International Business Assignment: Challenges Faced By A Managers
Assessment Details: Describe, using academic references, the international challenges and possible opportunities for managers operating in a global environment.
Provide a recent practical example of an Australian organisation which has faced the challenges of international competition and expansion. You can use companies which have been in recent news, such as Qantas, or Ford, for sources.
Give your personal view of how some of the conflict generating and solutions could have been handled in a more effective process.
It is becoming difficult for the managers operating global business due to the increasing uncertainties, rapid and intense changes in the global business environment. A firm which has plans to go for international investment for production or marketing – fundamentally require effective understanding of environmental factors of that business both at home country and host country. Through analysis of internal and external factors an organization scan restrain to the situation and take necessary provision while strategizing decisions on global business for business operation. The global environmental observations involve observations of specific industry segment globally to find business opportunity. Such observation based on the objective of detecting the variations in demand conditions for goods or services globally. This can be done by defining and finding trend indicators related to the factor of observation (Gupta, 2013). A manager of the firm makes an assessment of possible opportunities by analyzing the observed data. The international business assignment will discuss the opportunities and challenges faced by the managers in operating International business. The international business assignment will also discuss the impact of the foreign environment and global environment on the investment and expansion decisions of management of multinational corporations.
Operating in Global environment
Dymsza developed a conception on evolution of internationalization which reveals that the successful managerial role is the key driving factor for effective business performance in global market. The global environmental issues of a firm to be emerged as a multinational corporation play an important role in making managerial decisions related in other countries. It is quite obvious for a manager to analyze different factors while making new business decisions. The analysis of global business environment is an essential prerequisite for strategic management and effective decision-making. Today, multinational organization is giving greater emphasis on the analysis of global business environment while expanding their business to outside their country boundary. Some of the major factors which affect the managerial business decisions of the firms include Economic issues, Political issues, Socio-cultural issues, Technological issues, and Legal issues (Ristovska & Ristovska, 2014). The economic environment is the most important parameter for managerial international business decisions. There are a number of general and useful indicators that are needed for assessing an economic environment in which most of the multinational companies operate (Burzynski, Graeml & Balbinot, 2010). Some of the indicators related to economic issues of the firm as well as the home country are listed below:
- The financial capability of the firm,
- The low-cost finance availability within the country for long-term external investment,
- The type of the economy at home country,
- Low profit in local business due to high local competition,
- Possession of quality endowments in the country of global standards,
- Skilled manpower and prior global experience lead to confidence in investment.
The political environment also plays an important role in the international business decisions to be taken by a firm. These political issues listed below have direct or an indirect influence on managerial business decisions:
- Due to changes in political conditions and changes in governing political parties and their philosophy, the Country policy and State government policies towards supporting the FDI investments are changing with time.
- In case of certain specific products with possible military applications, political environment play an important role in firms decision-making process.
- The export and import of certain materials to the subsidiaries of the firm may be banned by the country government through enhanced tariffs, or fixing quotas, or limiting FDI flow etc (Burzynski, Graeml, & Balbinot, 2010).
Considering the social issues, it is difficult for a manager working in global front to manage customers with a new set of values and lifestyles. Since the culture and tradition of a country decide consumer behavior in a given country. Apart from this, there are Technological issues such as different technological gap, where a firm decides to invest more on R & D and to get access to global technology Furthermore, the legal environment in any country for international investment and market relates to the laws and regulations governing the business decisions (Gupta, 2013).
Challenges in operating International ?
The main issues faced by the manager while making international business decisions are as follows:
- Currency Differences: Due to the differences between currencies used in different countries and also due to the fluctuation in their exchange value, there is large uncertainty in currency rate with time. Further, the firms in host country have to make all payments for their imports in host country currency (Heino, 2008).
- Difference in Natural and Geographical Conditions: Natural endowments like fresh water, raw materials, mine and minerals, soil quality, rainfall amount, weather and temperature etc. may differ drastically between different countries. Due to such changes in natural and geographical conditions, countries and their firms may specialize themselves in the production of certain commodities with high-quality and low-cost. Such specialization based high-quality low-cost products of local firms may impose challenges to the foreign firms to take investment decisions.
- The issues like availability of skilled labors and capital in host country for the firm’s business or the possible mobility of such factors of endowment from the home country are getting importance while making the international business investment decision (Hyvönen, 2013).
- Difference in Political Systems: Presently in the world, each and every country is considered as an independent political entity with its own political agenda to maintain the countries (people and firms) interest. Depending on political conditions and policies, of the country, there may be a substantial difference in the tax imposed on domestic firms and on international firms which may hinder the interest of the firms on international business investment.
- Difference in Legal Systems: The difference in legal systems between different countries makes the various business processes quite difficult especially due to the reason that they have to study and follow legal provisions of the two countries as regards to a particular trade.
- Population & Occupation Distribution: The population and its distribution, the education level and occupational distribution also differ from country to country. This leads the availability skilled and experienced employees in foreign countries. A firm which is intended to invest in another country should study the availability of skilled workers before taking decisions related to such investment (Ristovska & Ristovska, 2014).
