Importance of International Business And Globalisation - Essay Example

? THE IMPORTANCE OF INTERNATIONAL BUSINESS AND GLOBALIZATION A Introduction Importance of international business As the world globalizes, business toll need to globalize and use all the technologies and opportunities at their disposal and benefit by exploiting slightest benefits over the competition. International business is increasingly essential in the development of a nation’s economy because it provided extensive business opportunities to exchange its local production – goods and services. Depending on local markets may be increasingly challenging and that why many companies opt to go the international way. Discussion International business has some benefits to the economy of a nation. For instance, with the persistent decline the United States economy, international business will result to crucial improvement in the economy. International business increased the rate of exchange with international nations and this reduces the changes of economic failure because of increased exchange of products. International trade provides innovations and concepts, and US benefits from these concepts. International business enables a country to earn foreign exchange as the nation exports its products globally and this aids in earning crucial foreign exchange that is utilized in paying imports, (Kalmi and Klinedinst, 2006, p.96). Similarly, foreign exchange aids to make the companies increasingly productive and to reinforce a national economy. International business allows optimum resources utilization because it makes large-scale productions for international market. Similarly, international business uses resources from different parts of the globe and it utilizes rich nations finance and technologies as well as labor and law materials from poor nations. Companies in the United States have achieved crucial economic growth through exposure to international new talents and resources that are beneficial to the economy. International business enables US firms to spread economic risks and threats. Being in the international transactions, United States does business globally and thus loss in one nation us balanced by increased benefits in another nation, (Daniels, 2007, p.45). The surplus production in one nation can be exported to another, the surplus resources may be exported to other nations, and this aids in business risks reduction. International business enhances efficiency of national organizations to enable them to bear the stiff competition in the global markets. National organizations use contemporary management technologies to enhance efficiency and attain economic growth, such organizations employ qualified and experienced experts and workers. With international business, people are highly motivated by increased benefits, salaries, international promotions and transfers and this leads to organizational efficiency and increased economic growth. International business increases economic growth through economic expansion and diversity to earn more profits. Customers’ creation through international markets leads to increased profits. International business creates global markets for their customers through new products introductions, introduction of new distribution methods like e-commerce, e-communication, and shopping. B Globalization influence on countries Globalization has in the past, influenced different stakeholder groups, and will affect other stakeholders in future. It has caused various changes in the globe. As clearly defines, it is the extensive economic, social and cultural transformations or interdependence that has let to various changes such as a crucial economic prosperity increase, democracy spread, free capital and ideas flow and heightened entrepreneurship and competition. Globalization has opened world economy for both developed and developing nations to participate and benefit as it allows nations to trade products and services with each other. Globalization has accelerated the rate of trade among nations, for instance, by trading with one another, technology and knowledge is exchanged that foster economic growth of developing and developed nations, thus the economy is enhanced and innovated faster. It has fostered economic completion for efficiency and increased production. This avails wide variety of cheap and affordable products to customers in different countries. Industrial and financial transformation is enhancing substantially and establishing new economic chances for both developed and developing nations. For instance, due to globalization, developing economies are now able to use and attract foreign capital and investors, thus enhancing their economic base. Globalization gives power nations and economies access to foreign lending and funds, which are later used for economic development such as infrastructure, industries, healthcare, education, living standards, and social services, (Rugman, Collinson, and Hodgetts, 2006, p.12). It also results to free trade among nations, which is a greatest advantage to developing nations as it reduces trade barriers for locally produced industrial goods, and gives them access to broader international market. Globalization is broadening the income disparities between rich and poor nations, for instance, while the foreign nations and capitals influx create a reduction in general poverty and unemployment, it similarly enhances the wage gap among literate and illiterate people. Consequently, the level of education will increase as the poor nation’s financial health increases; therefore, the poor nations will continue to languish in poverty. Foreign companies’ influx into poor nations accelerates employment for skilled workers, advancement in technology come with new techniques that spread to local companies thus, causing unemployment. For instance, agricultural and manufacturing companies’ automation increased productivity and lessens the requirement for cheap labor and thus increased unemployment. Globalization has increased the gap between poor and wealthy nation, and uneven distribution of resources within nations causing civil wars increase and collapse of economies in some nations because of economic mismanagement and unequal trade relationships. Business organizations Globalization affects business organizations by enhancing their customer base potential, markets and chains of supply. It enables them to trade all over the nations and allows rapid growth and extension with adequate decision-making. Because of bilateral agreements of trade, business organizations have access to affordable resources because business organizations benefits from cheaper labor and diversity of resources. Business organizations benefits from exchange of technologies and knowledge between internationally oriented companies and entrepreneurial firms, and this enable them to explore new business opportunities. Globalization functions in the rich organizations interests that persistently dominate small business organizations. Similarly, lack of guarantee that international wealth will benefit small organization is a limitation because rich business benefit in expense of small