Difficulties in International Business, Essay Example

One problem in doing business in an international country is that parent company has to develop an entirely different marketing strategy due to the vast differences in cultures, consumer habits, and consumer preferences. It may be that customers in international markets may prefer a different product than what the parent company is specialized at and they may prefer different distribution channels such as mom-and-pop shops as opposed to departmental stores. These differences may require a marketing approach in which the company might have no prior experience.

Another difficulty is the difference in regulations and the governments’ attitudes towards the international investors. Some governments may not allow asset ownership and the only way may be to partner up with a local business. Similarly, differences in regulations may not only create confusion but may also put international companies at disadvantage. Companies that prefer total control over strategy and brand image may be hesitant to trust a local partner.

Other factors such as political instability also increase the risk and the companies may find it difficult to earn returns that may justify the level of risk taken. In addition, there may also be a risk of nationalization due to political conflicts as some international companies have learnt in Venezuela. The economic conditions such as high inflation levels may also lower real returns.

If a company decides to export, it will have little control over how the product may be marketed and distributed. Some companies prefer to establish a uniform brand image around the world, thus, they do not want to lose control over the marketing of their products.