kurdi & S Ahmad, 2019). The different FTAs are part of a long-term plan by the African Union to turn the whole continent of Africa into one economic bloc. As a result, foreign investors, such as global businesses, can use economic integration. Several regional organizations have helped improve and upgrade foreign investment protection in Africa and continue to promote international organizations. However, the structures of these organizations’ institutions are different, and the legal agreements they have made are different.
The Impact of Having Two or More Monetary Systems
Dealing with more than one monetary system has an adverse impact on international business operations. There is a possibility of coordination problems which leads to an unfriendly environment for businesses (Gourinchas et al., 2019). This can reduce the quality of the currency of a country. Based on this, current fluctuations affect the ability of an international business to thrive and expand its operations to different countries. An organization with more than one monetary system will likely maintain the status quo due to confusion on which monetary policy to adopt. This leads to unsuitable legislation that does not support contemporary international trade (Gourinchas et al., 2019). Therefore, an organization needs to use one monetary system at a time to enhance its effectiveness.
Foreign Operations
Foreign operations enable an organization to establish low-cost production facilities near raw materials and cheap labor. Joint venture promotes sharing of resources and responsibilities. When two or more organizations agree to work together, the main goal is to reduce production costs (Luo et al., 2019). A company usually joins a joint venture because it does not have the knowledge, money, technology, or access to a specific market that it needs to do the project on its own and be successful. The venture is based on the fact that a local firm can access cheap labor and material to support the production process. A subsidiary enables an organization to access a new market through the locals. It gives a firm the ability to access human resources and raw materials.
References
Altan, M. Z. (2018). Intercultural sensitivity. Journal of Intercultural Communication, 46(1), 1-17.
Gourinchas, P. O., Rey, H., & Sauzet, M. (2019). The international monetary and financial system.Annual Review of Economics, 11, 859-893.
Kurdi, O., & S Ahmad, B. (2019). Integration of decisions of global organizations with decisions of regional organizations. Journal of College of Law for Legal and Political Sciences, 8, 20-47.
Luo, Y., Zhang, H., & Bu, J. (2019). Developed country MNEs investing in developing economies: Progress and prospect. Journal of International Business Studies, 50(4), 633-667.
Reid, R. D., & Sanders, N. R. (2019). Operations management: an integrated approach. John Wiley & Sons.
Vlados, C., & Chatzinikolaou, D. (2019). Methodological redirections for an evolutionary approach to the external business environment.Journal Management & Sustainability, 9, 25.
Zapp, M. (2019). International organizations, educational development, and conflict: A (world) cultural perspective. Prospects, 47(4), 321-337.