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Business Networks and International Business

By Exforsys | on December 12, 2007 |
Business Networking

Internationalizing a Business Network

Traditionally, only big enterprises and companies had the financial strength to become multinational firms. In the present era of information technology, small businesses and medium scale businesses have joined together to form small business networks. The internet and the Word Wide Web have brought the extremes of the earth closer through its rapid communication features.

The small business networks have taken full advantage of these technological innovations and are now able to compete with the multinational firms in the global market. Some of these business networks come fro economically backward countries, come from the developing economies and others from the developed countries.

Hence competition is very tough and a pricing war takes immense proportions in the international perspective. Along with internationalization and globalization, several new studies and analysis has been conducted on international business.

Specialized reports in specifics business areas such as marketing, finance and management are also available. There are also research papers available on managing international business relationship. This article focuses on bringing out these aspects which will help in international business network development.

Managing Alliances

Alliances form the key part of any international business network. In general the control and coordination of these alliances is a very difficult and complex issue. The top management in this international business network formulates business strategies taking into consideration that all alliances will be able to implement it.

Moreover the international business management techniques are very essential in managing a lasting relationship with its international alliances. These alliances are empowered to take a wide array of decisions so as to complement the overall strategy of the business network. There are certain aspects and factors which greatly influence the international business networks to manage their alliances. These factors are discussed below.

Regional factors: Different regions of the world follow different norms in business dealings. The alliances need to orient towards their business network and develop new methodologies in business dealings. The flexibility and adaptability of these foreign firms is an essential factor in overcoming the regional barriers and performing well in the international business networks.

Social factors: Social dynamics play a major role in determining the influence on internationalization of a business network. Most of the networks are formed with social and cultural interests in small regions around the world and they have common principles that unite them. When an alliance joins an international business network, there is a need to adopt radical and new principles which is generally considered risky and hence there is great resistance causing direct influence on the internationalization of the business network.

Cultural Factors: The next important factor that affects internationalization is the cultural factor. These are age old polices and conventions followed for years by the members of a business network in a particular region in coordination with the cultural ethos of the region. In certain cases these paradigms are nation wide, and are accepted by the major business networks and vary from country to country. So when an international alliance is formed, these cultural aspects play an important role in the effectiveness of the internationalization process.

Religious Factors: The religious factors also play a very important and essential part in international business. Religious factors decide on the cohesiveness of a business in a network. However, these aspects are now being tackled with promoting the sole aim of success in the international ventures and mutual respect of each others religious aspects.

International Management: Businesses thrive on the basis of accurate results produced through analysis and management metrics.

Management metrics and strategies rely heavily on the timely and accurate data obtained from the business network. Managing information flow in an international arena is a very complex process and forms a vital factor in managing the alliances

International Business Networks Regulations

The formulation of legal agreements and licensing is the next most complicated process in the effort o internationalization of the business network. Each country defines its own policy for foreign alliances and collaborations. The government laws of the countries differ in many aspects.

The financial regulations, trade policies and international cooperation define the regulations which are necessary to be adopted for creating alliances with foreign country businesses. These rules also define the limits and licensing rules that need to be adopted.

Agreements on intellectual property rights and knowledge transfer are also essential to be considered in adding foreign alliances with the business networks.

The rules are also varied and differ from country to country. Problem arises when two different alliances from two different countries join a major business network.

In such cases, even though both the alliances need to be treated equal, the treaties and agreements between them and the business networks will differ.

Defining strategies to alleviate such differences will be very complex process. But once both alliances are made to agree on the common principles and rules of the business network, the possibility of successful collaboration and coordination is achieved.

International Consultancy

There are several firms which offer consultancy in the aspects of internationalizing the various business networks. These consultancy services provide the necessary knowledge base about probable alliances, the problems that may come up in such alliances, benefits associates with the alliances, and also the cost effectiveness of the alliances.

This information is very vital for companies and business networks to work out feasible solutions and analyze the risk factors associated in such ventures.

The businesses can also take help fro these consultancy firms to perform feasibility study and analysis on the legal and licensing aspects of internationalization of their business network.

The specialized, country specific consultancy agencies are aloe available. These agencies maintain an up to date legal policies and trade policies and their interpretation specific to various regions of the world.

Certain consultancy services also provide guidance and advice to the business networks in establishing secure and effective alliance ties within the regional regulations and limitations.

Special country specific trade shows are also avenues where these consultancy services show case their expertise and knowledge base in providing consultancy solutions to the business networks planning to expand to international markets.

« « Listening Skills – Master Listener
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Author Description

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Editorial Team at Exforsys is a team of IT Consulting and Training team led by Chandra Vennapoosa.

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