International Management, The Importance of Regionalization, The Importance Of Globalization and The Importance Of The International Environment.
The field of international management is greatly influenced by the concept of regionalization, globalization and the global landscape. Regionalisation has gained significance in business as a management tool to solve the governance issues and for socio-economic development of a nation.
Regionalization is useful in meeting unique needs of a region for the achieving economic development goals of the region by analyzing its political, legal, environmental and socio-economic factors. The decentralization of regions would increase in the assimilation of funds by setting priorities at the regional level and focusing on projects that add value to the regional development (Oh & Rugman, 2012).
Thus, regionalization is also necessary for the process of planning the developmental policies of a nation in an international context. The globalization poses an advantage to the interest of international corporations by increasing access to different markets, opening the global economy and giving an advantage to the firms to trade or export low-cost commodities in global markets.
The globalization in international context promotes global corporation by an understanding of cross-culture and exchange of ideas, product or services for the organization growth. The globalization directed the right of entry to an overseas market to facilitate business and organization growth (Baylis et al., 2013).
The international environment is a supportive framework for the global economy which has an influence on the business trade and functioning. The strength and weakness of the organization along with competitive forces and the macro-environment factors are essential to consider while operating in international environments (Wild et al., 2014). The international environment is required to be harmonious to help the business achieve its objectives in the overseas market.
International management, cultural diversity, the importance of cultural diversity
Cultural diversity refers to an array of culture in an area, region, and nation or presence of the different cultural individual within an organization (Trompenaars and Hampden-Turner, 2011). The common variety is seen in the form of language, traditions, the manner in the conduct of business operation (etiquette) and interactions with the internal and external environment.
Cultural diversity impacts the international management due to the difference in attitude, behaviour, and perception. The cultural differences in plays a distinctive role in organizational interaction or within professional capacity leading effective or ineffectual business interaction and understanding among the workforce.
A good understanding of the cultural diversity in a transnational corporation is useful in enhancing the communication between the workforce and between management and employees to promote a compassionate work culture.
The cultural diversity in international operation is to get rich ideas and opinion to solve complex challenges faced by transnational corporations by collaboration and creativity of individual from the different cultural background (Pieterse et al., 2013).
Moreover, understanding cultural diversity assists the businesses to offer services product and services on a global level. Cultural diversity provides an opportunity for market development and foreign investments to the foreign land and facilitates economic opportunity for individuals worldwide.
Thus, it is essential to understand cultural diversity to achieve sustainability in the business and to promote international cooperation and development of a more collaboration work environment. According to Trompenaars and Hampden-Turner (2011), the cultural diversity is also significant in carrying out marketing globally such as promotion campaign launch and also useful in negotiating business terms with individuals from the foreign land.
International management, discuss the importance of creativity and innovation.
In this competitive international landscape, creative and innovative organizations are main drivers of the global economy. There is a close inter-relation between creativity and innovation as to reach a solution to a complex problem requires creativity through the innovation process.
Creativity in business is the capability to generate new ideas and techniques and creativity is a force that drives innovation to implement the creativity into processes, products, business models, etc. (Anderson et al., 2014). Thus, creativity is a vital component in the incorporation of innovative practices.
The significance of innovation in international management is to beat the pressure of international competition by introducing high quality products, enhancing the quality of services, efficient environmental processes, improving the production process, strengthening business models and management practices.
The innovative practices in important to acquire new boundaries and markets, increase global market share, provide wide choices to customers, improvement in the quality of products and service, substitute outdated products and follow innovative practices to reduce the impact on the environment. Similarly, creativity in global corporation helps the business to thrive in the competitive environment and to achieve the edge over competitor firms (Mudambi and Swift, 2011).
However, the skills of creativity and innovation in global operations holds relevance to accomplish business objectives and to handle management problems that arise in managing overseas projects which need the creative process to reach an innovative solution (de Sousa et al., 2012).
The significance of creativity and innovation is directed towards improvement in processes, increase productivity, providing effective solutions to management problems, and promote a culture of innovation to provide the competitive advantage for the success of the business.
The Influence of International Currency on International Management
The international currency has an impact on the economy in the context of international management. The advantage of conducting business in the international currency could prevent the multinationals from the risk of exchange rate volatility by transacting in domestic currency, and the corporation has risk avoidance to protect its market share by permitting a constant price.
The way to hedge in opposition to adverse currency fluctuations can help the corporations to protect from the rise in cost due to international currency appreciation (Cohen and Benney, 2014). On the other hand, the influence of international currency is moderately affecting transnational corporations as these corporations are involved in different transactions in different currencies.
Moreover, the international currency directly impacts the global investments which are affected by the varying relative value of assets assessed in other currencies. The international currency has a direct influence on the international trade. For instance, a weaker international currency would encourage exports, but at the same time, the import would be declined due to higher cost implication.
This could increase surplus and decrease a country trade deficit after a certain period. On the other hand, a stronger international currency would make import cheap and affect the export which leads to the broader trade deficit and eventually would weaken the currency through a mechanism of self adjustment (Bénétrix et al., 2015).
A strong currency strongly influences the export oriented industries in the global platform. Moreover, a higher GDP of an economy is indicated by the high value of net exports. The international currency is seen to influence the global competitiveness of corporation along with giving an opportunity for cost advantages by conducting transactions in foreign currencies instead of principal currencies manage the risk of foreign exchange volatility.
References
Anderson, N., Potočnik, K. and Zhou, J. (2014) Innovation and creativity in organizations: A state-of-the-science review, prospective commentary, and guiding framework. Journal of Management, 40(5), pp. 1297-1333.
Baylis, J., Smith, S. and Owens, P. (2013) The globalization of world politics: an introduction to international relations. UK: Oxford University Press.
Bénétrix, A. S., Lane, P. R. and Shambaugh, J. C. (2015) International currency exposures, valuation effects and the global financial crisis. Journal of International Economics, 96, pp. 98-109.
Cohen, B. J. and Benney, T. M. (2014) What does the international currency system really look like?. Review of International Political Economy, 21(5), pp. 1017-1041.
de Sousa, F. C., Pellissier, R. and Monteiro, I. P. (2012) Creativity, innovation and collaborative organizations. International Journal of Organizational Innovation (Online), 5(1), pp. 26.
Mudambi, R. and Swift, T. (2011) Leveraging knowledge and competencies across space: The next frontier in international business. Journal of International Management, 17(3), pp. 186-189.
Oh, C. H. and Rugman, A. M. (2012) Regional integration and the international strategies of large European firms. International business review, 21(3), pp. 493-507.
Pieterse, A. N., Van Knippenberg, D. and Van Dierendonck, D. (2013) Cultural diversity and team performance: The role of team member goal orientation.Academy of Management Journal, 56(3), pp. 782-804.
Trompenaars, F. and Hampden-Turner, C. (2011) Riding the waves of culture: Understanding diversity in global business. USA: Nicholas Brealey Publishing.
Wild, J., Wild, K. L. and Han, J. C. (2014) International business. United Kingdom: Pearson Education Limited.
