International management was a restricted enterprise for most of the companies till very recent times. Only big firms could afford to go international for the enormous cost involved in international ventures. However, the process of globalization, and coming in existence of regional and global trade bodies have created a level playing field for the companies to enter into global business. The entire world has become a common market with dilution of cross-national trade barriers. As a result the companies – big and small – are taking the route of international management for globalizing at an unprecedented scale.
There are a number of factors that have made the task of international management easier. The nations across the world are constructing duty free zones, and exclusive economic zones offering unmatched infrastructural facilities to foreign and domestic businesses. The internet technology combined with revolutionary advances in telecommunications has facilitated the task of international management never before.
Small and medium businesses can now take full advantage of these technologies at a very low cost. However, international management despite the political, social, and technological changes in recent years, needs careful planning and strategizing to avoid unexpected and unforeseen consequences.
The focus of international management is on diverse cultures across the world. The understanding of foreign cultures can make a better business sense. Culture defines frame works within which people define situations, assess social relations, and distinguish between beautiful and ugly, important and unimportant, and right and wrong.
Companies today recognize that international opportunities can ultimately define success or failure. However, there are cultural and psychic barriers to international management.
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In context of international management, while cultural assimilation may be difficult, if not impossible, it is more important to avoid cultural blunders. The identification of cultural distance/difference might help the executives to avoid these blunders, while identifying the cultural similarities can enhance closeness to the market. Consequently, culture becomes the site of both bridge and barrier in off shore market penetration.
It turns out that there is a great diversity of cultural frameworks in the world. The work of Geert Hofstede and Fons Trompenaars, the two Dutch scholars have proven groundbreaking empirical studies in the context of international management.
Geert Hofstede has developed the most extensively researched framework or cultural map. He identified four basic value patterns of cultures around the world: Individualism, Power distance, Uncertainty avoidance, Masculinity. He also linked these dimensions to international management theories and practice. Later with colleague Michael Bond, he identified a fifth value of Confucian Dynamism or Long-term orientation.
Hofstede’s frame work has further been modified by Fons Trompenaars who developed a map of seven dimensions. These are Universalism versus Particularism, Collectivism versus Individualism, Affective Versus Neutral Relationships, Specificity versus Diffuseness, Achievement versus Ascription, Orientation toward time, Internal versus External control. Trompenaar’s framework has become quite popular international management theory and practice.
However, in international management, the pit falls begin to emerge when this becomes the basis for identifying national differences because large nations like the U.S.A, China and India have multiple cultural, racial, religious, social and ethnic influences that may not be amenable to national cultural interpretation. This may require further research on cultural classification rather the national classification linked to culture. In other words, cultural mapping would give us an altogether different picture in comparison to national scales.