International Business Challenges And Opportunities For Managers: An Essay.

International Challenges and Possible Opportunities for Managers Operating in a Global Environment

Discuss about the International Business for Journal of Human Resource Management.

International business can be defined as conducting transactions and trades at the international level. It includes the trade of technology, products, services, knowledge and/ or capital. Cross border transactions are involved in the international business relating to goods and services between countries. For the purpose of conducting the business overseas, it is essential that the companies should be aware of the factors due to which the business activities are affected such as political systems, legal systems, accounting standards, living standards, local cultures, labor standards, environmental standards, etc. a number of functions are performed by the international managers for adjusting the business within the environment of a new country (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014).

This report focuses on the international challenges and opportunities for the managers while operating in the global environment. Moreover, it provides the practical example of Qantas that faced challenges as a result of international competition and expansion. Furthermore, the report offers personal view regarding the manner in which the conflicts and solutions can be handled effectively.

The international managers should consider the social, economic and political climate of the region where the organization is planning to function. There are a number of challenges faced by the international managers while operating in a global environment.

Language Barriers- Every successful business considers communication as the key factor. Therefore, a certain level of fluency in the local language should be given preference. In case, the managers do not have basic knowledge regarding the local language of the country, it can prove to be costly and dangerous. Moreover, the instructions given to the employees will not be communicated properly   regarding the operation of new piece of machinery and the details given will be lost in translation due to the existence of language barriers.  This can often result in the damaged equipment or injury to the employee. However, such incidents can be prevented by way of taking an immersion course in the local language of the country for the purpose of improving the ability to communicate properly (Stahl & Tung, 2015).

Cultural Differences- the operation of the business in a foreign country requires a proper understanding regarding the local culture. The communication by a manager with his clients is also affected as a result of lack of proper understanding of the culture. Moreover, this also ends up in affecting the negotiating abilities of the manager with other businesses. Some business practices is considered to be common is one country while it is considered to be an insult in another. Therefore, the formal etiquettes of performing the duties must be learned by the international managers (Forsgren & Johanson, 2014).

Practical Example of Organization that has faced Challenges of International Competition and Expansion

Currency Issues-   an international manager is required to deal with foreign currencies at the tie of operating overseas. For the purpose of completing the transactions effectively and efficiently, the manager is required to keep up with the conversion rates and current exchange rates.   The mistakes made by the managers in the accounts due to incorrect calculations can often result legal complications and false reporting. This can even result in legal complications and false reporting. Misappropriations and other related issues can be prevented by way of developing a company- wide policy for the purpose of instructing the employees regarding the accounting practices that involve foreign currency including the review of the closing procedures at the end of the month thoroughly (Cano- Kollmann, Cantwell, Hannigan Mudambi & Song, 2016).   

Laws and Regulations- if proper attention is not paid by the international managers towards the legalities and regulations that govern the country in which the business is operating, it can weaken the business and can create serious challenges in front of the managers.  Tax laws, government controls and standards for health and safety vary from country to country. Therefore, it is the job of the international managers to properly understand the laws that affect the operations of their business.  Necessary research is required to be conducted by the managers along with the communication of the expectations and findings throughout the organization. Shift in the state of the economy and political power can often lead to changes in certain areas. For avoiding the pitfalls, the managers are required to stay updated with the circumstances of the country.

On the other hand, there are some opportunities for the managers while operating in the global environment.

Economies of Scale- while expanding the operations internationally, the international managers are capable of reducing the total costs of the products of the business along with integrating the results of critical resource functions in economies of scale. Core competencies can be attained by the organizations through knowledge and resource sharing with other countries through the international market. Knowledge sharing helps in the efficient production of goods and services along with the expansion of its operations.  

Increased market size- The international managers get an opportunity to increase the size of the business in the international market by making requisite investment in research and development. Such investment is made by the managers in the countries having scientific knowledge for the purpose of gaining competitive advantage. The managers can prefer an international strategy for earning profits and expanding their operations across the world (Brannen, Piekkari & Tietze, 2014).

Handling of Conflict Generation and Solutions

Return on Investment- there is an opportunity for the managers to increase the return on investment for the business particularly for capital intensive investments such as research and development or plant and capital equipment. Managers will get a change to enhance the operations in an efficient manner in terms of expenditures relating to research and development and capital investments (Deresky, 2017).

 Due to the increase in competition and expansion of the companies in the global market, various organizations face challenges for survival.  Qantas which is the biggest airline of Australia and a largest travel agent had faced immense competition in the recent times due to the reduction in air fares and adding of more capacity by the carriers. Also, the number of international flights has also increased rapidly in the past few years which in turn had forced the existing airlines to offer heavy discounts to the customers. Most of the companies in the airline industry have expanded their market and have entered the international business. With the growing capacity of the international competitors on Australian routes, there was a reduction of around 9 per cent in the ticket revenue on every international seat. The earning from the international business of Qantas also suffered from a fall of 22 per cent (Shaffner, Mills & Helms Mills, 2017)).

According to the Chief Executive of Qantas, Alan Joyce, the travelers were completely aware about the fall in the prices for the oil required for running the air planes. Cheaper oil resulted in the capacity growth on the international flights resulting in the reduction of fares thereby having a severe impact on the all of the major airlines. It was creating difficulty in the operations of Qantas therefore the organization required stabilization in the prices so that their job can become easier (Mathews, Bianchi, Perks, Healy & Wickramasekera, 2016).

