International Business

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International Business

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International Business

 

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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 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 involve 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].

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.

Areas of study within this topic include differences in legal systems, political systems, economic policy, language, accounting standards, labour 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.

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

 

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 supply chain management, accounting, finance, human resources

Overlaying alternatives: choice of countries, organization and control mechanisms

 

Physical and societal factors

 

Competitive factors

 

There has been growth in globalization in recent decades due to the following eight factors:

 

Studying international business is important because:

 

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[3]:

  1. Take advantage of trade agreements: think outside the border
    • Familiarize yourself with preference programs and trade agreements.
    • Read the fine print.
    • Participate in the process.
    • Seize opportunities when they arise.
  2. Protect your brand at all costs
    • You and your brand are inseparable.
    • You must be vigilant in protecting your intellectual property both at home and abroad.
    • You must be vigilant in enforcing your IP rights.
    • Protect your worldwide reputation by strict adherence to labour and human rights standards.
  3. Maintain high ethical standards
    • Strong ethics translate into good business.
    • Forge ethical strategic partnerships.
    • Understand corporate accountability laws.
    • Become involved with the international business self-regulation movement.
    • Develop compliance protocols for import and export operations.
    • Memorialize your company's code of ethics and compliance practices in writing.
    • Appoint a leader.
  4. Stay secure in an insecure world
    • Security requires transparency throughout the supply chain.
    • Participate in trade-government partnerships.
    • Make the most of new security measures.
    • Secure your data.
    • Keep your personnel secure.
  5. Expect the Unexpected
    • The unexpected will happen.
    • Do your research now.
    • Address your particular circumstances.
  6. All global business is personal
    • Go to the source.
    • Keep communications open.
    • Keep the home office operational.
    • Fly the flag at your overseas locations.
    • Relate to offshore associates on a personal level.
    • Be available to overseas clients and customers 24/7.

 

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

 

Thailand

 

The purpose of this subject is to enable participants to identify and employ strategies and actions to effectively identify and succeed in an international business environment.

Such companies are sometimes called Multi National Corporations or MNCs. Points of discussion with this topic may include cultural considerations, which itself may include differences in law and legal systems, language barriers, living standards, climate and more. These have to be overcome for a MNC to be successful in an overseas venture. A form of company in international business is an IBC. An IBC (international business corporation) is a form of offshore company. IBCs include banks, insurance companies, and trading firms.

Well known examples of MNCs include fastfood companies McDonald's and Yum Brands, vehicle manufacturers like General Motors and Toyota, consumer electronics companies like LG, Sony, and General Electric.

MNCs generally have a subsidiary or an interest over a company in the country of venture.

One of the results on the increasing success of International Business ventures is Globalization.

 

See also

 

External links

 

 

Learning Objectives and Outcomes

 

This is a non-taught unit designed for self-directed study by those intending to enhance their professional or managerial competence, knowledge, understanding, and skills in business finance.

Knowledge

After completing the course, student will understand

international business

 

Skills

After completing the course, student will be able to

 

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Introduction and Overview

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Globalization (or Globalisation) refers to the increasingly global relationships of culture, people, and economic activity. It is generally used to refer to economic globalization: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import quotas and the reduction of restrictions on the movement of capital and on investment. Globalization may contribute to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage.[1][2] The term can also refer to the transnational circulation of ideas, languages, and popular culture.

 

Europe and Globalization

Critics of globalization allege that globalization's benefits have been overstated and its costs underestimated. Critics argue that it has decreased inter-cultural contact while increasing the possibility of international and intra-national conflict.

 

Health Hazard

 

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World Business Culture

http://www.worldbusinessculture.net/

When working in the global commercial environment, knowledge of the impact of cultural differences is one of the keys to international business success. Regardless of the sector in which you operate – finance, technology, or computers and consumer electronics –global cultural differences will directly impact on you and the profitability of your business. Improving levels of cultural awareness can help companies build international competencies and enable individuals to become more globally sensitive. The culture-focused country profiles contained in the World Business Culture website are your passport to international business expertise. If you don’t have the right level of knowledge about these issues, you are taking a gamble every time you work cross-border – why bet on the future of you business or your career?

 

What Is Culture? A Mind Map For More Sales

Read More ...

 

Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

 

Understanding ethical differences and international business

 

Business ethics has both normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behaviour employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behaviour with non-economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporations promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."[1] Governments use laws and regulations to point business behaviour in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behaviour that lie beyond governmental control.[2] The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.[3]

 

See also

 Ethical Issues In International Business

 

 

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The Global Trade and Investment Environment

 

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United Nations Radio

 

 

International trade is the exchange of capital, goods, and services across international borders or territories.[1] In most countries, such trade 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.

 

Global Competitiveness Index (2008-2009)

Global Competitiveness Index (2008-2009): competitiveness is an important determinant for 
the well-being of states in an international trade environment.

 

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.

