International Business Issues
‘International Business’ sounds big, complicated, interesting and fun at the same time. What is it that makes the term sound so huge? Maybe the interest may be interacting with different people, maybe its complications, it can be anything that interests you in international business. The term is big not because of any other factor because it involves and includes the globe and its businesses. Would you want to know more about doing business across the border? Let’s start with understanding ‘International Business’ first.
What is International Business Issues?
International Business is business conducted across the globe. It includes several transactions and all different types of international business issues transactions. For example, transfer of services, technology, products, knowledge and managerial skills, and finances to other countries in terms of loans. In short, it includes import and exports of goods and services.
Global Business or International business Marketing are two more terms International Business is known, called or referred to as. Some options of global business include the factors given below:
- Import and Export of goods and services.
- Production of goods on an international name and license in the host country.
- Initiating a joint venture in a different country with a company.
- Starting up a branch of producing and distributing goods and services in a host country.
- Giving managerial services to different international business issues companies in another country.
There are many more influencing factors for global business. Let us take a look at them and also analyze some features of international business issues.
What are the Features of International Business Issues?
In international business, issues are always conducted on a huge scale and not small because they need to be first supplied in the local markets and sent or exported to global markets. Hence the operations are conducted on a huge scale.
Combines the global economy
The global economy combines several economies of different countries. For global business includes finance from a different country, infrastructure from a different country, labour from another one, etc.; this brings economies of different countries together. Many international business issues get times the product is designed in one country; its parts are produced in another country; they are assembled in a different one and are sold in a completely different country. All this takes place in global business, where different countries come together to manufacture and sell one single product.
Developed economies dominate global business.
When it comes to global businesses, the developed and the bigger economies obviously dominate the market or the global business. Markets or economies such as the United States of America, the European countries, and Japan dominate and control the global market completely. The economies are not controlled by the economies directly; however, they are controlled by their Multinational Corporations or MNCs. The reason behind their dominance is their huge finances, good technology, good international business research and development, skilled human resource and good resources, etc.
Developing countries also benefit.
The big economies definitely get stronger and better in the global market by dominating; however, even the developing economies start making profits and benefiting from the global business by participating. MNCs look for developing countries to outsource their production and their services to developing countries to make sure that they maximize profits by outsourcing to emerging countries; in this way, the poor and the developing countries get employment for their people this invites other currencies to the developing countries and creates opportunities for growing and developing better.
Though the developed economies dominate the global market even, they have a fear of competition. Competition can come from anywhere for them; it can either be from equal competitors or from developing countries. Developing countries can provide the same goods and services at a lower cost and can help the MNCs maximize profits.
Promotes technology and science
Because the developed economies use both science and technology to enhance and add value to their products and services, they expect the same quality when they outsource their business to developing countries; they also educate them about the techniques, their technology and the science used for the goods and services manufactured by them. This also introduces science and technology to developing countries helping then grow.
Little changes affect big businesses.
In international business, even the slightest change in economic policies, political international business environment, technology, etc., have big effects on international trade. Because global business is very sensitive in nature and must be taken care of to ensure that the business activities do persist even along with the changes. Thus the market needs to be researched carefully.
And the features and their benefits will continue till you don’t stop talking about it. However, global businesses face many issues with international business on settling, growing, and flourishing in other countries or host countries. If you want to master in international business issues, you must know about these hurdles and issues and also develop a knack for overcoming them to make sure business does not suffer.
What Issues with International Business being Facing Currently?
Legal issues of the host country
When you conduct trade, you need to be familiar with law and order, the legal terminology, and the legal barriers every country has to conduct business. You might be aware of the legal aspects of conducting business in your country; however, legal issues with international business differ from country to country. Hence, to start the business in a different country or globally, you need to know about the law and conducting business in the host country.
Issues of local and regional language
You definitely are aware of this fact. Your language is different from the languages spoken in other countries and other nations. Communications is one of the most important factors for any business. If you know how to communicate in their local and regional languages, will you be able to do business in the host country, else? You might have to recruit local people to help you with the business in the host country. Hence language will be one of the barriers or one of the issues with the international business you might face in global business.