organization. For instance, rich firms with extensive economies of scale may throw small firms out of the business leading to their economic collapse. Lack of strictly implementation of international laws implies that large companies will pollute the business environment and impose poor working conditions for small companies. Effects on society Due to globalization, social services such as education and health have improved. It has increased people contact making them learn from each other. Due globalization societies have learned about economy, social life, diets, languages and culture of other nations which has been increasing crucial to social and economic development in their nations. Globalization has affected societal and human activities and has created cultural homogeneity leading to resurgence of local traditions interests. It has increased social movement and exploration to different parts of the word, (Kalmi and Klinedinst, 2006, p.120). It has enhanced multiculturalism and increased people access to cultural diversities via education, sporting activities and media. The hybridization resulting from multiculturalism has caused traditional cultures erosion and assimilation. Effects on customers Globalization has reduced product prices for customers. Due to competition, globalization has increased product quality producing variety and high quality products for customers, and giving customers purchasing choices. Internet shopping has created new chances for accessing global products at ones comfort, as products from different nations are available online. While competition is likely to produce high quality goods for customers, the products may be expensive to local buyers because of increased bureaucracies involved. Illiterate customers may find it difficult to purchase online and many people may loss job due to globalization. Effects on workers Many firms have access to international business that provide outsourcing, and increased wages for company employees. Firms in foreign nations have adopted modern principles in providing high quality workstation safety and working conditions. This benefits workers because they have safe and sanitary working environments, (Daniels, 2007, p.74). Safe and secure environment reduces workplace risks and threats that may affect workers health and well-being. Globalization requires workers to learn to work with cultural diversity in their workplace, which is a challenge because of diversities in opinions, language, and interests. Globalization has brought about complex technological advancements that require high skills and expertise to operate, this may be a challenge to workers because only experts can operate the technology others end up losing their job. C Memo Date: 23/7/2013 To: Richard Page, Marketing Manager, From: Marketing Advisor Subject: Differences between international and domestic business and the risks involved. International business entails exchange of products and services among two or many nations and across borders. Domestic business entails business operations or trade within the national borders. Several distinctions occur between the two businesses but their main principles are almost similar. For instance, their strategic methods are similar to enhance and create the productivity of the company, enhance market share and development of products. Their main differences centers on their adaption idea, for instance, labor resource in domestic business is less productive compared to international business, (Griffin and Pustay, 2010, p.56). Similarly, the strategic plans for international business concerns the need to recruit domestic professionals to aid the company by integrating into domestic economy, therefore, without such integration international business is unproductive. The crucial distinction between the two concerns the crucial potential markets and investment diversity, and the key issues revolve around different currencies adoption, regulations, and political challenges of diverse nations, (McDonald, Tu?selmann and Wheeler, 2002, p.23). The cost of business operations internationally is high compared to domestic operation and international business has more methods of industrialization in various nations. Their practice standardization is known globally and this assists all nations to overcome their challenges related to international trade. Expanding a domestic business to international level may have some challenges and risks in handling local culture, practices of business, regulations at government level and language. Therefore, before expanding his business to other nations, Richard should first consider these aspects and many other to be sure that his decision to expand internationally is beneficial. Since no two cultures have similar characteristics, therefore comprehending business culture and social culture of the people in another country is crucial for business success. This is because culture dictates the content and activities of a society, ranging from its business operation, marketing strategies, its reactions to marketing and advertising, to sales negotiations. Expanding business internationally may face cultural risk and shock, therefore, investigating the culture of the nation one intends to expand to be crucial for successful marketing. Comprehending these issues ensures that one is better prepared to face and overcome the risks before entering the market. Richard firm is likely to face competition risk, for instance, the firm will face foreign market competition because the markets tends to be increasingly complex and dynamic compared to local markets. The firm will experience some market intelligence challenges, for instance, limitations in understanding how markets operate and how to determine the best market strategy for entry. It will be hard to find reliable data and information for foreign markets. The firm will be unfamiliar with foreign politics and law as no two nations have similar systems of law and politics. All governments have their own laws and regulations in relation to foreign companies and goods so operating in a foreign land may be difficult. Foreign laws and regulations may adversely affect the potential of permanent achievement of the firms. Finally, just like technological advancement, infrastructure if business in foreign markets may be at diverse development level and this may affect the ability of the firm to market its products. Bibliography Daniels, J. D. (2007). Effects of globalization on the firm. Los Angeles [u.a], SAGE. Kalmi, P., & Klinedinst, M. (2006). Participation in the age of globalization and information. Amsterdam, Elsevier JAI. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=648928. Griffin, R. W., & Pustay, M. W. (2010). International business. Upper Saddle River, NJ, Prentice Hall. McDonald, F., Tu?selmann, H.-J., & Wheeler, C. (2002). International business adjusting to new challenges and opportunities. Houndmills, Basingstoke, Hampshire, Palgrave. http://site.ebrary.com/id/10076982. Rugman, A. M., Collinson, S., & Hodgetts, R. M. (2006). International business. Harlow, Financial Times Prentice Hall. http://www.myilibrary.com?id=60201. Read More