While
studying for this week’s homework assignment, I also find myself
preparing to teach my Sunday school lesson throughout the week as well,
as is often the case. I am surprised that more often than not the
subject matter is pleasantly similar. For example, the subjects I wish
to discuss in this forum are the perils and challenges of international
operations, and the subject that I am covering in Sunday School is the
book of the Acts of the Apostles (in the New Testament), specifically
chapters ten through fifteen which deal predominately with the challenge
of a congregational or local organization that has been tasked with
taking the message and ministry globally. While my personal experience
in international business is limited, I see some similarities in what
the early Christian church dealt with, and International businesses
today. The subtle challenge to deal with is that often, current
businesses are more geared to focus on profit maximization while the
early church was more focused on establishing and sustaining a more
mission focused strategy. This can still prove to be a helpful model, as
many Non-profit organizations are effectively more focused on a
sustainable mission rather than profit-bearing decisions and thus
establishing a more unique set of risks (Michalski, 2012).
Some of
the predominant struggles of an international focus may not seem to
directly focus on financial decisions, but are still factors in the
decision for growth strategies. Topics such as cultural diversity,
standard operating procedures, economies of scale and scope, and the
fear of existing competitors, as well as new entrants, are the concern of
both the early Christian church, and businesses today. To go from one
culture in Jerusalem,
with its unique blend of different dialects and cultures and expanding
to one that would include Greek, Roman, Ethiopian, and other cultures
would go beyond merely understanding what is best for the whole group.
Changes would need to be made that could accommodate the new locations
while not losing the prior formation’s interest or passion. One of the
greatest challenges of expansion is ensuring a new budget and balanced
resources can meet the needs of the expanded presence. If the resources
are spread too thin, they can become weak in certain areas; therefore,
an effective means of keeping current assets at a manageable level
becomes a driving factor for the organization (p. 361).
A
struggle than can ensue in international growth, especially one that
hopes to blend different opportunities, must also worry about leadership
and hierarchy structures. What may have worked in one branch or area
may not work in another. Chapter fifteen of Acts mentions the covenant
of circumcision as a ‘regulation’ to belong to the organization, but as
they expanded to the ‘Gentile’ nations, this requirement was discussed,
revealed, and rescinded for the additional proselytes (while still
giving them specific requirements that they would need to meet). This
may also be the case when multiple currencies of different nations are
involved. One may be the predominant currency with it’s associated rates
and risks, and the less dominant one may struggle to keep up. While
there are such balances as Purchasing Power Parity
to keep finances in check, there can still be some risks involved, or a
more relative approach rather than absolute (Ross, et al, 2013). These
types of concerns may differ depending on the industry, but they are
still there (Greenwald, 2012).
Political
challenges must be dealt with as well, as the organization must provide
the social responsibility of benefiting the culture with which they
hope to assimilate (Rammohan, 2010, See also Ross, et al, 2013).
Rammohan discusses the need to smooth over the process, understand the
culture, and discuss why the organization can benefit the community. The
early church dealt with this risk in excess. There were constant feuds
with both religious leaders as well as political figures such as Herod
and King Agrippa. The church sought to visit with the leaders directly,
built on common ground when possible, and taught in the synagogues and
places of worship offered to them. This particular risk can be the most
difficult as regulations and legal matters often slow or stop progress,
as well as stagnant international growth. It is interesting to see from
the examples in Acts that each region would react differently. Some
would be more accepting, some would seek certain favors or benefits in
return, while others would outwardly reject them. The organization was
the same, but acclimating to each culture is what provided the different
responses.
In
managing these risks, the leaders of the church eventually needed to
change the base of operations to a more conducive environment. While
this situation may not always work, it is certainly feasible to assess
different reactions to various locations to ensure proper acclimation.
Some industries offer Beta testing while many restaurants change various
elements to their menu to accommodate each region differently. As far
as helping with different currency risks and parity, it would be a
crucial element of the financial team to ensure that the correct methods
of accounting are maximized to account for various international
challenges such as interest rates, exchange rates, and spot prices. Just
as the international church was able to communicate effectively to
expand growth, mitigate risk, and assess changes (Such as letters or
other official forms of communication), so to must the international
business of today communicate, adapt, and expand to meet the needs of an
international community.
References
MICHALSKI, G. (2012). OPERATING CYCLE AND NONPROFIT ORGANIZATIONS
EFFICIENCY. Economics, Management & Financial Markets, 7(4), 360-376.
Rammohan, S. (2010). Fueling Growth. Stanford Social Innovation Review, 8(3), 68-71.
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2013). Fundamentals of corporate finance (10th ed.). New York, NY: McGraw-Hill/Irwin.
