Managing Across Border

Question: Identify and discuss in detail five key issues that managers need to carefully assess when contemplating an overseas expansion. Throughout your discussion, provide details relating to two examples of Australian companies who have successfully expanded their operations overseas. Answer: Introduction This report is prepared for developing understanding of key requirements for internationalization of the business. It focuses on the different issues and challenges that the manager needs to carefully assess while deciding overseas expansion of the existing business. Simultaneously it focuses on different organization that has successfully expanded their business at international level. Globe International and Foster Group are the two most successful companies of Australia that are selected for completion of this report. Key issues Following are major issues that are necessary to be assessed for a manager while going for overseas expansion of its business: Cultural diversity issue Technical development issue Political/legal issues Human resource issue Economic issue Detailed analysis of 5 key issues of the overseas expansion is as below. Cultural diversity issue: Whenever manager/entrepreneur expands its business at international level, it needs to identify the cultural diversity issue and its various implications. Manager needs to assess various culture factors while taking strategic business decisions such as belief, values, traditions, languages, laws, climate, religion, etc (Ferraro and Brody, 2015). Cultural diversity is helpful to improve strategic plan, built a productive culture at the workplace. Hence, organization can sustain for a long period through effective cultural diversity management. Due to differences of culture, the managers may face differences in taste and preferences of customers that is critical factor for their product demand in target market. The manager of the firm identifies the needs and preference of the customers through analysis of cultural factor of a country. Consequently, firm can ensure that whether its products will be successful in a particular country or not. At the same time, manager analyses the employ ees behavior in a different culture that is helpful to create the employees engagement at international level (Banks, 2015). Simultaneously manager can overcome the cultural issue in recruitment through carefully designing and conducting recruitment process in host country. A manager can increase the work efficiency of their employees through cultural training and development (Greenfield and Cocking, 2014). Furthermore, a manager can manages the internal conflict in the organization through appointment of the expatriates in the host country. For example, Australian firm Globe International is successful in shoes, accessories, etc in the Australian market. At the same time company expands its operation at overseas and it has faced the several issues such as the tradition of people, customer belief towards the firm, etc. Along with this, the company uses the research and development to know the customer needs, new innovative products, customize the market strategy according to needs of local culture in the host country (Robbins, et al., 2013). The company provides the culture diversity training to their empl oyees, which is helpful to reduce the cultural issues. In addition, the language barrier is the common issues in every culture. It is because difference of language creates challenges for international companies. Manager can overcome the language issues through develops the strategy policy in new culture. As well as, manager can overcome the language barrier through appoints the local employees in the firm (Greenfield and Cocking, 2014). While the firm increases its operations at international level it faces the advertising issue. In addition to this, cultural difference also affects the acceptance of company products in target market. For example, you cannot sell beef in the Indian market because cows are a sacred animal in India. But at the same time, a manager can mitigate that issue through new cultural ideas. Likewise, a manager can meet the requirement of its customers through effective research and development and customization of products in the host country. Apart from this, organizations face the communication issues during the international expansion. But the managers can address this issue through developing understanding of different. For example, Australian firm Foster Group is the successful firm who operates their business in different countries. Foster Group has also faced the cultural issues like taste and preference of the people, language related, etc. Along with this, company mitigates this issues through innovates the new products according to customer requirements. As well as, the company reduced the language issue through develops the standard language of the culture and reflect the value of the customer, which feels comfortable (Cavusgil, et al., 2014). In addition to this, company focuses on cultural training of its staff. Technical development issue: Technical development plays an imperative role in operating the business successful at international level. Each country has different techniques, therefore, it can be said that techniques have also impact on the performance and production of the firm in the long term. Technology issue can be a major issue for the expansion of business at the international level. For instance, Foster group use the modern technology to operate its business. Simultaneously, level of technology at production units of companies decides the level of output of the firms. It is very important for a manager to assess the level of technology in target market selected for expansion of its business (Johanson and Mattsson, 2015). For example, a telecom company that is looking for overseas expansion of its business (4G services) in a country, it cannot select a country with absence of 4G network. Furthermore, a manager also faces the technical problem during the expansion of business in host country such as research and development, the flow of communication, plant