Impor Importa tance nce of Inter Interna natio tional nal Manag Managem emen ent. t. Wh What at is the impl implica icati tion on of Inter Internat nation ional al Manag Managem emen entt for Devel Develop oped ed Count Countrie ries, s, Deve Develo lopin ping g Count Countri ries es and Le Less ss Devel Develope oped d Countries.
The management of business operations for an organization that conducts business in more than one country. International management requires knowledge and skills above and beyond normal business expertise, ex pertise, such as familiarity with the business regulations of the nations in which the organization operates, understanding of local customs and laws, and the capability to conduct transactions that may involve multiple currencies. As trade barriers recede and businesses in developed economies increasingly pursue market opportunities abroad, competency and effectiveness in international management are paramount skills at many companies. The issues involved in international management span the whole gamut of those concerning management in general, but there are several areas of special interest, including
international finance and currency matters cros cross! s!cu culltural ural comm commun uniicat cation ion market mar keting ing implications#
and and
unde unders rsta tand ndin ing g
foreign legal requirements and accounting practices
global strategy
international competition
"inc "inclludi uding international
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In the $%&'s, the world(s leading industrialized nations began an era of cooperation in which they capitalized on the benefits of working together to improve their individual economies. They continued to seek individual comparative advantages, i.e., a nation(s ability to produce some products more cheaply or better than it can others, but within the confines of international cooperation. In the $%%'s these trends continued, and in many cases accelerated. )ountries negotiated trade pacts such as the $orth (merican &ree Trade (greement (greement *$(&T(+, *$(&T(+, and the #eneral (greement on Tariffs and Trade *#(TT+, or formed economic communities such as the the !uropean nion. These pacts and communities communities created new marketing marketing opportunities opportunities in the respective markets by decreasing trade duties and other barriers to cross!border commerce. They opened the door through which companies of all sizes and in various aspects of business entered the international market. The *nited +tates benefited extensively from the expanded global economic activity. activity. I$T!"$(TI%$(L I$T!"$(TI%$(L '-I$!-- M%D!LImporte/port businesses. Independent agents, licenses, and franchises.
0oint ventures 'uying a stake in a foreign affiliate. Multinational corporations. (11"%(C!- T% I$T!"$(TI%$(L M($(#!M!$T
There are three approaches to international management ethnocentric, polycentric, and geocentric. ach has its advantages and disadvantages. -one of these theories can be successful, however, unless managers understand completely the nuances involved in their applications. The ethnocentric approach is one in which management uses the same style and practices that work in their own headquarters or home country. +uch an approach may leave managers open to devastating mistakes, because what works in the *nited +tates, for example, may not necessarily work in apan. There are many cases in which companies made grievous errors when they attempted to transfer their management styles to foreign countries. /or example, 0rocter 1 2amble )o. lost 345 million in apan between $%67 and $%&8 because its managers would not listen to apanese advisors. The company ran ads for its )amay soap in which a apanese man meeting a apanese woman for the first time compared her skin to that of a porcelain doll.
In contrast to ethnocentric management is the polycentric management theory . In this approach, management staffs its 2orkforce in foreign countries with as many local people as possible. The theory is simple local people know best the host country(s culture, language, and work ethic. Thus, they are the ideal candidates for management. This approach works well in some countries. The third style of international management is the geocentric approach . This theory holds that the best individuals, regardless country origin, should be placed in management positions. This philosophy maintains that business problems are the same regardless of where in the world they occur. International management (ffects Developed Countries
The phenomenon of International management began in a primitive form when humans first settled into different areas of the world9 however, it has shown a rather steady and rapid progress in recent times and has become an international dynamic which, due to technological advancements, has increased in speed and scale, so that countries in all five continents have been affected and engaged. The goal of International management is to provide organizations a superior competitive position with lower operating costs, to gain greater numbers of products, services and consumers. This approach to competition is gained via diversification of resources, the creation and development of new investment opportunities by opening up additional markets, and accessing new raw materials and resources. Industrialized or developed nations are specific countries with a high level of economic development and meet certain socioeconomic criteria based on economic theory, such as gross domestic product "2:0#, industrialization and human development index ";:I# as defined by the International
rganization "=T>#. *sing these definitions, some industrialized countries are *nited
?ingdom, @elgium, :enmark, /inland, /rance, 2ermany, apan, uxembourg, -orway, +weden, +witzerland and the *nited +tates. The !conomic Impact on Developed $ations
International management compels businesses to adapt to different strategies based on new ideological trends that try to balance rights and interests of both the individual and the community as a whole. This change enables businesses to compete worldwide and also signifies a dramatic change for business leaders, labor and management by legitimately accepting the participation of workers and government in developing and implementing company policies and strategies. In a global economy, power is the ability of a company to command both tangible and intangible assets that create customer loyalty, regardless of location. Independent of size or geographic location, a company can meet global standards and tap into global networks, thrive and act as a world class thinker, maker and trader , by using its greatest assets its concepts, competence and connections.
