GLOBAL MANAGEMENT AND INTERNATIONALIZATION OF BUSINESS

What Is Globalization?

Globalization refers to the spread of the flow of financial products, goods, technology,
information, and jobs across national borders and cultures. In economic terms, it
describes an interdependence of nations around the globe fostered through free trade.

Globalization refers to the way that people around the world have become more
connected politically, economically and socially. We are moving away from self-
contained countries and toward a more integrated world.

Globalization of business is the change in a business from a company associated

with a single country to one that operates in multiple countries.

Stages in Internationalization of business

Domestic company

Market potential is limited to the home country. Production and marketing facilities are
located at home country. Surplus may or may not be exported. There are no overt
efforts to develop foreign markets. It may add new product lines and serve new local
markets but the whole planning is limited to national markets only

Features

a. Their focus remains with the domestic market

b. Their production facilities remain based in the home country. Their analysis is
focused on the national market
c. They do not think globally and avoid taking risks going global
d. Their top management may have traditional kind of business management
competence and less global expertise
e. They perceive that there is risk in expanding into global market and thus they try
to play safe and satisfied with whatever gains they have in the domestic market
International company

Some ambitious efficient companies after going beyond their domestic marketing
capacities starts thinking of expanding their operations in the international market. The
main strategies of entering international market include;

a. Off shoring/global out sourcing

b. Exporting
c. Licensing
d. Franchising
e. Joint ventures/acquisition
f. Direct investment

Even though they think of international market, still they are ethnocentric or domestic
oriented. These companies adopt the strategy of expanding the branches of their
companies in other countries and practice the same domestic operations in foreign
markets including the same promotion, price, product etc policies

Features

a. Focus on going beyond domestic

b. Their management remains ethnocentric with a vision of expanding
internationally. They extend their domestic products, domestic prices and other
business practices to foreign countries
c. They keep their marketing mix constant and extend their operations to new
countries
d. Their management style remains centralized for their home nation and extend
top down to the overseas market country.
MULTINATIONAL COMPANY

After some time, international companies realize that domestic model and practices
adopted through extension policies do not serve the purpose. The foreign customers
may not prefer the products that are sold in domestic market. Hence, these companies
may respond to needs of different customers in different countries and produce such
goods and services that will satisfy them

Features

a. Companies when they spread their wings to more nations become multinational
companies
b. Sooner or later the realize they should change their marketing mix according to
the foreign market
c. This can also be termed as domestic in which different strategies are adopted for
different markets
d. The management of such companies remain decentralized and even production
may be in the host country
e. Performance evaluation is done at different host countries

Global

The global company adopts global strategy for marketing its products. It may produce
either in the home country or in any other single country and market its products
throughout the world. It may also produce the products globally and market them
domestically

Features

a. Such companies have a global marketing strategy

b. They either produce in home country or in a single country and focus marketing
globally
c. They adapt to the market condition according to the foreign market
d. Their performance evaluation is done world wide
Transactional company

Transactional company operates at global level by way of utilizing resources to serve

the global markets. It has geocentric orientation and has integrated network. Its key
assets are dispersed and every sub unit of the company contributes towards
achievement of company objectives. It produces best quality raw materials from the
cheapest sources in the world, process them in the country where ever it is economical
and sells the finished products in those markets where prices are favorable

Features

a. They have geocentric approach, which means they think globally and act locally
b. They collect information worldwide and scan it for use beyond geographical
boundaries
c. Their vision is to grow more in a global way
d. The R&D, management, product developments are shared worldwide
e. Their Human resources procurement and development remains globally

WHO IS AN INTERNATIONAL MANAGER?

The management can be defined as a factor of production, together with the

equipment, the materials and finance, so it’s multifunctional unit that coordinated the
business and the managers, and the employees and the work, according to Peter
Drucker.

Also, there is wide accepted definition by Mary Marker Foller that says “The
management is art of performing tasks through people”.

According to Harold Koontz, the management is defined as art of performing tasks

through others, with formal, organized groups.
The definition by F.W. Taylors states “The management is art of knowing what we want
and how to achieve that in best and cheapest way”

Role of International Managers

Planning, organizing, staffing, directing and controlling are basic functions of

management. Given the peculiar characteristics of international business, these
functions also require some changes in implementation.

