How International Companies Practice International Management Functions

How International Companies Practice International Management Functions
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Introduction
Managing international business involves the complex task of navigating political risk, ethical considerations, and staffing decisions (Lu et al., 2022). This essay aims to explore effective strategies for managing international political risk, the significance of ethical theories in international business ethics, and the importance of various staffing approaches, including the inclusion of women managers.
One key aspect of managing international political risk is implementing appropriate strategies. These include risk avoidance, hedging, insurance, negotiation, joint ventures, and risk assessment. By adopting these strategies, organizations can better anticipate disruptions caused by political instability and regulatory changes.
Additionally, these strategies serve to mitigate the impacts of such disruptions. Ethical theories play a fundamental role in guiding decision-making in international business ethics. Some notable theories are utilitarianism and deontology. By integrating these ethical frameworks into their practices, organizations can promote responsible behavior that aligns with societal values—employing models such as ethnocentric hiring (favoring individuals from the home country). Polycentric hiring (preferring individuals from host countries) or geocentric hiring (seeking individuals based on merits regardless of nationality) has wide-ranging implications for organizational success. Furthermore, it is imperative to include women managers as they bring unique perspectives while promoting gender diversity and equal opportunities.
Part A: Managing International Political Risk
Businesses face numerous challenges when venturing into international markets in our interconnected world. Among these challenges managing political risk stands out as one of the most critical. Political risk refers to the potential impact of political factors on a company's operations, investments, and profitability in foreign countries (Lu et al., 2022). The stability of the political climate is crucial for smooth business operations. Therefore, businesses must employ various strategies to effectively navigate political risk. It is widely believed that a plan can only fail if the strategy behind it is flawed. Hence with the right strategy, businesses can mitigate potential political risks. This section will explore some strategies employed to manage international political risk.
The first and foremost step in devising effective mitigation strategies is comprehending the nature and types of political risk. Political risk encompasses a wide range of factors, including government instability, policy changes, regulatory hurdles, political violence, and corruption. These risks can manifest in different ways, such as expropriation, contract repudiation, currency restrictions, or changes in laws and regulations.
One highly effective strategy for managing political risk is the avoidance strategy. This approach involves minimizing exposure to political risk by refraining from entering high-risk markets or sectors (Lu et al., 2022). Organizations that priori...