Risks And Challenges Involved In International Business

International businesses have to face risks and challenges at many fronts. Some are similar to the risks and challenges a domestic business confronts and some are unique. Even the challenges that are similar by definition differ in nature. For example both types of businesses have to face financial challenges, but an international business will be facing many factors related to global financial markets that don’t affect domestic businesses as much. They are more of a challenge in nature than risks and most of them can be handled through proper planning. Keep reading to understand these challenges better.

The challenge of international planning & strategy:
The first challenge for an international enterprise is to make a global strategy and then implement it. The managers and those at decision-making positions often find it difficult to change their thought pattern, which is not used to work in global paradigm. There are many international businesses but just some of them have truly adopted a proper global strategy. Though the situation is improving with more and more trained graduates and professionals taking on the management roles. Nevertheless, international business management requires extra ordinary management, foreseeing and leadership skills.

Financial and economic challenges:
It starts from arranging the funds to start international business and includes everything such as fluctuation in exchange rate, global economic crisis (or some economic crises in the host country), shift in oil prices, global inflation or tariff barriers imposed by the host government, also the export related policies of your own government.

International Politics:
Political know-how is a must for everybody but it becomes all so important when operating at international level. If some policies were suitable for your business, a change in ruling party can bring drastic changes in those policies. Political chaos will bring down the economy and with that your business. To prevent your business from such negative impacts, you need to make sound political judgments.

Environment, natural disasters and warfare:
Many multinational businesses have to face serious opposition by some environment friendly organizations. Citizens are more concerned about air and water pollution these days as it is becoming a serious threat to their health. Some natural disaster like floods and earthquake, or some kind of civil war breaking out in the host country is also in the list of possible challenges. A new challenge that an international business has to bear now days in some specific countries is the threat of terrorism.