and machinery, technology, etc. Thus, after analysis of above issues a manager removes this issues through purchase of advanced technology, investment in technology, appropriate selection of target market and outsource decision in the host country (Piekkari, et al., 2014). A manager also resolves the technical development issues at globally by adding value for the customer through technology advancement. Simultaneously, manager accesses the opportunity and to refine the products to meet out the needs of the customers. Apart from this, a manager reduces the problem of a technical expert, through appoints the expatriate in the host country. Along with this, the company uses the advanced technology to reduce the technical problems. In the context of technical issues, a manager can analyze the issue of employees resistance towards the acceptance of new technology. Manager should provide the training to their employees for overcoming this issue (Ko and Choo, 2015). Company needs to build the advertising and promotional strategy through various channels. For instance, Globe International provides the quality products with the help of advanced technology. But at the same time, the organization has faced the technology failure issue in the host country. Along with this, the company increases the skill of the employees, through technology, motivation, etc. As well as, the company focuses on recruitment of right people at the right place to reduce the technical issues (Lonard, et al., 2012). Political/legal issues: Managers at multinational firms also face the political and legal issues during the overseas expansion. Consequently, Political and legal issues have a major impact on the company and its production operation. Political relationship of home country and host nation is essential for the firm while going for overseas expansion (Rodan, 2013). Along with this, there are various political and legal factors affect the sustainability of the firm in international market such as tax policies, tariffs laws etc. Rise in tax leads to an increase in product cost. In the case of Foster, it is analyzed that the tax policy of the host country is effective for its operations. Therefore, Foster is effective in attaining growth in international market. Thus, the company invests in low tax policy host country that is helpful to maximize the profitability of the Foster as well as increases the sustainability of the firm in long-term (Useem, 2014). On the other hand, fiscal policy of a country also affects the Foster growth strategy. The company analyses unemployment rate, inflation rate of the host country, which is beneficial for the firm for enhancing their business at international level. Apart from this, trade tariffs also affect the business because it is predictor of future sales of compan7y in target nation. For instance, Globe international analyses the host country tariff policy it is because trade tariff imposed on the imported goods and services of the firm increases the cost of the firm. But Globe international is effective to select host country with low trade tariff that increases the production as well as revenue of the firm. This way, company maximizes its profits globally. Simultaneously, Globe International increases their operation in that country where entry mode regulation is easy to operate (Santoro, 2015). Similarly, the company also analyzes the stability of the government in a host country because stable governments impose the low tax policy and provides the tax rebate. Thus, it is helpful for the firm to raise their productivity at international level. In addition, to this, some legal factors also affect the firm growth strategy at international level like employment law, taxation law, data protection law, effectiveness of intellectual property law etc. In addition to this, the other laws like minimum wage law of nation also affect the country selection decision of managers in a company. Country laws are necessary to be understood by managers, so as to design the flexible Hr policy for a meet out the legal requirements of the host country. Firm provides the health conscious goods for meeting the health and safety regulations of host nation (Steingold, 2015). This way, a company can easily increase its profit at overseas level. Globe international is successful organization at globally. But it has also faced some legal issues in overseas expansion. Company provides effective quality product with the latest technology. But at the same time, company expand their business at globally he faces the various issues like product regulation, patent infringement, antitrust laws, etc (Fernando and Congress, 2015). Therefore, Globe International uses the advanced technology quality products with affordable prices in the host country, which reduces the problem of competition, quality issues, etc. Human resource issues: Human resource plays an imperative role in operating any kind of business at the international level. Therefore, it can be said that Human resource will also affect the performance of the business in a significant manner (Ulrich, 2013). Human resource issue may be faced by manager in the form of non-availability of appropriate human resource in host nation. Along with this, it is significant to the organization for expanding its business that it clearly set the procedures of the human resource because it will be effective reduce substandard performance issues in business. For instance: Fosters is a famous Australian company that faces the human resource issue at the time of the business expansion at the global level. Foster set its business in another country and it did not estimate the procedure towards the incentives for the excellent work and disciplinary measures then it faced various challenges that affected the business of the organization. At the same time, organization has declined the incentive issues and punitive measurement of the workers through the determination of the deadline of the work of the employees. It will be effective for the substandard performance and also enhance the growth of the organization in an effective manner. Moreover, it can