The 21st century business environment has been highly complex because of increasing number of businesses performing expansion into international markets with a view to achieve higher growth in their business. Globalization has become the buzzword among businesses as they are performing expansion of their business activities in international markets with a view to achieve higher level of growth in their operations. Further, the limited opportunities as available within their domestic environment have also contributed towards higher level of globalization of activities by these businesses. Although they are performing expansion of their business activities into such international markets, yet an important area of concern to them is mainly with respect to performing the management of their business processes in such a diverse business environment condition. There are various challenges to which businesses are confronted to while performing the management of their business activities in such international markets and this is mainly because of completely different external environment condition in such markets from that of their domestic market (Venter, Hough, Neuland, Erwee and Lange, 2009).
This essay is aimed at performing an analysis of the various major challenges that managers confront to while managing their business activities at international level. The important challenges will be identified through performing a critical analysis of the existing literature and based on the findings; it will be summarized in the conclusion section of this essay.
Major Challenges Facing Managers of Multi-National Operations
An analysis of the existing literature indicates that the managers of multi national corporations are confronted with significant level of challenges. This is mainly because of large number of factors and this section of the analysis is focused towards analyzing different important aspects related to such challenges as faced by managers. The important challenges as confronted by them in the management of global operations are discussed as follows:
Cross-Cultural Management Challenges: This has been an important and the most crucial challenge that is faced by managers while performing the management of global business operation. Cross cultural challenge is mainly a challenge because of the cultural incompatibility as faced by managers in the global business context. The culture of each country differs significantly from that of another and this often poses challenges to the management in performing the successful management of its business activities across the international business environment in an efficient manner. Cross cultural challenge is a massive challenge to managers in global operations and this is mainly because of differences with respect to the cultural values and styles as prevailing across different country environment. As indicated by DuBrin (2011), cross cultural management is an important area that poses significant level of threats to the managers in performing the management of their global operations.
This is mainly because the value, norms and policies are different across different cultural environment. As for instance, in managing the global business operations, the managers are required to devise appropriate marketing strategies in creating adequate awareness among their target customers in such international markets, in order to persuade them to buy the products and services offerings as made by the business. However, an important factor that these global managers are required to consider is the diverse cultural values and norms as prevalent across such international markets. This has been a major challenge to the global manager because incorporating the international cultural norms and values require them to have in-depth understanding of such diverse cultural values and principles (Gannon and Newman, 2002).
There are various such examples whereby the global managers failed to fully understand the cultural differences in the international business environment which has adversely affected their reputation. Some of these examples include the case of Coca Cola whereby its managers failed to understand the cultural norms that are prevalent across the international markets and this leads to marketing initiatives undertaken by them which has adversely affected the reputation of the company. As for instance, Coca Cola’s global manager has adopted a strategy of marketing its products and services in Dutch market as ‘refresh yourself’ within its tagline, but as per the Dutch culture, it has different meaning. The Dutch people have considered it as washing their hands with Coca Cola. This implies that the non consideration of cultural values across international markets adversely affects the image of the organization, and this necessitates it for the global managers that they should make adequate consideration with respect to such cultural differences that persists across international boundaries (Long, 2004).
The cross cultural management issue has been a major issue facing the global managers because it not only affects one particular business area, but its relevance is there in respect to other major areas of business operations. As for instance, apart from the marketing activities, the impact of cross cultural management issue is evident in other major areas of the business. The cross cultural issue is evident in respect to the management of workforce because the global managers have to work with employees from different cultural backgrounds (Tihanyi, Griffith and Russell, 2005). Since the international management of business activities is performed by majority of the businesses through considering the hiring of locals, this leads to the employees from diverse background and their management has been highly difficult. Management mostly considers the application of their standardized global culture which often creates problems for the diverse people to accept and this ultimately creates difficulties to the global managers in performing the efficient management of their diverse employees (Primecz, Romani and Sackmann, 2011).
Apart from this, there are various other issues to which global managers are confronted to in respect to international business, and this can be in terms of language barriers. The differences in the language also creates problem for the global managers to perform efficient coordination with their employees across international branches and they also finds it difficult to coordinate well with their customers. The resulting impact is inefficient overall management of their customers and it therefore adversely affects the performance of the entire business in an adverse manner. These are the major issues that are faced by global managers in performing their operations across international boundaries, and all these issues are mainly because of cultural differences that are faced by them across international boundaries. The differences in the national culture from that of global diversity therefore pose threats to the performance of global managers in a successful manner (Gannon and Newman, 2002).
Ethical Considerations: This is another major issue confronted by the global managers in performing the management of their business practices across international markets. The global managers are required to take into consideration various important aspects related to ethics in performing the management of their business operations across international boundaries. The task of maintaining ethics has been highly difficult because the policies, procedures, laws, regulations as prevalent in one country varies significantly with that of other, and this have higher overall chances of ethical issues to businesses. The chances of non compliances with the applicable legal rules and policies are significantly higher and this often results into significant challenges to them in performing their business practices in a highly ethical manner. Thus, the ethical considerations are significantly higher and because of differences in policies and legal norms across international boundaries, the issue of performing business activities in a highly ethical manner is highly difficult (Pablos, 2004).