International trade is, in principle, not different from domestic trade as the motivation and the behaviour 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.

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, labour or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production.

Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labour, the United States imports goods that were produced with Chinese labour One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.[2]

International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

 

See also

 

External links

Official statistics

Data on the value of exports and imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes:

 

The definitions and methdological concepts applied for the various statistical collections on international trade often differ in terms of definition (e.g. special trade vs. general trade) and coverage (reporting thresholds, inclusion of trade in services, estimates for smuggled goods and cross-border provision of illegal services). Metadata providing information on definitions and methods are often published along with the data.

Other data sources

 

Other external links

The Expected Benefits of Trade Liberalization for World Income and Development: Opening the "Black Box" of Global Trade Modelling

The McGill Faculty of Law runs a Regional Trade Agreements Database that contains the text of almost all preferential and regional trade agreements in the world. ptas.mcgill.ca

Interactive Ricardian Model Simulator

Consumers for World Trade Education Fund electronic trade library

International trade, Encyclopædia Britannica

Benefits of International Trade

Should trade be considered a human right?

Penn Program on Regulation's Import Safety Page

Articles on EU international trade in Statistics explained.

 

 

International finance (also referred to as international monetary economics or international macroeconomics) is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries.[1][2] International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade.[1][2][3]

Sometimes referred to as multinational finance, international finance is additionally concerned with matters of international financial management. Investors and multinational corporations must assess and manage international risks such as political risk and exchange rate risk, including transaction exposure, economic exposure, and translation exposure.[4][5]

Some examples of key concepts within international finance are the Mundell–Fleming model, the optimum currency area theory, purchasing power parity, interest rate parity, and the international Fisher effect. Whereas the study of international trade makes use of mostly microeconomic concepts, international finance research investigates predominantly macroeconomic concepts.

 

http://www.jhwhitney.com/global_perspective.asp

 

See also

 

 

Foreign direct investment (FDI) is direct investment by a company in distribution located in another country either by sharing a company in the country or by expanding operations of an existing business in the country. Foreign direct investment is done for many reasons including to take advantage of cheaper distribution costs in the country, special investment privileges such as tax increase offered by the country as an incentive for investment or to gain tariff-free access to the companies of the country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. [1]

As a part of the national accounts of a country FDI refers to the net inflows of investment to acquire a lasting tax interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.[2] It is the sum of equity capital, other long-term capital, and short-term capital as shown the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares.[3] FDI is one example of international factor movements.

 

 

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The Global Monetary System

 

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Bancor: The Name Of The Global Currency That A Shocking IMF Report Is Proposing

 

International monetary systems are sets of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investment and generally the reallocation of capital between nation states. They provide means of payment acceptable between buyers and sellers of different nationality, including deferred payment. To operate successfully, they need to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade and to provide means by which global imbalances can be corrected. The systems can grow organically as the collective result of numerous individual agreements between international economic actors spread over several decades. Alternatively, they can arise from a single architectural vision as happened at Bretton Woods in 1944.

 

Foreign Exchange Market

 

 

See also

 

External links

 

 

Current International Monetary System

 

 

Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

 

The global financial system (GFS) is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are the global institutions, such as International Monetary Fund and Bank for International Settlements, national agencies and government departments, e.g., central banks and finance ministries, private institutions acting on the global scale, e.g., banks and hedge funds, and regional institutions, e.g., the Eurozone.

Deficiencies and reform of the GFS have been hotly discussed in recent years.

 

A plan to stabilize the global monetary system

 

 

See also

 

Criticism, discussions and reform

 The Great Misdiagnosis

 

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The Strategy and Structure of International Business

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Cases BP: Creating a Global Brand
Restructuring Exide
Philips versus Matsushita: A New Century, a New Round

 

Readings

 

The strategy of internationalization in universities: A quantitative evaluation of the intent and implementation in UK universities

 

International business strategy refers to plans that guide commercial transactions taking place between entities in different countries. Typically, international business strategy refers to the plans and actions of private companies rather than governments; as such, the goal is increased profit.

 

How do you build a global strategy?

 

Most companies of any appreciable size deal with at least one international partner at some point in their supply chain, and in most well-established fields competition is international. Because methods of doing business vary appreciably in different countries, an understanding of cultural and linguistic barriers, political and legal systems, and the many complexities of international trade is essential to commercial success.

As historically developing countries become increasingly prominent, new markets open up and new sources of goods become available,[1] making it increasingly important even for long-established firms to have a viable international business strategy. This is often facilitated with the use of international management consulting firms such as Oliver Wyman, Roland Berger, Amritt, or the Everest Group.

See also

 

Developing countries

Developing countries that are neither part of the least developed countries, nor of the newly industrialized countries

 

 

Newly industrialized countries

Newly industrialized countries as of 2010. This is an intermediate category between fully developed and developing.

