Essay On International Management
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The level of competition in the business world has been high over the last couple of decades and has increased to heights that have not been reached before. Business organizations are faced with the pressure of maintaining their competitiveness. This has led to organizations seeking more market in the international scene that in turn has led to international business. Globalization is one of the factors that have contributed to the raise in international business as it seeks to integrate the global economy (Daft & Marcic, 2013). One of the major objectives of the international business is to help organizations gain more customers so that they can make higher sales and hence higher profits. Operating in the international scene gives the organizations a competitive advantage.
The advancement of business organizations to the international scene has meant that managers need to embrace international management strategies. In simple terms, international management refers to the kind of management where one manages an organization that operates in more than one nation. In other words, it is management borders. It is a kind of management where the manager needs to posses knowledge beyond the usual management knowledge. For instance, the manager should have knowledge of the various nations where the business operates such as their cultures, the environment, and the legal structures (Daft & Marcic, 2013). This would help in planning and strategizing in that the plans will be in line with the country's nature. This article focuses on the international business environment, management interdependence as well as understanding of international culture- role and communication across borders. It will also discuss the formulation of international strategy as well as global alliances and strategy implementation.
The business organization operates in an environment that affects their performances either directly or indirectly. The business environment that surrounds organization could be categorized in two classes namely external environment and internal environment. The external environment is the environment that is outside the business organization, and the management has no influence on it. Internal environment, on the other hand, is within the organization and can be influenced by the management as well as the people within the business. The external environment can be assessed using various models such as PESTLE and Porters Five Forces.
Under PESTLE analysis, the environmental assessment is based on Political environment, economical environment, social environment, technological environment and legal environment. Different nations have different political structures. The manager should, therefore, understand these political structures as they can have a positive or a negative effect to the business organization. For instance, in the country where the political environment is not very stable, business may not perform well as compared to the performance in a politically stable nation. The tax policies, trade restrictions, labor laws as well as environmental laws in the different nations should also be assessed (Daft & Marcic, 2013). There are nations that restrict entry of certain products from outside. Also, some nations impose very high tariffs making it too expensive for international organizations. All these political factors need to be assessed to enable proper and effective strategizing and planning.
Economic factors are also essential. A nation that has good economy gives better prospects for an international business. Good economic growth means that the business is likely to grow faster as compared to other nations. Among the factors that should be assessed when assessing economic environment include; inflation rates, exchange rates, the rate of economic growth as well as the interest rates. Social environment focuses on factors such as culture. Education, life styles, demographics, and age distribution among others. Understanding of culture is very important as the manager will know the best ways to communicate with the residents of the nation and also the kind of products and services that should be offered. The management strategies in the international scene should be adjusted in such a manner that they will be in line with the social structure of the nations in which the operations are being established (Wührer & Bilgin, 2013).
The technological environment also needs to be assessed. This is because the environment in the current business world gives organizations a competitive advantage. The managers should, therefore, assess the R&D opportunities, automation as well as other technology incentives. These will ensure that the business stays competitive if the country has these factors. On the other hand, a nation that lacks these factors may not give the business an advantage.
Other factors other than the ones discussed under PESTLE include competition, customers, suppliers and threat of new entrants. The international managers should ensure that there are suppliers to the business. This will ensure that the business is well stocked at all times. It will increase the level of satisfaction to customers (Daft & Marcic, 2013). Customers are other important factors as they have a direct effect on the sales and profitability of the business. Competition also affects the business directly. The manager should assess the level of competition. When competition is less, it will better for the business as this will increase the chances of better performance in terms of sales and profitability.
Managing Interdependence- Social responsibility and ethics
Over the recent couple of years, Corporate Social responsibility has become an important tool that organizations use to gain a competitive advantage. Most organizations are embarking on activities that are meant to benefit the community as a way of compensating for the effects that they may have on the environment or as a way of giving back to the society. The rules that govern CSR are different in various nations. In international management, it is imperative for the manager to ensure that he or she understands any rules that govern social responsibility. They should also assess the effects of social responsibility to the competitiveness of the business. For instance, they should find out whether in a given nation CSR offers any competitiveness to the business organization.