be said that human resource is a part of the business because that directly influences the growth of the organization (Saunders, 2011). In contrast, for example, Globe International is also an Australia-based multinational company that is famous for offering the shoes, accessories etc. There are some significant human resource issues that can be faced by the organization at the time of the business expansion. These are such as Labor availability problem, Labors skills issues etc that affect the growth of the company in an effective manner. Global International face the labor availability issues because each country has differed income level that affects the organization. Additionally, a company is not able to appoint the cheap labor in host nation that is big problem for the organization. At the same time, a global international company has not identified the skilled employees for its company that was the big issues because it influences the growth of the company (Rosenberg, 2011). Therefore, the company has determined target for the employees and also determined the wages or salaries according to their work that was effective to the organization because it will be supportive is selection of appropriate person at the appropriate place effectively. Thus, it will be also significant for the successful expansion of the business at the international level and enhance the productivity and growth of the business. At the same time, it can be analyzed that both Fosters and Globe International organization are the Australian Company; therefore, it is based upon the western culture. At the same time, it can be said that in the western country each person has a tendency to accomplish their task at own level but in another country. It is not possible that every person is capable of delegating towards the work at own level. It develops the problem for the company so a company has understood about the hierarchy strategy and implement in the business to successfully expand their business (Rivoli, 2014). In Addition to this, in the hierarchy Strategy Company has determined the position of the workers according to their work and they follow the top management to accomplish the work successfully. It can be said that company has appointed the managers to manage the low-level employees and accomplish the goal of the organization effectively (Jackson et al., 2011). Furthermore, it can be analyzed that the global international have understood the strategy of the others country before the expansion of the business in an effective manner. It will be supportive for enhancing the profitability and growth of the company in long term. At the same time, it will also be beneficial for manager to assess the human resource issues that may be faced by it in target market for increasing customer satisfaction and loyalty for its products (Flamholtz, 2012). Economic Issue: The economic issue is also a significant factor for the managers because it directly affects the performance of the business. In this context, it can be said that economic parameter will be a major issue for operating the business in an effective manner. Along with this, it can be said that there are some significant factors that can affect the expansion of the business. These are such as Gross domestic product, Inflation, Interest rate and exchange rate. They will majorly impact on the performance and growth of the business significantly. For instance: The Fosters is a famous multinational company that offers the various products to its customers. Fosters also face the economic issues during the business expansion at the international level. Currency value of the host nation is also a major economic factor that is necessary for manager to be assessed while selecting a country for internationalization of business. The excellent understanding towards the specific country can be effective for successful business expansion in a long term (Edwards, et al., 2013). At the same time, manager has also faces the inflation issues in the expansion of the business. The Fosters Company has also managed the inflation issues at the time of the expansion of the business at the international level. It has declined prices of the product to attract the more customers towards the utilization of the product and services. At the same time company has selected the cost leadership strategy to offer product at a low price that has been significant for the company to enhance the productivity and growth in long run. Globe International is also a well-known multinational company. It offers the various products and services to its customers and satisfies the needs in an effective manner. Global international has also faced the economic issues at the time of the business expansion at the global level (Cavusgil, et al., 2014). Furthermore, it faced different types of factors in expansion of business. These are such as currency fluctuation, GDP and exchange rate (Boxall, et al., 2011). The company has eliminated its currency rate issues through the utilization of hedging instrument. The hedging instrument is effective to enhance the growth and productivity of the business in a systematic manner (Dyckhoff, et al., 2013). In addition to this, the GDP have also affected the performance of the company hence company can research about the country GDP before an expansion of the business in a specific country because it directs impacts on the sales of the company and it will affect the profitability and fin ancial situation of the company (Bernstein, 2015). Furthermore, a Global international company has been analyzing that the GPD is high or low in target country. If the GDP rate is high it means the purchasing power of the country is high and it will positively impact the growth and productivity of the company. Therefore, Global international select that company with higher GDP rate for enhancing the sales and profitability in long run (Dunning, 2012). Conclusion On the basis of the above discussion it can be summarized that business expansion is significant for enhancing the productivity and growth of the organization. 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