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International Business (Essay Sample)


An essay on “Businesses operate in a world of regionalism not globalism”. Do you agree or disagree with this statement? Explain your answer.


International Business
Professor Name:
(January 01, 2014)

International Business
“Businesses operate in a world of regionalism not globalism”
This paper disagrees with the statement that “Businesses operate in a world of regionalism not globalism”. Regionalism is the traditional concept applied by businesses in the earlier times. The world has opened up traditional boundaries in favour of globalization, a concept supported by the ‘global village’. International business is characterized with a diverse environment of operations that international companies face defined by both domestic context and international context.
Managing international business requires different skills in cross border management, which is part of internationalization and globalization (Hill, 2012). International markets are influenced by economic elements, political elements, legal institutions and informal institutions such as religion, culture and language among others (Gilpin & Gilpin, 2001). Formal and informal institutions influencing international business are part of internationalizing and globalizing companies. Globalization is a form of regionalism reflecting on the world as one market.
International business is characterized with commercial transactions related to sales, governments, private organizations, logistics, investments and transportation among other factors taking part beyond the political boundaries. International companies are facilitated by profits; governments are facilitated by political reasons and for profit (Rugman & Collinson, 2012). International business is characterized by cross border movements of services, goods and resources. Movement of economic resources is facilitated by the skills, people and capital among other factors necessary in industries such as in construction, finance, insurance and banking among others.
Business ethic is influenced by the environment of operations, it varies with jurisdictions. Foreign Direct Investment (FDI) and Trade environment influence the way international business is carried out. International business strategies are changing with globalization as companies seek international market share (Rugman & Collinson, 2012). Entering foreign markets depends on the target market, and there is no one model that fits all. Companies seeking an international market share must conduct a thorough business research in understanding the target market. There are cases where international business has failed after research on the target market was not conducted well (Hill, 2012). An example of a failed international business is the investment of the American based Nova automobiles in the Spanish market. The word Nova in Spanish means that the product does not move, similar translations on the Nova automobiles led to failed business in Spain; target market in this concept influence internalization of the strategies (Rothaermel, 2012).
Organizations may enter the target market through different modalities; there are companies that prefer entering new markets on their own or in partnerships. Such organizations must develop mechanism of the detecting the associated risks and on models of negotiating with the governments in the target business jurisdictions. Managing international business is characterized with a clear understanding of the international finance, international marketing, international strategy, international sustainability management, international human resource management and on international supply chains characterized with logistics, production and operations (Rugman & Collinson, 2012). Corporate functions are part of international business in realizing the desired domestic and international goals facilitated by international strategies (Rothaermel, 2012).
It has been noted that globalization is influenced by diverse political processes, economic pressures and diversity in the approach of the international markets (Boudreaux, 2007). International trade together with the free trade are some of the factors that shape globalization. Globalization has opened up regional businesses to international business (Rugman & Collinson, 2012). Globalization and socialization are current concepts that are shaping societies, business life, business environment and different economies; where the globalization has led to failure and emergence of new businesses. Information sharing is in real time around the world despising national borders, a model influencing international businesses. International businesses are forced to adapt to the changes in remaining relevant in the target market, through developing competitive edges.
The concept of globalization has enabled small companies in seeking a share in the international markets (Rugman & Collinson, 2012). Multinational companies (MNCs) are also expanding to the global market share taking a significant share in the developed nations, developing nations and in the least developed nations. Examples of established brands in the international markets are The Coca-Cola brand, General Motors, Google brand, Toyota, Ford Motor Company, Samsung, Nokia, Sony, LG, Shell, BP and Dell brand among others. Some MNCs are very strong to an extent that they influence the nations of operations (Roberts, 2007), particularly in the developing nations and in the least developed nations. The returns associated with some MNCs are huge to an extent that they exceed the Gross Domestic Product of some host nations of doing business. The global economy to some extent is being controlled by some powerful MNCs (Rugman & Collinson, 2012).
Surveys indicated that MNCs affect the balance of payments and import huge capital to the nations of operations, the practice affects the business practices in the host countries, which is associated with globalization. Importation may be in the form of tangible capital and also human capital resources; the model affects the business practices in the region. MNCs to some extent in the host nations facilitate more importation than the exportation of goods and services, a model that betters the living standards of people in the host country (Telò, 2004). MNCs have been characterized with facilitating the globalization concept.
The employment concept in the twenty first century is currently globalized. Import and export of human capital is evident as people live largely in multicultural societies (House et al., 2004). The free movement of human capital in the world is discouraging regionalism in favour of globalization. Different professionals are distributed all over the world irrespective of their originality, it has come to a point that regionalism is not critical in defining business operations around the world (Shenkar & Luo, 2008). In so doing, movement of human capital around the world is improving the quality of the human capital in the local communities as people engage in constant learning as people match the demands of new jobs that are facilitated by globalization (Rugman & Collinson, 2012). A sound example of labour importation identifies with Japanese companies importing cheap labour from China, Bangladesh and Philippines among other neighbouring countries. The model supports globalization and disfavours regionalism.
China is the current market targeted by all the MNCs in the world; each and every MNC is setting out a factory or distribution network in China. It is argued that the Chinese market offers a ready market due to the high population of people and that the factors of production in China are cheap compared to other nations of the world. Almost every product in the market has links to China. This is part of globalization and not regionalism. MNCs are facing stiff competition, and also pushing away local companies in the host countries (Telò, 2004). Companies in the twenty first century are engaging more and more in partnerships, mergers and in acquisitions as a way of building a competitive edge in the target domestic and international market. De-regularization in most nations is encouraging direct foreign investments (Rugman & Collinson, 2012), which is part of globalization. Traditional markets that were inaccessible in earlier times are currently exploited by the huge MNCs that are after each and every opportunity in the international market.
It is argued that international business facilitates local and global companies refine their products and services in meeting the exact needs and preferences of the target market (Boudreaux, 2007). Consumers are more informed than in the decades before, an indication that they have better information on the products and services in the market. Flow of information has been facilitated by the growing trends in information and technology. Access of information by the target consumers is influencing the purchase patterns of the consumers, hence shaping local and international business (Rugman & Collinson, 2012).
Consumers in the world are characterized with diverse purchasing powers, MNCs benefit from economies of scale where they sell the products and services at subsidized prices in favour of huge sales. There are diverse gadgets in the market that are generating real time information in all parts of the world (Telò, 2004); the concept is encouraging globalization since the information is consumed by people in all parts of the world. Transfer of information does not value the national boundaries and facilitate international business (Rugman & Collinson, 2012). Companies are opening up to global knowledge and information in adapting to the consumer trends in the target market.
International business is encouraging transfer of technology mainly from developed nations to developing nations (Hill, 2012). Transfer of the technology does not value national or geographical barriers. Technology is ...
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