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26.4.17

Overlooking the Costs to Globalize By

Overlooking the Costs to Globalize By [http://EzineArticles.com/expert/Timothy_Hild/2399574]Timothy Hild Many companies today are looking for new ways to increase profits. International business is sometimes the answer for these companies. We see increasingly more U.S companies debating whether-or-not to operate on the global scale. With the many potential benefits from expanding companies on the international level we see many companies trying to compete and play on that exact level. There may be many potential gains or benefits from expanding into that arena, however, there are things that are overlooked when taking that decision into consideration. What many companies fail to realize is the hidden and sometimes tough to see challenges that they might in fact face in this transition into international business. Change in Culture Competing internationally is about striving to increase profits, however, the costs incorporated with that sometimes tend to hide themselves. One of these such hidden costs is the difference in culture. Whether leaving the Country or even leaving the state you are from, you undoubtedly see a switch in the culture. Whether it be the people or the way of living, you see the differences. The culture in New York City differs greatly from the culture held by say North Dakota. Whether this being cost of living or values held by society as a whole, you are sure to see differences. This is exactly and perhaps to a greater extend as to the cultural shifts companies can face when operating in a totally new country. This change of culture is one of the many hidden costs in conducting business internationally. Law/Regulation Differences When weighing the options of whether to operate/conduct business on the global scale, these companies sometimes fail to acknowledge the differences in law and regulation. While abiding by official law, companies must follow the Foreign Corrupt Practices Act, which aims at eliminating bribery and unethical practices in international business (Hult). We have seen many examples throughout the past that show the difficulty in dealing with bribery. Bribery is one of the many regulations that differ between countries. In fact, bribery in some places is very common in conducting business and is sometimes one of the main ways companies gain leverage. However, U.S companies must not stray away from the core principles and get caught up in anything unethical. With the difference in the laws and regulations held by other countries U.S companies are trying to operate in, they face a hidden cost that they did not intend on facing. Accounting One of the most important things to take into consideration when contemplating going global on the business front is international accounting. International accounting could cause challenges to those businesses who may be liable for corporate taxation overseas. A company must be aware of the taxation regulations in the location where they are operating and be aware of multiple differences between countries. A company has to be alert of the chances there may be multiple taxation layers. Some companies have moved overseas to avoid taxation and to gain tax breaks from the U.S. Sometimes we see that those same companies use other countries and subsidiaries to keep money hidden and to pay less in American taxes. These companies try to shelter assets from getting taxed at the corporate level. In addition to these hidden costs, we also see Political issues that arise; differences in the culture, environmental issues, labor problems, trouble with communication, and many more. Uncertainty in politics could cause an increase in these so-called costs to operate on the global scale. Political, economic, and social issues continue to create increasing problems for international business. Companies must take all costs and benefits related to all aspects of conducting business overseas into consideration. When many companies think about the option to operate globally, many of those such companies tend to overlook the potential dangers and challenges faces that exact decision. With the potential to grow and expand business and profits, these U.S companies tend to get tunnel vision on these potential gains. The underlying issues that could arise and are sure to show themselves sometime in the future, which could create many challenges for companies in both the U.S and those that are operating internationally. References: Hult News. "11 Biggest Challenges of International Business in 2017" from Hult. 6 January, 2017. Web. 20 March, 2017. Article Source: [http://EzineArticles.com/?Overlooking-the-Costs-to-Globalize&id=9672168] Overlooking the Costs to Globalize


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