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International business
International business
International business
International business
International business
International business
International business
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International business

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  • 1. International business <br />is a term used to collectively describe all commercial transactions (private and governmental, sales, investments, logistics,and transportation) that take place between two or more regions, countries and nations beyond their political boundary. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons.[1] It refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc.[2]<br />A multinational enterprise (MNE) is a company that has a worldwide approach to markets and production or one with operations in more than a country. An MNE is often called multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets.<br />Areas of study within this topic include differences in legal systems, political systems, economic policy, language, accounting standards, labor standards, living standards, environmental standards, local culture, corporate culture, foreign exchange market, tariffs, import and export regulations, trade agreements, climate, education and many more topics. Each of these factors requires significant changes in how individual business units operate from one country to the next.<br />The conduct of international operations depends on companies' objectives and the means with which they carry them out. The operations affect and are affected by the physical and societal factors and the competitive environment.<br />Operations<br />Objectives: sales expansion, resource acquisition, risk minimization<br />Means<br />Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey operations, management contracts, direct investment and portfolio investments.<br />Functions: marketing, global manufacturing and supply chain management, accounting, finance, human resources<br />Overlaying alternatives: choice of countries, organization and control mechanisms<br />Physical and societal factors<br />Political policies and legal practices<br />Cultural factors<br />Economic forces<br />Geographical influences<br />Competitive factors<br />Major advantage in price, marketing, innovation, or other factors.<br />Number and comparative capabilities of competitors<br />Competitive differences by country<br />There has been growth in globalization in recent decades due to the following eight factors:<br />Technology is expanding, especially in transportation and communications.<br />Governments are removing international business restrictions.<br />Institutions provide services to ease the conduct of international business.<br />Consumers know about and want foreign goods and services.<br />Competition has become more global.<br />Political relationships have improved among some major economic powers.<br />Countries cooperate more on transnational issues.<br />Cross-national cooperation and agreements.<br />Studying international business is important because:<br />Most companies are either international or compete with international companies.<br />Modes of operation may differ from those used domestically.<br />The best way of conducting business may differ by country.<br />An understanding helps you make better career decisions.<br />An understanding helps you decide what governmental policies to support.<br />Managers in international business must understand social science disciplines and how they affect all functional business fields.<br />Tom Travis, the managing partner of Sandler, Travis & Rosenberg, PA. and international trade and customs consultant, uses the Six Tenets when giving advice on how to globalize one's business. The Six Tenets are as follows[3]:<br />Take advantage of trade agreements: think outside the border <br />Familiarize yourself with preference programs and trade agreements.<br />Read the fine print.<br />Participate in the process.<br />Seize opportunities when they arise.<br />Protect your brand at all costs <br />You and your brand are inseparable.<br />You must be vigilant in protecting your intellectual property both at home and abroad.<br />You must be vigilant in enforcing your IP rights.<br />Protect your worldwide reputation by strict adherence to labor and human rights standards.<br />Maintain high ethical standards <br />Strong ethics translate into good business.<br />Forge ethical strategic partnerships.<br />Understand corporate accountability laws.<br />Become involved with the international business self-regulation movement.<br />Develop compliance protocols for import and export operations.<br />Memorialize your company's code of ethics and compliance practices in writing.<br />Appoint a leader.<br />Stay secure in an insecure world <br />Security requires transparency throughout the supply chain.<br />Participate in trade-government partnerships.<br />Make the most of new security measures.<br />Secure your data.<br />Keep your personnel secure.<br />Expect the Unexpected <br />The unexpected will happen.<br />Do your research now.<br />Address your particular circumstances.<br />All global business is personal <br />Go to the source.<br />Keep communications open.<br />Keep the home office operational.<br />Fly the flag at your overseas locations.<br />Relate to offshore associates on a personal level.<br />Be available to overseas clients and customers 24/7.<br />According to C.K. Prahalad & S. Hart,2002, The fortune at the bottom of the pyramid, Strategy & Business, 26: 54-67, and (2) S.Hart, 2005, Capitalism at the Crossroads (p. 111), Philadelphia: Wharton School Publishing.