Federico M. Camasura Jr. Mgt.

110

1. What are the basic ideas and concept of international business? Enumerate and explain. The the beverages of the disk in apply watch The but so you a tea of drink USA might be produced The in you States been been wear by have an in tea Sri operate of in India, you but drink Lanka. might with is The have

collaboration from and hard

company.

prepared spares been The The

powder the the might might shoe

produced computer United have have you

produced perfume television you you

America. France. the been Air travel you.

produced produced might Italian

with have

Japanese produced France services Most visiting offered might products of of

technology. in and Taiwan, so on

remarketed forth might to

company. your air

provided

you different

have web

the sites, companies

experience knowing across of 'even process international

of the the

browsing products globe.

Internet and Some of buying the arena

and services you the

by have

various the

experience Internet. in the This

ordering gives you

and

through

opportunity without

transacting

business

visiting the You of have get the

or

knowing

the

various

countries

and

companies

across globe.

all

these

even where

without they due to are

visiting

or

knowing All and

the

country activities of

company a

produced. the operations

these

become

reality

activities

international Thus, resources global international of the business globe is and the process of of the and focusing

business. on the on

objectives opportunities

organizations

business

threats.

2. How these concepts affect managers as they make decisions, develop strategies. Business and trade are the lifeblood of the global economy. The future of any successful economy depends on the skill, imagination and the training of its own people the entrepreneurs who make business grow. Global trade is growing at unprecedented speed and is affecting all businesses, even those focused on the domestic market. To be successful, managers must be aware of the importance of regional trade agreements and supra-national organizations, and the effect of foreign exchange systems and the effect of fluctuations in foreign exchange. Students who major in international business develop an understanding of these important issues along with knowledge of the strategies used by multinational corporations and how to manage in a cross-cultural environment. 3. What are the fundamental mechanics and ingredients of the global economy? How they affect people, business and industries?

It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economyeven if currently exploited in some wayand could be considered of latent value only in the same way as uncreated intellectual property, such as a previously un conceived invention. 4. Explain the evolution of the economy and the complex commercial and political relationships among Asia, Europe, North America and the rest of the world. Evolution The carried limited World national The business on to War across since the If times international period into of the borders immemorial. trade witnessed international has until an or given International of But, the the the countries business past. had had The Business been been post of

recent unexpected

expansion

companies post 1990s

multinational greater

companies. fillip to

period

international In before emerged emerged International fact, the two from term decades. the from Trade to term the international The business term was international marketing, 'export Marketing: not in business which in

business. existence has turn,

international term International

marketing'. Originally, the

producers and the example, during country and India, addition include electronics, appropriate development, India, economies. International multinational their countries

used

to

export the

their exports the

products to far

to off

the

nearby countries.

countries Gradually, For ore the

gradually companies India the

extended

extended used early us steel to

operations raw cotton, massive jute raw

beyond jute

trade. and iron in

export

1900s. to

The export

industrialization products, cotton

enabled

garments 1960s.

during create markets The for tea, Indian coffee attractive process all is true for its products,

during to creation

1980s mere of

could

in efforts

exporting. demand products,

export

marketing like arranging package, not and only

products etc.,

textiles, for product with

leather

distribution pricing also etc. with

channels, This almost

but

developed

developing

Marketing companies countries 1980s, facilities in one For in which and

to were

International producing them their in

Business: the products various plants and Later, in

The in foreign other they other its Limited

home before

marketing locating foreign/host foreign example, India, country Uni i.e.,

started in

manufacturing started foreign subsidiary producing

countries. and Lever Hindustan

marketing

countries. company

established Lever

(HLL). in

HLL

produces Sri is

its Lanka,

products Nepal

in etc. into

India Thus,

and the

markets scope of

them the and

Bangladesh, trade

international international Nature The 1990s

expanded is

international into

marketing

marketing of and and dramatic trader social, the

expanded

international

business. Business

International new millennium The the clearly entire transition to analyze political more international variations one in business political, to social, indicate globe period. and and

rapid is Today, interpret natural clearly.

internationalization passing the the at a

globalization. pace is in through a

international global

position economic,

technical, factors

environmental Conducting a crucial and venture factors, most due to of

managing due from the their prefer higher to

operations cultural country. less Whereas priced the

is and For costly the

economic example, products German due to

country

another prefer

African poor high

consumers economic

conditions. and high

consumers their

quality to buy. export and vice

products international

ability and

Therefore, less versa High in are costly to

businessman most of

should the and

produce

products most and countries and of

to the high and

African North soaps

countries American are Palmolive

European quality the

countries. marketed soaps

priced

Palmolive economy

European exported

priced

marketed

in

developing

Countries

like

Ethiopia,

Pakistan,

Kenya,

India, etc.

