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International Business and Trade

International business and trade has increased globalization through the interdependence of economies, cultures, and populations brought about by cross-border flows of goods, services, technology, investment, people and information. International business includes all commercial transactions between two or more countries by private or public entities. Factors that have increased globalization include the rise of technology, liberalization of trade, development of services supporting international business, growing consumerism, increasing competition, and expanding cross-national cooperation.

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35 views

International Business and Trade

International business and trade has increased globalization through the interdependence of economies, cultures, and populations brought about by cross-border flows of goods, services, technology, investment, people and information. International business includes all commercial transactions between two or more countries by private or public entities. Factors that have increased globalization include the rise of technology, liberalization of trade, development of services supporting international business, growing consumerism, increasing competition, and expanding cross-national cooperation.

Uploaded by

Erika B
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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INTERNATIONAL BUSINESS AND TRADE

GLOBALIZATION
Interdependence of the world's economies, cultures, and populations, brought about by cross-border
trade in goods and services, technology, and flows of investment, people, and information.
International Business
All commercial transactions between two or more countries
Private or Public
The International environment is more complex and diverse than a firm’s domestic environment
Importance
# 1. National Economy:
1. It is important to meet imports of industrial needs.
2. Debt Servicing: This means to grant loan for and for their industrial development.
3. For rapid economic growth.
4. For profitable use of natural resources.
5. To face competition successfully-better quality goods production having lower or moderate prices.
To improve the image of the producer as well as of the country in the minds of foreign customers.
6. Increase in employment opportunities.
7. To increase national income.
8. Increase in standard of living of the people.

# 2. Importance to Exporting Firm:


Business and industrial firms/exporting firms are also benefitted from the international business,
(a) Insufficiency of Domestic Demand:
(b) To Utilize Installed Capacity:
If the installed capacity of the firm is much more than the level of demand of the product in the
domestic market, it can enter the international market and utilize its un-utilized installed capacity. In
this way it can export the surplus production.

(c) Legal Restrictions:
Sometimes the Government of a country imposes certain restrictions on the growth and expansion of
certain firms or on the production and distribution of certain commodities in the domestic market in
order to achieve certain social objectives.
(d) Relative Profitability:
The export business is more attractive for its higher rate of profitability. The higher profitability rate
also gives extra strength to the firm.

e) Less Business Risk:


A diversified export business helps the exporting firm in mitigating the risk of sharp fluctuations in the
business activity of the firm.
(f) Increased Productivity:
Due to certain social and technological developments the industrial production has increased to a
great extent. The production will be higher at cheaper rate. The surplus production can be exported.
(g) Social Responsibility:
In order to meet the social responsibility some business firms take the decision to contribute to the
National Exchequer by exporting their products.
Source: https://www.economicsdiscussion.net/business/importance-of-international-business/13945

Importance
# 1. National Economy:
1. It is important to meet imports of industrial needs.
2. Debt Servicing: This means to grant loan for and for their industrial development.
3. For rapid economic growth.
4. For profitable use of natural resources.
5. To face competition successfully-better quality goods production having lower or moderate prices.
To improve the image of the producer as well as of the country in the minds of foreign customers.
6. Increase in employment opportunities.
7. To increase national income.
8. Increase in standard of living of the people.

# 2. Importance to Exporting Firm:


Business and industrial firms/exporting firms are also benefitted from the international business,
(a) Insufficiency of Domestic Demand:
(b) To Utilize Installed Capacity:
If the installed capacity of the firm is much more than the level of demand of the product in the
domestic market, it can enter the international market and utilize its un-utilized installed capacity. In
this way it can export the surplus production.

(c) Legal Restrictions:
Sometimes the Government of a country imposes certain restrictions on the growth and expansion of
certain firms or on the production and distribution of certain commodities in the domestic market in
order to achieve certain social objectives.
(d) Relative Profitability:
The export business is more attractive for its higher rate of profitability. The higher profitability rate
also gives extra strength to the firm.

e) Less Business Risk:


A diversified export business helps the exporting firm in mitigating the risk of sharp fluctuations in the
business activity of the firm.
(f) Increased Productivity:
Due to certain social and technological developments the industrial production has increased to a
great extent. The production will be higher at cheaper rate. The surplus production can be exported.
(g) Social Responsibility:
In order to meet the social responsibility some business firms take the decision to contribute to the
National Exchequer by exporting their products.
Source: https://www.economicsdiscussion.net/business/importance-of-international-business/13945

FIGURE 1.1 Factors in International Business Operations The conduct of a company's


international operations depends on two factors: its objectives and the means by which it
intends to achieve them. Likewise, its operations affect, and are affected by two sets of
factors: physical/social and competitive. OPERATING ENVIRONMENT OPERATIONS
PHYSICAL AND SOCIAL FACTORS • Political policies and legal practices • Cultural
factors • Economic forces • Geographical influences OBJECTIVES • Sales expansion •
Resource acquisition • Risk minimization STRATEGY COMPETITIVE FACTORS •
Competitive product strategy • Company resources and experience • Competitors in each
market Modes • Importing and exporting • Tourism and transportation • Licensing and
franchising • Turnkey operations • Management contracts • Direct and portfolio
investment (including joint ventures) MEANS Functions Overlying Alternatives Marketing
• Choice of countries Manufacturing Organization and and supply-chain control
mechanisms management • Accounting • Finance • Human resources

Various Studies: Comprehensive comparisons


Income of the countries’ populations
-Countries with higher-income populations tend to be more globalized than those with
lower-income populations

A Selection of Key Aspects of Globalisation


Trade to GDP ratios are increasing for most countries
Expansion of Financial Capital Flows between countries
Foreign Direct Investment and Cross Border M&A
Rising number of global brands - including from emerging countries
Deeper specialization of labour components come from many nations
Global supply chains & new trade and investment routes e.g. South-South trade
Increasing levels of international labour migration and migration within countries
Increasing connectivity of people and businesses through mobile and Wi-Fi networks

Factors in Increased Globalization


Increase in and application of technology
Liberalization of cross-border trade and resource movements
Development of services that support international business
Growth of consumer pressures
Increase in global competition
Changes in political situations and government policies
Expansion of cross-national cooperation

Expansion of cross-national cooperation


To gain reciprocal advantages
To attack problems jointly that
one country acting alone cannot solve
To deal with areas of concern that lie outside the territory of any nation
Treaties, Agreements, and Consultation

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