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Managing in a Global Environment

Introduction

Globalization coupled with massive mobility has forced organizations to work with
increasing numbers of people from diverse cultures with diverse values, customs,
practices and beliefs. The face of business has completely transformed over the pat
few decades following technological advancement. Today, business opportunities
are widely spread. Opportunities are in different countries including United States,
United Kingdom, Sweden, Italy and many more. We are evidently living in a global
world today. There are intense and constant challenges faced by international
managers. Managerial training and gaining an understanding of foreign business
environment is imperative. A thorough examination of management in a global
environment will be presented.

Discussion

Managers have to deal with a wide array of environmental and cultural differences
when managing an enterprise in a foreign country. Continual monitoring of legal,
political economic, socio-cultural and technological environments is fundamental.
The political environment can either hinder or foster direct investments and
economic developments. This environment is ever transforming (Karen, 2011). For
instance, it is not surprising for economic and political philosophies of a countrys
leader to change overnight. There is an element of volatility associated with a
nations government stability, which relies on citizens support. Investment
opportunities and operations may be undermined by different citizen groups with
vested interests. Additionally, local governments may portray suspicions toward
foreign firms (Karen, 2011).

Corporations engaged in international business ought to take into consideration the

relative instability of nations like South Africa, Honduras and Iraq. Countries such as
Haiti, Peru, Somalia, and former Soviet Union nations are associated with constant
political unrest (Victor, 2006). Hence, they have a high likelihood of creating hostile
and even dangerous environments for conducting international business. For
instance, foreign managers often need to hire bodyguards in Russia. This is owed to
the fact that 16 foreign businesspeople were killed in the country in the year 1983.
Business activities may be disrupted by Civil war, as was the case with Bosnia and
Chechnya. Sudden power change may lead to ushering in of a regime that is
unfriendly toward foreign investment. This may eventually force some businesses
out of the nation altogether (Amir, 2008).

The legal environment should also be considered when managing in a global

environment. There are a number of laws that have been put forth by the American
federal government with the aim of regulating the activities if United States firms
involved in international business. However, American firms are likely to find that
the laws of other countries are different from those of the United States once they
move outside U.S. Many legal rights taken by American citizens for granted are
inexistent in other nations (Charles & Cheryl, 2009). A United States business
organization conducting business internationally should not only understand but
also adhere to the laws set by the host nation.

As an example, in the United States, it is unlawful to accept payoffs or bribes. The

acceptance of payoffs or bribes may be legal in other countries. Additionally, the

copyright and patent laws of some countries are less strict compared to those in the
United States. Recently, China was threatened with serious trade sanctions, owed to
the countrys history of allowing counterfeiting or copying of American goods.
Therefore, it may be necessary for organizations engaging in international business
to take extra measures to protect their goods and products because local laws may
be inadequate to protect them (Charles, 2009).

The economic environment is also fundamental in management of international

business. It is vital for managers monitor infrastructure, currency, interest rates,
inflation, taxation, and wages. Attention should be directed toward the populations
average income levels. There is no market in a population that has extremely low
mean income levels (Karen, 2011). Tax structures should also not be overlooked.
Foreign firms pay much higher tax rates compared to local competitors in some
countries. Different countries have different inflation rates. For instance, the
inflation rates in the United States have been relatively stable and quite low.
However, in some countries, it is not uncommon for the rates to be 40 or even 100
percent on an annual basis. High inflation rate results to general increase in price
levels, which may affect an international business in several ways. International
managers should also consider fluctuation in exchange rates. The major
determinant of the exchange rate or the value of a countrys currency is the
demand and supply for the specific countrys services and goods (Umesh, 2011).

The socio-cultural environment matters when managing an international business.

