How Contemporary International Firms Practice International Management Functions

Managing International Business
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Managing International Business
Increased and accelerated global business activities have necessitated managerial expertise in managing multinational companies. This knowledge is needed due to the emerging problems and risks in the global market. Political risks are the major threats to companies worldwide and a significant hindrance to firms that wish to enter the international space. Other challenges include cultural barriers, foreign laws, global company structure, currency rates, and supply chain complexity. These challenges affect many companies from expanding their operation overseas to boost profits. Despite these problems, global business is dynamic. It rapidly changes and adapts in response to these problematic events. Multinational companies with effective management strategies have gained a competitive advantage and continue to thrive in global business. Managing an international business is essential for the growth and profitability of the company. It involves decision-making and strategic planning. This essay analyzes how contemporary international firms practice political risk management, ethical behavior, and human resource management. It also outlines relationships between the three functions and identifies changes or new corporate behavior patterns that have emerged in these areas.
Strategies to Manage International Political Risk
Global firms are significant drivers of a country's economic growth and development due to their role in creating employment in various sectors and investing in underdeveloped aspects. Despite the success and benefits of these firms to a community, political risks threaten their existence in a host country. Political risks are uncertainties associated with political decisions. They adversely affect corporate profits and goals. They range from policy changes to political protests, terrorism, government interference and expropriation, and transfer and currency conversion (Ali et al., 2021). Since these actions harm international business, global firms must implement strategies to mitigate or prevent them.
The first strategy to manage global political risk is to evaluate the political climate of a given country before investing. Global firms and investors must ensure that they conduct extensive research about a host country to determine the existence or likelihood of political risks that would affect them negatively (John & Lawton, 2018). Doing so will help them decide to refrain from setting up operations in political risk hot spot countries. While some firms may find this measure effective, others may want to take calculated risks if riskier countries are lucrative. In such cases, companies can consider negotiating compensation terms with the host nation to obtain a legal basis if a political factor disrupts the country's operations (John & Lawton, 2018). However, the problem with this solution is that the host country’s legal system may be significantly different from the investor’s country. In some regions, non-nationals hardly win cases against a host nation. In worse scenarios, a revolution could instill a new admini...