Planning

To do business internationally, managers must first plan their approach well. They have
to decide how exactly will they be conducting their activities. This includes deciding
whether they will export products or enter into joint ventures with a local business.
International planning always requires a thorough understanding of local political,
social and economic environments. These factors also include political stability,
government pressure, intellectual property policies, competition, etc.

Organizing

It is not possible for an international business to operate in multiple countries using

standard and common practices. International managers always have to organize their
business to adapt to local requirements of all countries, adhere to local laws and
regulations of the nations they operate in. Managers even have to keep local business
practices and customs in mind while organizing.

Staffing

International managers next have to figure out whether they will hire local employees
or send their own staff abroad. Consequently, they will need to be aware of all local
labour laws if they decide to hire employees locally.
Directing

Directing can often become very difficult when people from multiple countries work
together. Since cultural differences influence people to work differently, managers have
to adapt themselves in every unique situation. Even language can become a barrier in
cross-border business.

To deal with such problems, managers can try to involve people of diverse cultures and
nationalities in management. Human resource departments of large companies always
try to encourage cultural diversity in their organizations. They even conduct sensitivity
seminars to make employees and managers aware of diverse cultures among their
workforces.

Controlling

The problems that affect the function of directing apply to the process of controlling as
well. Controlling requires meetings between people which helps in the exchange of
information on a routine basis. Reporting and inspections are also important aspects of
control. Cultural differences amongst employees can always affect these kinds of
functions. Managers, thus, should be able to adapt to all peculiarities and facilitate the
controlling process.

Key traits to become an effective global leader.

Highlighted below are key traits to become an effective global leader.

1. Self-Awareness

Self-awareness is key to becoming an effective global leader by understanding their

strengths and weaknesses. Leaders who are self-aware hire people who have strengths
in areas they are weak and more likely to listen to ideas from people with divergent
perspectives.
2. Patience.

Effective global leaders need to be patient as it reinforces the importance of focusing on

long-term outcomes (i.e., strategic planning, program management, people
development) Effective leaders recognize that patience enables them to understand the
situation and wait until they can take appropriate and effective actions to capitalize on
them.

3. Inclusivity

Inclusive leaders demonstrate the ability to recognize, and learn from the different
values, attitudes and behavioral expectations needed of various roles, both in their own
culture and in the cultural context in which they are operating. Global leaders who
embrace diversity are more likely to encourage risk taking and disruptive thinking to
challenge the status quo and foster innovation.

4. Effective Communication

Global leaders need to effectively communicate with everyone in manner conducive to

all. This is essential when managing from a distance. They need to speak well, be
charismatic, deliver a compelling message, and command an audience that spark the
interests of others. Effective global leaders learn to overcome geographic, culture and
language barriers and adapt their communication skills accordingly.

5. Building Alliances and Partnerships

Building alliances is one of the most important competencies for global leaders.
Effective global leaders successfully build trusting and long-term strategic relationships,
both internally and externally, and leverage those partnerships to have alignment
around the organizations’ s mission, and complete tasks at hand.

6. Big Picture Perspective

Having a clear view of the future of the organization is an essential skill for a global
leader. Effective global leaders are always thinking ahead and moving forward. Their
extensive industry knowledge enables them to anticipate future trends. They have a
longer-term view of the business and market, allowing them to generate business
strategies that translate into meaningful goals and objectives in the organization.

7. Inquisitiveness

The best global leaders are curious, have a thirst for knowledge and open to new
experiences. Effective global leaders explore and investigate, and always ask open
ended “why” and “how” questions.

8. Versatility

Global organizations are ever-changing environments with multi-layer complexities.

Effective global leaders need to not be resistant to change and be able to be versatile
and adapt to dynamic environments with shifting priorities.

9. Creativity

Effective global leaders are innovative and think outside the box. Creative global leaders
are in tune with the current trends and not afraid to explore and try new things.

10. Trustworthy

Global leaders who are trustworthy are well respected. Generally, people work with
others they feel have integrity and will lead them on the right path. Effective global
leaders are viewed as transparent, sincere, dependable, and promise keepers and
people are more willing to be more productive working for someone they trust.

11. Compassionate
Effective global leaders are compassionate and caring. They are empathetic, genuinely
care about their colleagues and mindful of their needs.