Cultural differences can be extremely subtle, and are therefore vital. It is essential
for any business entering a global marketplace at any give level to prioritize the
need to learn the foreign nations cultural practices and taboos (Vital & Michael,
2010). Grave misunderstanding and complete lack of trust may occur due to failure
by a business to comprehend the culturally appropriate ways of doing business.
Attention should be given to management differences in different nations. For
instance, China gives more value to a harmonious environment than productivity. Of
utmost importance are language barriers. It is essential for international managers
to keep in mind that all words do not translate clearly into foreign languages. There
are several global companies that have had an extremely hard time in overcoming
language barriers. The results have ranged from embarrassment to total failure. For
instance, seemingly innocuous advertising phrases and brand names used in
marketing can present hidden or unintended meanings when translated into foreign
languages. This clearly shows the essence of socio-cultural environment in
international business management (Vital, 2010).

Additionally, the technological environment should not be overlooked. This may

include innovations ranging from cellular phones to robotics, which are rapidly
evident in all technological forms. Prior to making the decision to sell its product to
a foreign nation, a country should ensure that that there is compatibility between
the two countries technology. Formation of mergers is one way in which companies
can increase the speed of development and research while at the same tome
minimizing the costs associated with adopting the latest technology (Ricado, 2011).

Managing talent in a global environment is an extremely challenging task (Ann,

2007). Daily headlines have demonstrated the fact that communication, movement
of products, services, and capital, is increasing globally. The trends in workforce and
market determine how and where to conduct a business. Talent crisis has been
noted as one of the major results of the mentioned changes. Organizations face
complex issues as they try to recruit and advance a workforce derived from an
international talent market. Organizations need strategies for managing new and
different employee life cycles in order to address the challenges posed by a globally
diverse workforce (Ann, 2007).

One of the core skills for global recruiting teams is the ability to identify and source
diverse and nontraditional talent. Firms must widen their sourcing tools and look for
top talent in non traditional places so as to maintain the level of competitiveness
(Amir, 2008). In order to tap a global talent tool, it would be necessary to have an
understanding of evaluating a talent that is culturally diverse from the current
leadership of a company. This is a challenging case for international businesses,
owed to the fact that talent tools are drawn from unknown learning institutions, and
may hold diverse sets of cultural beliefs and values (Ann, 2007).

It is vital for international organizations to learn the skill of looking beyond

credentials that are comparable. More often than not there are valuable skills
possessed by nontraditional candidates, and these skills may be applicable to
working in a global environment. Research studies have indicated that there is a
tendency for people who learn to work in different cultures to develop sophisticated
behaviors and abilities that lack in their mono-cultural counterparts. The most
visible of these multicultural competencies are language skills. Generally, an
essential capability in a global marketplace is recognition of talent that has a
different outlook, sounds different and views the work differently (Victor, 2006).

There is a growing need for managers in a global environment to understand that

there is a mega-environment that encompasses the business environment they
operate in. The social dynamics of this mega-environment affect both the business
and the economic trends. Companies should learn know that there is permeability in
the process of people systems and talent management. This means that political
and cultural currents in host countries can easily threaten and even derail such
processes. It is necessary for any company seeking to effectively operate
internationally to comprehend its larger environments dynamics. It should also
understand how the policies and actions of the larger environment may be
perceived by a rapidly increasing set of diverse, multiple stakeholders (Vital, 2010).

A crucial step in ensuring that a diverse workforce gives maximum value to the
customer or client is developing ways to create optimum performance from
multinational teams. The most often cited desirable befits of diverse teams are
increased innovation and creativity. A strategy that international business managers
should try out is splitting work groups across fault lines of religions, ethnicity, and
gender (Umesh, 2011). Strong leadership is needed so as to push multicultural
groups beyond their cultural assumptions and establish mutual respect and
effective norms. Research studies indicate that once a manager has succeed in
establishing effective norms and mutual respect, heterogeneous teams tend to
report higher performance compared to teams with moderate diversity. Additionally,
the performance of such teams matches up to that of homogenous teams.