- Transportation Infrastructure: The type, availability, and the cost of transportation systems in the host country to transport the raw materials and finished products from sources to production plant and from the production plant to market also contribute the decision on expanding the business by international investment (Katerina &Aneta, 2014).
- Scalability in Production: The increase in the scale of production gives many advantages for the firms including low unit production cost. This supports firms to increase their production by creating more demand. One of the methods to increase the demand for the firm’s products is creating more demand for such products through expanding the market share to other countries through proper international investment decisions.
- Differences in Production Costs: The cost of production of any product differs from one country to another due to various reasons which include the availability of quality natural resources, supportive geographical conditions, supportive industries, skilled employees, production in large scale, degree of automation, availability of developed technology etc. The international investment decision is strongly influenced by the cost of production in a given foreign country and the opportunity to become cost leader (Katerina &Aneta, 2014).
- Degree of Self-sufficiency: The opportunity of creating demand for its products to expand market share is the major objective of any firm while deciding on international business in a foreign country. Such opportunity of creating demand mainly depends on the degree of self-sufficiency of that foreign country and is usually, differs from country to country. Therefore, the countries which cannot produce at all or can produce only at a very high cost, are the potential host countries to attract international business investments.
Qantas International challenges
Qantas is one of the major aviation industries in Australia and is facing several external and internal problems which have effectively influenced the performance of the organization in global market. However in last few years the organization is facing three major international threats. Firstly, in 2011 the dispute raised between the organization and TWU in demand of further increase of wages and enhancement of working condition. The warning and restructuring policies of Qantas’s CEO resulted in downsizing of labor and loss of around $70 million. Secondly, in 2010 the natural disasters all around the world such as massive earthquake in Haiti & Iceland volcanic explosion have effectively influence the business performance of Qantas. Lastly the increase in petrol price in last few years left Qantas under severe financial pressure. For example, the jet fuel price in Singapore has risen from US$88 to US$131 in 2014 (Button, 2018).
Opportunities for managers operating in a global environment?
Operating in a global environment provides a wide assortment of products, technologies, and knowledge, and these expansions give a potential to spread suggestively to the larger customer bases. As a manager in MNC, global market denotes larger dimensions for sales and business, and more empowerment through the procurement of further capital and resources. These benefits are viewed as most practical, provides a best possible benefits to the manager of an MNC (Katerina & Aneta, 2014).
The common benefits of manager in operating globally include unsaturated market for the new products, lower labour costs, lower expensive natural possessions and other efforts to operational process (Kemp & Dwyer, 2003). Technological advancement plays a vital role for the managers of MNC while operating business internationally in much more convenient way. The manager seek to take advantage from globalism by marketing goods in several countries, as well as obtaining production unit in regions that can yield goods more beneficially. In other words, a manager can choose to work globally either because they can attain higher levels of profits or because they can attain a lower cost of structure within their operations.
Recomendation for effective management in International environment
Global environmental issues can be identified and monitored with the help of a checklist based procedure that evaluates every possible favorable and unfavorable factor. In general, while analyzing every factor in global environmental issues, a proper procedure has to be developed systematically to identify changes. Some of the major recommendations for manager for effective management in International environment ?are discussed below.
- Global Environmental Observation: The global environmental observations involve observations of specific industry segment globally to find business opportunity. Such observation based on the objective of detecting the variations in demand conditions for goods or services globally. This can be done by defining and finding trend indicators related to the factor of observation (Okoye & Nwaigwe, 2015).
- Global Environmental monitoring: Global environmental observation is the initial component of the global environmental analysis. After identifying critical trends and potential events during observation, the next step is called global environmental monitoring. In this stage, the identified issues and opportunities have to be repetitively observed by the manager in order to monitor the specified change indicators based on a defined purpose.
- Global Environmental assessment: In this step of the global environmental analysis, the firm makes an assessment of possible opportunities by analyzing the data. It may use various data analysis techniques available in various research methodologies.
- Global Environmental forecasting: In this stage of environmental analysis, the direction, speed, and intensity of environmental trends are predicted through environmental forecasting. The prediction for possible opportunities and threats is the focus in this stage.
In this sample solution of international business assignment a detailed analysis is done by referring to the academic theories which helped us to arrive at an accurate inference. It is known that the international business management is a risky process due to many unanticipated environmental changes and environmental factors which effects the successful management of the foreign business of a firm as sustainable for long time. Although in this international business assignment it is found that it is extremely difficult for the today’s managers operating global business due to the increasing uncertainties, rapid and intense changes in the global business environment. However, the issues corresponding to the global environment for managerial business decisions can be analyzed using Global environmental Observation, Global environmental monitoring, and Global environmental assessment and Global environmental forecasting. This procedure of global environmental analysis in this international business assignment allows manager to take optimum decisions in international business for sustainable profit. International business assignments are being prepared by our business assignment help experts from top universities which let us to provide you a reliable assignment help service.