It has to take into account these business policies of various countries which govern their imports and exports. This is the table of contents for the book Challenges and Opportunities in International Business (v. 1.0). Matters related to the workforce, energy, currency and sociopolitical issues can make or break a firm. The problems are: 1. The rise of globalisation posits a number of important challenges to a business seeking international presence. 2021. A number of well-known companies have had to consider adapting the names of their brand or product when launching in a foreign market. A Case Study “Challenges and threats for international business" Mohammad Almotairi. Beyond abiding by official laws, engaging in international business often requires following other unwritten cultural guidelines. Well-known companies with operational headquarters in the Republic of Ireland include Google, Facebook, and Intel. It’s important to note that employment and labor requirements also differ by country. Nowhere, perhaps, was it felt more keenly than in the world of international business. While price setting and payment methods are major considerations, currency rate fluctuation is one of the most challenging international business problems to navigate. 6.Product Safety7.Fair Price8.Following Local Laws9.Impact On Local Social Institutions10.Fair Return On Investment 7. • One way to protect against fluctuations in currency is to pay suppliers and production costs in the same currency as the one we’re selling in. Dispersed resources, varied cost structure, cultural differences and governmental factors all provide international management obstacles. The following points highlight the seven main problems of International business. The General Agreement on Tariffs and Trade (GATT) gives out rules that govern the operation of a business that is functioning internationally. By relocating production for the Chinese market and using more locally sourced materials, the company was able to successfully cut prices to better reflect its brand and boost sales among target consumers. The global environment provides opportunities for the international business to sell their products and services globally. (ii) Inflation, high prices and black marketing are starting us in the face. Other Problems. The international community is confronted with a new set of challenges, the scale and complexity of which is virtually unprecedented. International firms have access to a larger workforce and a bigger customer base. Accounting strategy is key to maximizing revenue, and the location where your business is registered can impact your tax liability. Beyond a legal or ethical incentive to be more eco-friendly, establishing environmentally conscious business practices can attract new, forward-thinking consumers to your company. Part of this task falls to individual countries. Risk too much and you’re running at loss. Discover how Hult’s unique global Masters, One-Year MBA, and EMBA programs are designed to prepare globally minded professionals to overcome the pressing problems of doing business on the international stage. This includes staying up to date with legal changes and technological advancements, aligning global mobility policies to evolving business needs, and developing and managing the organisation’s present and future global talent pool with commercially viable incentives. The country desirous of achieving self-sufficiency, follows a strategy of importing capital goods equipped with latest and sophisticated technology and restricting imports of less important consumer goods with a view to lowering down its import bill. ranking for 2019, Hult MBA ranked #15 in the world by the Economist Which MBA? Different Trade Patterns 2. ranking for 2019, or give your employability a huge boost with an MBA in international business. For instance, American coffee company Starbucks seriously struggled in Australia, where the demand for local, independent cafes and coffee shops vastly outweighed the appeal of the corporate giant. Being aware of acceptable business etiquette abroad, and how things like religious and cultural traditions can influence this, will help you to better navigate potential communication problems in international business. Different countries have evolved different procedures, practices and documents in order to regulate the export trade. Share Your Word File Or will low prices help you to penetrate a new market? Discover the subtle nuances of body language for different countries and nationalities you may be doing business with: “Hult gave me an opportunity to open my mind towards the world. Download a brochure or get in touch today to find out how Hult can help you to explore everything about the business world, the future, and yourself. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Although slumping sales figures in Latin America have proven to be an urban legend, the story of the “no go” car serves as a useful reminder of the importance of preparing well before launching your business in a new market. National Policy of Development 6. Lop Sided Development of Developing Countries 4. One fundamental consideration is the structure of your organization and the location of your teams. Equally valid for small enterprises and large corporations, staying ahead of the game is fine art for any organization out there. Currency Rates • One of the most challenging international business problems to navigate. Cultural issues with international business; Every nation, every economy grows and develops in different cultures. For a quick check of costs and compliance, UPS International has created an online tool called TradeAbility to help businesses and individuals manage the movement of good overseas. It helped me gain perspective towards people from different countries such that I can go to any country and start working without any culture shock.” –Mayur Chimurkar, MBA Class of 2014. Ethical Issues in International Business ... Read Full Source Law And Management: Ethical Issues in International Business Structured around real-world cases that simulate the challenges of today’s domestic and global markets, the course equips students to manage and integrate the differing perspectives of lawyers and managers. On a practical level, if you’re considering expanding your business overseas, it’s important to be aware of the country-specific environmental regulations and issues associated with your industry. While developing countries on the other-hand lack technological knowledge and latest equipment. Despite the risk of fluctuating value, the lack of fees is one of the reasons a number of online companies, including WordPress, the Apple App Store, Expedia, and a number of Etsy sellers accept Bitcoin. Comment below on any further issues or challenges and how your organization is overcoming them. Every business has its difficulties and presents is own challenges in when it comes to operating it successfully. The central Presidents manage Presidents of smaller, country-based or regional subdivisions. The world’s economic system has been through a lot in recent years — from the challenge of the financial crisis to income inequality, the pressures of immigration, changing technologies and geographic shifts in production, … Economic Unions 5. 2Researcher Department of Marketing, College of Business Administration, Monitoring political developments and planning accordingly can mitigate political risks of doing business abroad. However, it can protect your sales from the risk presented by unstable currency. You must consider costs to remain competitive, while still ensuring profit. Of growing concern is the risk in international business of forced labor and worker exploitation. For instance, if your company is paying suppliers and production costs in U.S. dollars, but selling in markets with a weaker or more unpredictable currency, your company could end up with a much smaller margin — or even a loss. International business has to deal with the business patterns among the various countries of the world. Current Issues in International Business contributes a great deal to the field and presents all the important issues that will propel international business research into the 21st century.’ – Leo A. Giglio, Business and the Contemporary World It considers key up-to-date developments in both the theory and practice of international business. Being aware of tax treaties between countries where your business is trading will help to ensure you’re not paying double taxes unnecessarily. Globalization and the digital age have created new business opportunities worldwide but at the same time they have given rise to new legal issues, particularly with respect to the form of contracts and enforceability of contracts … Before considering expansion into a new or unknown market, a risk assessment of the economic and political landscape is critical. A growing trend towards economic nationalism also makes the current global political landscape potentially hostile towards international businesses. The Ashridge Centre for Business and Sustainability at Hult researches innovative ways that organizations can develop and implement more environmentally sustainable business models. Mitigating the risk of multiple layers of taxation makes good business sense for any organization trading abroad. inconsistencies in tax assessments and excessive penalties. Want to learn more? 11 Biggest Challenges of International Business in 2017, Hult International Business School is a 501 (c)(3) non-profit educational organization registered in the Commonwealth of Massachusetts and accredited by, Cost calculation and global pricing strategy, Choosing the right global shipment methods, Communication difficulties and cultural differences, Supply chain complexity and risks of labor exploitation, Ashridge Centre for Business and Sustainability, Hult scores in top 20 in The Economist’s Which MBA? When it comes to sourcing products and services from overseas, managing suppliers and supply chains can also be a tricky process. So let’s look at the three international HR challenges in the above list, in a bit more detail. Every country wants to export its surplus natural resources, agricultural produce and manufactured goods to the extent, it can and import only these goods and products which are not produced or manufactured within the country. This book is licensed under a Creative Commons by-nc-sa 3.0 license. Becoming an international company opens doors to new marketplaces and revenue streams. Request a Brochure Apply Now Free GMAT Test. But the international community also has a role to play by working together to deal with the cross-border issues. Starting a business venture in a foreign country is an exciting prospect, but you must be prepared for the multitude of challenges that come with operating in a vastly different environment. TOS4. Today, she writes on topics including business, higher education, healthcare, and culture. Make the most of what your career has to offer with a Masters in International Business from Hult. Written by Hult contributing blogger Katie Reynolds who is a freelance