The paper "Effective Strategies for Managers" is a good example of management coursework. With the increasing levels of globalization resulting from liberalization of markets, efficient flow of information, and integration of markets, the level of competition in the local market has increased tremendously. This has resulted from the entry of multinational companies in the local market. These firms have a huge financial base to segment the market, position their products strategically in the market, and attract customer loyalty towards their products. In order for the local businesses to remain competitive, they are being forced to diversify their operations to other untapped markets in order to reduce the risks and uncertainties associated with concentrating on a single market.
Furthermore, the internationalization process is being forced by the increased cost of production in the local markets. Therefore, businesses are establishing their subsidiaries in different parts of the world where there is cheap but qualified labor force, cheap raw materials, and the necessary infrastructures to support the operations of the companies (Lan & Unhelkar, 2005). Although many companies have been able to make immense profits, there are numerous challenges associated with going global.
This paper will, therefore, discuss these challenges and effective strategies that managers can put in place in order to deal with them. Financial constraint is one of the major challenges that face any manager who is planning to go global. The size of the international market is very large. As a result, the company requires high amounts of funds to penetrate and reach the target market some of whom are located in different parts of the world. Moreover, establishing a business in foreign countries faces huge financial challenges.
Despite the existence of the modern technology such as video conferencing which has eased the mode of communication with the subsidiaries, more resources are required in order to sustain these businesses and products, especially during the growth and penetration stage. During these stages, the business’ profits are taken back in order to improve various operations. Therefore, the firm requires constant support from headquarter. Consequently, before a company decides to go global, it must ensure that it has the necessary resources to support the new enterprises over a specific period of time.
Taxation is another major challenge that is associated with finance. In many countries, foreign businesses and products are charged more than the local businesses and products that have been produced locally (Awe, 2009). Therefore, a business must ensure that it calculates the cost of doing business in a foreign country before embarking on the process. This is significant in avoiding losses. Another major challenge that is faced by the manager when entering the international market is cultural diversity. In the local market, the customers have a single or few cultural differences.
As a result, it is easy to advertise and draft an advertising message for such a market. However, in the international market, customers have different cultural beliefs and practices which might affect the success of the product in the market (Travis, 2007). For instance, Apple Inc has been unable to segment the Chinese market fully due to the unique cultural practices and beliefs held by the local people.