Cambodia International make market based enter International information. on the business Coca timely is the US the an for on the business appropriate leather accurate various houses Cola could need not enter whereas entrance compared also made of to houses decision. goods data need Europe and could accurate was particularly make European only the Pepsi accurate European entered but market later. the information most for appropriate

to

opportunistic shoes. decision Bata to

countries. timely based Another companies countries. the case Europe.

information, timely market companies

example into Indian of' laws, the should enter Host level, monetary rates system also

Indian those timely of

software other in

software

decision

business Indian enter

laws

and

policies For venture

and example, with

regulations

formulated

by

Government. into joint

international domestic them regulate etc. the through foreign tools of

business to

the among

company

Malaysia. Country's flow of Monetary

Important System: production addition, monetary rate, cash they

include: price their exchange monetary liquidity

Countries levels regulate The

money, In the

systems. through bank

system. reserve

include

ratio,

statutory

ratio

etc.

Governments business should full obey

also houses these

regulate to

remittance other

of

the

profit

of

international companies introduced many account National formulates companies example, business Impact Housewives Language: business. in

countries. The Indian account; on

International Government in fact, current liberalization. Every country

regulations. on full of the its these Host national national as far current

convertibility introduced a Policies policies abide is a part of for by free

Governments as Security the should USA

convertibility economic Countries: security. security as to

Multinational policies. out For the many Switzerland

economy

carrying

compared of Culture

of

language Even though operations of 'non business language many the of

is

an 'English in the English'

important language' world,

factor is there a are

in major still

international language a large

business

number international the would Therefore, local be

speaking should host use train country. in

countries. their Added

Therefore, in there ours. in

houses THC in houses

employees to this, like

languages business

many, train

countries their

should

employees

the local languages also. 5. How International Business succeed & How they Fail?

The economic benefits that greater openness to international trade or business bring are: Faster growth: economies that have in the past been open to foreign direct investments have developed at a much quicker pace than those economies closed to such investment. Cheaper imports: this is down to the simple fact that if we reduce the barriers imposed on imports (e.g. tariffs, quota, etc) then the imports will fall in price

New technologies: by having an open economy we can bring in new technology as it happens rather than trying to develop it internally

Spur of foreign competition: foreign competition will encourage domestic producers to increase efficiency. Carbaugh (1998) states that global competitiveness is a bit like golf, you get better by playing against people who are better than you.

Increase consumer income: multination will bring up average wage levels because if the multinationals were not there the domestic companies would pay less. Increased investment opportunities: with globalisation companies can move capital to whatever country offers the most attractive investment opportunity. This prevents capital being trapped in domestic economies earning poor returns. While the failing drivers of International business are: Increased costs: There are increased operating expenses including the establishment of facilities abroad, the hiring of additional staff, travelling of personnel, specialized transport networks, information and communication technology. Foreign regulations and standards: The firm may need to conform to new standards. This may require changes such as in the production process, inputs and packaging, incurring additional costs.

Delays in payments: International trade may cause delays in payments, adversely affecting the firm's cash flow. Complex organizational structure: International business usually requires changes to the firms operating structure. Training/retraining of management may be necessary to facilitate restructuring.

The negative drivers of globalisation included culture which is a major hold back of globalisation. An example of how culture can negatively affect globalisation can be seen in the French film industry. The French are very protective of this part of their culture and provide huge grants to help its development. As well as government barriers market barriers and cultural barriers still exist.

Also a negative aspect to a countries development is war e.g. tourism in Israel fell by 40% due to the latest violence. as Corporate strategy may try can to also locate be in a negative one driver of

globalization

corporation

particular

area.

Another negative driver of globalisation is local focus or localisation as it is termed in Richard Douthwaites book Short Circuit. Douthwaite (1996) believes that globalisation can and should be reversed. He also believes that localisation is the way to do this. He defines localisation as not meaning everything being produced locally but it means a better a balance between local, regional, national and international markets and thus bring less control to multinational corporations. Another step to reverse globalisation would be for governments to club together to curb the power of multinational by negotiating new trade and treaties that would remove the subsidies powering globalisation and give local production a chance. Douthwaite also states that the global economy is itself nothing less than a system of structural

exploitation that creates hidden slaves on the other side of the world and also that the North should allow the South to produce for itself and not just for us (North). So it can be seen that Douthwaite is very opposed to globalisation especially that part of it exploited by multinational corporations.

Further arguments put forward against globalisation by Mr. Lawton include that it actually destroys jobs in wealthy advanced countries. This is due to the lower costs of wages in developing countries. Multinationals will move to areas of lower wage levels at the drop of a hat e.g. Fruit of the Loom. Also this ability to relocate has meant that wage levels of unskilled workers in developed countries has actually fallen relatively speaking. This is down to the fact that one now needs skill and knowledge in developed economies to survive.

Also there is the loss of sovereignty that globalisation brings. Many anti-globalisation believers state that nations are losing their identity and selling their soul.

Then there are environmental factors of globalisation as described earlier. These are becoming more and more controversial.

Technology, though usually viewed as a positive aspect of globalisation, also has some negative points. Jeffry Sachs (The Economist, June 24th 2000) argues that technology is now what divides the world. Sachs states that 15% of the worlds population account for nearly all the worlds technological advances. This has to be a concern if developing economies are ever going to catch up. Many countries, almost 30% of the worlds population, are technologically excluded (this means not only that they do not innovate but also that they cannot adopt new technologies). In recent years some countries, such as Taiwan, South Korea and Israel, have become top rank innovators and with this their economies have flourished. This would indicate that perhaps the best way to tackle world poverty is to provide aid through education and technology.