'eneficial !ffects
+ome economists have a positive outlook regarding the net effects of International management on economic growth. These effects have been analyzed over the years by several studies attempting to measure the impact of International management on various nations( economies using variables such as trade, capital flows and their openness, 2:0 per capita, foreign direct investment "/:I# and more. Trade among nations via the use of comparative advantage promotes growth, which is attributed to a strong correlation between the openness to trade flows and the affect on economic growth and economic performance. Additionally there is a strong positive relation between capital flows and their impact on economic growth.
armful !ffects
-on!economists and the wide public expect the costs associated with International management to outweigh the benefits, especially in the short!run. ess wealthy countries from those among the industrialized nations may not have the same highly!accentuated beneficial effect from International management as more wealthy countries, measured by 2:0 per capita etc. Although free trade increases opportunities for international trade, it also increases the risk of failure for smaller companies that cannot compete globally. Additionally, free trade may drive up production and labor costs, including higher wages for more skilled workforce, which again can lead to outsourcing of Bobs from countries with higher wages. :omestic industries in some countries may be endangered due to comparative or absolute advantage of other countries in specific industries. Another possible danger and harmful effect is
the overuse and abuse of natural resources to meet new higher demands in the production of goods. The !conomic Impact on Developing $ations
International management has also brought up new challenges such as, environmental deteriorations, instability in commercial and financial markets, increase inequity across and within nations. The positive and negative impact of International management on developing nations in the following proportions9 $! conomic and Trade 0rocesses /ield 4! ducation and ;ealth +ystems 7! )ulture ffects International management helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers. They cannot share the same economic growth that developed countries had. ;owever, with International management the =orld @ank and International ne the most important advantages of International management are goods and people are transported easier and faster as a result free trade between countries has increased, and it decreased the possibility of war between countries 4! ducation and ;ealth +ystems International management contributed to develop the health and education systems in the developing countries. =e can clearly see that education has increased in recent years, because International management has a catalyst to the Bobs that require higher skills set. This demand allowed people to gain higher education. ;ealth and education are basic obBectives to improve any nations, and there are strong relationships between economic growth and health and education systems. Through growth in economic, living standards and life expectancy for the developing nations certainly get better. =ith more fortunes poor nations are able to supply good health care services and sanitation to their people. In addition, the government of developing countries can provide more money for health and education to the poor, which led to decrease the rates of illiteracy. 7! )ulture ffects
International management has many benefits and detriment to the culture in the developing countries.
=e are living at a time when f course, the original assumption of microeconomics is that the consumer has a certain priority for his commodity preferences milk before bread, bread before eggs, eggs before bacon, etc. @ut, a fair question may well be! why introduce the subBect of microeconomics in a discussion of free trade. The simple answer is that free trade can only be successfully managed when the needs of the consumer and his ability to satisfy those needs with purchases are taken into consideration. It is the old DmarketingE clich of selling refrigerators to skimos. If /ree Trade is to be successful with, and among, the less developed countries that trade has to include goods that can be easily purchased, rather than stored in some massive inventory for future use. -igeria, for example, has oil to export. It needs no fuel to import. @ut, it does need tools and materials to improve its infrastructure. +o, a trade for paving materials, additional cement factories, buses andJor railroads to transport goods and workers, and appliances for those -igerians in the labor force who need an incentive to remain on the Bob and not mobile, moving from place to place to seek other work. =e need to pause in the aspect of examining /ree Trade and how it affects the less developed countries to realize that the whole notion of Dless developedEK stands for a lack of a trained and effective labor force. =e have none
other than Adam +mith to look to, for the assumption that DlaborE is the most important means of Budging the riches of a nation. +mith sees two DcircumstancesE Another positive view of free trade states To minimize conflicts in the future, we should aim to create a world in which people are free to buy what they want, live and work where they choose, and invest and produce where conditions seem the most propitiousL.=ould!be traders should encounter no restrictions or barriers to trade within and across national bordersLE There are opposing viewpoints to /ree Trade. -eedless to say, we are all familiar with the anti!-A/TA diatribes of Moss 0erot. @ut there are many who feel that free trade, as it is now constituted, is harmful. DThe world has never had a genuinely free and fair trading system. ver since people argued whether trade follows the flag or the flag follows trade, trade has been based on domination and dependency, and has been an instrument of them.E The Asian nations, for example, have an option. DIn ast Asia, intra!Asian trade is now on the same level as trade across the 0acific and is likely to grow much faster as Asian nations reduce their trade barriers and take advantage of one anotherGs prosperity.E$% The Asian nations are also now willing and able to spend more on research and development. DThere is significant untapped technological promiseL-N the * or its member nations, but should be primarily concerned with the building of a stable and growing economy in that :). This may be an extremely difficult item to control, since the purpose of the investment is to gain an economic advantage. )apital flow is not philanthropy any more. 2overnments will no longer shield corporations from a conflict with the rules and regulations covering foreign aid, for example. 7. /raud, bribery, kick!backs, private enrichment of government officials must be avoided. There has to be an ethical and moral standard for capital investment. If the =T> or the *- cannot provide such safeguards, then the entire international system of building :)s is lost. =e cannot
continue ! in the 4$st )entury to see :)s as Dbanana republicsE, those feeble moral and ethical characters reminiscent of 2raham 2reene. =e cannot continue to cause +outh ast Asian nations to see *.+. involvement as the intrusive D*gly AmericanE. K. =hile there are still the Dold boys clubE investors and risk takers who see the :)s as a playground for dollars or pounds sterling or francs, these nations must be treated in a way that the investment and capital flow goal is to permit the investment to be returned, and the :) able to stand on its own two economic feet. )apital investment is not an DallowanceE for doing Dgood thingsE for the investor. It is like moving from walker to crutch, from crutch to cane, from cane to an orthopedic shoe, and then complete freedom to walk or run. 5. The motivation for investment must be a obBective one, not based on traditional or ethnic preferences. It can be a case of the wolf lying down with the sheep and reaching an entente. All too often, the :)s are seen as being DdifferentE from the =estern world because of the religion, habits, customs, history, ethnic and moral standards which may well differ from =estern outlook on things. In short, we cannot bind :)s with our own moral and traditional precepts. As has been said several times now, these nations do not want to be bullied. >n the other hand, investors from the =est do not want to transfer funds in eight and nine!digit amounts and, at the same time, wink at what they might consider the amorality of the deal.