writer based in London. A focus on tax efficiency is often the aim of international accounting efforts. Come in the way of free trade and unfettered flow of foreign business. Given the current global upheaval in political, economic and technological terms, international HR teams are facing an overwhelming array of challenges. These policies and practices impose certain constraints and restrictions on international business. Other Problems. Along with getting your company structure in place, gaining a comprehensive understanding of the local laws and regulations governing your target markets is key. This is inevitable. Effective communication with colleagues, clients, and customers abroad is essential for success in international business. Content Guidelines 2. Challenges Faced By Managers When They Are Operating in Foreign Countries. Market challenges. Some key considerations include how your production methods might impact the local environment through waste and pollution. However, it also brings about new challenges for business leaders. Here is our advice on how to tackle the 11 biggest challenges for international business: If your aim is to be competitive globally, you must have a team in place that’s up for the challenge. Your choice of shipping method can be a major influence on your revenue and may be a limiting factor to the products you can viably sell overseas. In the video below, Dr. Mark Esposito discuss the global business and societal benefits of the circular economy: As we see what the first months of the new year will bring for international business, new opportunities, challenges, and uncertainties will continue to arise. (iv) Poor business ethics is also responsible for our international business. In the era of globalization and the new digital-driven era of globalization, businesses face legal issues in international business transactions. In the midst of significant uncertainty, there are four things we can do: boost confidence in trade and global markets by improving transparency about trade-related policy actions and intentions, keep supply chains flowing, … To raise awareness and help local and international businesses respond more effectively to this issue, their published research report presents case studies of businesses who have implemented practices at the leading edge of the fight against modern slavery. National Policy of Development 6. In the European Union, companies may benefit from the Common Consolidated Corporate Tax Base proposal, whereby companies with operations around the EU can limit tax liability to one corporate center. This may mean switching to more local production where possible in order to better balance your outgoings and sales revenue. Monitoring exchange rates must therefore be a central part of the strategy for all international businesses. I’ve been speaking to business leaders and HR professionals from all over the world to find the answer to this question – beyond the obvious issues of language barriers and timezone differences. If the situation persists it may put our price level beyond the means of our customers abroad, no matter how badly they need our export. Nevertheless, the global business scene can expose companies to a wide variety of issues and complications. Of course, this potentially means missing out on greater profit should rates shift in your favor. Major fluctuations can seriously impact the balance of business expenses and profit. How are you preparing to make the most of the opportunities of doing business overseas in 2017? Regulatory Measures 3. 5 Challenges Companies Face When Doing Business Overseas Due to fast-changing market dynamics and increased competition, many organizations seek to expand their market internationally. While the global marketplace becomes more interconnected and accessible, the risks involved in doing business abroad are not to be taken lightly. Recent international legislations and proposals, such as the UN’s Sustainable Development Goals, have put environmental issues at the forefront of international business development. For any size company it is becoming much easier to reach new markets, and customers to sell their products, as well as locating vendors. Share Your PPT File, International Business: Advantages and Disadvantages. Different Trade Patterns 2. Sometimes culture can be one of the barriers or one of the issues with international business and MNC might face. Expanding business overseas means reaching new clients or customers and potentially boosting profits. If not, will you consider hiring local market experts who understand the culture of your target markets, but will work centrally? But the negative side effects must be acknowledged—and addressed. Accepting wire transfers, PayPal payments, and Bitcoin, are other possibilities, with Bitcoin users benefiting from no bank or credit card transaction fees. Or will you have offices and representatives “on the ground” in key markets abroad? Good communication is at the heart of effective international business strategy. Learn more about six key factors that can influence currency exchange rates: The potential of online sales presents a huge international business opportunity for retailers in the 21st century, but finding reliable, fast, and cost-effective shipment and distribution methods can be a difficult balance in some markets. These include: low quality and coverage of infrastructure. Tax consolidation is a feature of several multinationals’ decision to be headquartered in Dublin, as Ireland is known for its “business-friendly” corporate tax