International vs Domestic Management - Essay Example

? International Management versus Domestic Management In today’s society businesses are increasingly developing interests in the international markets. However, such efforts have not been rewarding considering the complexities in dealing with different nation at the international market. Among the key commonly highlighted hindrances include, first, given different nations, there is a wide disparity in terms of laws concerning trade and investment (Brooke, 1996). Secondly, there are pronounced differences in the business ethics and culture, political systems, as well as, monetary policies, limited to such nations. It is also noted that the involved countries have widespread variations in the currencies (Brooke, 1996). This paper seeks to discuss the factors that set aside international management from domestic management. International management, as used in this context, refers to the process of carrying out business activities and operations on the international setting (Mordern, 2004). As such the management is concerned with the establishment of good relations with other countries. As noted, management takes into consideration the diversity in cultural aspects often associated with transactions with other international business organizations. International management is asked with a responsibility to perform supervisory services on the practices involved in the business, as well as operation in foreign countries. This happens because of the partnerships, mergers, as well as out sourcing of the workforce (Mordern, 2004). Such operations and practices help the company to achieve its targets. Moreover, international management is brought by the changing trends in the operations of business which challenges the capability of the organization in handling the changes (Mordern, 2004). This implies that international management incorporates some of the traditional management practices and techniques in order to achieve its primary goal. The traditional management techniques are altered in a manner to fit the standards of global management. It should be noted that international standards take in consideration of legal and ethical issues as well as the multicultural aspects in order to avail the services to expanded population (Rodriques, 2009). Furthermore, international management oversees the operations in a number of facilities within the foreign land, this is normally seen as a move to woo the international population (Goodertham and Nordhaug, 2003). Domestic management, on the other hand, refers to the traditional type of management that is normally carried out in a particular region or a country (Thomas, 2002). It should be noted that the primary target for domestic management is slightly different from international management. With domestic management involving a single country, international management, involves operations between two or more countries (Thomas, 2002). By examining the primary target for the international and domestic management, it can be established that international management might be said to be inclusive of the larger market population in different regions across the world, while domestic management covers only a small population within the country of operation. However, when international management is examined in relation to the global management, it can be established that the target market appears as an average population (Brooke, 1996). Following that, it becomes evident that international management appears to be more demanding in the context of operation techniques and strategies as well as the necessary resources due to the wider scope. In terms of human resource management, it can be pointed out that international human resource management focuses on the diverse cultural differences as well as legal and ethical issues relating to the cultural settings (Rodrigues, 2009). On the other hand, domestic human resource management is guided by state laws and the ethical issues as such, such that little change can be done in their management strategies and techniques (Rodrigues, 2009). In addition, international management involves extensive utilization of resource where technology is such of paramount for efficient communication and transmission of information and goods to distant regions (Mordern, 2004). On the other hand, domestic management requires little resources to be diverted on technology in order to realize its primal goals. As such, it can be pointed out that the differences between international management and domestic management majorly lies in extend of work as well as the operations involved. Although, the management involved in both cases emphasizes on efficient organization, it cannot be negated that the scope and demand of international management is much more than domestic management. It should be noted that, international management could entail the management of the activities of the smallest firm to even a much wider global organization that has well balanced strategies as well as interconnected operations. Additionally, international management involves transactions between the nationals of different countries, as such it occurs across the political demarcations of different countries, while the domestic management entails management of the business within the local domain (Goodertham and Nordhaug, 2003). Furthermore, domestic management mainly concentrates on the opportunities in the domestic market, where the idea of growing globally is not of a concern (Hofstede, 1980). However, if growth is realized beyond the present capacity , the management settles on a diversification strategy in order to penetrate the domestic markets as well as incorporate the new products and technology. Ideally domestic management does not focus on penetrating the international markets, the operations are limited to the country of operation. On the other hand, international management exploits the oppourtunities that are presented outside their domestic country (Mordern, 2004). As such the focus for international management is rather domestic but still it extends a hand to the foreign countries. It should be noted that international management extends services such as business practices to the foreign markets (Thomas, 2002). In addition, terms of the economic and the legal structure international management takes inconsideration of the legal structures as well as the financial methods and customs of the different countries it operates in. for instance a multinational company in the united states will be compelled to change its financial reporting standards in the event of starting subsidiary companies in other nations (Mordern, 2004). By and large, variations in the currency denominations must be considered in international management, since they have to carry pout business with other countries (Eun and Resnick, 2012). As such there are a lot of costs as well as, inconveniences to be dealt with. It should be noted that, in domestic management only one currency is used. Thirdly, in the international management, the multinational companies face challenges due different languages they are exposed to in their daily activities (Latham, n.d).. As such, a country with a subsidiary I china will be compelled to carry out business in the Chinese language, following that the company incurs huge costs since they have to translate the main company policies as well as conversations in a number of languages. However in the domestic management, the company carries out business without the need for translation of the language. Another factor separates international management from domestic management is the cultural differences (Walter and Murray, 1988). As such international companies must operate in a flexible manner in order to adapt to the prevailing local cultural practices and preferences. Indeed the cultural differences may compel a company to carry out business in relation culture in a given country (Hofstede, 1980). For instance, a fast food company like McDonalds will be compelled to serve Nicaragua rice in Italy. Moreover, international managements, occasionally risks due to the variations in the tariffs imposed on them by some countries, as such the tariff may be burdensome hence derailing the growth of the business. While in domestic management, the tariffs may be flexed in order to encourage growth of the local companies. As noted, the complexity surrounding international management is far much greater as compare to domestic management. As such, it cannot be negated that the venture in international business has become less challenging due to the flexibility of the trade laws. Moreover, technological breakthroughs have made entry of business in the international market more of a reality. However, entry of local companies in the international business has a lot more of environmental issues to deal with as well as the actual running of the new venture. Lastly, it has been observed that international management is more involving and it requires careful consideration of all the issues in the new location References Brooke, M. (1996). International management. Washington: Nelson Thornes. Print Eun, S.C, and Resnick, G.B. ( 2012). International Financial Management. New York: McGraw-Hill. Print Goodertham, P., and Nordhaug. O (2003). International Cross Boundary Challenges. New York: John Wiley & Sons. Print. Hofstede, G. (1980) .Culture's Consequences: Individual Differences in Work Related Values. Beverly Hills, CA: Sage Publications. Print. Latham, A . (n.d). What Are the Six Key Differences between Multinational and Domestic Financial Management? Retrieved on 13th April 2013from http://www.ehow.com/info_8641557_six-multinational-domestic-financial-management.html#ixzz2QLKtOZTm Mead, R. (1998). International Management. New York: John Willey &Sons. Print. Mordern, T. ( 2004). Principles of International Management. California: Ashgate publishing. Print Rodrigues, C. (2009). International Management : A Cultural Approach. Los Angeles: Sage Publications. Print Thomas,C.D. (2002). Essentials of International Management: A cross cultural perspective. Los Angeles: Sage Publications. Print. Walter, I., and Murray, T. A. (1988). Hand Book of International Management. California: John Wiley & Sons. Print. Read More