Challenges of International Business Management

Topics: International business, International trade, Economics Pages: 5 (1044 words) Published: October 4, 2011

What are the challenges of International Business Management?

International business management is a term that is used collectively to describe all commercial transactions which include; •Private

The above take place between two or more nations. It involves all business activities which partake in cross border activities of goods, services and resources between nations. Private companies and the government partake in international business for profit and political reasons respectively.

Every business has its difficulties and presents is own challenges in when it comes to operating it successfully. Countries and firms that operate in the international firm undergo challenges and they prove how successful the company or country shall be.

Challenges faced in international business

The main aim of any international business is to be successful in the countries they are operating and make their products or service a global name. The challenges that are brought about by international business include: •Political system and policy

Economic policy
Legal policy
Language/ communication barrier
Environmental standards
Corporate and local culture
Foreign exchange markets
Import and export regulations
Trade agreements

All the above are the most common challenges in the international business sector that affect countries, local firms and global industries.

Challenges in international business is broad and it affects different sectors that is; 1.The firm
2.The country
3.The industry

1.The Firm and International Business

The presence of international business in the country (example – Uganda) causes strain in the local business industry. It is considered rather difficult to penetrate the local industry due to the presence of international, multinational and private companies.

The challenges brought about by international business to the local industry/firm include the following;

Less local production
Loss of domestic jobs - Certain labor-intensive industries (textile and software development industry). Increases unemployment, thus loss of jobs in domestic industry. Barriers to enter the market and the primary aspect which can badly influence to business performance. Business may need to wait for long-term gains

Financial problems

The challenges brought about in the local industry are similar to those in international businesses.

2.The Country, Industry and International Business
International business is considered to be very significant in a country and its industry due to the presence of multinational companies. International trade is the exchange of resources, goods and services between two countries. The trade can only occur when both countries are aware and are in agreement of the terms to trade. To a country and industry, international business enhances the infrastructure of the whole country. This brings about profitable investments, innovation, creation of jobs and it enhance the political and economical sector of a country. (example – The Flower industry in Kenya) However with international trade, brings about barriers and challenges in the two operating countries. Challenges the country and industry faces when attempting to trade in a different country are as follows: i) Economic factors

The host country plays an important role in the decisions of the country or industry it shall trade with. It must asses the foreign exchange control policies, the tax structure and the tax policies of the host country must be studied and considered. Some of the economic factors to be considered are:

(a) GNP, income levels of the work force and the proportion of disposable income, saving habits of the population, economic growth trends, trends in industrial development, inflation rate, interest rate.

(b) Any local financial resources...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • international business Essay
  • International Business Essay
  • International business Research Paper
  • Culture and International Business Essay
  • international business study Essay
  • international business management Essay

Become a StudyMode Member

Sign Up - It's Free