Cultural issues with international business
Every nation, every economy grows and develops in different cultures. Sometimes culture can be one of the barriers, or one of the issues with international business and MNC might face. For example, in some countries, women are not given equal rights to men, which might not permit women working in a few nations and much more than that even. In such cases, you might not find in safe sending your women employees to work in such places; even if the woman employee is extremely talented and can help turn situations, you will have to make sure that she is safe first. A few cultures might take contracts as one of the most serious issues with international business may be more serious than a human being, whereas, in some cultures, contracts are not at all serious. This creates problems in running the business smoothly.
Keeping a watch gets difficult.
The distance that is global distance makes keeping a watch and managing business very difficult. You might have started a production business, or you might have purchased a property in a different country; whatever might be the case, you cannot personally keep a regular track of your business from a distance. Without keeping a watch, you might end up signing unfair contracts or unfair deals. You might not be able to make sure that the manufactured products are safe for people’s consumptions, which can be dangerous for your business and your brand name. To keep a watch, you might have to work on the distance issues so that distance is not a huddle in conducting business.
Several economies and cultures completely oppose MNCs and their existence in their motherland. This becomes a part of their politics, law, and order. Besides all the business, employment, and development the nation will receive, they do not easily allow MNCs into their system. Politics and culture here become a huge problem to enter into business in such nations. This stops or hinders global business and growth.
Issues that arise socially
Common social issues include issues such as at war situations between two countries that can stop and hinder global business. The two countries might be very good in a particular business and can good even better together; however, they are in a war situation; this will restrict their global business as they would not like to get into the business.
The second social issue can be corrupt political parties with corrupt leaders exploiting MNCs and minimising their national growth. Similarly, if militants rule a country, they do not encourage and entertain global business and restrict MNCs from entering their nation.
Another social issue can be the host company’s wrong attitude towards foreign business; this attitude is visible in the rules and regulations laid down by the nation for MNCs. Too much of government interference in the working of the MNC is another drawback and a problem for global business.
Lack of infrastructure in developing countries
In simple words, if the country or rather the host country is unable to provide basic infrastructure to the MNCs to conduct business, it will make global business difficult or impossible. For example, facilities for MNC employees such as resident complexes, proper schools and transportation facilities need to be provided. MNCs make sure that they and their employees have a proper work atmosphere to conduct business. In case a country or a nation lacks these facilities, they will not be able to work as global players.
Issues related to ethics
Maintaining basic work ethics is very important when you are working in the corporate world. However, ethics might be different in different nations and countries. Well, we can simply name a few ethics and ethical issues every economy and every company faces.
- Rules and regulations for employees are different in different countries and companies.
- Human rights differ
- The work environment differs.
- Bribery and corruption issue
- MNCs obligations for moral values
- Safety of products
- Rational product cost
- Making sure local laws are followed
- Local social, institutional impacts
- Return on investments needs to be fair.
- Child labour problems
- Forced labour issues
- Safety and health of employees
- Reasonable working hours
- Reasonable wages
Issues with the environment
These days the environment and its precaution is a huge concern for every nation. Now MNCs that are banned in developed countries because of the release of their industry’s waste for polluting their environment has set up their base in developing countries to run their operations, and they are now polluting the developing countries. The release of hazardous nuclear waste into the atmosphere can cause huge social damage to the environment.
Competition in the host country
Before entering a host country, the MNC needs to study the competition it will face in the country. I mean, of course, just like the MNC business, there might be similar businesses in the host country that might create competition for the MNC with similar offers. The MNC needs to think out of the box before launching a similar business in a country with a huge competitor awaiting them.
Problems and issues will never end; the more you discuss, the stronger they get. Hence the best way is to work around the problem. Dealing with issues the smart way can help you and your business grow locally and globally. Most of the issues discussed above might be issues you face even in your own country while executing business. However, you still continue to conduct business and are still managing to good great in your field; however, here, issues will be more and even stronger because global business is about doing business across the border.
This has been a guide to International Business Issues. Here we discuss the features of international business issues. You may also look at the following articles-