Tension is created when talent management intersects with global diversity. There
are permeable lines between the systems and values of an organization and the
values of those people involved in the business environment. Organizations must
reassess and revise the value of propositions their offer to critical talent so as to
operate effectively in a global, multicultural environment. Additionally, they need to
be willing to reorganize basic organizational relationships so that the talent can
commit to the set organizational goals. Organizations that do not manage to adapt
to changes in international talent market will be unable to maintain the level of
competitiveness. This is owed to the fact that their conventional talent
management models will not be adequate to meet the challenges posed by a
workforce that is globally diverse (Amir, 2008).

In addition to talent crisis, there are global managers encounter a wide range of
personal challenges. The need for personal growth and learning is critical when
managing in a foreign country. Managers who are most successful in foreign
assignments are often culturally flexible. This means that they have the ability to
acclimatize easily to new ways of doings things and new situations. Humans have a

tendency to be ethnocentric. This refers to the belief that ones cultural beliefs and
values are superior to the values held by other countries. Research studies have
suggested that the majority of the best international business managers are drawn
from nations where citizens have understand and emphasize in the importance of
working with people from diverse ethnic and cultural backgrounds. For example, the
Dutch have to learn French, German, and English so that they can conduct business
with their neighbors, Germany, France and England, who are economically dominant
(Ann, 2007).

Global managers need to let go of the headquarters mindset. There is a tendency

for many international companies to assume that they can operate in a same way
as they do locally. More focus should be directed toward the empathic qualities that
prospective global managers possess. The ability to work with people, groups,
companies, and systems that are different from the norm is wan essential
component in a global environment. It is also necessary for managers to have an
understanding of what unites people as well as what differentiates them.
Organizations at the very least should make sure that managers have had a chance
to familiarize themselves with the foreign cultures in which they intend to operate.
Therefore, one of the major characteristics that should be possessed by a successful
global manager is openness to new and diverse ideas. A belief that differences
matter is another fundamental characteristic. Cognitive complexity is also
important. This refers to the ability to focus on both soft and hard organizational
metrics. The people side is the soft metrics while the quantitative side is the hard
metrics (Vital, 2010).

The ability to balance the need for consistent corporate practices with the need for
regional uniqueness is one of the rarest traits that global managers posses. This is
both in regard to appreciation of cultural diversity and seizing of the unique
advantage offered by each market. One of the challenging tasks is teaching new
managers the skill of creating a balance between corporate philosophy and the
unique situation of a local market. Awareness of cultures in the midst of dynamic
change is a key requirement. New managers should be given adequate time to learn
the skills required to manage in a global environment (Victor, 2006).This will
eventually result to perfection of managerial skills.

Conclusion

With advanced technology, many organizations are opting to expand their business
operations to the global market. Managing in a global environment is an extremely
difficult and challenging task since it involves a diverse workforce with different
beliefs and cultural values. Continual monitoring of the political, legal, sociocultural, technological, economic environment is fundamental. Additionally,
managers should be open to new ideas and learn to let go off the headquarters
mindset. Recognizing the fact that differences exist and working with them to create
an effective norm and mutual respect is the key to attaining success in managing an
international business.

References

Amir, A. (2008) Managing Effective Teams in a Global Environment, Evaluation

Engineering, 47(2), 14-19

Ann, B. (2007). Managing talent in a global work environment, Employment

Relations

Today, 34(3), 27-35

Charles, O., & Cheryl, S. (2009) Global Positioning: Managing the Far-Reaching Risks

of an International Assignment Program, Benefits Quarterly, 25(4), 23-29

Karen, S. (2011) International Environment Governance: Managing Fragmentation

Through Institutional Connection. Melbourne Journal of International law, 12(1), 177216

Ricado, C. (2011) Managing IT Professionals in Global Environments, Journal of

Global

Information Technology Management, 14(4)

Umesh, V. (2011) Managing workforces in a Global Business Environment,

Siliconindia,

14(12), 6-7

Victor, T. (2006) Managing in the New Global Environment, Evaluation Engineering,

45(5), 12-16

Vital, A., & Michael, T. (2010) Managing global projects: A structured approach to
better

Performance, Project Management Journal, 41(2), 60-72

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