Ethics has been an essential factor not only to the business organization but also to the society. It is all about what is right and what is wrong in a certain company or a certain society. People and corporates are expected to behave in the right way that does not harm anyone morally. Each company has its ethics that are normally outlined in the code of ethics (Wührer & Bilgin, 2013). On the other hand, various nations have different ethical believes. For instance, one action could be right in one nation but wrong in the other. It is, therefore, important for the manager to understand the ethics of the nations in which the organization is operating and ensure that the code of ethics of the business is in line with the national ethics. It should be noted that when a business acts in a way that is not ethical, it is likely to loose its competitiveness in the various nations.
Understanding the role of Culture
Each society or each nation has its cultures that could be different from those of other nations. Culture could be internal or external. The internal culture of an organization is what comprises the organizational culture. It refers to the behavior of people in the organization, as well as the activities that are carried out within the organization. The organizational culture is made up of the people, the values, norms, mission, and vision statements. Other components of culture are; beliefs, habits, the language used, as well as the systems and symbols used in the organization. The external culture, on the other hand, is the culture that is beyond the influence of management. It is not within the organization. Different nations have different cultures. Therefore, the organizations should ensure that the internal culture is different from the external culture.
Culture influences the buying behaviors of customers as well as their decision-making process. This is important in that it helps the organization in its marketing strategies, advertising as well as packaging and other business operations. It is, therefore, important for business international managers to assess the culture of the various nations in which the companies are operating. Managers also need to understand the modes of communication in the various nations. It can emphatically be mentioned that communication varies from one society to another and from one nation to another (Wührer & Bilgin, 2013). Communication is a factor that can either contribute to the success of a business organization and at the sane time can contribute to the failure of the business. Therefore, an international manager should be able to understand the variations in communication in different countries.
Formulating international strategies
Formulating the international strategies is important as it increases the chances of success. Julius Caesar is one of the people who were able to apply international strategies successfully, and this enabled him go through Gaul. Caesar organized a civil war that led to the end of Roman Empire. The territory was wealthy, and this made it strong. To defeat it and gain sovereignty, Caesar organized on how the possessions of those people could be taken away. This could make them weak, and it was easy for Caesar to acquire the supremacy of Gaul (Caesar, 2008). In formulating this strategy, Caesar first understood the situation and the environment of Romans. He knew their social life and the ways which could make them weak. Similarly, organizations need to understand the regions they want to enter and find out the best and the easiest ways to introduce their services and products. They should find or probably create a need to the people and provide the solution. Understanding the weak areas increases the chances of success in the event that one can be in a position to capitalize on these weaknesses.
Global Alliances and Strategy Implementation
Alliances have been applied in many set ups to increase the chances of success. In business, organizations have formed mergers and alliances so as to increase their success chances. This is especially common when a certain organization wants to enter a new market in the international market. Caesar increased his chances of going around Gaul by forming alliances. Through the alliances, he was able to convince people easily to follow his directions. He formed alliances with Marcus Messala and Marcus Piso (Caesar, 2008). Together, they masterminded the conspiracy whereby they convinced the people to take away the possessions of Orgetorix of Helvetii. After they succeeded in taking away the possessions, Caesar and his alliances took up the supremacy of Gaul. Probably, without the alliances, it could not be easy to succeed in the battle. However, forming alliances and implementing strategies together increased the chances of success.
Business organizations should, therefore, form alliances, especially when joining new markets in different countries. When a new company in a new country forms an alliance with an existing company in the nation, the chances of success are high. This is because the already existing company is known among the residents, and hence it will help the new company be known faster. It will also help it save most of the costs that are used to promote and advertise the products. International managers should embrace alliances as a strategy to succeed in the international market.