International Management

The economic independence of nations fosters the growth of multinational firms that conduct business on a global scale where markets are more important than political boundaries.

Managers operating in an international environment deal with a variety of unique challenges growing out of such factors as politics, economics, and cultures.

Each foreign country is different from all other countries where a firm might do business. So, when a company is first getting established in a foreign country it is environment’s current state that gets more attention. It has to learn local laws, customs, and languages. It must learn to deal with foreign patterns of economic growth, investment, and inflation. The company must also concern itself with various aspects of international trade, such as the value of a country’s currency relative to other currencies (the foreign exchange rate) and its balance of payments, as well as the extent of controls on imports and exports, on foreign investors.

Firms that wish to expand into a foreign country must also assess its political stability, the business attitudes of its government, ruling party and opposition. Both a country’s internal and foreign policies can influence the business environment.

Companies may decide to expand internationally for a number of reasons which may include a) receiving orders from foreign customers, b) the decision to open new markets, c) the decision to stop foreign companies from entering specific foreign markets and eventually becoming competitors, and d) offering a unique product and value. Companies planning to become international must consider four factors; market factors, production factors, competition, and government.

International management is the process of planning, organizing, leading and controlling in organizations engaged in international business. Such organizations vary in size from small to midsize to multinational business. A considerable amount of international business is conducted by transnational corporations.

A multinational company must adjust to a multinational legal environment that includes laws and regulations dealing with taxes, tariffs, quotas, copyrights.

A company’s main resource is its people. Their attitudes guide its internationalization, or prevent it. There are three primary attitudes among the managers of international companies: ethnocentric, polycentric, and geocentric.

Ethnocentric managers see foreign countries and their people as inferior to those of the home country. These managers believe that the practices of the home country can be exported along with its goods and services.

A polycentric manager sees all countries as different and as hard to understand. Believing that a company’s foreign offices are likely to understand their needs, such managers leave them alone.

Geocentric managers recognize similarities as well as differences among countries. Such managers attempt to draw in the most effective techniques and practices, wherever they originate.

Firms with foreign interests are likely to have managers with each of these perspectives. But it is considered that polycentric attitudes are the most suitable kind for managers of multinational companies, but they are also the hardest to learn and accept.

There is currently much debate over selecting a managerial approach for a multinational enterprise. Probably no single method of managing works for all countries; however, many arguments have asserted that the success of some world firms indicates the existence of a successful approach to managing that is effective between cultures.

So, if a company chooses a multinational strategy, then product and marketing strategies differ according to the customs, tastes and buying habits of a particular national market. Consider the Ford Corporation, one of the biggest producers of cars. Ford cars are designed, produced and sold for individual markets. Thus, cars made for European customers are never seen in the USA.

Whatever the strategy, the principle goal of international management is to expand and secure the company’s position in the global market.

3. Answer the following questions:

1. What does the economic independence of nations foster?

2. What do managers operating in an international environment deal with? 3. What is referred to as a country’s environment?

4. What aspects of international trade must company concern itself with? 5. What reasons make companies expand internationally?

6. What is international management?

7. What must a multinational company adjust to?

8. What are the three primary attitudes toward foreign countries among managers of international companies?

9. Is there a single managerial approach for a multinational enterprise?

10. How can you define the principal goal of international management?

4. Give Ukrainian equivalents of the following words and word combinations:

to expand internationally, to conduct, global strategy, ruling party, buying habit, to secure, to influence, balance of payments, various aspects, are likely to…, country’s currency, basic functions, internal policy, suitable kind, customs, local laws, to engage, leading, midsize, global market, to assess, to foster.

5. Give English equivalents of the following words and word combinations:

компанія середнього розміру, пропонувати унікальний продукт, який би не, запобігати, складне завдання, сприяти, керівний підхід, спроби (намагання), середовище, залучати, розширяти, курс іноземної валюти, контроль імпорту та експорту, закони, правила, тарифи, гарантувати, квоти, авторське право, підхід, однак (хоча), підприємство, звичка.

6. Match and learn the synonyms:

A: to conduct, to do business, to vary, to indicate, to expand, regulations, habit, to assess, to guide, to foster;

B: to differ, to encourage, to operate, custom, to manage, to point out, to grow, to evaluate, rules, to run business.

7. Match and learn the opposites:

A: foreign, import, to expand, external, growth, the hardest, important, to accept, successful, stability, to differ;

B: to be the same, domestic, unimportant, to refuse, the easiest, to narrow, unsuccessful, decline, internal, export, instability.

8. Complete the sentences with appropriate words from the text:

1. There is currently … … over selecting a managerial approach for a multinational enterprise. 2. Managers operating in an … … deal with a variety of unique challenges growing out of such factors as politics, economics, and cultures. 3. A country’s internal and foreign policies can influence the … …. 4. Believing that a company’s … … are likely to understand their…, such managers leave them alone. 5. Probably no single … … works for all countries. 6. … … of international management is to expand and … the company’s position in the global market. 7. A considerable amount of international business is conducted by … ….

9. Define the following terms from the text:

multinational company, international management, ethnocentric manager, transnational corporation, multinational strategy, polycentric manager.

10. Put questions to the words in the italics:

1. Companies may decide to expand internationally for a number of reasons. 2. International managers must also take a professional view of their work. 3. Cars made for European customers are never seen in the USA. 4. A global strategy uses a standardized product and marketing strategy world-wide. 5. Firms with foreign interests are likely to have managers with each of these perspectives. 6. Each foreign country is different from all other countries where a firm might do business. 7. A polycentric manager sees all countries as different and as hard to understand.

11. Translate into English:

1. Основна мета менеджменту – це зберегти позицію компанії на світовому ринку. 2 Міжнародний менеджмент є важливою складовою частиною міжнародного бізнесу. 3. Управлінський персонал міжнародних компаній діє згідно з глобальною або багатонаціональною стратегіями. 4. Фірми, які готові експортувати свою продукцію, повинні оцінювати політичну стабільність країни. 5. Транснаціональні корпорації розміщують свої виробничі філії по всьому світу. 6. Менеджери міжнародного рівня повинні знати закони, звичаї та мову країни з якою працюють. 7. Внутрішня та зовнішня політики однаково впливають на ділове середовище. 8. Існує багато думок щодо управлінського підходу на багатонаціональному підприємстві. 9. Немає єдиного методу роботи менеджера для всіх країн. 10. Значна частина міжнародного бізнесу управляється транснаціональними корпораціями.

Grammar: Appendix #7