international business essay

international business essay

The Impact of Globalization on International Business Practices

1. Introduction to Globalization and International Business

In this sense, “IB” is a label for the area of study and/or practice that concerns humanity’s global exchanges of tangible, intangible, people-based, and financial-based international economic activities. The previous paragraphs refer to the first level of the term. When organizations, individuals, or administration bodies act “beyond their country borders” and/or by “getting international”, they engage a new level titled “The International Business Practices Level”. However, this internationalization’s processes can attain consequences that go beyond immediate economic influence. When the effects of this discipline interfere and colonize different levels of direction, it becomes also the “Globalization Level”.

The world is changing rapidly. To meet every population’s needs, countries seek trade opportunities, partnerships, and become available to offer their products and services around the world. Countries collaborate, trade, and communicate with each other to address their concerns. Therefore, international business has become both an intricate and very significant constituent in the current business world. The definition of International Business (IB) has been controlled by changes in both international political relationships and in worldwide business operations. As a result, the meaning of “IB” has been dramatically influenced through time by political trends and by the organic adaption of different new “forces” in the business world. Substituted definitions were the result of the different shades of this “impact”. However, international business or foreign business can be described generally in terms of the international trade of goods, the cooperative relations that are developed through negotiations as an organization operates apartments outside its national borders, the political risks associated with international business, as well as other explanations relevant for the present essays.

2. Key Theories and Concepts in International Business

Generally speaking, absolute advantage is not a very useful theory of trade. For one thing, its underlying assumption that lower opportunity costs will lead to specialization is often refuted in practice, with countries and firms continuing to produce goods for which there are better alternatives. Moreover, the theory considers only the cost of producing goods as the relevant factor – and then it only considers differences in cost. Indeed, most goods are not distributed freely, nor are they produced within the same country. In the absence of trade, these opportunities are foregone. However, when countries trade on the basis of comparative advantages – that is, they engage in specialization and trade in those goods which they can produce at the least cost – the world can produce and consume more of both goods. Only then will they trade these goods in order to take advantage of the cost differences.

No account of international business could be written without making some reference to the theory of international trade. In the early elementary work of Vernon, technological factors are used with specialization to address shifts in product composition in world trade. He states that “While the model is not a full shift model, it does allow for changes in the direction of trade… and… based on the factor proportions theory of comparative advantage,” “models, in which the speed of production rises faster in sectors such as the United States, in free trade, the Netherlands, or Germany. In discussing that given the United States’ “specific factor advantage related to production… advanced countries would be traders off.”

3. Challenges and Opportunities in International Business

The changing characteristics of the market are enough to make any businessman shiver. Furthermore, the various research surveys conducted by different organizations on the issue of the international business environment have also been able to identify a number of other characteristics that increase the complexity of the global business environment: (1) Technology transfer; (2) Competition; (3) The United States Dollar Position and the U.S. Budget Deficit in the case of international business being conducted from America; and (4) Political and Economic tensions.

There are a number of characteristics of the global international business environment that generate both opportunities and challenges. The global market is characterized by the following: (1) a 24-hour trading market; (2) virtually risk-free arbitrage opportunities; (3) mergers and acquisition pressure; (4) integrated capital markets through securitization and globalization of banking services; (5) enormous cost pressure due to growing competition and the necessity of universal standards; (6) a global customer base, implying the capability to earn revenue in different cultures, time zones, and periods; and (7) it is now the era of the service economy.

4. Strategies for Success in International Business

Thus, international managers plan strategy and execute respective tactics, becoming the remaining motor of international business success. The global firm must reach an understanding of barriers to international operations among employees throughout its structures. Delegation is not enough. If the corporation’s top management does not act as global ambassadors and persistently supervise a global mindset in all company divisions, international objectives are in trouble. They may be achieved, but only through extra corporation subscription of resources and a surcharge of risk.

The opportunities and threats of international business cut both ways. The increasing interdependence of the world’s economies also means that the practice of international business is more complicated than it has ever been. For success in international business, firms need more information, which indeed is of high quality. They also need more understanding; few of the cultures and environments in which the global enterprise must perform are meeting company expectations, so companies need new skills, new perspectives, and intercultural thinking.

5. Conclusion and Future Trends in International Business

Indeed, this forms the essence of international business – strategies of corporate activity which transcend national frontiers, embodying or leading to multinational enterprises. These strategies, being sets of business functions or activities, are used by nations, by MNEs themselves, and by a wide range of transactions-cost agents to reconcile and overcome the various sources of cross-border opposition created by the restless process of MNE growth and the various barriers and friction factors impeding that growth. Accordingly, they are international business practices. These practices contain all the traits and variables that influence the growth and development of existing MNEs, future multinationals, and world and intra-networks. They involve participation through investment in foreign firms as well as transactions through specialized intermediaries.

The ultimate concern for the survival, let alone the attainment of supremacy, of any business is its ability to exploit global market opportunities and to experience the triple advantages of international specialization, environmental turbulence, and more effective ecological balance. It has become increasingly obvious that the preeminent satisfaction of company-related goals requires a corporate involvement which no longer confines their strategies within national frontiers. It is a prerequisite for success that long-term international competitiveness should top managers’ business agendas.