As indicated by Honeycutt, Ford and Simintiras (2003), the legal challenges are highly applicable to the global managers performing the management of their business activities at international level. As for instance, the main focus of the businesses should remain on providing products and services that best accounts for adequate value of money to the customers. However, in ensuring so, it is highly essential that the needs and preferences of customers should be well known in advance. By having an understanding of their needs and preferences, these global managers can ensure the development of their products that better caters to the needs and expectations of their customers. But it has been highly difficult for the global managers to identify the exact needs and preferences of their customers at international levels and this often leads to the development of products and services that are not suited to such international customers. They often create ethical issues in the sense that the products are categorized as non equivalent to the local standards (Honeycutt, Ford and Simintiras, 2003).
The ethical issues are also applicable to the global managers in the sense that they work in a completely different working environment conditions in global market and this often leads to their non compliance with various major areas of business activities. As for instance, some countries pay higher level of importance to the social and environmental performance. There are regulatory authorities that monitors the activities of companies with respect to the business activities as carried out by them and their impact over the environment conditions. The customers also shows higher preference level towards the products and services as offered by companies that adopts a higher societal and environmental approach in performing their business activities. However, the higher profit motive of the global managers often leads to lower overall attention towards such environmental and societal performance which often creates ethical concerns to the company (Goerzen, Asmussen and Nielsen, 2013).
Leadership Issues: Efficient leadership skill is highly essential within global managers because they need to lead the people from different culture. The leadership style as followed by them across their local or domestic country environment would not prove to be successful in the context of international environment conditions. It is therefore essential that leaders should make proper assessment of the environmental and working conditions across international business environment and they need to make adjustments to their approach of managing international workers through adapting a different leadership style. A welcome attitude towards diverse culture is highly important in becoming an efficient global leader. Such global leaders much encourage and inspire other workers in another country about the future of multinational corporations. Good interpersonal relations are required for the purpose of managing diverse groups of teams from different cultural backgrounds and at the same time, the global leader must also adapt positive initiative towards higher overall success and should be highly oriented towards higher overall success. The issue to the global leaders is therefore the need to monitor their business activities in a different manner across international boundaries. They need to consider wide number of areas and the culturally diverse environment in particular necessitates them to adapt different leadership styles in handling different types of employees (Mcfarlin and Sweeney, 2008).
Managing Currency Fluctuations: This is another international management challenges facing the managers of multinational operations i.e. to perform the management of risk from currency fluctuations. The multinational companies have their operations in more than one country and this exposes them to significant level of currency exchange rate risk. Currency exchange rate risk is mainly the risk faced by businesses from fluctuations in the currency and this therefore affects the profitability performance. The global managers are therefore required to be faced with such issues that arise from changes in the currency rates and they need to devise appropriate strategies through which they can efficiently monitor and manage such fluctuations in currency to achieve better overall profitability performance. The impact of currency fluctuation is direct over the performance of the entire business and it therefore becomes a major issue for the managers to ensure that they are highly protected from such issue in a positive manner. An important strategy that could be applied by them in dealing with such issue of currency fluctuations is mainly the hedging strategy which allows for the management of risks from currency fluctuation in a positive manner (DuBrin, 2011).
Copying with the Risk of Imitation and Dangerous Products- This is a major challenge to global managers in performing the management of their business activities in international markets i.e. the risk of imitation of their key product features by others across such markets. The legal rules as applicable with respect to the protection of trade and copyrights differs significantly across nations and it is therefore essential for the global managers that they should made adequate level of efforts in understanding the trademark and copyright rules as applicable in the target market. This is mainly because the risk of imitating the key product features or its competitiveness is higher within international business environment conditions and the resulting impact would be lack of appropriate level of importance to the products and services offerings as made by company. Hence the global manager is required to make adequate level of consideration with respect to the applicability of risks from imitation across the global markets (DuBrin, 2011).
Apart from the challenge of protecting the products and services offering from the risk of imitation, the global managers are also confronted with the challenge of assigning the tagline of dangerous products to their products and services offerings. This is mainly because the products that have been highly successful in the domestic market might not prove to be highly successful in respect to global markets, and as a result, it is highly essential that there should be adequate measures that should be adopted to ensure that the needs and preferences of customers in such new market environment are properly understood and the offerings of products and services should therefore be accordingly performed. This indicates the existence of significant level of responsibility on the global managers across the international boundaries which make it extremely challenging and difficult to them in achieving higher level of effectiveness in their operations (Conklin, 2010).
A critical analysis of the challenges confronting managers in performing the management of global operations of their business across multinational environment is performed in this essay and the performance of analysis revealed significant findings concerning the various such challenges to which global managers are exposed. As for instance, it has been evaluated that the globalization of business activities is performed at a rapid pace by businesses and this has affected their performance in terms of higher overall exposure to significant level of risks to them. The management of business activities across international markets has been extremely difficult since because there are large number of challenges to which global managers are directly exposed. The analysis leads to identification that the most significant challenge is mainly from the cross cultural environment conditions that managers have to face across international environment. This affects all their business activities ranging from marketing functions to the management of human resources within organization. The analysis has also indicated about large number of challenges to global managers in performing the management of their business functions across international boundaries and the major ones as identified include the ethical considerations, leadership issues across such international business environment conditions, managing the issue of currency fluctuation, and also copying with the risk of imitation and dangerous products by the managers. These are the major challenges that global managers have to face in performing the management of their global operations in an efficient manner.