The requisite mindset of the international business manager

The globalisation of business has generated an increase in the standard of living in many countries with a great deal of euphoria among citizens particularly of the developing world in sampling the delights of the developed world with the availability of a large variety of consumer goods. 

In Ghana, it is a delight for the middle class to shop in the ambience of shopping malls, eat in KFC restaurants, drink coffee and eat pastries in Vida e Caffe and 2nd Cup Coffee shops in the various malls and locations.  

Supermarkets like Shoprite, MaxMart, electronic goods shops like CompuGhana and others, all attest to the growing pedigree of foreign products in Ghana.

Factors guiding the investment decisions of international businesses

Upon taking the decision in establishing itself outside its home country, a business would have to take the crucial decision about its mode of entry through joint venture, acquiring an already existing business, licencing its technology to a local business, franchising, acquiring an equity stake in a local business or establishing a subsidiary in the country in which it intends to expand. These modes of entry come with their own nuances. 

Guideposts for the international business outside its home base

Profs Charles W.L. Hill and G. Thomas M. Hult in their book, Global Business Today, list 4 main guideposts for the international business in its investment decisions outside its home state as follows:

i. Countries are different.

ii. The range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business.

iii. An international business finds ways to work within the limits imposed by government intervention in the international trade and investment system.

iv. International trade transactions involve converting money into different currencies.

It is to be recognised that, there are also country specific problems with the conduct of international business.

Some peculiarities associated with international business operations in Ghana

International businesses which intend to set up in Ghana have to deal with certain peculiarities associated with business operations in Ghana.

Firstly, foreign businesses in Ghana cannot employ wholesale foreign expatriates. This is because of the existence of the Immigration Act, 2000 (Act 573) which prescribes the permitted number of expatriates in the operations of a foreign business.

It is to be noted by the international business manager that, after completing the formalities of business registration with the Registrar of Companies, the international business manager must also register with the Ghana Investments Promotions Centre (GIPC) if the business requires registration under the GIPC Act. 

The international business would also have to complete registration formalities with a number of state agencies like the Social Security and National Insurance Trust (SSNIT), Ghana Revenue Authourity, GRA.

It also has to obtain requisite permits as applicable from the Environmental Protection Agency, Ghana National Fire Service, obtain business registration permits from the appropriate district, municipal or metropolitan authourity as applicable etc. 

There is as yet no one-stop shop for obtaining all the permits and undergoing registration procedures for the establishment of a foreign business. 

An international business may have to design an elaborate training programme for the staff that it shall recruit to fit its operational model, though there is an appreciably well trained workforce with a number of tertiary institutions offering courses across a wide spectrum of business, technology, computer science etc. 

It is to be noted that many countries have promulgated local content laws in response to the downsides of globalisation to salvage jobs in their countries and Ghana is no exception. 

The international business manager must be aware of the existence of a Local Content Law (LI 2204) which mandates the sourcing of some materials locally for some particular businesses especially in the extractive industries. 

This is a non-negotiable requirement which an international business has to comply with even if such items can be procured from outside the country at comparatively cheaper prices.

Profs Hill and Hult make the important point in their book, Global Business Today that, “differences among countries require that international business vary its practices country by country.”

They further state that marketing a product in Brazil may require a different approach from marketing a product in Germany while managing workers in the US may require a different approach to managing workers in Japan. 

They also state that while it may be very necessary and relevant for an international business to maintain a very close relationship with a government in Mexico, that may not be the case in Britain. 

This view by Profs Hill and Hult emphasise the point that the nuances of international business are varied with its own peculiarities in the particular country that the international business chooses to operate in.

As stated previously by Profs Hill and Hult, it may be necessary for an international business to cultivate relations with the government in some countries most importantly through a personality with a patronising influence.

In Ghana, where the Presidency wields controlling influence in every facet of public life, it is often the case that the international business manager may have to cultivate useful networks at the Presidency and possibly have the ear of the President to be able to get certain concessions to smoothen the way of the international business. This is in spite of the laws that regulate or facilitate business in Ghana.

One significant thing about the Ghanaian business terrain is that, there are no particular requirements for a forced joint venture partnership with state entities which are dominant in some particular sectors of the economy or even private entities in some particular areas of the economy.

Except the downstream petroleum sector where the players are required to grant 5% equity stake to local partners there are virtually no forced joint ventureship requirements for international or foreign businesses wishing to operate in Ghana.

There are also no compulsory listings for certain categories of businesses on the local Stock Exchange so businesses are absolved from this stipulation as pertains in other countries.

Some nuances for international businesses in Ghana may be the stagger of repatriation of profits. Often due to balance of payment difficulties, a foreign business entity may be required to stagger its repatriation of profits to its home country. This nevertheless is not a business impediment as eventually, repatriation of profits in foreign currency is generally guaranteed. 

Building relationships with traditional authorities

It is important for the international business wishing to operate in Ghana to cultivate a good relationship with the traditional authority in its area of operations. In conformity with established practice, the executives of the business would have to pay a visit to the traditional overlord of the area to announce its presence.

Thereafter, it is expected to make periodic donations to support the activities of the traditional authority particularly during the celebration of festivals and also to support some community initiatives of the traditional authority.

Employment opportunities for locals

A notable requirement that an international business would have to fulfil in Ghana and also in most developing countries is the offer of employment to a significant number of the youth in its catchment area. 

This could sometimes pose a dilemma for the international business as the target of employment may not possess the requisite employable skills for which reason the company may have to spend quite substantial amounts of money to train the people to be employed.

Conclusion

It is to be noted that since there is no homogeneity in business practices prevailing across all countries, it is important for an international business to take steps to gain first-hand insight into the operations of the business environment to enhance its operations.

This it may do by hiring a well-known investment adviser to thoroughly apprise it with all the nuances of business operations in the country.

The writer is a lawyer with specialisation in international business law.

Email:   joseph.a@akyeampongandco.com