Understanding consumer behavior, the right marketing mix, managing cultural diversity, sourcing and investment decisions have to be considered as well. While new technologies and liberalizations have helped big companies to increase their efficiency and reach, these very forces pose a challenge from the smaller firms. The smaller firms are a threat to the big corporations as they too capture the market and are in the race for the same products and services. This report highlights the issues that arise in managing international business.
Improvements in transport and telecommunications sector have reduced the impact of distance allowing firms to enter foreign markets. At the same time, new technologies and deregulation of capital markets allow small firms to compete with multinational corporations. As competition increases, the interest of share holders and the customers become important in corporate decision-making. This new form of corporate governance has to be accepted otherwise they run the risk of losing finance and customers to competitors (Savitsky & Burky, 2004). Governments must support this transition to a more accountable, transparent, and efficient form of corporate governance within their economies. Economies of all shapes and sizes – including China, Germany, France and the Asian Tigers – are confronting this challenge. The clash of traditional business practices is most acute in Japan, resulting in opening up of the economy to mergers and acquisitions, including those by foreign investors. Recent studies indicate that it is now the microeconomic factors like management of the firm which determine success rather than the macroeconomic reasons. This is because of the increasing role of international trade, improved managerial techniques, and supply chain management. When firms adopt the strategy of mergers and acquisitions in developing countries, they face resistance. Acquisition of existing facilities is accompanied by payroll cuts.