12. Emotional Intelligence

Emotional awareness, persistence, and resilience are important traits for global leaders
to master, especially stressful circumstances. Effective global leaders are aware of the
source of their emotions and are capable of sensing and responding effectively in
situations that are emotionally charged.

Role of International Managers

Given the peculiar characteristics of international business, below are the functions of
international manager;

Planning

To do business internationally, managers must first plan their approach well. They have
to decide how exactly will they be conducting their activities.

This includes deciding whether they will export products or enter into joint ventures
with a local business. They may even function as an MNC by opening offices in various
countries by operating from one location.

International planning always requires a thorough understanding of local political,

social and economic environments. These factors also include political stability,
government pressure, intellectual property policies, competition, etc.
Organizing

It is not possible for an international business to operate in multiple countries using

standard and common practices. International managers always have to organize their
business to adapt to local requirements of all countries.

Firstly, they have to create a command hierarchy that involves people operating in
multiple countries. Then, they have to adhere to local laws and regulations of the
nations they operate in. Managers even have to keep local business practices and
customs in mind while organizing.

International businesses also have complicated management hierarchy structures as

people operate from many nations. Managers must ensure that they have a robust
communication protocol to deal with this problem. Employees must always be able to
address their grievances, ideas and suggestions.

Staffing

International managers next have to figure out whether they will hire local employees
or send their own staff abroad. Consequently, they will need to be aware of all local
labour laws if they decide to hire employees locally.

Directing

Directing can often become very difficult when people from multiple countries work
together. Since cultural differences influence people to work differently, managers have
to adapt themselves in every unique situation. Even language can become a barrier in
cross-border business.

To deal with such problems, managers can try to involve people of diverse cultures and
nationalities in management. Human resource departments of large companies always
try to encourage cultural diversity in their organizations. They even conduct sensitivity
seminars to make employees and managers aware of diverse cultures among their
workforces.

Controlling

The problems that affect the function of directing apply to the process of controlling as
well. Controlling requires meetings between people which helps in the exchange of
information on a routine basis. Reporting and inspections are also important aspects of
control.

Cultural differences amongst employees can always affect these kinds of functions.
Managers, thus, should be able to adapt to all peculiarities and facilitate the controlling
process.

What makes a good international manager?

Wills and Barham (1994) believe that a good international managers require four
sets of attributes as follows.

Attributes of a Good International manager

1. An International manager must be able to cope with cognitive complexity and be

able to understand issues from a variety of complicated perspectives;

2. He should have cultural empathy, a sense of humility and the power of active
listening. Because of their unfamiliarity with different cultural settings international
managers cannot be as competent or confident in a foreign environment;

3. A good manager should have emotional energy and be capable of adding depth
and quality to interactions through their emotional self-awareness, emotional resilience,
ability to accept risk and be able to rely on the support of the family;
4. A good international manager should demonstrate psychological maturity by
having the curiosity to learn, an orientation to time and a fundamental personal
morality that will enable them to cope with the diversity of demands made on
them.

WHY ORGANIZATIONS GO FOR INTERNATIONAL BUSINESS

1. Explore the world

If you have the travel bug, there’s nothing more satisfying than working abroad. Not only
do you get to experience your new country at a much deeper level, you get paid to do it.

Living in a foreign country is completely different to a holiday. You’ll actually get to

experience your adopted country in the long-term, picking up local knowledge along the
way such as who sells the best coffee, what tourist traps to avoid and how to get the
most out of your new city. As well as exploring your host country, you’ll also get the
chance to travel to neighbouring countries on your time-off.

2. Brush up on your language skills

Chances are you’ll be moving to a country where you don’t speak the language. Making
the effort to learn the local language shows that you have the ability to adapt and thrive
in new situations. It’s a life skill that will not only help you in day-to-day situations in your
new country and build deeper connections within the community, it can also potentially
open up new work opportunities for you in the future.

3. Enhance your career & boost your CV

Having an international assignment on your CV could boost your future employability.

The training and work experience you gain at an overseas company will expand your
horizons and range of expertise.

In a globalised, well-connected world, employers increasingly value candidates with

international work experience, and it’s often seen as a prerequisite for most senior
positions at major international companies. Many professionals who undertake expat
assignments find that they experience faster career progression as a result.

