Report on International Business Organisation and Cultural Differences


INTERNATIONAL BUSINESS ORGANIZATION AND CULTURAL DIFFERENCES
Difference between Organizational Structures: Centralized and Decentralized
The flow of information which goes on in an organization becomes organized in a centralized structure as it goes from top to bottom and bottom to top and there is very less room for error in this structure in the communication while in decentralized structures, the flow of communication is open and in free flow.
In centralized structures, the source of authority is in a limited area and leaves possibility for autocratic structures within organization. Compared to this, in a decentralized structure, the responsibility of controlling processes and groups of employees gets divided in the organization.
While decentralized structures prove to be more appropriate for areas like stock markets, direct sales and work areas which require employees require power to take initiative, the centralized structures project limited flexibility.
Centralized organizational structures show traditional form of hierarchies and formations within an organization while decentralized structures can be useful where complex hierarchies are possible.
Pros and Cons of Centralized and Decentralized Organization Structures
• A centralized structure in an organization promotes effective leadership as a manager can take charge which further eases the activity of maintaining focus on the vision of the organization.
• A decentralized organization does not allow the unification of the goals and a centralized decision cannot be passed in the organization.
• A decentralized organization allows the employees to take initiative on their own or there is a very limited chain of command required to pass a decision which is good for organizations that require employees taking independent decisions and to improve overall quality of products/services.

Organizational Structure of Thinkflash
The organizational structure of ThinkFlash is a decentralized type of organizational structure. This structure is formulated on the basis of the activities of the organization considering the advantages of decentralized organizational structures. ThinkFlash is an event management firm which specializes in managing music festival and artist performance events. While securing clients requires independent marketing teams to approach artists (their managers) on a worldwide basis, while an event is going on, the firm require employees that are working on the field during live events to be able to take decisions on their own if there is a situation of urgency which is possible during live events at times. There is also the factor that there are many multiple activities to be done while an event is being organized; some people are involved in managing location activities while some are engaged in arranging transportation and ticketing which are very diverse processes are require quick decisions to be taken at times which makes a decentralized structure ideal for the firm.
SELECTION OF EXPORT MARKETS
Selection of export markets require consideration of multiple factors in an organization. Expanding to newer countries required the analysis of people and how the existent employees will be able to deal with the new scenario. The characteristics of the home environment and the similarity to the new environment which is to be approached, was analyzed before exporting to a new country. It is always advantageous to have a diverse workforce and when it comes to selection of the employees which are to be selected for the operations in the export region, employees with appropriate characteristics and suitable character traits as the target market were selected by ThinkFlash.
Another factor that is considered by ThinkFlash is that the cultural difference business practices in home environment and the target environment are to be analyzed for an optimized approach to exporting a business. The most critical aspect of focus is interpersonal dynamics between two countries which is to be considered before exporting a business to another country if the business is in the service sector and ThinkFlash as an event management service providing company has taken that into account. The aspect of marketing also changes and promoting an event might just require standard marketing techniques in country while another country would require personal visits for promotion and employees are selected according to that factor.
MARKET ENTRY STRATEGY
Market Entry
The factor of desirability and favorability clash at times when foreign markets are being targeted for selection. Favorable markets for event management sector scenarios were considered in the selection of foreign market. The aspect of media exposure and cultural diversity should be considered because even if a country is developing economically, the prospects of events are only high when media of a country is open and with a high amount of exposure to other cultures.
Cultural element includes the preferences of the culture because countries in Europe are abundant with performances from artists across the world while in certain countries people might not have much idea about such things. Cultural exposure is also considered with art related events. The aspect of economic development is to be considered because it increases the future possibility of events of corporate nature.
Time of Foreign Market Entry
The determination of a right time to enter a foreign market is not easy and the time of entry can be the decisive factor. A time of market entry can be deemed as early when the target market in consideration has not been approached before by the same industry sector, which in this case is high level event management. If a market entry into a market is early it can give the organization the benefit of first mover advantages to set up a successful organization in a market with demand.
If the target country already has businesses set up of the same sector, ThinkFlash won’t get first mover advantages but a wide perspective can be gained from the performance of the existing competitors and how ThinkFlash has a competitive advantage. The drawback to this also is that the organization will have to consider pioneering costs.
Scale of Market Entry
The first and foremost factor of consideration is that when a firm enters a foreign market, it is entering into a commitment of a strategic nature. The scale of entry decides the level of commitment an organization gives to a foreign market. This decision which an organization has to make is not completely irreversible but changing the scale can take a lot of time and restructuring.
Each option from the large scale and small scale has its own set of advantages and disadvantages. If an organization chooses to enter another market with small scale functions then it can eventually expand while learning about the market and taking time to form correct strategies and also if the business doesn’t work, it won’t harm the organization as much as a large scale organization. If the market enters with large scale operations and attains success then it can establish excellence faster and can become a pioneer in the market.
Business Entry Mode
Selecting a business entry mode can be critical for many reasons and the right entry mode can be reason for the firm’s success. If exporting is considered, cost can be saved and it is flexible compared to other options. Franchising also has the same cost benefit but the range of profits becomes limited.
Strategic Alliance
Strategic Alliance type of expansion method is essentially a business agreement between two businesses which can also be competitors which can be on a permanent or on a contract basis.
Our group is considering a strategic alliance because competitors already have a higher level of know-how in the country and they also possess a cultural familiarity benefit which also stretches to the aspect of dynamics. Other assets like transportation vehicles, venue contacts, and the reputation of the competitor also acts as an asset for the organization and is useful because we do not have to worry about building one but just about the enhancement.
GLOBAL HUMAN RESOURCE MANAGEMENT
The first step will be the planning of a human resource strategy when it comes to global expansion. First of all, if there are valuable existing resources in the firm which can be used in the expansion of the organization, then they should be considered. Recruitment is a necessary process in global expansion because new staff is required at the new location. In an event management firm, local staff is a must in certain departments as know-how of the region is essential to function.
Labor relations are another factor which is to be considered at an early stage to know about the rules and regulations regarding employee policies and labor laws help define compensation and job timings. Adaptation of a global mindset is an important factor of consideration for managers to avoid expatriate failure.
Risk and Investment Decisions
Risk is a decisive factor in the financial decisions of firms considering two types of risk factors involved in the financial decisions. Political risk factors are oriented with the political turn of events associated with the risk conditions pertaining to events connected with the national security of a country can cause a firm to take insurance measures or try to go small scale in a country.
Economic risk factors are considered because performance issues and poor management of finances for business usage can cause economic changes in a company. These risk factors can influence the progress of the company and either by causing losses. Companies also have certain defensive measures regarding these risk factors which include the adjustment of cash flow and changing the rate of discount in case of the countries which display a high level of probability of the risk factors.

Skills

Posted on

March 7, 2018

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