Legal and political issue
Discuss About The Liquidity In Foreign Exchange Market.
The primary motive of this paper is to outline the risks and challenges that are associated with companies. The paper discusses that how various risks and challenges that could affect the business operations and functioning. Apart from this, some suggestions have been given to overcome the issues and obstacles which are related to the foreign market. More detail of the paper has been explained below.
In today’s era, each and every company tries to enter in the foreign market to maximize the profitability and outcomes. Along with this, it also helps to beat and overcome the competitors in the international market. By entering in the foreign market, an organization has been able to expand and explore the business activities and operations in the competitive market. Doing business globally provides ample opportunities to the company for profit and growth. In addition, the company has been able to attract more and more clients while entering the foreign market. Various multinational companies are tried to enter in the foreign market for uplift and increase profits and outcomes. Although, the companies can take ample of opportunities while functioning ay international level but some issues or challenges are also faced by the companies (Laufs & Schwens, 2014). Some of the risks or key challenges associated with business in foreign countries are discussed below.
Legal and political issue: It is one of the biggest and foremost issues that could be encountered by the multinational companies while conducting business in the foreign market. When the organization conducts trade in another or foreign country the company needs to be familiar with that country’s rules, regulations, norms, and policies. Along with this, the company also will have to pay additional taxes and import duties while implementing the business activities and operations in the foreign market. The legal complexities of foreign business can be very tricky and challenging. Thus, the company needs to take advice from the legal advisors to overcome the competitors in the international market. Furthermore, it has been found that many people are highly opposed to globalization, outsourcing, and other international business practices. The company has to face plenty of legal issues and obstacles while trading in the foreign market. Aside this, if the firm is engaged in the human rights then abuses in other countries also dealt by the company negatively. If the organization has failed to create new and innovative ideas then abuses are occurred within the organization. Apart from this, investing in experienced and knowledgeable corporate counsel can prove invaluable and ineffective at the workplace. Due to competition, the organization is unable to understand and follow the local laws and regulations. It is noted that political and legal issues may also affect the performance and productivity of the company in the host country adversely. Unethical practices and bribery also could affect the efficiency and effectiveness of the company in the foreign market (Vahlne & Johanson, 2017).
Language and cultural issue
Language and cultural issue: One of the foremost and vital issues that encountered by the company is language and cultural issues. The language barriers or issues reduce the profitability and outcomes of the organization adversely. It has been found that many times the employees are unable to understand and know the language of the foreign country. Thus, the organization might need to rely on translators when speaking to the business contracts. Sometimes, the customers are unable to understand the languages of the workers in the international market. It the organization is outsourcing the customer service to another country, the customers may strive to understand the people whose first and effective language is different than home country language. This is the unique and effective issues in the international market. No organization can survive and cope with rivalries without evaluating and determining the condition of the foreign market. Due to the language issue, the firm could not able to understand the language of the host country. Furthermore, it has been measured from the various analysis that different cultures have different norms, values, attitudes and lifestyle. Culture issues are raised due to cultural differences in the foreign marketing. For example, gender discrimination is one of the biggest common issues that can affect the sustainability of the firm adversely in the foreign market. The issue is problematic for the foreign market where women are not given equal rights and opportunities rather than boys (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014).
The CEO and board of director might find it wondering if the company can safely send female workers to some specific countries. Moreover, the marketing system of different countries is quite different as it also may influence the desired goals and objectives in the global market. In addition, the polite behavior of some countries may be impolite and ineffective hence it can affect the sustainability and outputs of the firm. It has been noted that some cultures do not take contracts as seriously as other countries and many cultures give preference to the group as compared to the individual. Therefore, it is essential to learn the culture of the different countries before initiating the business in foreign countries. Culture issue is one of the important challenges or issues for the firm that can also affect the potential outcomes and efficiency (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014).
Cultural and language issue arise due to lack of proper communication, low wage rate system and ineffective performance management system. Due to cultural and language issue, the company is unable to identify and evaluate the needs, requirements, and demands of the customers in the international market. Lack of motivation also leads to language and cultural issues in the foreign market. All these issues also affect the corporate social responsibilities and sustainability in the competitive market. Apart from this, the organization will have to be bear ample of losses and challenges in the global market. Uncertainty and technology advancement also put a direct impact on the revenue and returns of the firm negatively (Agoraki, Delis & Pasiouras, 2011).
Ways to handle and reduce issues and obstacles
There are ample of ways to handle and reduce the issues and obstacles that are occurred in the workplace. To overcome the competitors, the organization needs to focus on the activities and operations of technology in the global market. It has been found that the companies need to focus and identify the goods and service while operating business in the foreign market. It is noted from the various analysis that the company should maintain an effective, unique and effective communication with customers in the international market. The firm should analyze and evaluate policies and norms that are made by the government to beat the competitors in the marketplace. Excellent communication system shall be implemented by the company while running out the business effectively in the international market. Open and strong communication methods should be initiated by the firm to address and handle these issues and challenges globally (Mancini, Ranaldo & Wrampelmeyer, 2013). The international expansion is possible effectively by preparing an international business to evaluate and analyze the needs, goals, and mission or the firm. It is mandatory to assess commitment and readiness to grow and expand the international market. In addition, a foreign market research and survey is conducted by the firm to promote and encourage the marketing development and expansion in the global market. Finding a solution to an issue or obstacle is the first step in boosting and developing a successful and ineffective culture and people as well. Aside this, health and safety act should be considered while entering in the competitive market. Training and development sessions, seminars and programs shall be maintained by the company while entering the international market (Laufs & Schwens, 2014). Effective and unique reward system must be built and developed by HRM to carry out the business process and functions in the international market successfully and effectively. Along with this, the firm should also focus on the policies, rules, and strategies before initiating the business in some other countries. The organization should also focus on the effective and unique market entry strategies and policies that help the company to enter in the competitive market. Clear and unique marketing strategies must be used by the firm to cope up with rivalries in the global market. An audit committee should be recruited or appointed by the company to prevent the foreign market risks adversely. In this way, the organization can reduce and avert the business risks and challenges which are occurred in the foreign market. In this way, the company can reduce and overcome the issues and challenges of the market that are being associated with companies while entering in the foreign market (Figueira-de-Lemos, Johanson & Vahlne, 2011).
The above-mentioned analysis indicates that plenty of risks and issues are involved in the business operations. The above analysis shows that how the multinational companies expand and explore the business globally. Here is the discussion about the various issues and challenges that could affect the business operations of the firm adversely. At the end, some recommendations have been given to flourish the business operations effectively and successfully.
References
Agoraki, M. E. K., Delis, M. D., & Pasiouras, F. (2011). Regulations, competition and bank risk-taking in transition countries. Journal of Financial Stability, 7(1), 38-48.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
Figueira-de-Lemos, F., Johanson, J., & Vahlne, J. E. (2011). Risk management in the internationalization process of the firm: A note on the Uppsala model. Journal of World Business, 46(2), 143-
Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.
Mancini, L., Ranaldo, A., & Wrampelmeyer, J. (2013). Liquidity in the foreign exchange market: Measurement, commonality, and risk premiums. The Journal of Finance, 68(5), 1805-1841.
Vahlne, J. E., & Johanson, J. (2017). The internationalization process of the firm—a model of knowledge development and increasing foreign market commitments. In International Business (pp. 145-154). Routledge.
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