Managing in the global economy Essay Example | Topics and Well Written Essays - 750 words

Managing in the global economy - Essay Example Hence it becomes very essential to study the physical and societal environments when opening and international business. Managing in a global environment means manage people who are separated not only by time and distance but also by cultural, social, and language differences. The main challenge here is to integrate and coordinate these individuals in ways that will ensure success. And it is important to be sensitive to and respect the cultural differences. People from different cultures tend to misunderstand each others behaviours or stereotype people from other countries. Portfolio investment values and cash flows are affected when political change causes unanticipated discontinuities in the business environment. This is the Robock and Simmonds (1973) definition of political risk. They are also affected by the risks that include potential restrictions on the transfer of funds, products, technology and people, uncertainty about policies, regulations, governmental administrative procedures, and, finally, risks on control of capital such as discrimination against foreign firms, expropriation, forced local shareholding, etc. Wars, revolutions, social upheavals, strikes, economic growth, inflation and exchange rates all figure in the political risk literature and, obviously, are capable of affecting portfolio investment as well as direct investment. Gross National Income comprises the total value of goods and services produced within a country (i.e. its Gross Domestic Product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries. For example, if a British-owned company operating in another country sends some of their incomes (profits) back to UK, the UK’s GNI is enhanced. Depending on the exact country circumstances, FDI may increase the host country capital stock, bring in new technologies and boost GNI growth rates (and hence GNI per capita). Inflation