Essay on International Business Structure and Strategy
Since 1980s the global competition is becoming very important for the world and national economics’ development. It begins to have a decisive influence on the strategic planning and management not only in the largest transnational corporations, but also in companies that have traditionally relied upon the national market. Companies are involved in the processes taking place in international business either directly or indirectly.
International business is similar to the national business in many ways, but there are significant differences that must be taken into account for the successful implementation of international strategies.
The main problem is to overcome differences in national cultures, which manifest themselves quite often. International business operates in countries with different cultures, so the same formal parameters of starting a new business (the amount of capital raised, number of employees, production assets, performance incentives, etc.) can be implemented, when used in different cultural environments, and lead to different results.
International businesses face some serious challenges – issues and solutions about what products (services) should be attractive for various foreign markets, possible problems with the transfer of currency, the uncertainties associated with predicting the costs and profitability, creating significant management problems, the impact of different cultures, the complexity of choosing the optimal structure for international business, taxation and pricing, high political risks, etc.
Specifics of financial planning is determined by the following problems: volatility in exchange rates, revaluation of currencies, particularly the national taxation, possible difficulties with the export of funds from abroad, problems with in-house transfer pricing, problems in terms of estimating performance of foreign subsidiaries, etc.