Organizing International Business

Organizing International Business: Overview

To effectively organize their operations, international businesses base their organizational operations on five main orientations: production, product, sales, marketing, and welfare given to the consumer (Hehl & Roever 2009). Different operations around the globe may emphasize different aspects of these operations in different nations -- for example, the product may be manufactured in a low-cost labor nation such as China, but sold to other nations with a higher demand for that particular import, as was the case for Mattel toys. The toys were manufactured in China and sold abroad -- although Mattel toys famously fell afoul of this strategy, as they did not adequately supervise and monitor the safety standards of certain Chinese factories (Trouble in Toyland, 2009, Knowledge @ Wharton). The product and service must be tailored for particular nations or regions as well -- although one of the most famously standardized companies in the world, McDonald's offers certain regional specialties, everything from a McShawarma in Israel to a McCurry in India, to better position its product within the local market (Hotfelder 2009).

The theme of organizing international business is thus based upon customization -- yet quite often, the core strategy of a company with a strong philosophy remains unaltered, even across national lines. For example, Japan is a nation that lacks a strong, unionized workforce but provides generous benefits and high salaries to its workers to ensure corporate loyalty. In Toyota's American operations, Japan his often retained such features, in contrast to General Motors' unionized workforce. Some of Toyotas products may be different in the U.S. -- its SUVs would be unsuitable to Japan's tight roads and highly concentrated areas, while Toyota's holistic focus as a company on going green and reducing production and fuel costs in all nations have made it well-suited and adaptable to both Japan and the United States (Langfitt 2007).

The need for a balance between harmony of mission statement across nations and cultures and customization is one reason why many companies place such a strong emphasis on establishing a physical presence on the ground of nations that are crucial marketing venues so they can tweak their strategy and organizational structure when needed. However, globalization of operations can also pose a risk, as local political and economic pressures can interfere with business. Currency downturns and upturns that cannot be controlled by the business can also affect the receptivity of imports, exports, and the costs of doing business abroad. Doing business internationally can 'hedge' risk in the sense that a downturn in one arena can be compensated by an upturn in another area, but during times of general economic downturn, the risks can also be greater, rather than balanced. This can be seen in the wake of the current credit crisis -- because of interconnected global operations, when American real estate 'sneezes' the world's credit market 'caught cold' in the subsequent deep-freeze.