International Management and Multinational Corporations

The study of international management focuses on the operation of international firms in host countries. It is concerned with managerial issues related to the flow of people, goods, and money, with the ultimate aim being to manage better in situations that involve crossing national boundaries.

The environment factors that affect domestic firms usually are more critical for international operating in foreign countries. Managers involved in international business are faced with many factors that are different from those of the domestically oriented firm. Managers have to interact with employees who have different educational and cultural backgrounds and value systems; they also cope with different legal; political and economic factors. Thus, these environments understandably influence the way managerial and enterprises functions are carried out.

Although business has been conducted on an international scale for many years, international business has gained greater visibility and importance in recent because of the growth of large multinational corporations. International businesses engage in transaction across national boundaries. These transaction include the transfer of goods,, services, technology, managerial knowledge, and capital to other countries.

One is the exportation of goods and services. Another is a licensing agreement for producing goods in another country. The parent company may also engage in management contracts that provide for operating foreign companies. Still another form of interaction is the joint venture with a firm in the host country. Finally, multinational companies may set up wholly owned subsidiaries or branches with production facilities in the host country. Thus in developing a global strategy an international firm has many options.

Unifying influences occur when the parent company provides and shares technical and managerial know how thus assisting the host company in the development of human and material resources. Moreover, the parent corporation and the firm in the host country may find it advantageous to be integrated into a global organization structure. Whatever the internaction, policies must provide for equity and result in benefits for both the parent firm and the host company. Only then can one expect a long lasting relationship. Many factors can cause conflicts between the parent firm and the host country. Nationalistic self interest may overshadow the benefits obtained through cooperative. Similarly, socio-cultural differences can lead to breakdowns in communication and subsequent misunderstandings. Also a large multinational firm may have such overpowering economic effects on a small country that the host country feels overwhelmed. Some international corporations have been charged with making excessive profits, hiring the best local people away from local firms and operating contrary to social customs. The international corporation must develop social and diplomatic skills in its managers in order to prevent such conflicts and to resolve those that unavoidably occur

Domestic and International Enterprises:

The language spoken, written or official is one in the domestic enterprise and multiple in the international enterprise. Education system its quality, level or extent is none or little constraint in domestic enterprise and has a great constraint in international enterprise.

Social values, attitude towards the achievements, risk taking, scientific method and work is homogeneous in domestic enterprise and heterogeneous in international enterprise. Social organization’s authority, status, roles, institution, mobility and social systems is similar in domestic enterprise and different in international enterprise.

The political orientation and its power and ideologies are country centered in domestic enterprise and transnational in international enterprise.

Legal environment like laws, codes, regulations are fairly uniform in domestic enterprise whereas different in international enterprise. National sovereignties are one in domestic business and multiple in international ones.

In Economic environment the development in domestic enterprise is at similar stages whereas at different stages in international ones.