Report
International business organizations that operate in multiple countries have to adhere to the policies set by host countries. Good relations are required for the companies to gain access to customers and partner with local firms. However, some issues may arise and affect relationships between host countries and international firms. Differences between individual states can have adverse effects on business cooperation in the international arena because sanctions may be placed and make it difficult for individual companies to operate effectively in some nations.
The article U.S. sanctions turn up heat but Huawei serving European 5G clients, executive says by Michael Shields, discusses an ongoing issue that involves Huawei, a telecommunications firm, and the United States government. The author writes that the company is getting affected negatively by sanctions imposed by the U.S. government (Shields). Since the country imposed sanctions, the firm has been unable to access semiconductors provided by American companies. The report states that since last, U.S. manufacturers have been banned from supplying semiconductors to the company. Thus, Huawei is finding it difficult to access technical support for new phone models using the Android operating system. The current administration is forcing the American firms, like Google, to stop doing business with Huawei. It is still looking for a solution to this problem. However, Huawei continues to serve European 5G network customers.
The problem mentioned in the article shows dynamics in the international business environment. Governments usually control how companies in their respective jurisdictions operate (Rottig 101). Differences between nations can contribute to this problem significantly. Issues regarding tariffs, taxation, and political differences can make it difficult for some firms to operate in specific countries. This shows how government policies affect the ease of doing business in particular regions. Companies have to observe different political landscapes in countries where they have operations to determine how they can adapt or change strategies to fit the current environment.
Politics and economics are usually interrelated since one affects the other. Politicians and political parties can deem specific businesses’ operations in their countries to be dangerous (Detomasi 685; Etienne 257). Thus, they may impose restrictions regarding the extent of operations that the firm can carry out in these nations. Sometimes, however, these decisions may be informed by biases and personal differences between the people in power and the business organization’s leaders. It affects cooperation between the concerned company and local companies significantly. As a result, revenue may be lost for both groups of firms.
A government may control the public from unfair or harmful business practices, especially international companies. Notably, multinational firms may threaten national security because of methods that they may apply as they do business (Meyer 211). The government may thus impose restrictions protect its citizens and local businesses from harm. A government may also ban trading with the company altogether.
Though free trade is encouraged to promote globalization, governments have to closely control trade and manage economic operations. There are several critical areas that a government can control trade and manage operations of international businesses (Porter and Kramer 323; Zaki 156). Subsidies, tariffs, and administrative policies are some of the measures that a country can use to manage these operations. However, sometimes it is difficult to establish between genuine and malicious actions because some leaders may want to punish a firm because of its standpoint on various issues. This can affect an innocent business and make it run into unnecessary losses.
To summarize this paper, differences between individual countries can have adverse effects on business cooperation in the international arena because sanctions may be placed and difficult for respective companies to operate effectively in some nations. In his article, Michael Shields describes the differences between the U.S. government and Huawei that have led to banning business cooperation between U.S. companies and Huawei. This shows how a government can control international business through the implementation of specific measures.