4. Experience a new culture

One of the biggest draws of life abroad for many expats is the chance to explore a new
culture. Living overseas can be an extremely fulfilling and enriching experience, and the
best way to open your eyes to a whole new way of living and culture - from discovering
music, trying new foods, meeting the locals, and learning about the history and
traditions of your new country.

5. Earn better pay and benefits

Many expats receive salaries that are considerably higher than those of their
counterparts back home, and in some countries expats also benefit from favourable tax
regimes.

In addition, expats normally also receive a considerable amount of expatriate benefits.

An additional allowance is usually provided to help with relocating and settling into a
new country and often includes accommodation, work permits, medical cover and other
perks.

6. Expand your global network

Working abroad is a great way to expand your personal and professional

network, giving you the opportunity to build relationships with people in your field on an
international level. Developing an international social network can be useful both during
your stay and when you're back in your home country.

Luckily, maintaining the network you build abroad is now easier than ever before. Social
media, LinkedIn, and apps like WhatsApp, can all help you to stay connected with your
circle of friends from all over the world.

WAYS TO ENSURE SUCCESS OF INTERNATIONAL ASSIGNMENT

1 Conduct screenings on potential mobile assignees
Everyone copes differently in new settings and towards new challenges in international
assignments. As such, the mobility team should first evaluate these employees' abilities
to deal with the stress of being relocated. For instance, send them on short trips first to
gauge how well they respond and how suitable they might be for long-term relocation.

Further, be sure to conduct background and reference checks; assess their language
skills; evaluate their interpersonal skills, psychological state of mind, vocational skills,
personality, and cultural fit.

2 Carry out standard medical checks and mental health assessments

Medical screenings ensure that any chronic medical needs or medication requirements
by employees are addressed early. This way, the mobility team will be able to
determine whether the employee can be assigned overseas, and can take the necessary
measures to arrange any medical referrals needed.

Further, don't forget to also assess the employee's mental health condition. If their
families or partners are relocating with them, then these assessments should be
conducted on them as well. In line with this, there should be a structured support
framework, for instance addressing unique family needs.

Lastly, employees should also be assessed for their emotional well-being, physical state
of health and attitude towards work-life balance, which will affect their quality of life. By
doing so, it will help the team provide these employees with the right support material
such as health advice.

3 Provide proper training and support

As some employees may not be familiar with the country they may be relocating to, HR
and the mobility team plays a key role in thoroughly preparing them for what's ahead -
in terms of the culture, political climate, a brief on the country's history, as well as what
to expect of the social situation there. It will be good to provide them with a support
network they can tap on, check in on them regularly.

Particularly for culture, an assignee's ability to adapt to a new culture is critical, as they
will need to have a sense of belonging that would then motivate them to work
productively there. Thus, cross-cultural training should be conducted, for both the
employee and their family. Do encourage them to conduct their own research as well.

4 Make safety and security a key responsibility

While aspects such as natural disasters or political instability are out of your control,
you should still prepare employees as much as possible by providing training on safety
and evacuation procedures, as well as constantly monitor the situation in the country.

To further support employees, especially those in high-risk areas, it will be good for
them to have access to updated security reports. For instance, through any related
applications in the country, or by subscribing them to regular SMS or email bulletin
alerts and a travel assistance phone line.

5 Ensure proper healthcare access

When mobilising an employee, always ensure they have proper access to quality
healthcare services wherever they are relocated. Familiarise them with how the
healthcare system and policies work in the particular country, as well as the different
types of insurance packages available to expats.

6 Provide regular end-to-end care and check-ins

Regular staff appraisals are essential during mobile assignments, in ensuring the
wellbeing of these employees remain good, and the continued success of the
assignment. It will be good for the team to check in on these employees frequently, to
provide them with further support with needed as well as access to support from the
home country.
7 Support employees in repatriation
When employees move back home, it is natural for them to feel disoriented, especially
when the skills and abilities picked up in their country of assignment are a mismatch to
their home country. It could provide a culture shock, and lead to difficulties in fitting
back in. In such instances, the company should provide support such as mentoring and
repatriation training to these employees and their families.

Further, make the most out of what they have learnt through the mobility process -
give them opportunities to mentor and support their colleagues who will be relocating.