policy. In October 2015, the UK passed the Modern Slavery Act in response to this often-hidden human rights violation. Of the main legal areas to consider when it comes to doing international business, tax compliance is perhaps the most crucial. Small practical considerations can also be easily overlooked, such as creating quality translations of product and marketing materials, and even ensuring your brand name works well abroad. For instance, companies like Facebook are banned in China, partially in preference for national social networks and also due to government regulation over internet content. The following points highlight the seven main problems of International business. One of the first questions you must answer is whether your business is actually suited to succeed in international markets. In this lesson, we will examine the ethical issues in international business, such as corruption, pollution, and environmental challenges. Wherever you’re looking to launch your product or service, here are four useful strategies to help you find the right price: The proliferation of international e-commerce websites has made selling goods overseas easier and more affordable for businesses and consumers. However, communicating across cultures can be a very real challenge. Swedish furniture giant Ikea, known in Europe for its low-cost value, struggled initially in China due to local competitor costs of labor and production being much cheaper. Recent research led by a partnership between Hult International Business School and the Ethical Trading Initiative revealed that an astonishing 77% of businesses believe that modern slavery exists at some point in their supply chains. Determining acceptable payment methods and ensuring secure processing must be a central consideration for businesses who seeks to trade internationally. However, this strategy leads the international business to face multiple issues and challenges such as cost-effective strategy, qualified employees and effective management teams, high competition and downsizing. As the research team continues to bring their findings to light, developing and supporting ethical and sustainable business practices remains a focus in the Hult classroom. Businesses can play an important role in addressing modern slavery.”- From Corporate Leadership on Modern Slavery, Download the report on Modern Slavery from Hult International Business School. With a number of brands such as Dell, Renault, and MUD Jeans leading a shift towards the circular economy, there is an opportunity and demand for changing production methods and consumer behavior to establish a more sustainable future for the environment and society as a whole. Even the challenges that are related, by definition, are of a different character. The Chevrolet Nova is perhaps the most commonly cited example, where “no va” literally translates to “no go” in Spanish—not the best product name for a car. Originally from Michigan in the U.S., she relocated to the U.K. in 2010 to pursue a master’s degree at Hertford College, Oxford. From tax implications through to trading laws, navigating legal requirements is a central function for any successful international business. Legal issues that mostly arise in foreign countries include protection of the intellectual property, payment issues, taxation among others (August, Mayer & Bixby, 2009). In this connection, there are heightened demands for international business research to provide guidance for … Even though it sounds like there are endless of opportunities; international business has many challenges. “International conventions and national legislation make modern slavery illegal, but we are still a long way from its final eradication. If so, how will these teams be organized, what autonomy will they have, and how will they coordinate working across time zones? Developed counters are equipped with sophisticated, technologies capable of transforming raw materials into finished goods on a large scale. While Coca-Cola is a vast international brand, the structure of your business and the number, nationality, and level of expertise of your team will vary depending on your industry, product, and the size of your business. Thanks to the Internet and the globalization all boundaries started to disappear in the trading and business world. 1Department of Marketing, College of Business Administration, King Saud University Riyadh Kingdom of Saudi Arabia . One way to protect yourself against large fluctuations in currency is to pay suppliers and production costs in the same currency as the one you’re selling in. One franchisee expressed it this way, “What I have learned from the franchisor was worth ten times what I paid for the franchise.” In any new business, much time and money are spent in trial and error, but a proven franchise may eliminate many of those start-up problems, allowing one to open a franchise with little or no previous experience in a give… In response, companies doing business in the United States must abide by the Foreign Corrupt Practices Act, which aims at eliminating bribery and unethical practices in international business. Constant flexibility is required to adapt to changing patterns at local, regional and international levels. 3 . At Hult, our aim is to prepare our students to become the next generation of global business leaders, embracing the opportunities and challenges of international business. Privacy Policy3. To learn more, take a look at our blog Hult scores in top 20 in The Economist’s Which MBA? 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