<br />Top Tier: Per capita GDP/GNI > $20,000 Approximately one billion people<br />Second Tier: Per capita GDP/GNI $2,000-$20,000 Approximately one billion people<br />Base of the Pyramid Per capita GDP/GNI < $2,000 Approximately four billion people<br />International trade<br />From Wikipedia, the free encyclopedia<br />Global Competitiveness Index (2008-2009): competitiveness is an important determinant for the well-being of states in an international trade environment.<br />International trade uses a variety of currencies, the most important of which are held as foreign reserves by governments and central banks. Here the percentage of global cummulative reserves held for each currency between 1995 and 2005 are shown: the US dollar is the most sought-after currency, with the Euro in strong demand as well.<br />International trade is exchange of capital, goods, and services across international borders or territories.[1] In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries.<br />Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.<br />International trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture.<br />Another difference between domestic and international trade is that factors of production such as capital and labour are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Then trade in goods and services can serve as a substitute for trade in factors of production.<br />Instead of importing a factor of production, a country can import goods that make intensive use of the factor of production and are thus embodying the respective factor. An example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor the United States is importing goods from China that were produced with Chinese labor. One report in 2010 suggested that international trade was increased positively when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.[2]<br />International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.<br />What Is Globalization? <br />Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. <br />Globalization is not new, though. For thousands of years, people—and, later, corporations—have been buying from and selling to each other in lands at great distances, such as through the famed Silk Road across Central Asia that connected China and Europe during the Middle Ages. Likewise, for centuries, people and corporations have invested in enterprises in other countries. In fact, many of the features of the current wave of globalization are similar to those prevailing before the outbreak of the First World War in 1914. <br />Map of the Silk Road<br />But policy and technological developments of the past few decades have spurred increases in cross-border trade, investment, and migration so large that many observers believe the world has entered a qualitatively new phase in its economic development. Since 1950, for example, the volume of world trade has increased by 20 times, and from just 1997 to 1999 flows of foreign investment nearly doubled, from $468 billion to $827 billion. Distinguishing this current wave of globalization from earlier ones, author Thomas Friedman has said that today globalization is “farther, faster, cheaper, and deeper.” <br />But policy and technological developments of the past few decades have spurred increases in cross-border trade, investment, and migration so large that many observers believe the world has entered a qualitatively new phase in its economic development. Since 1950, for example, the volume of world trade has increased by 20 times, and from just 1997 to 1999 flows of foreign investment nearly doubled, from $468 billion to $827 billion. Distinguishing this current wave of globalization from earlier ones, author Thomas Friedman has said that today globalization is “farther, faster, cheaper, and deeper.” <br />This current wave of globalization has been driven by policies that have opened economies domestically and internationally. In the years since the Second World War, and especially during the past two decades, many governments have adopted free-market economic systems, vastly increasing their own productive potential and creating myriad new opportunities for international trade and investment. Governments also have negotiated dramatic reductions in barriers to commerce and have established international agreements to promote trade in goods, services, and investment. Taking advantage of new opportunities in foreign markets, corporations have built foreign factories and established production and marketing arrangements with foreign partners. A defining feature of globalization, therefore, is an international industrial and financial business structure. <br />Technology has been the other principal driver of globalization. Advances in information technology, in particular, have dramatically transformed economic life. Information technologies have given all sorts of individual economic actors—consumers, investors, businesses—valuable new tools for identifying and pursuing economic opportunities, including faster and more informed analyses of economic trends around the world, easy transfers of assets, and collaboration with far-flung partners. <br />Globalization is deeply controversial, however. Proponents of globalization argue that it allows poor countries and their citizens to develop economically and raise their standards of living, while opponents of globalization claim that the creation of an unfettered international free market has benefited multinational corporations in the Western world at the expense of local enterprises, local cultures, and common people. Resistance to globalization has therefore taken shape both at a popular and at a governmental level as people and governments try to manage the flow of capital, labor, goods, and ideas that constitute the current wave of globalization. <br />

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