Management international business

Management International Business Student Name Institutional Affiliation Date Management International Business Introduction Globalization has opened markets abroad for businesses. Gone are the days when trade was confined to smaller geographical locations. The advancement in technology has led to a more interconnected world, where businesses can identify opportunities in other parts of the globe. Businesses, in their attempt to maximize returns, have resulted to expanding their operations to oversee markets by establishing subsidiaries. The move has increased the opportunities available to such businesses. However, the expansion leads to complexity in how such businesses operate. Unlike the rest of the local businesses, international businesses have to customize their operations to suit the political, legal, and cultural conditions in the host countries (Boso et al., 2023). In particular, international businesses need to be aware of the political risks their subsidiaries are exposed to in the host nations. International businesses need to operate following ethical standards. They also need to appreciate that the host countries have different staffing requirements. This essay explores how international businesses can manage political risks, follow ethical guidelines, and choose the most appropriate staffing approach for their subsidiaries. Strategies to Manage International Political Risk For multinational corporations, political risk implies the risk that a host nation can make political decisions that may have adverse effects on the firm’s profits or objectives (Kesternich & Schnitzer, 2010). Risks can be geopolitical, country, and societal. Geopolitical risks emerge where countries' foreign policies or regulatory environment more broadly affect businesses. These include political conflicts, sanctions, and trade wars. Country politics occur when the national political environment or the stability of government and institutions affects businesses. Policy changes, civil conflict, and corruption are examples of country conflicts. Societal conflicts arise when tensions between groups or public actions initiated by groups like trade unions affect the operations of businesses. For instance, boycotts, corporate espionage, and disruption of supply chains are examples of societal conflicts. Regardless of the type of political risk that an international business faces, companies will lose money if they are unprepared for such advanced situations. Due to the negative implications of political risk, multinational businesses can take the following mitigation measures. Firstly, international businesses can diversify their operations across different nations. This is critical since political risks affecting one market will not impact the operations of the entire business. For instance, Cola-Cola has expanded into more than 200 brands in more than 200 countries and territories. This has allowed the company to survive in different markets where regulatory changes can adversely affect the sale of some of its products (Huse et al., 2022). For instance, the company faced hurdles when the Philippines government imposed a sugar-sweetened beverage tax in 2019 to address health concerns due to obesity and diabetes. The tax increased Coca-Cola's cost of operations and made it reevaluate its pricing strategy and product portfolio in the Philippines. Because of its diverse portfolio, Coca-Cola continues to operate in the Philippines since it has more products to offer. However, the diversification of products and operations is complex and comes with heavy costs. It requires international businesses to have the required resources to manage the operations and product portfolio in different countries. Without financial resources, diversification may prove challenging to implement despite the apparent political risks. Secondly, international businesses can form partnerships with local businesses. Local partnerships are the means through which foreign companies’ identities intertwine (Cuypers et al., 2020). For international businesses, entering a new market carries risks like regulatory compliance and political instability. Strategic partnerships can assist in mitigating these risks by capitalizing on the local partner's familiarity with the local environment. Local partners are critical in offering the required guidance on legal and regulatory requirements, which can assist international businesses in navigating the complex bureaucratic processes. The partnership also assists international businesses in aligning their strategies with local political values. Uber is an example of an international company that has partnered with local businesses successfully. The transport company has an app that enables passengers to ride and drivers to charge a certain fee, with the company getting a commission from successful rides. By using local partnerships, Uber has created an expansive network of drives even in remote parts of the world. The strategic partnerships with local drivers have allowed Uber to integrate its services into different markets. The partnerships have allowed Uber to minimize the political risk associated with entering new markets. The business leverages the local partners to navigate the complex legal and regulatory procedures, which differ from one country to another. Moreover, international business could take a political risk insurance. While some countries present a significant risk to an international business, venturing into such markets can lead to substantial benefits. Due to the high level of political risks, international businesses can buy political risk insurance. Some organizations specialize in selling political risk insurance where multinational corporations can purchase a policy that would cover them in case an adverse political event takes place (Braun & Fischer, 2018). The business will pay for the policy depending on the nation, the industry of operation, and the risk insured among other relevant factors associated with doing business in the particular market. The advantage of political risk insurance is ensuring that an international business receives compensation in case its operations are disrupted. This ensures that the business does not absorb all the losses and gets the resources needed to navigate the adverse event. However, purchasing political risk insurance does not guarantee that a business will be compensated immediately if an adverse event takes place. The business may be forced to wait for some months before receiving compensation, which can adversely affect its operations. Additionally, political risk insurance is costly for businesses. Purchasing insurance premiums, especially for countries with high political risk can cost the business a lot of money. This can increase the operation costs of the businesses, significantly reducing their profitability. Ethical Theories for Managing Ethics Within International Business Ethical considerations are critical in the operations of international businesses. The survival of international corporations depends largely on their ability to navigate the cultural, legal, and social landscapes. Ethics demand that any business, including multinational corporations make decisions considering the implications of their actions on the various stakeholders like clients, staff members, communities, and the environment. Ethical decision-making requires adherence to applicable ethical theories, which offer a framework for what is right or wrong. Two relevant ethical theories for managing ethics within international businesses are utilitarianism and deontology. Utilitarianism indicates that an action is right if it promotes happiness and wrong if it results in sadness or the reverse of happiness. As a theory, utilitarianism is based on three premises. Firstly, happiness is the only that that has intrinsic value. When something has an intrinsic value, it means it is good in itself. Intrinsic value is different from instrumental value since the latter denotes something which is a means to an end. Secondly, utilitarianism holds that actions are right when they lead to happiness and wrong if they promote unhappiness or pain (Guha & Carson, 2014). In this regard, the theory considers the results of an action, where morality is decided by the consequences. If an action leads to maximum benefits for a larger number of individuals, then utilitarianism does not care if the results are through immoral motives or not. Instead, utilitarianism ignores the morality of the forces behind the results and considers the quality of the outcomes. Thirdly, the theory indicates that everybody's happiness counts equally to all people. In particular, an action should create happiness for all, not just a few people. For instance, the government is tasked with creating policies that ben...