 

References

  1. ^ "International Business Strategy in India and China". Retrieved 1 May 2011.
  2. ^ Porter, M. (1980). Competitive Strategy.
  3. ^ Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1): 99–121.
  4. ^ An institution-based view of international business strategy: a focus on emerging economies

 

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Business Operations

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This term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in the home country to other markets.[1]

 

Your export countries

 

Any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers.[2]

Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and eBay have largely bypassed the involvement of Customs in many countries because of the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. An export's counterpart is an import.

 

 

LNG Imports to the UK

 

 

 

See also

 Government Pro-active Countertrade: a decade of deals

 

External links

 

Outsourcing is the process of contracting a business function to someone else.[1] It is sometimes confused with offshoring, though a function may be outsourced without offshoring or vice versa. The opposite of outsourcing is called vertical integration or insourcing.

 

The Power of Outsourcing

 

 

See also

 

External links

 

Global Human Resource Management - Meaning and Objectives

 

Human Resource Management

With the advent of globalization, organizations - big or small have ceased to be local, they have become global! This has increased the workforce diversity and cultural sensitivities have emerged like never before. All this led to the development of Global Human Resource Management.

Even those organizations who consider themselves immune to transactions across geographical boundaries are connected to the wider network globally. They are in one way or the other dependent upon organizations that may even not have heard about. There is interdependence between organizations in various areas and functions.

The preliminary function of global Human Resource Management is that the organization carries a local appeal in the host country despite maintaining an international feel. To exemplify, any multinational / international company would not like to be called as local, however the same wants a domestic touch in the host country and there lies the challenge.

We may therefore, enumerate the objectives of global HRM as follows:

  1. Create a local appeal without compromising upon the global identity.
  2. Generating awareness of cross cultural sensitivities among managers globally and hiring of staff across geographic boundaries.
  3. Training upon cultures and sensitivities of the host country.

 

The strategic role of Human resources Management in such a scenario is to ensure that HRM policies are in tandem with and in support of the firm’s strategy, structure and controls. Specifically, when we talk of structures and controls the following become worth mentioning in the context of Global HRM.

Decision Making: There is a certain degree of centralization of operating decision making. Compare this to the International strategy, the core competencies are centralized and the rest are decentralized.

Co-ordination: A high degree of coordination is required in wake of the cross cultural sensitivities. There is in addition also a high need for cultural control.

Integrating Mechanisms: Many integrating mechanisms operate simultaneously.

 

Global HRM and the Staffing Policy

Here also the role is no different i.e. hiring individuals with requisite skills to do a particular job. The challenge here is developing tools to promote a corporate culture that is almost the same everywhere except that the local sensitivities are taken care of.

Also, the deciding upon the top management or key positions gets very tricky. Whether to choose a local from the host country for a key position or deploy one from the headquarters assumes importance; and finally whether or not to have a uniform hiring policy globally remains a big challenge.

Nevertheless an organization can choose to hire according to any of the staffing policies mentioned below:

Ethnocentric: Here the Key management positions are filled by the parent country individuals.

Polycentric: In polycentric staffing policy the host country nationals manage subsidiaries whereas the headquarter positions are held by the parent company nationals.

Geocentric: In this staffing policy the best and the most competent individuals hold key positions irrespective of the nationalities.

Geocentric staffing policy it seems is the best when it comes to Global HRM. The human resources are deployed productively and it also helps build a strong cultural and informal management network. The flip side is that human resources become a bit expensive when hired on a geocentric basis. Besides the national immigration policies may limit implementation.

Global HRM therefore is a very challenging front in HRM. If one is able to strike the right chord in designing structures and controls, the job is half done. Subsidiaries are held together by global HRM, different subsidiaries can function operate coherently only when it is enabled by efficient structures and controls.

 

The International Accounting Standards Board (IASB) is an independent, privately funded accounting standard-setter based in London, England.

 

International business for entrepreneurs: Global finance: initial considerations

 

The IASB was founded on April 1, 2001 as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (the new name for International Accounting Standards issued after 2001), and promoting the use and application of these standards.

 

See also

 

External links

 

 

National accounting standard-setting bodies

 

Discussions

 

International Finance

 

 

Social Enterprise and Philanthropy Investing In The Global Financial Markets

 

Recommended Texts

 

International Business: Competing in the Global Marketplace,

International Business: Competing in the Global Marketplace, 5/e
Charles W. L. Hill, University of Washington

 

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International Political Economy: Interests and Institutions in the Global Economy

International Political Economy: Interests and Institutions in the Global Economy, 2/E

Thomas Oatley, University of North Carolina at Chapel Hill

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International Human Resource Management

International Human Resource Management

Second Edition Edited by:

Anne-Wil Harzing University of Melbourne, Australia
Joris Van Ruysseveldt Open University, The Netherlands

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OECD Publication Reviews the Role of Foreign Direct Investment in Development

OECD Publication Reviews the Role of Foreign Direct Investment in Development

 

 

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