international business essay topics

international business essay topics

Exploring Key Issues in International Business

1. Introduction to International Business

It is relatively easy to understand that countries and firms choose international business activities to make use of the production possibilities offered by the set of resources under their control. Some countries have an excess of natural resources as compared to what they can use, while others are not rich in such goods. For example, Kuwait has vast oil reserves but not enough people or resources to use all the oil extracted. In contrast, another country may have the people, know-how but lack some natural resources, thus justifying the need for imports. Every country is in one or the other of these two situations with respect to some scarce resources.

Why should companies choose international business activities? Why prefer exporting to foreign direct investment or franchising? Which entry strategies are suitable under what conditions? What strategies should companies use with the businesses they set up abroad? These are some of the questions managers and students are concerned with and to which international business provides clues and answers. Furthermore, knowing that international interaction shapes and is shaped by national governments’ actions and concerned with the roots and reasons behind international business increases understanding of an activity which represents over a third of world production and international trade and which has a great impact on a nation’s welfare.

2. Globalization and Its Impact on Business

It is vital that the international business field supports a variety of viewpoints and perspectives if it is to continue its significant contributions to the effective conduct of business across the many cultures and nations in the world. After all, it is made up of a significant number of disciplines, such as economics, finance, management, marketing, and strategy, and embraces different levels of interest from the business, government, and social and nongovernmental sectors. It is the aim of this paper to review some key issues in the international business field. After an introduction providing some brief comments as to why that area is the focus, the background of the term is discussed in section 2. There follows a discussion of methodology.

Globalization has had and continues to have a profound impact not only on the international trade environment but also on the world economy more generally. Though the concept and process of globalization are not new, the liberalization and integration policies adopted worldwide, the favorable climate for business, improvements in technology and communications, falling barriers in the form of tariffs, quotas, and direct investment restrictions, have all studied, gave tremendous momentum to the process and revealed more of its characteristics and consequences. As a result of globalization, in terms of income, trade, investment, and jobs, the world environment has been changed significantly. However, not all the people within every country have been benefited by this change, and the successes and failures have led to heated debates on a wide range of questions concerning international business, including the field’s success in providing satisfactory answers, to providing effective teaching and learning.

3. Cross-Cultural Management and Communication

National culture has a profound impact on management practices in more than one location in multinational firms, impacting differing elements of management across these locations, including strategic issues such as acceptance or otherwise of participation in joint ventures, operational issues such as hiring, training, and rewards, and managerial issues such as effective leadership and control. There are certainly risks to multinational firms in not realizing and learning to deal with such cultural background, including the related issues of communicating with foreign subsidiaries and partners, and deciding whether to centralize or decentralize firm decision-making across nations with different cultures.

National cultures differ in terms of Hofstede’s dimensions of power distance, uncertainty avoidance, individualism, and masculinity.

The impact of culture on management, communication, and technology. Among scholars interested in cross-cultural management and communication, one area of interest has been in differences among cultures that may impact management practices in firms with locations in different countries. Such cultural differences have been identified through the comparison of national cultures, with the most famous effort being Hofstede’s exercise in sorting through numerous national culture studies to arrive at a typology of four general cultural dimensions.

4. International Market Entry Strategies

Finally, cooperative exporting is an extension of the direct-export mode established with a host foreign company. It is used to contribute local market knowledge, financial support, and other resources, for example, for in-store promotion or joint venture partnerships.

Indirect exporting relies on intermediaries—such as foreign-based importers and agents or domestic-based export merchants or export management companies—for all activities related to exporting. Direct exporting allows total control over foreign market activities, but it requires the firm to perform exporting tasks. These tasks can be performed with in-house personnel and resources, but often the firm must develop new skills, such as invoicing, packing, and shipping. Less frequently, a firm may perform these tasks through use of exporting experts, such as freight forwarders.

Product and service firms have two basic options for entering international markets: exporting and foreign market production. Exporting is clearly the most-used mode of entry. As a result, the three basic types of exporting (indirect, direct, and cooperative) are described in greater detail in this chapter than other entry options.

5. Ethical and Social Responsibility in International Business

But ethical and social responsibility issues are broader than just compliance issues. The meaning of “social responsibility” although nowhere agreed, has a sense that comes close to the general feeling that business “should be doing something for society”. This should business of course, has a cost and the general feeling may vary from ‘doing nothing’. These, in most societies, are often the only major tenets of the doctrine of social responsibility. All the rest are only different attitudes and different strategies of the ‘who pays for what’ game. This game starts with the very first hurdles that any business must jump: the current costs of setting up a firm, finding initial financing, starting operations, and getting a profit on capital. It ends with the time when the business is no more in existence, either because it has been liquidated, or because its owners have decided that its activities are no more interesting, or profitable, when financial profit is equal to the cost of capital, or when life has become simply impossible.

Of course, two things have created the appearance of an utterly perceptions are national differences in what is seen as fair. Business must be very sensitive to the fact that there are these differences. It must design its operations to take them into account. The concept of a foreign business should not be seen in the sense of maximization of profit in the narrowest manner possible. Rather, the foreign business must see that it has a responsibility for all of its stakeholders including that country of operation by evaluating its actions in a truly global manner.

In sum, companies incur social responsibility when they operate offshore. There is a cost of corporate social responsibility, as every business knows. Offshore, the cost may conflict with good management since local goals cannot be established, at least in part so as to enhance equitably corporate profits. The highest responsibility of a business, of any business, must be upholding the basic rules, that is, the universal operative norms that occur in every country or even in every community. Every business must act fairly. It must not require its stakeholders to act unfairly, or, at least, it must try to assure that they do not act unfairly.

Ethical dilemmas are the normal state of affairs in international business. This is because there is no one correct way of doing business that is valid in all regions of the world. Values and ethical norms vary widely between societies. Of course, this does not mean that international business firms should be permitted to set their own ethical norms, which might include, for example, child labor. Agreements such as those which have just evolved from international labor organization meetings are evidence that both multinational corporations and nation-states are party to certain global issues that must be resolved to satisfy ethical norms.