Unpacking 3 Major Challenges Of International Management

International management presents business leaders with a number of unique difficulties. In this blog, we investigate three of the challenges and the impact they have.

It’s important to note that references to companies and businesses in these examples are equally applicable to other types of international organisations.

Cultural differences

Shaidul Kazi, a Senior Lecturer at Tampere University of Applied Sciences and Multicultural Intelligence Expert, explores the impact of cultural differences. In his report, Dealing with Cultural Differences in International Business, he highlights that even though there are common elements such as artifacts, rituals and stories across all cultures, the content of these elements differs greatly. This leads to intercultural differences, such as individuality versus the group and participative decision-making versus authoritative decision-making, which have a major impact on the running of an international business.

In international business, business success is strongly contingent, among other factors, on how business executives manage a new and unknown culture (Kazi, 2009).

To bridge these differences, you can incorporate :

• Cultural awareness
• Accept that cultural differences are as common as individual differences
• Develop a sense of cultural heterogeneity
• Be flexible but retain your own identity
• Believe in a win–win game
• Task-and purpose related focus
• Create cultural synergy

Ensuring compliance with local laws and regulations

In Chapter 7 of Managing Internationally, Kamal Fatehi highlights one of the most complex challenges facing individuals in international management: understanding and navigating local and international laws.

Although in the last few decades, we have witnessed the growth of an assortment of international agreements governing a variety of issues, the world remains primarily a community of nation-states, each with its own body of law, interests, and unique outlook. Even the European Union (EU) remains a collective of national sovereign states with their separate and unique national legal systems (Fatehi, 366).

As a leader in an international organisation, you must be acutely aware of how your interactions across regions work from a legal standpoint. As Fatehi highlights (Fatehi, 400) in his own chapter on international management and law, “Even textbooks devoted entirely to the law of international business only scratch the surface, giving a snapshot in time of the law as it existed at the time of the writing. Business firms find it necessary to go beyond a general knowledge and to master, with the aid of competent professional advice, the many specifics, often nation by nation”.

These regulations don’t only impact the management of your organisation, but could have financial or legal consequences if local laws are not adhered to.

The bigger they are, the harder they fall

In this article from McKinsey, global organisations are often found to be “unhealthier” than their locally based competitors.

A year ago, we uncovered a “globalization penalty”: high-performing global companies consistently scored lower than more locally focused ones on several dimensions of organizational health. (Dewhurst, Harris and Heywood, “Understanding your ‘globalization penalty’,” McKinsey Quarterly, July 2011).

A few areas where companies fell behind in this study included establishing a shared vision, encouraging innovation and building relationships with governments.

Unfortunately, despite their efforts, they were unable to find one model that could address this challenge. Whether it was due to the company’s history, or the opportunities and challenges they currently faced, there was no “one-size-fits-all” solution.

During their research, McKinsey identified four “tensions” that affect global organisations in different ways:

• Strategy – As you extend your reach, the company can struggle to develop a strategy and correctly allocate resources, which impacts local operations.
• People – Finding people with the right skills in an emerging market to be very difficult. This could be due to the systems that exist favouring individuals from a particular background, or simply finding the relevant talent due to lack of individuals with the right skills.
• Costs – One of the tensions for an organisation that is reaching into bigger and more diverse markets is complexity costs. This usually results in a standardisation of systems to lower costs, which causes problems with local markets.
• Risks – A global organisation may be more secure in some ways thanks to its market diversity, but this vast and varied reach introduces new risks. Each new market comes with new challenges, which the organisation may struggle to navigate.

Go global with Stellenbosch Business School

At the University of Stellenbosch Business School (USB), we offer an MBA with a stream that specialises in Managing International Organisations (MIO). This MBA will equip you with the skills you need to thrive in international organisations, multinational for-profit organisations and international development agencies or NGOs.

We’ve partnered with the United Nations System Staff College (UNSSC) to address the needs of individuals working in international organisations. This programme will provide you with the tools, theories and frameworks to grow in an increasingly complex global environment where economic, political, legal and many other differences abound.

Whether you are a manager who wants to work in international development, a professional who wants to move into a multinational for-profit organisation or a UN worker looking to improve their managerial skills, Stellenbosch Business School can help. Our MBA MIO course will teach you how to lead responsibly, function globally, make better decisions and understand the roles of organisational departments in an international organisation.

If you have queries about this programme or any of our other courses, you can reach out to us directly.