International businessÂ
Movement of goods from one country to another country (export, import, trade).Agreements that allow foreign companies to use products, services and processes from other countries (licensing, franchise).Organization and operation of sales, manufacturing, research and development, and distribution facilities in foreign markets.
The study of international business involves understanding the impact of the above activities on domestic and foreign markets, nations, governments, businesses, and individuals. Successful international companies recognize the diversity of global markets and are able to navigate the uncertainties and risks of doing business in an ever-changing global market. International corporate strategy, planning and/or operational decisions are classified as:
Multinational companies have independent subsidiaries that operate as national companies; OR
Global services and integrated subsidiaries; OR
However, a strong aspect of international business, is that many companies combine aspects of many countries with global operations:
Multi-homes – An important type of business that involves promoting different products and services in different markets around the world and adapting the products/services to the cultural traditions, preferences and religious traditions of different markets.
Multinational – A business plan that involves selling products and services in different foreign markets without changing the quality of the product/service to meet the cultural values ​​or customs of the different markets. Participating in international events allows countries to compare their opportunities.Also Read: 5 Best steps to become Meta Business partner
The concept of comparative advantage means that a country has an advantage over other countries in terms of access to land, resources, labor and capital. In other words, a country must export goods or services that use a lot of inputs. In addition, firms with sufficient capital may look for other countries with more land or labor, or firms may seek to invest abroad when their domestic market is saturated. Participation in foreign trade gives other countries the opportunity to take advantage of special skills and many production facilities to bring goods and services to the international market.
This has the advantage of increasing the variety of products and services available in the market. International trade increases competition in domestic markets and opens up new opportunities in foreign markets. Global competition encourages companies to be innovative and efficient in the use of their resources. For consumers, international trade introduces them to a variety of products and services. For many, it improves their quality of life and increases their exposure to new ideas, tools, products, services and technologies.
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The growth of foreign trade
The development of international trade increased significantly during the last period of the 20th century, thanks to the freedom of trade and investment in the development of technology. Some of the important factors that have made international business so advanced include:
The creation of the World Trade Organization (WTO) in 1995
A study of electronic money transfers
The introduction of the euro in the European Union
New technology that enables global communication and travel
The spread of many communist markets, thus opening up many economies and private companies
Today, global competition affects almost every business, regardless of size. Many suppliers of goods from abroad and even more with goods or services from abroad compete. International business is still a broad concept that includes small companies that may export or import to another country, as well as large global companies with integrated operations and strategic integration around the world.
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Challenges in International Business Concepts
Because a country has a system of government, laws and regulations, taxes, jobs, money, customs, customs, etc. In particular, international business is decidedly more difficult than business that only works in the domestic market.
The main function of international trade is to understand the global market share. There are now more than 200 international stores around the world, making international business opportunities seem endless. However, the differences between different countries provide unique perspectives and many obstacles, such as:
National economic disparities
Economic disparities between countries are still significant.Regions vary by economy and population: North America is only 5% of the world’s population, but it controls almost a third of the gross domestic product n ‘the world. Different cultures languages: There are more than 10,000 different languages/cultures in the world.
Country size and diversity: There were about 60 countries at the beginning of the 20th century in 2000, this number reached more than 200. Some of the challenges discussed by businesses and professionals involved in international trade include:
Economic situation
Economic conditions can vary greatly from one country to another. Economies of different countries can be developed (developed), emerging (newly developed) or developing (third world). Also, within each of these economies there are many variables, which have a significant impact on everything from education and infrastructure to technology and health.
National economic systems such as free markets, centralized markets, or mixed markets also play a role in the ease with which international trade efforts can be undertaken. For example, a market economy allows international business operations to take place with less interference. At the other end of the spectrum, the government controls the organized economy. Although many countries now operate as market economies, China, the most expensive country in the world, is still a planned economy.
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Political region
The political sphere of international business refers to the relationship between government and business, as well as national political risk. Therefore, companies involved in international business should expect to deal with different types of government, such as multi-party democracy, political party, dictatorship and authoritarian government. .
Some governments may view foreign companies as legitimate, while others may view them as exploitative. Since international companies depend on the goodwill of the government, international companies must take into account the political system of the foreign government.
International organizations will also consider the degree of political risk in foreign countries; In other words, the possibility of a major political change is taking place. Crisis, revolution, war and terrorism are some of the problems of unstable governments that international organizations must take into account.
Cultural environment
Foreign environmental culture is still an important part of the international business environment, but it is one of the most difficult to understand. The culture of a foreign country includes common beliefs and values, which are formed by factors such as language, religion, geography, government, history, and education.Also Read:5Ways to Accumulate Wealth for your Business
It is common for many international companies to conduct research on foreign cultures to better understand these factors and their impact on international business efforts.
Competition area
The competitive landscape is constantly changing depending on the economic, political and cultural environment. Competition can come in many forms and the type of competition can vary from place to place. It can be encouraged or discouraged for the support of cooperation, and the relationship between buyers and sellers can be friendly or hostile. The level of technological innovation is also an important part of the competitive environment, with companies competing for access to the latest technology. To be successful in foreign markets, international companies must understand the many factors that affect the competitive environment and analyze their effects carefully.
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