“Analysis of Challenges in International Management”
The following essay analysis the challenges in International Management with particular regard to the challenge of “culture” in international business as it is the must difficult to deal with and being essential for successful results in a wide range of global management tasks nowadays and in the future. Introduction
Today successful international management requires more than a lot of frequent flyer miles or seasoned expatriate managers. But what are those exclusive challenges of international management in today’s world? The importance of international management is constantly increasing, as we exist in a world where globalisation is affecting the traditional borders in a broad range of areas. •
Trade and investment,
The international stage players, and
The work environment
are changing rapidly, being supported by the increasing sophistication and lower cost of information technology. World trade and investments are growing fast (the volume of world trade among countries has grown at an average rate over 8% since 2005 (WTO 2008)), linking the economies and creating opportunities and threats. New, strong and forced competitors are coming from developing nations in Asia and the transitioning economies of Eastern Europe. Furthermore, the constantly rising level of foreign direct investment also has a globalising effect (Thomas 2002). Moreover, the emergence of the free-trade areas drastically decreased traditional economic boundaries. So do the three largest groups, the EU, the NAFTA, and the APEC, account for nearly half of the world’s trade (Cullen 2002) and the World Trade Organization (WTO) now has 140 member-nations, aiming to reduce tariffs and liberalize trade. But globalization also affects the work environments within organizations. Changes involve cutbacks, team-based management movements and privatization. For instance, there can be factory closings, as Nokia closing their German plant in Bochum moving to Romania, because of cheaper labour. All in all, as one key consequence of globalisation, international managers nowadays have to face a more dynamic, complex, competitive and uncertain environment and need skills (as a global mindset or the ability to work with people from diverse background) not considered necessary for domestic-only managers.
The environment of international management can be divided into •
cultural factors (Thomas 2002).
So for making decisions it is essential to understand the economic strategies of the countries in or with one wants to conduct business with, because level of economic development and quality of life differs extremely worldwide. Furthermore, there are various national sovereign laws and regulations existing in the world which have to be observed and made allowance for. And in addition, there are several varieties of political systems (e.g., theocratic totalitarianism in Saudi Arabia), containing different levels of political risks which have to be managed. For instance, decision makers have to able to estimate the degree of risk associated with a government’s involvements in business affairs depending on characteristics of their company. All these factors present impressive challenges multinational management has to face. However, the management challenge of culture and its effects on business practices and organizations is one of the most difficult to deal with. As conducting business with people from other cultures will never be easy you have to understand how culture affects management and organizations. “Culture” is a concept borrowed from cultural anthropology and there are numerous and subtle different definitions. As each definition has limitations focussing on international management the following description of Geert Hofstede seems very helpful. He defines the culture of any society as comprising shared values,...
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