International business
From Wikipedia, the free encyclopedia
International business 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 nations. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons.[1]
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 (TCN). 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.
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, 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.
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.
Operations
- Objectives: sales expansion, resource acquisition, risk minimization
Means
- Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey operations, management contracts, direct investment and portfolio investments.
- Functions: marketing, global manufacturing and chain supply management, accounting, finance, human resources
- Overlaying alternatives: choice of countries, organization and control mechanisms
Physical and societal factors
- Political policies and legal practices
- Cultural factors
- Economic forces
- Geographical influences
Competitive factors
- Major advantage in price, marketing, innovation, or other factors.
- Number and comparative capabilities of competitors
- Competitive differences by country
There has been growth in globalization in recent decades due to the following eight factors:
- Technology is expanding, especially in transportation and communications.
- Governments are removing international business restrictions.
- Institutions provide services to ease the conduct of international business.
- Consumers know about want foreign goods and services.
- Competition has become more global.
- Political relationships have improved among some major economic powers.
- Countries cooperate more on transnational issues.
- Cross-national cooperation and agreements.
Studying international business is important because:
- Most companies are either international or compete with international companies.
- Modes of operation may differ from those used domestically.
- The best way of conducting business may differ by country.
- An understanding helps you make better career decisions.
- An understanding helps you decide what governmental policies to support.
Managers in international business must understand social science disciplines and how they affect all functional business fields.
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[2]:
- 1. Take advantage of trade agreements: think outside the border
- 2. Protect your brand at all costs
- 3. Maintain high ethical standards
- 4. Stay secure in an insecure world
- 5. Expect the Unexpected
- 6. All global business is personal
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.
Top Tier: Per capita GDP/GNI > $20,000 Approximately one billion people
Second Tier: Per capita GDP/GNI $2,000-$20,000 Approximately one billion people
Base of the Pyramid Per capita GDP/GNI < $2,000 Approximately four billion people
[edit] Notes
- ^ Daniels, J., Radebaugh, L., Sullivan, D. (2007). International Business: environment and operations, 11th edition. Prentice Hall. ISBN 0131869426
- ^ Travis, T. (2007). Doing Business Anywhere: The Essential Guide to Going Global. Hoboken: John Wiley&Sons. ISBN 978-0-471-97317-1
[edit] See also
[edit] External links
- US Chamber of Commerce The world’s largest business federation representing more than three million businesses and organizations
- The International Trade Centre ITC is the joint agency of the World Trade Organization and the United Nations
- The U.S. Government’s export promotion and finance portal A government resource for U.S. exporters
- UK Trade & Investment A government resource for UK exporters
