Student Name: Abass Gbla  

Student ID: 10102295
Course Name/Code: MGT 107 
Assignment Question: 
What are the global challenges that
managers of International businesses face

ATTEMPT COUNT: 1 
 
 
 
 
 
INTRODUCTION 
As managers of modern organizations today are increasingly involve in international
business and investment, they are required to understand that, the task of managing an
international business is different from that of managing a purely local or national business in
many ways. Generally, the differences arise from the common fact that countries in the world
are different. Each country is different in their political systems, cultures, legal systems,
economic systems, and levels of economic development. Even though there has been a talk
about on the emerging global village, and the trend of globalization of world markets and
production activities, there are still enormous global challenges that managers of International
businesses faces today; many of these challenges are very profound and enduring. Hence, this
research paper will seeks to give the common global challenges affecting managers of
International firms.

INTERNATIONAL BUSINESS
An international business simply is any commercial transactions done between two or
more countries or when a firm/individual engages in cross border trade or investment. It also
encompasses a number of cross-border exchanges of goods, services, or other resources
between nations. Normally such exchanges go beyond the exchange of money for goods which
encompasses the international transfers of other resources, like people, intellectual property,
and assets or liabilities (e.g., the permission to utilize some other countries asset, and giving
some long term service to foreign customers, or under a difficult financial instrument). Usually,
International businesses or firms operating in cross border trade comprises of big multinational
corporations with many employees undertaking business activities in different countries around
the world and small medium enterprises which may have one-person acting as a sole importer
or exporter. However, a wider concept of international business is the maximization of profit
through transactions or transactions influenced by non-financial gains such as corporate social
responsibility, political favors, triple bottom line etc) that affects a business’s future. As the
whole world moves toward a truly interdependent world economy, many businesses, both
small and large are becoming international businesses.

GLOBAL CHALLENGES THAT MANAGERS OF

INTERNATIONAL BUSINESSES FACE
No International business manager can make a major business decision without
encountering problems. However, deciding to expand a firm globally comes with many
challenges and establishing a foreign business in a foreign country or global marketplace
without any proper market research can possibly lead to disappointing outcomes as well as
hinders international business manager’s efforts in their domestic marketplace. Here are the
common challenges that managers of international businesses face today in the global
marketplace;

Firstly, one of the key global challenges that managers of international businesses face
today is how to evaluate the business milestones of their global business operation. It is a well-
known concept that an international business quite literally “differs and takes on a whole
dimension of its own” and improves with detail strategy, management approach, and no
particular performance key indicators. However, gauging the return on investment is usually a
difficult task that involves breaking down the many variables specific to global expansion.

Secondly, other challenge that managers of international businesses or firms face is the
incurring of additional costs in developing products to be consumed in global markets with its
administrative costs occurred in order to produce promotional materials, or obtaining particular
export licenses. Furthermore, international business operations, firms may experience longer
sales cycles, problems with cash conversion, and the complexity of trying to work out return on
investments when there are many currencies involved in international business transaction.
With this and usually, it is very difficult for manager to know actually easy what how to
determine business “growth” because each product/market segment requires that the
international business manager plan different objectives and create a different performance
key indicators. A common example is the difficulties of transporting products such as shipping
and logistics which are enormous in international business operations. In fact, the most
complex aspects of functioning in the business world today is divided into two main categories:
how to get a product from one country to another, and how to negotiate with courier
companies and pass through customs regulations.

Thirdly, other challenges encompasses the manager of international business having to

understand new business practices, as well as coping with limited technology, local HR laws and
regulations, other investment regulatory hurdles, international business transaction costs,
foreign exchange differences, and the establishment a local partnerships.

Then also the aspect of assessing the “country risk” which is most challenging for small
firms at times. However, larger corporations do have mechanisms in place that monitors this
particular challenge. As for the country risk, it is said to have a number of challenges. For
Instance, there is the challenge of coping with “political risk” which is dealing with the overall
nature of the host government, expropriation, attitudes of consumers, civil unrest, corruption,
bureaucracy, religious freedoms, and nepotism etc.

Furthermore, managers of international businesses faces the challenge of government

monitoring, seizure, controls, foreign exchange rate policy tools, free trade barriers, foreign
exchange systems like foreign currency inconvertibility and the involvement of currency trading
in foreign markets.

Lastly, there is also a greater challenge for international business managers in

monitoring the transfer of funds, and determining the foreign country’s “capital account,” or
trade balances with other countries of the world. Perhaps the most talk about and hardest
challenge faced by international managers is invigorating the global outlook. Only through this
dimension i.e. the general shift in mentality that fresh opportunities are uncovered. In fact,
some recommend that it suppose be a formal corporate process that involves “global
marketplace learning.”

CONCLUSION
Managers of international businesses today are increasingly facing many challenges in
their foreign business operations because of the difference between countries. And this has
been affecting the way they operate in the global markets because countries differ in their
International business practices. Thus, managers of international businesses are required to be
very sensitive to these differences, and to effectively use their most applicable organizational
policies and strategies for dealing with these differences. Furthermore, the emerging global
challenges of managing an international business in today’s integrated global economy are
trying to solve the greater complexities of managing an international business which differs
from that of a domestic business. In addition to the challenges that arise from the differences
between two or more nations, a manager in an international business is faced with a number of
other issues that the manager in a local firm never faces.

References

Charles W.L. Hill, G. T. (2017). International Business. In G. T. Charles W.L. Hill, International Business
(Eleventh ed., p. 30). New York, NY: McGraw-Hill Education.

Chad Brooks. (2018, May 8). Going Global: How to Expand Your Business Internationally.
Retrieved from Business News Daily: https://www.businessnewsdaily.com/8211-
expand-business-internationally.html

Coventry University. (2009). Challenges and Opportunities. Retrieved from future learn:
https://www.futurelearn.com/learn/business-environment/0/steps/39430