Effective conflict resolution is an effective function to be performed by the international managers. With the expansion of the operations of the business worldwide, there are a number of differences in customs, cultural background, language which can result in misunderstanding in the organization. However, the conflict generation is part of the international expansion. Solutions are required to be found according to the conflicts. More effective process could have been adopted by Qantas for handling such conflicts and solutions (Usunier, van Herk & Lee, 2017).

The operations of Qantas suffered severely due to increased competition in the international business as a result of expansion. Automatically conflicts arise for the international managers. The international manager of Qantas can use a number of social initiatives for the purpose of promoting understanding which is intended to increase positive relation among the employees of the organization so that the work environment can be translated into a collaborative and harmonious work environment (Fatehi & Ghadar, 2014). Stereotypes can be easily identified by the employees along with the creation of an understanding regarding the manner of distortion of expectations with the help of workshops designed for encouraging an open dialogue (Beugelsdijk, Maseland, Onrust, van Hoorn & Slangen, 2015).  In case, the conflict arises, it is the duty of the international managers to understand that the effectiveness of the methods of resolution depends on the country of origin of the employees. Qantas can also perform the useful method of bringing the conflicting parties together so that they can discuss the problem openly and can find a ground for the purpose of reaching the stage of a compromise. However, sometimes this method can also proof to be too confrontational. In such case, the use of a third party is used to be more beneficial. Cultural consultation service can also be used as an alternative of a third party for the satisfactory resolution of a conflict (Shenkar, Luo & Chi, 2014).

With the expansion of the global business of Qantas, a number of opportunities have been offered for reaching a higher number of people across regions and countries. The expansion, on the other hand, results in the increased risk of conflicts in the organization. Such conflicts can be the result of differences in communication and cultural backgrounds. Sometimes conflicts also arise due to lack of extensive training provided to the employees of the organization.  For effectively handling the conflicts, the local culture must studied by the international manager before expanding the business into the foreign market (Fainshmidt, White & Cangioni, 2014).

Being a global company, Qantas also require understanding the role cross- cultural communication plays in an organization. Therefore, it should further focus on the development of effective training methods for their managers and expatriate employees. Such cross- cultural training will be of prime importance in helping the managers and employees for quickly assimilating to the cultural norms of the new surroundings (Melkman, 2018).  Moreover, the international managers should also try to understand the cultural differences prevailing between the employees and always keeping such differences into consideration for the purpose of increasing the satisfaction level of employees and productivity of business (White, 2017).  

The factors that motivate the employees should be previously determined through the development of an in- depth understanding of the cultural backgrounds of the individuals and making adjustments in the methods accordingly.  The organizational objectives and goals can be build up with the information gained through the understanding along with the tailoring of strategic decisions (Moran, Abramson & Moran, 2014). 

Conclusion

Therefore, it can be concluded that international business includes the cross border transactions of goods and services that takes place between two or more countries. A number of responsibilities are required to be performed by the international managers for handling international business. The international managers face challenges such as language barriers, cultural differences, currency issues, laws and regulations, etc. However, while operating in a global environment, there are opportunities for the managers i.e. to increase the market size for the business, attain economies of scale and increase the return on investment. The report offers the practical example of Qantas as an organization that has faced challenges due to international competition and expansion. At the end of this report, personal view point has been offered for handling the generation of conflicts and the solution related to it in an effective manner.   

References

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Brannen, M. Y., Piekkari, R., & Tietze, S. (2014). The multifaceted role of language in international business: Unpacking the forms, functions and features of a critical challenge to MNC theory and performance.

Cano-Kollmann, M., Cantwell, J., Hannigan, T. J., Mudambi, R., & Song, J. (2016). Knowledge connectivity: An agenda for innovation research in international business.

Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.

Deresky, H. (2017). International management: Managing across borders and cultures. Pearson Education India.

Fainshmidt, S., White, G. O., & Cangioni, C. (2014). Legal distance, cognitive distance, and conflict resolution in international business intellectual property disputes. Journal of International Management, 20(2), 188-200.

Fatehi, K., & Ghadar, F. (2014). A measure of international managers’ mindset. International Journal of Commerce and Management, 24(4), 321-333.

Forsgren, M., & Johanson, J. (2014). Managing networks in international business. Routledge.

Mathews, S., Bianchi, C., Perks, K. J., Healy, M., & Wickramasekera, R. (2016). Internet marketing capabilities and international market growth. International Business Review, 25(4), 820-830.

Melkman, A. (2018). Training international managers: Designing, deploying and delivering effective training for multi-cultural groups. Routledge.

Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing cultural differences. Routledge.

Shaffner, E., Mills, A. J., & Helms Mills, J. C. (2017). Reading Qantas History: Discourses of Intersectionality and the Early Years of Qantas. In Insights and Research on the Study of Gender and Intersectionality in International Airline Cultures(pp. 445-469). Emerald Publishing Limited.

Shenkar, O., Luo, Y., & Chi, T. (2014). International business. Routledge.

Stahl, G. K., & Tung, R. L. (2015). Towards a more balanced treatment of culture in international business studies: The need for positive cross-cultural scholarship. Journal of International Business Studies, 46(4), 391-414.

Usunier, J. C., van Herk, H., & Lee, J. A. (2017). International and cross-cultural business research. Sage.

White, R. (2017). Cross-Societal Cultural Differences and the Shaping of Opinions on International Trade. In Public Opinion on Economic Globalization (pp. 171-229). Palgrave Macmillan, Cham.